Energy Conservation Program: Energy Conservation Standards for Dehumidifiers, 38337-38396 [2016-12881]

Download as PDF Vol. 81 Monday, No. 113 June 13, 2016 Part III Department of Energy mstockstill on DSK3G9T082PROD with RULES3 10 CFR Parts 429 and 430 Energy Conservation Program: Energy Conservation Standards for Dehumidifiers; Final Rule VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 PO 00000 Frm 00001 Fmt 4717 Sfmt 4717 E:\FR\FM\13JNR3.SGM 13JNR3 38338 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations DEPARTMENT OF ENERGY 10 CFR Parts 429 and 430 [Docket Number EERE–2012–BT–STD– 0027] RIN 1904–AC81 Energy Conservation Program: Energy Conservation Standards for Dehumidifiers Office of Energy Efficiency and Renewable Energy, Department of Energy. ACTION: Final rule. AGENCY: The Energy Policy and Conservation Act of 1975 (EPCA), as amended, prescribes energy conservation standards for various consumer products and certain commercial and industrial equipment, including dehumidifiers. EPCA also requires the U.S. Department of Energy (DOE) to periodically determine whether more-stringent standards would be technologically feasible and economically justified, and would save a significant amount of energy. In this final rule, DOE is adopting morestringent energy conservation standards for dehumidifiers. It has determined that the amended energy conservation standards for these products would result in significant conservation of energy, and are technologically feasible and economically justified. DATES: The effective date of this rule is August 12, 2016. Compliance with the amended standards established for dehumidifiers in this final rule is required on and after June 13, 2019. ADDRESSES: The docket for this rulemaking, which includes Federal Register notices, public meeting attendee lists and transcripts, comments, and other supporting documents/materials, is available for review at www.regulations.gov. All documents in the docket are listed in the www.regulations.gov index. However, not all documents listed in the index may be publicly available, such as information that is exempt from public disclosure. A link to the docket Web page can be found at: http://www.regulations.gov/# !docketDetail;D=EERE-2012-BT-STD0027. The www.regulations.gov Web page will contain instructions on how to access all documents, including public comments, in the docket. For further information on how to review the docket, contact Ms. Brenda Edwards at (202) 586–2945 or by email: Brenda.Edwards@ee.doe.gov. FOR FURTHER INFORMATION CONTACT: Mr. Bryan Berringer, U.S. Department of mstockstill on DSK3G9T082PROD with RULES3 SUMMARY: VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 Energy, Office of Energy Efficiency and Renewable Energy, Building Technologies Office, EE–5B, 1000 Independence Avenue SW., Washington, DC 20585–0121. Telephone: (202) 586–0371. Email: dehumidifiers@EE.Doe.Gov. Ms. Elizabeth Kohl, U.S. Department of Energy, Office of the General Counsel, GC–33, 1000 Independence Avenue SW., Washington, DC 20585–0121. Telephone: (202) 586–7796. Email: Elizabeth.Kohl@hq.doe.gov. SUPPLEMENTARY INFORMATION: Table of Contents I. Synopsis of the Final Rule A. Benefits and Costs to Consumers B. Impact on Manufacturers C. National Benefits and Costs D. Conclusion II. Introduction A. Authority B. Background 1. Current Standards 2. History of Standards Rulemaking for Dehumidifiers III. General Discussion A. Product Classes and Scope of Coverage B. Test Procedure C. Technological Feasibility 1. General 2. Maximum Technologically Feasible Levels D. Energy Savings 1. Determination of Savings 2. Significance of Savings E. Economic Justification 1. Specific Criteria a. Economic Impact on Manufacturers and Consumers b. Savings in Operating Costs Compared to Increase in Price (LCC and PBP) c. Energy Savings d. Lessening of Utility or Performance of Products e. Impact of Any Lessening of Competition f. Need for National Energy Conservation g. Other Factors 2. Rebuttable Presumption IV. Methodology and Discussion of Related Comments A. Market and Technology Assessment 1. Scope of Coverage and Product Classes a. Preliminary Analysis and NOPR Proposals b. Comments and Responses c. Final Rule Product Classes 2. Technology Options B. Screening Analysis 1. Screened-Out Technologies 2. Remaining Technologies C. Engineering Analysis 1. Efficiency Levels a. Baseline Efficiency Levels b. Higher Energy Efficiency Levels 2. Manufacturer Production Cost Estimates D. Markups Analysis E. Energy Use Analysis F. Life-Cycle Cost and Payback Period Analysis 1. Product Cost 2. Installation Cost PO 00000 Frm 00002 Fmt 4701 Sfmt 4700 3. Annual Energy Consumption 4. Energy Prices 5. Maintenance and Repair Costs 6. Product Lifetime 7. Discount Rates 8. Efficiency Distribution in the No-NewStandards Case 9. Payback Period Analysis G. Shipments Analysis H. National Impact Analysis 1. Product Efficiency Trends 2. National Energy Savings 3. Net Present Value Analysis I. Consumer Subgroup Analysis J. Manufacturer Impact Analysis 1. Overview 2. Government Regulatory Impact Model (GRIM) a. Government Regulatory Impact Model Key Inputs b. Government Regulatory Impact Model Scenarios 3. Discussion of Comments 4. Manufacturer Interviews K. Emissions Analysis L. Monetizing Carbon Dioxide and Other Emissions Impacts 1. Social Cost of Carbon a. Monetizing Carbon Dioxide Emissions b. Development of Social Cost of Carbon Values c. Current Approach and Key Assumptions 2. Social Cost of Other Air Pollutants M. Utility Impact Analysis N. Employment Impact Analysis V. Analytical Results and Conclusions A. Trial Standard Levels B. Economic Justification and Energy Savings 1. Economic Impacts on Individual Consumers a. Life-Cycle Cost and Payback Period b. Consumer Subgroup Analysis c. Rebuttable Presumption Payback 2. Economic Impacts on Manufacturers a. Industry Cash Flow Analysis Results b. Impacts on Direct Employment c. Impacts on Manufacturing Capacity d. Impacts on Subgroups of Manufacturers e. Cumulative Regulatory Burden 3. National Impact Analysis a. Significance of Energy Savings b. Net Present Value of Consumer Costs and Benefits c. Indirect Impacts on Employment 4. Impact on Utility or Performance of Products 5. Impact of Any Lessening of Competition 6. Need of the Nation To Conserve Energy 7. Other Factors 8. Summary of National Economic Impacts C. Conclusion 1. Benefits and Burdens of TSLs Considered for Dehumidifier Standards 2. Summary of Annualized Benefits and Costs of the Adopted Standards VI. Certification Reporting and Enforcement Requirements VII. Procedural Issues and Regulatory Review A. Review Under Executive Orders 12866 and 13563 B. Review Under the Regulatory Flexibility Act 1. Statement of the Need for, and Objectives of, the Rule 2. Significant Issues Raised by Public Comment E:\FR\FM\13JNR3.SGM 13JNR3 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations 3. Response to Comments From the Small Business Administration’s Chief Counsel for Advocacy 4. Description and Estimated Number of Small Entities Regulated a. Methodology for Estimating the Number of Small Entities b. Manufacturer Participation c. Comparison of Large and Small Entities 5. Description and Estimate of Compliance Requirements 6. Significant Alternatives to the Rule C. Review Under the Paperwork Reduction Act D. Review Under the National Environmental Policy Act of 1969 E. Review Under Executive Order 13132 F. Review Under Executive Order 12988 G. Review Under the Unfunded Mandates Reform Act of 1995 H. Review Under the Treasury and General Government Appropriations Act, 1999 I. Review Under Executive Order 12630 J. Review Under the Treasury and General Government Appropriations Act, 2001 K. Review Under Executive Order 13211 L. Review Under the Information Quality Bulletin for Peer Review M. Congressional Notification VIII. Approval of the Office of the Secretary I. Synopsis of the Final Rule Title III, Part B 1 of the Energy Policy and Conservation Act of 1975 (EPCA or the Act), Public Law 94–163 (42 U.S.C. 6291–6309, as codified), established the Energy Conservation Program for Consumer Products Other Than Automobiles.2 These products include dehumidifiers, the subject of this document. Pursuant to EPCA, any new or amended energy conservation standard must be designed to achieve the maximum improvement in energy efficiency that DOE determines is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A)) Furthermore, the new or amended standard must result in significant conservation of energy. (42 U.S.C. 6295(o)(3)(B)) EPCA also provides that not later than 6 years after issuance of any final rule establishing or amending a standard, DOE must publish either a notice of determination that standards for the product do not need to be amended, or a notice of proposed rulemaking including new proposed energy conservation standards. (42 U.S.C. 6295(m)) In accordance with these and other statutory provisions discussed in this document, DOE is adopting amended energy conservation standards for dehumidifiers. The amended standards, which are expressed in the minimum allowable integrated energy factor (IEF), expressed in liters (L) of moisture removed per kilowatt-hour (kWh), are shown in Table I.1. These standards apply to all products listed in Table I.1 and manufactured in, or imported into, the United States on and after June 13, 2019. 38339 TABLE I.1—ENERGY CONSERVATION STANDARDS FOR DEHUMIDIFIERS (COMPLIANCE STARTING JUNE 13, 2019) Portable dehumidifier product capacity (pints/day) Minimum integrated energy factor (L/kWh) 25.00 or less ......................... 25.01–50.00 .......................... 50.01 or more ....................... 1.30 1.60 2.80 Whole-home dehumidifier product case volume (cubic feet) 8.0 or less ............................. More than 8.0 ....................... 1.77 2.41 A. Benefits and Costs to Consumers Table I.2 presents DOE’s evaluation of the economic impacts of the adopted standards on consumers of dehumidifiers, as measured by the average life-cycle cost (LCC) savings and the simple payback period (PBP).3 The average LCC savings are positive or zero for all product classes, and the PBP is less than the average lifetime of portable and whole-home dehumidifiers, which is estimated to be 11 years and 19 years, respectively (see section IV.F). TABLE I.2—IMPACTS OF AMENDED ENERGY CONSERVATION STANDARDS ON CONSUMERS OF DEHUMIDIFIERS Average LCC savings (2014$) Product class PC1: PC2: PC3: PC4: PC5: Portable Dehumidifier: ≤25.00 pints/day ................................................................................................ Portable Dehumidifier: 25.01–50.00 pints/day ....................................................................................... Portable Dehumidifier: ≥50.01 pints/day ................................................................................................ Whole-home Dehumidifier: ≤8ft3. Whole-home Dehumidifier: >8ft3. DOE’s analysis of the impacts of the adopted standards on consumers is described in section IV.F of this document. mstockstill on DSK3G9T082PROD with RULES3 B. Impact on Manufacturers The industry net present value (INPV) is the sum of the discounted cash flows to the industry from the base year through the end of the analysis period (2016 to 2048). Using a real discount rate of 8.4 percent, DOE estimates that the INPV for manufacturers of dehumidifiers in the case without 1 For editorial reasons, upon codification in the U.S. Code, Part B was redesignated Part A. 2 All references to EPCA in this document refer to the statute as amended through the Energy VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 107 119 142 Simple payback period (years) 0.5 0.4 4.5 amended standards is $179.5 million in 2014$. Under the adopted standards, DOE expects that manufacturers may lose up to 20.9 percent of this INPV, which is approximately $37.5 million. Additionally, DOE identified five other DOE regulations that impact dehumidifier manufacturers and considered potential manufacturer impacts associated with the cumulative burden of these regulations, as discussed in section V.B.2.e of this document. Based on DOE’s interviews with the manufacturers of dehumidifiers and impacts analysis, DOE does not expect significant impacts on manufacturing capacity or loss of employment for the industry as a whole to result from the standards for dehumidifiers. DOE’s analysis of the impacts of the adopted standards on manufacturers is described in section IV.J of this document. Efficiency Improvement Act of 2015, Public Law 114–11 (Apr. 30, 2015). 3 The average LCC savings are measured relative to the efficiency distribution in the no-newstandards case, which depicts the market in the compliance year in the absence of standards (see section IV.F.9). The simple PBP, which is designed to compare specific dehumidifier efficiency levels, is measured relative to the baseline model (see section IV.C.1.a). PO 00000 Frm 00003 Fmt 4701 Sfmt 4700 E:\FR\FM\13JNR3.SGM 13JNR3 38340 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations C. National Benefits and Costs 4 DOE’s analyses indicate that the adopted energy conservation standards for dehumidifiers would save a significant amount of energy. Relative to the case without amended standards the lifetime energy savings for dehumidifiers purchased in the 30-year period that begins in the anticipated year of compliance with the amended standards (2019–2048), amount to 0.30 quadrillion Btu (quads).5 This represents a savings of 7.4 percent relative to the energy use of these products in the case without amended standards (referred to as the ‘‘no-newstandards case’’). The cumulative net present value (NPV) of total consumer costs and savings of the standards for dehumidifiers ranges from $1.28 billion (at a 7-percent discount rate) to $2.71 billion (at a 3-percent discount rate). This NPV expresses the estimated total value of future operating-cost savings minus the estimated increased product costs for dehumidifiers purchased in 2019–2048. In addition, the standards for dehumidifiers are projected to yield significant environmental benefits. DOE estimates that the standards would result in cumulative greenhouse gas emission reductions (over the same period as for energy savings) of 18.6 million metric tons (Mt) 6 of carbon dioxide (CO2), 11.0 thousand tons of sulfur dioxide (SO2), 33.1 tons of nitrogen oxides (NOX), 77.9 thousand tons of methane (CH4), 0.23 thousand tons of nitrous oxide (N2O), and 0.04 tons of mercury (Hg).7 The cumulative reduction in CO2 emissions through 2030 amounts to 5.3 Mt. The value of the CO2 reductions is calculated using a range of values per metric ton of CO2 (otherwise known as the ‘‘Social Cost of Carbon,’’ or SCC) developed by a Federal interagency working group.8 The derivation of the SCC values is discussed in section 0. Using discount rates appropriate for each set of SCC values, DOE estimates that the net present monetary value of the CO2 emissions reduction (not including CO2 equivalent emissions of other gases with global warming potential) is between $0.1 billion and $1.9 billion, with a value of $0.6 billion using the central SCC case represented by $40.0/t in 2015. DOE also estimates that the net present monetary value of the NOX emissions reduction to be $0.03 billion at a 7-percent discount rate, and $0.07 billion at a 3-percent discount rate.9 Table I.3 summarizes the national economic benefits and costs expected to result from the adopted standards for dehumidifiers. TABLE I.3—SUMMARY OF NATIONAL ECONOMIC BENEFITS AND COSTS OF AMENDED ENERGY CONSERVATION STANDARDS FOR DEHUMIDIFIERS * Present value (billion 2014$) Category Discount rate (%) Benefits Consumer Operating Cost Savings ..................................................................................................................... CO2 Reduction Value ($12.2/t case) ** ................................................................................................................ CO2 Reduction Value ($40.0/t case) ** ................................................................................................................ CO2 Reduction Value ($62.3/t case) ** ................................................................................................................ CO2 Reduction Value ($117/t case) ** ................................................................................................................. NOX Reduction Value † ....................................................................................................................................... Total Benefits †† .................................................................................................................................................. 1.4 2.9 0.1 0.6 1.0 1.9 0.03 0.07 2.0 3.6 7 3 5 3 2.5 3 7 3 7 3 0.11 0.19 7 3 1.9 3.4 7 3 Costs Consumer Incremental Installed Costs ............................................................................................................... Net Benefits Including CO2 and NOX Reduction Monetized Value †† ..................................................................................... mstockstill on DSK3G9T082PROD with RULES3 * This table presents the costs and benefits associated with dehumidifiers shipped in 2019–2048. These results include benefits to consumers which accrue after 2048 from the products purchased in 2019–2048. The costs account for the incremental variable and fixed costs incurred by manufacturers due to the standard, some of which may be incurred in preparation for the rule. 4 All monetary values in this section are expressed in 2014 dollars and, where appropriate, are discounted to 2015 unless explicitly stated otherwise. Energy savings in this section refer to the full-fuel-cycle savings (see section IV.H for discussion). 5 The quantity refers to full-fuel-cycle (FFC) energy savings. FFC energy savings includes the energy consumed in extracting, processing, and transporting primary fuels (i.e., coal, natural gas, petroleum fuels), and, thus, presents a more complete picture of the impacts of energy efficiency standards. For more information on the FFC metric, see section IV.H.2. 6 A metric ton is equivalent to 1.1 short tons. Results for NOX and Hg are presented in short tons. VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 7 DOE calculated emissions reductions relative to the no-new-standards-case, which reflects key assumptions in the Annual Energy Outlook 2015 (AEO 2015) Reference case, which generally represents current legislation and environmental regulations for which implementing regulations were available as of October 31, 2014. 8 Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866. Interagency Working Group on Social Cost of Carbon, United States Government. May 2013; revised November 2013. Available at: http:// www.whitehouse.gov/sites/default/files/omb/assets/ inforeg/technical-update-social-cost-of-carbon-forregulator-impact-analysis.pdf. 9 DOE estimated the monetized value of NO X emissions reductions using benefit per ton PO 00000 Frm 00004 Fmt 4701 Sfmt 4700 estimates from the Regulatory Impact Analysis for the Clean Power Plan Final Rule, published in August 2015 by EPA’s Office of Air Quality Planning and Standards. (Available at: http:// www.epa.gov/cleanpowerplan/clean-power-planfinal-rule-regulatory-impact-analysis.) See section IV.L.2 for further discussion. Note that the agency is primarily using a national benefit-per-ton estimate for NOX emitted from the Electricity Generating Unit sector based on an estimate of premature mortality derived from the ACS study (Krewski et al., 2009). If the benefit-per-ton estimates were based on the Six Cities study (Lepuele et al., 2011), the values would be nearly two-and-a-half times larger. E:\FR\FM\13JNR3.SGM 13JNR3 38341 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations ** The CO2 values represent global monetized values of the SCC, in 2014$, in 2015 under several scenarios of the updated SCC values. The first three cases use the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The SCC time series incorporate an escalation factor. † The $/ton values used for NOX are described in section 0. DOE estimated the monetized value of NOX emissions reductions using benefit per ton estimates from the Regulatory Impact Analysis for the Clean Power Plan Final Rule, published in August 2015 by EPA’s Office of Air Quality Planning and Standards. (Available at: http://www.epa.gov/cleanpowerplan/clean-power-plan-final-rule-regulatory-impact-analysis.) See section IV.L.2 for further discussion. Note that the agency is primarily using a national benefit-per-ton estimate for NOX emitted from the Electricity Generating Unit sector based on an estimate of premature mortality derived from the ACS study (Krewski et al., 2009). If the benefit-perton estimates were based on the Six Cities study (Lepuele et al., 2011), the values would be nearly two-and-a-half times larger. †† Total Benefits for both the 3% and 7% cases are derived using the series corresponding to average SCC with 3-percent discount rate ($40.0/t case). The benefits and costs of the adopted standards, for dehumidifiers sold in 2019–2048, can also be expressed in terms of annualized values. The monetary values for the total annualized net benefits are the sum of (1) the national economic value of the benefits in reduced consumer operating costs, minus (2) the increases in product purchase prices and installation costs, plus (3) the value of the benefits of CO2 and NOX emission reductions, all annualized.10 Although the value of operating cost savings and CO2 emission reductions are both important, two issues are relevant. First, the national operating cost savings are domestic U.S. consumer monetary savings that occur as a result of market transactions, whereas the value of CO2 reductions is based on a global value. Second, the assessments of operating cost savings and CO2 savings are performed with different methods that use different time frames for analysis. The national operating cost savings is measured for the lifetime of dehumidifiers shipped in 2019–2048. Because CO2 emissions have a very long residence time in the atmosphere,11 the SCC values in future years reflect future CO2-emissions impacts that continue beyond 2100. Estimates of annualized benefits and costs of the adopted standards are shown in Table I.4. The results under the primary estimate are as follows. Using a 7-percent discount rate for benefits and costs other than CO2 reduction, (for which DOE used a 3percent discount rate along with the SCC series that has a value of $40.0/t in 2015),12 the estimated cost of the standards in this rule is $11 million per year in increased equipment costs, while the estimated annual benefits are $136 million in reduced equipment operating costs, $34 million in CO2 reductions, and $2.9 million in reduced NOX emissions. In this case, the net benefit amounts to $163 million per year. Using a 3-percent discount rate for all benefits and costs and the SCC series has a value of $40.0/t in 2015, the estimated cost of the standards is $10 million per year in increased equipment costs, while the estimated annual benefits are $162 million in reduced operating costs, $34 million in CO2 reductions, and $3.7 million in reduced NOX emissions. In this case, the net benefit amounts to $189 million per year. TABLE I.4—ANNUALIZED BENEFITS AND COSTS OF AMENDED STANDARDS FOR DEHUMIDIFIERS * Million 2014$/year Discount rate High net benefits estimate Primary estimate Low net benefits estimate 136 ................... 162 ................... 10 ..................... 34 ..................... 50 ..................... 104 ................... 2.9 .................... 3.7 .................... 150 to 243 ........ 173 ................... 176 to 269 ........ 200 ................... 131 ................... 154 ................... 10 ..................... 34 ..................... 49 ..................... 102 ................... 2.9 .................... 3.7 .................... 144 to 236 ........ 167 ................... 168 to 260 ........ 192 ................... 141. 169. 11. 35. 51. 106. 6.7. 8.6. 159 to 254. 183. 188 to 284. 213. 11 ..................... 10 ..................... 11 ..................... 12 ..................... 10. 10. 139 to 232 ........ 132 to 224 ........ 148 to 244. Benefits Consumer Operating Cost Savings ............................................ CO2 Reduction Value ($12.2/t case) ** ....................................... CO2 Reduction Value ($40.0/t case) ** ....................................... CO2 Reduction Value ($62.3/t case) ** ....................................... CO2 Reduction Value ($117/t case) ** ........................................ NOX Reduction Value † .............................................................. Total Benefits †† ......................................................................... 7% ............................. 3% ............................. 5% ............................. 3% ............................. 2.5% .......................... 3% ............................. 7% ............................. 3% ............................. 7% plus CO2 range ... 7% ............................. 3% plus CO2 range ... 3% ............................. Costs Consumer Incremental Product Costs ........................................ 7% ............................. 3% ............................. Net Benefits mstockstill on DSK3G9T082PROD with RULES3 Total †† ................................................................................ 10 To convert the time-series of costs and benefits into annualized values, DOE calculated a present value in 2015, the year used for discounting the NPV of total consumer costs and savings. For the benefits, DOE calculated a present value associated with each year’s shipments in the year in which the shipments occur (e.g., 2020 or 2030), and then discounted the present value from each year to 2015. The calculation uses discount rates of 3 and VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 7% plus CO2 range ... 7 percent for all costs and benefits except for the value of CO2 reductions, for which DOE used casespecific discount rates, as shown in Table I.3. Using the present value, DOE then calculated the fixed annual payment over a 30-year period, starting in the compliance year that yields the same present value. 11 The atmospheric lifetime of CO is estimated of 2 the order of 30–95 years. Jacobson, MZ (2005), PO 00000 Frm 00005 Fmt 4701 Sfmt 4700 ‘‘Correction to ‘Control of fossil-fuel particulate black carbon and organic matter, possibly the most effective method of slowing global warming,’ ’’ J. Geophys. Res. 110. pp. D14105. 12 DOE used a 3-percent discount rate because the SCC values for the series used in the calculation were derived using a 3-percent discount rate (see section IV.L). E:\FR\FM\13JNR3.SGM 13JNR3 38342 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations TABLE I.4—ANNUALIZED BENEFITS AND COSTS OF AMENDED STANDARDS FOR DEHUMIDIFIERS *—Continued Million 2014$/year Discount rate Primary estimate 7% ............................. 3% plus CO2 range ... 3% ............................. Low net benefits estimate 163 ................... 165 to 259 ........ 189 ................... 156 ................... 157 to 248 ........ 180 ................... High net benefits estimate 173. 178 to 274. 203. * This table presents the annualized costs and benefits associated with dehumidifiers shipped in 2019–2048. These results include benefits to consumers which accrue after 2048 from the dehumidifiers purchased from 2019–2048. The results account for the incremental variable and fixed costs incurred by manufacturers due to the standard, some of which may be incurred in preparation for the rule. The Primary, Low Benefits, and High Benefits Estimates utilize projections of energy prices from the AEO 2015 Reference case, Low Economic Growth case, and High Economic Growth case, respectively. In addition, incremental product costs reflect a medium decline rate in the Primary Estimate, a low decline rate in the Low Benefits Estimate, and a high decline rate in the High Benefits Estimate. The methods used to derive projected price trends are explained in section IV.F. ** The CO2 values represent global monetized values of the SCC, in 2014$, in 2015 under several scenarios of the updated SCC values. The first three cases use the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The SCC time series incorporate an escalation factor. † DOE estimated the monetized value of NOX emissions reductions using benefit per ton estimates from the Regulatory Impact Analysis for the Clean Power Plan Final Rule, published in August 2015 by EPA’s Office of Air Quality Planning and Standards. (Available at: http://www.epa.gov/ cleanpowerplan/clean-power-plan-final-rule-regulatory-impact-analysis.) See section IV.L.2 for further discussion. For DOE’s Primary Estimate and Low Net Benefits Estimate, the agency used a national benefit-per-ton estimate for particulate matter emitted from the Electric Generating Unit sector based on an estimate of premature mortality derived from the ACS study (Krewski et al., 2009). For DOE’s High Net Benefits Estimate, the benefit-per-ton estimates were based on the Six Cities study (Lepuele et al., 2011), which are nearly two-and-a-half times larger than those from the ACS study. †† Total Benefits for both the 3% and 7% cases are derived using the series corresponding to the average SCC with 3-percent discount rate ($40.0/t case). In the rows labeled ‘‘7% plus CO2 range’’ and ‘‘3% plus CO2 range,’’ the operating cost and NOX benefits are calculated using the labeled discount rate, and those values are added to the full range of CO2 values. DOE’s analysis of the national impacts of the adopted standards is described in sections IV.H, IV.K, and IV.L of this document. D. Conclusion Based on the analyses culminating in this final rule, DOE found the benefits to the nation of the standards (energy savings, consumer LCC savings, positive NPV of consumer benefit, and emission reductions) outweigh the burdens (loss of INPV and LCC increases for some users of these products). DOE has concluded that the standards in this final rule represent the maximum improvement in energy efficiency that is technologically feasible and economically justified, and would result in significant conservation of energy. II. Introduction The following section briefly discusses the statutory authority underlying this final rule, as well as some of the relevant historical background related to the establishment of standards for dehumidifiers. mstockstill on DSK3G9T082PROD with RULES3 A. Authority Title III, Part B of the Energy Policy and Conservation Act of 1975 (EPCA or the Act), Public Law 94–163 (42 U.S.C. 6291–6309, as codified) established the Energy Conservation Program for Consumer Products Other Than Automobiles, a program covering most major household appliances (collectively referred to as ‘‘covered products’’), which includes the VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 dehumidifiers that are the subject of this rulemaking. (42 U.S.C. 6295(cc)) EPCA, as amended, prescribed energy conservation standards for dehumidifiers 13 manufactured on or after October 1, 2007, and more stringent energy conservation standards for dehumidifiers manufactured on or after October 1, 2012. (42 U.S.C. 6295(cc)) Under 42 U.S.C. 6295(m), the agency must periodically review its already established energy conservation standards for a covered product. Pursuant to EPCA, DOE’s energy conservation program for covered products consists essentially of four parts: (1) Testing; (2) labeling; (3) the establishment of Federal energy conservation standards; and (4) certification and enforcement procedures. The Federal Trade Commission (FTC) is primarily responsible for labeling, and DOE implements the remainder of the program. Subject to certain criteria and conditions, DOE is required to develop test procedures to measure the energy efficiency, energy use, or estimated annual operating cost of each covered product. (42 U.S.C. 6295(o)(3)(A)) Manufacturers of covered products must use the prescribed DOE test procedure as the basis for certifying to DOE that 13 Dehumidifiers are defined as self-contained, electrically operated, and mechanically encased assemblies consisting of: (1) A refrigerated surface (evaporator) that condenses moisture from the atmosphere; (2) a refrigerating system, including an electric motor; (3) an air-circulating fan; and (4) a means for collecting or disposing of the condensate. (42 U.S.C. 6291(34)) PO 00000 Frm 00006 Fmt 4701 Sfmt 4700 their products comply with the applicable energy conservation standards adopted under EPCA and when making representations to the public regarding the energy use or efficiency of those products. (42 U.S.C. 6293(c) and 6295(s)) Similarly, DOE must use these test procedures to determine whether the products comply with standards adopted pursuant to EPCA. (42 U.S.C. 6295(s)) The DOE test procedures for dehumidifiers currently appear at title 10 of the Code of Federal Regulations (CFR) part 430, subpart B, appendix X. DOE must follow specific statutory criteria for prescribing new or amended standards for covered products, including dehumidifiers. Any new or amended standard for a covered product must be designed to achieve the maximum improvement in energy efficiency that is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A) and (3)(B)) Furthermore, DOE may not adopt any standard that would not result in the significant conservation of energy. (42 U.S.C. 6295(o)(3)) Moreover, DOE may not prescribe a standard: (1) For certain products, including dehumidifiers, if no test procedure has been established for the product, or (2) if DOE determines by rule that the standard is not technologically feasible or economically justified. (42 U.S.C. 6295(o)(3)(A)–(B)) In deciding whether a proposed standard is economically justified, DOE must determine whether the benefits of the standard exceed its burdens. (42 E:\FR\FM\13JNR3.SGM 13JNR3 mstockstill on DSK3G9T082PROD with RULES3 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations U.S.C. 6295(o)(2)(B)(i)) DOE must make this determination after receiving comments on the proposed standard, and by considering, to the greatest extent practicable, the following seven statutory factors: (1) The economic impact of the standard on manufacturers and consumers of the products subject to the standard; (2) The savings in operating costs throughout the estimated average life of the covered products in the type (or class) compared to any increase in the price, initial charges, or maintenance expenses for the covered products that are likely to result from the standard; (3) The total projected amount of energy (or as applicable, water) savings likely to result directly from the standard; (4) Any lessening of the utility or the performance of the covered products likely to result from 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 standard; (6) The need for national energy and water conservation; and (7) Other factors the Secretary of Energy (Secretary) considers relevant. (42 U.S.C. 6295(o)(2)(B)(i)(I)–(VII)) Further, EPCA, as codified, establishes a rebuttable presumption that a standard is economically justified if the Secretary finds that the additional cost to the consumer of purchasing a product complying with an energy conservation standard level will be less than three times the value of the energy savings during the first year that the consumer will receive as a result of the standard, as calculated under the applicable test procedure. (42 U.S.C. 6295(o)(2)(B)(iii)) EPCA, as codified, also contains what is known as an ‘‘anti-backsliding’’ provision, which prevents the Secretary from prescribing any amended standard that either increases the maximum allowable energy use or decreases the minimum required energy efficiency of a covered product. (42 U.S.C. 6295(o)(1)) Also, the Secretary may not prescribe an amended or new standard if interested persons have established by a preponderance of the evidence that the standard is likely to result in the unavailability in the United States in any covered product type (or class) of performance characteristics (including reliability), features, sizes, capacities, and volumes that are substantially the same as those generally available in the United States. (42 U.S.C. 6295(o)(4)) Additionally, 42 U.S.C. 6295(q)(1) specifies requirements when promulgating an energy conservation VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 standard for a covered product that has two or more subcategories. DOE must specify a different standard level for a type or class of products that has the same function or intended use if DOE determines that products within such group: (A) Consume a different kind of energy from that consumed by other covered products within such type (or class); or (B) have a capacity or other performance-related feature which other products within such type (or class) do not have and such feature justifies a higher or lower standard. (42 U.S.C. 6295(q)(1)) In determining whether a performance-related feature justifies a different standard for a group of products, DOE must consider such factors as the utility to the consumer of such a feature and other factors DOE deems appropriate. Id. Any rule prescribing such a standard must include an explanation of the basis on which such higher or lower level was established. (42 U.S.C. 6295(q)(2)) Federal energy conservation requirements generally supersede State laws or regulations concerning energy conservation testing, labeling, and standards. (42 U.S.C. 6297(a)–(c)) DOE may, however, grant waivers of Federal preemption for particular State laws or regulations, in accordance with the procedures and other provisions set forth under 42 U.S.C. 6297(d)). EPCA also requires that, for any final rule for new or amended energy conservation standards promulgated after July 1, 2010, DOE must address standby mode and off mode energy use. (42 U.S.C. 6295(gg)(3)) Specifically, when DOE adopts a standard for a covered product after that date, it must, if justified by the criteria for adoption of standards under EPCA (42 U.S.C. 6295(o)), incorporate standby mode and off mode energy use into a single standard, or, if that is not feasible, adopt a separate standard for such energy use for that product. (42 U.S.C. 6295(gg)(3)(A)–(B)) DOE’s test procedures for dehumidifiers address standby mode and off mode energy use, as do the amended standards adopted in this final rule. B. Background 1. Current Standards EPCA prescribes energy conservation standards for dehumidifiers manufactured on or after October 1, 2012. In a final rule published on March 23, 2009, DOE codified these standards at 10 CFR 430.32(v)(2). 74 FR 12058. These standards are set forth in Table II.1. PO 00000 Frm 00007 Fmt 4701 Sfmt 4700 38343 TABLE II.1—FEDERAL ENERGY EFFICIENCY STANDARDS FOR DEHUMIDIFIERS * Product class * (pints/day) Up to 35.00 ........................... 35.01–45.00 .......................... 45.01–54.00 .......................... 54.01–75.00 .......................... 75.01 or more ....................... Energy factor (EF) ** (L/kWh) 1.35 1.50 1.60 1.70 2.5 * Product capacity in pints/day is measured according to the DOE test procedure in appendix X of 10 CFR 430. ** EF is a measure of the water removed from the air per unit of energy consumed by a dehumidifier and is calculated according to appendix X. 2. History of Standards Rulemaking for Dehumidifiers EPCA, as amended, established the first energy conservation standards for dehumidifiers manufactured as of October 1, 2007, based on the EF metric. As discussed in section II.B.1, subsequent amendments prescribed energy conservation standards for dehumidifiers manufactured on or after October 1, 2012. DOE is conducting this rulemaking pursuant to 42 U.S.C. 6295(m)(1), which requires DOE, no later than 6 years after issuance of any final rule establishing or amending a standard, to publish either a notice of determination that standards for the product do not need to be amended, or a NOPR that includes new proposed energy conservation standards. DOE initiated this rulemaking by issuing an analytical Framework Document, ‘‘Energy Conservation Standards Rulemaking Framework Document for Dehumidifiers.’’ 77 FR 49739 (Aug. 17, 2012). The Framework Document explained the issues, analyses, and process that DOE anticipated using to develop energy conservation standards for dehumidifiers. DOE held a public meeting on September 24, 2012, to solicit comments from interested parties regarding the Framework Document and DOE’s proposed analytical approach. DOE sought feedback from interested parties on these subjects and provided information regarding the rulemaking process that DOE would follow. Interested parties discussed the following major issues at the public meeting: Rulemaking schedule; test procedure revisions; product classes; technology options; efficiency levels; and approaches for each of the analyses performed by DOE as part of the rulemaking process. E:\FR\FM\13JNR3.SGM 13JNR3 mstockstill on DSK3G9T082PROD with RULES3 38344 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations Comments received following the publication of the framework document helped DOE identify and resolve issues related to the subsequent preliminary analysis. In the preliminary analysis, DOE conducted in-depth technical analyses in the following areas: (1) Engineering; (2) markups to determine product price; (3) energy use; (4) lifecycle cost and payback period; and (5) national impacts. The preliminary technical support document (TSD) that presented the methodology and results of each of these analyses is available at http://www.regulations.gov/ #!documentDetail;D=EERE-2012-BTSTD-0027-0015. DOE also conducted, and included in the preliminary TSD, several other analyses that supported the major analyses. These analyses included: (1) The market and technology assessment; (2) the screening analysis, which contributes to the engineering analysis; and (3) the shipments analysis,14 which contributes to the LCC and PBP analysis and national impact analysis (NIA). In addition to these analyses, DOE began preliminary work on the manufacturer impact analysis (MIA) and identified the methods to be used for the consumer subgroup analysis, the emissions analysis, the employment impact analysis, the regulatory impact analysis, and the utility impact analysis. DOE published a notice of public meeting and availability of the preliminary TSD on May 22, 2014. 79 FR 29380. DOE subsequently held a public meeting on June 13, 2014, to discuss and receive comments on the preliminary TSD. DOE received comments on topics including: Wholehome dehumidifier coverage and test procedures, product classes, design options, efficiency levels, use of experience curves, shipments projections, social cost of carbon estimates and the associated monetization of carbon dioxide, and small business impacts. After reviewing these comments, DOE gathered additional information, held further discussions with manufacturers, and completed and revised the various analyses described in the preliminary analysis. On June 3, 2015, DOE published a notice of proposed rulemaking (hereafter, the ‘‘June 2015 NOPR’’) and notice of public meeting. 80 FR 31645. The June 2015 NOPR and accompanying TSD presented the results of DOE’s updated analyses and proposed 14 Industry data track shipments from manufacturers into the distribution chain. Data on national unit retail sales are lacking, but are presumed to be close to shipments under normal circumstances. VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 amended standards for dehumidifiers. On July 7, 2015, DOE held a public meeting to discuss the issues detailed in the June 2015 NOPR. Interested parties commented on various aspects of the proposed rule and submitted supplemental written comments. Following the public meeting, DOE gathered additional information and performed additional analyses to supplement the analyses presented in the June 2015 NOPR. The results of these analyses are detailed in the TSD accompanying this final rule, available in the docket at the regulations.gov Web site. DOE considered the comments received since publication of the June 2015 NOPR, including those received at the NOPR public meeting, in developing amended standards for dehumidifiers. III. General Discussion DOE developed this final rule after considering comments, data, and information from interested parties that represent a variety of interests. The following discussion addresses issues raised by these commenters. A. Product Classes and Scope of Coverage When evaluating and establishing energy conservation standards, DOE divides covered products into product classes by the type of energy used or by capacity or other performance-related features that justify differing standards. In making a determination whether a performance-related feature justifies a different standard, DOE must consider such factors as the utility of the feature to the consumer and other factors DOE determines are appropriate. (42 U.S.C. 6295(q)) Existing energy conservation standards divide portable and whole home dehumidifiers into five product classes based on product capacity in the number of pints per day (pints/day) of moisture that the product removes from ambient air at test conditions, as measured by the applicable DOE test procedure, appendix X. In this rulemaking, DOE is establishing new product classes that differentiate dehumidifiers not only by product capacity but by product configuration as well (i.e., between portable and wholehome configurations). For portable dehumidifiers, DOE is establishing the following three product classes based on the product capacity:15 (1) 25.00 pints/ day or less; (2) 25.01 to 50.00 pints/day; and (3) 50.01 pints/day or more. For whole-home dehumidifiers, DOE is 15 Note that the test conditions for the new product classes are different from those for the existing product classes. PO 00000 Frm 00008 Fmt 4701 Sfmt 4700 adopting the following two product classes based on product case volume:16 (1) Less than or equal to 8.0 ft3; and (2) greater than 8.0 ft3. The product classes for portable dehumidifiers analyzed for this final rule are different from those examined in DOE’s initial analysis and the June 2015 NOPR, while the product classes for whole-home dehumidifiers are the same. In the May 2014 Preliminary TSD, DOE initially analyzed five product classes for portable dehumidifiers based on product capacity. Due, in part, to comments received on the preliminary TSD, DOE proposed only three product classes for portable dehumidifiers in the June 2015 NOPR: (1) 30.00 pints/day or less; (2) 30.01 to 45.00 pints/day; and (3) 45.01 pints/day or more. For this final rule, DOE adjusted the product capacity thresholds between these three product classes after considering comments and conducting additional discussions with manufacturers and further analysis. Comments received relating to the scope of coverage and product classes are discussed in section IV.A of this final rule. B. Test Procedure DOE’s current energy conservation standards for dehumidifiers are expressed in terms of EF, in L/kWh, and are a function of the product capacity, expressed in pints/day. (See 10 CFR 430.32(v)(2)). EPCA specifies that the dehumidifier test criteria used under the ENERGY STAR 17 program in effect as of January 1, 2001,18 must serve as the basis for the DOE test procedure for dehumidifiers, unless revised by DOE. (42 U.S.C. 6293(b)(13)) The ENERGY STAR test criteria required that American National Standards Institute (ANSI)/Association of Home Appliance Manufacturers (AHAM) Standard DH–1, ‘‘Dehumidifiers,’’ be used to measure product capacity while the Canadian Standards Association (CAN/CSA) standard CAN/CSA–C749–1994 (R2005), ‘‘Performance of Dehumidifiers,’’ be used to calculate the EF. The version of AHAM Standard DH–1 in use at the time the ENERGY STAR test criteria were adopted was AHAM Standard DH–1–1992. In 2006, DOE adopted these test criteria, along 16 Product case volume is the rectangular volume that the product case occupies, exclusive of any duct attachment collars or other external components. 17 For more information on the ENERGY STAR program, please visit www.energystar.gov. 18 ‘‘Energy Star Program Requirements for Dehumidifiers’’, Version 1.0, U.S. Environmental Protection Agency (EPA), available online at: www.energystar.gov/products/specs/system/files/ DehumProgReqV1.0.pdf. E:\FR\FM\13JNR3.SGM 13JNR3 mstockstill on DSK3G9T082PROD with RULES3 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations with related definitions and tolerances, as its test procedure for dehumidifiers at 10 CFR part 430, subpart B, appendix X. 71 FR 71340, 71347, 71366–71368 (Dec. 8, 2006). On October 31, 2012, DOE published a final rule to establish a new test procedure for dehumidifiers that references ANSI/AHAM Standard DH– 1–2008, ‘‘Dehumidifiers,’’ (ANSI/AHAM DH–1–2008) for both energy use and product capacity measurements. 77 FR 65995 (Oct. 31, 2012). The final rule also adopted standby and off mode provisions that satisfy the requirement in EPCA for DOE to include measures of standby mode and off mode energy consumption in its test procedures for residential products, if technically feasible. (42 U.S.C. 6295(gg)(2)(A)) This new DOE test procedure, codified at that time at 10 CFR part 430, subpart B, appendix X1, established a new metric, IEF, which incorporates measures of active, standby, and off mode energy use, in addition to the existing EF metric. DOE subsequently removed the existing test procedures at appendix X and redesignated the test procedures at appendix X1 as appendix X. 79 FR 7366 (Feb. 7, 2014). Any representations of energy use, including standby mode or off mode energy consumption, or efficiency of portable dehumidifiers must be made in accordance with the results of testing pursuant to the redesignated appendix X. On May 21, 2014, DOE published a NOPR (the ‘‘May 2014 Test Procedure NOPR’’) proposing further amendments to the dehumidifier test procedures in appendix X. 79 FR 29272. In addition to making clarifications and corrections in appendix X, DOE proposed creating a new appendix, appendix X1, which would: (1) Require certain active mode testing at a lower ambient temperature; (2) add a measure of fan-only mode energy consumption in the IEF metric; and (3) include testing methodology and measures of performance for wholehome dehumidifiers. On February 4, 2015, DOE published a supplemental notice of proposed rulemaking (the ‘‘February 2015 Test Procedure SNOPR’’). 80 FR 5994. In the SNOPR, DOE maintained its proposals from the NOPR, except that DOE proposed: (1) Adjustments and clarifications to the whole-home dehumidifier test setup and conduct; (2) a method to determine whole-home dehumidifier case volume; (3) a method for measuring energy use in off-cycle mode, including any fan operation; (4) a clarification to the relative humidity and product capacity equations; and (5) VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 additional technical corrections and clarifications. In response to the May 2014 Test Procedure NOPR, June 2014 public meeting, and February 2015 Test Procedure SNOPR, DOE received comments from interested parties related to the test procedure. DOE addressed these issues in the test procedure final rule to establish a new appendix X1 published on July 31, 2015 (the ‘‘July 2015 Test Procedure Final Rule,’’ 80 FR 45801), and based its analysis in this notice on product capacities and efficiencies determined according to the appendix X1 test procedure. C. Technological Feasibility 1. General In each energy conservation standards rulemaking, DOE conducts a screening analysis based on information gathered on all current technology options and prototype designs that could improve the efficiency of the products or equipment that are the subject of the rulemaking. As the first step in such an analysis, DOE develops a list of technology options for consideration in consultation with manufacturers, design engineers, and other interested parties. DOE then determines which of those means for improving efficiency are technologically feasible. DOE considers technologies incorporated in commercially available products or in working prototypes to be technologically feasible. 10 CFR part 430, subpart C, appendix A, section 4(a)(4)(i). After DOE has determined that particular technology options are technologically feasible, it further evaluates each technology option in light of the following additional screening criteria: (1) Practicability to manufacture, install, and service; (2) adverse impacts on product utility or availability; and (3) adverse impacts on health or safety. 10 CFR part 430, subpart C, appendix A, section 4(a)(4)(ii)–(iv). Additionally, it is DOE policy not to include in its analysis any proprietary technology that is a unique pathway to achieving a certain efficiency level. Section IV.B of this document discusses the results of the screening analysis for dehumidifiers, particularly the designs DOE considered, those it screened out, and those that are the basis for the standards considered in this rulemaking. For further details on the screening analysis for this rulemaking, see chapter 4 of the final rule TSD. PO 00000 Frm 00009 Fmt 4701 Sfmt 4700 38345 2. Maximum Technologically Feasible Levels When DOE proposes to adopt an amended standard for a type or class of covered product, it must determine the maximum improvement in energy efficiency or maximum reduction in energy use that is technologically feasible for such product. (42 U.S.C. 6295(p)(1)) Accordingly, in the engineering analysis, DOE determined the maximum technologically feasible (‘‘max-tech’’) improvements in energy efficiency for dehumidifiers, using the design parameters for the most efficient products available on the market or in working prototypes. The max-tech levels that DOE determined for this rulemaking are described in section IV.C of this final rule and in chapter 5 of the final rule TSD. D. Energy Savings 1. Determination of Savings For each trial standard level (TSL), DOE projected energy savings from application of the TSL to dehumidifiers purchased in the 30-year period that begins in the year of compliance with any amended standards (2019–2048).19 The savings are measured over the entire lifetime of products purchased in the 30-year analysis period. DOE quantified the energy savings attributable to each TSL as the difference in energy consumption between each standards case and the nonew-standards case. The no-newstandards case represents a projection of energy consumption that reflects how the market for a product would likely evolve in the absence of amended energy conservation standards. DOE used its NIA spreadsheet models to estimate energy savings from potential amended standards for dehumidifiers. The NIA spreadsheet model (described in section IV.H of this document) calculates savings in site energy, which is the energy directly consumed by products at the locations where they are used. Based on the site energy, DOE calculates national energy savings (NES) in terms of primary energy savings at the site or at power plants, and also in terms of full-fuelcycle (FFC) energy savings. The FFC metric includes the energy consumed in extracting, processing, and transporting primary fuels (i.e., coal, natural gas, petroleum fuels), and thus presents a more complete picture of the impacts of 19 DOE also presents a sensitivity analysis that considers impacts for products shipped in a 9-year period. E:\FR\FM\13JNR3.SGM 13JNR3 38346 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations energy conservation standards.20 DOE’s approach is based on the calculation of an FFC multiplier for each of the energy types used by covered products or equipment. For more information on FFC energy savings, see section IV.H.2 of this document. For natural gas, the primary energy savings are considered to be equal to the site energy savings. 2. Significance of Savings To adopt standards for a covered product, DOE must determine that such action would result in ‘‘significant’’ energy savings. (42 U.S.C. 6295(o)(3)(B)) Although the term ‘‘significant’’ is not defined in the Act, the U.S. Court of Appeals, for the District of Columbia Circuit in Natural Resources Defense Council v. Herrington, 768 F.2d 1355, 1373 (D.C. Cir. 1985), indicated opined that Congress intended ‘‘significant’’ energy savings in the context of EPCA to be savings that were not ‘‘genuinely trivial.’’ The energy savings for all the TSLs considered in this rulemaking, including the adopted standards, are nontrivial, and, therefore, DOE considers them ‘‘significant’’ within the meaning of section 325 of EPCA. E. Economic Justification mstockstill on DSK3G9T082PROD with RULES3 1. Specific Criteria As noted in this preamble, EPCA provides seven factors to be evaluated in determining whether a potential energy conservation standard is economically justified. (42 U.S.C. 6295(o)(2)(B)(i)(I)(VII)) The following sections discuss how DOE has addressed each of those seven factors in this rulemaking. a. Economic Impact on Manufacturers and Consumers In determining the impacts of a potential amended standard on manufacturers, DOE conducts an MIA, as discussed in section IV.J. DOE first uses an annual cash-flow approach to determine the quantitative impacts. This step includes both a short-term assessment—based on the cost and capital requirements during the period between when a regulation is issued and when entities must comply with the regulation—and a long-term assessment over a 30-year period. The industrywide impacts analyzed include: (1) INPV, which values the industry on the basis of expected future cash flows; (2) cash flows by year; (3) changes in revenue and income; and (4) other measures of impact, as appropriate. 20 The FFC metric is discussed in DOE’s statement of policy and notice of policy amendment. 76 FR 51282 (Aug. 18, 2011), as amended at 77 FR 49701 (Aug. 17, 2012). VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 Second, DOE analyzes and reports the impacts on different types of manufacturers, including impacts on small manufacturers. Third, DOE considers the impact of standards on domestic manufacturer employment and manufacturing capacity, as well as the potential for standards to result in plant closures and loss of capital investment. Finally, DOE takes into account cumulative impacts of various DOE regulations and other regulatory requirements on manufacturers. For individual consumers, measures of economic impact include the changes in LCC and PBP associated with new or amended standards. These measures are discussed further in the following section. For consumers in the aggregate, DOE also calculates the national net present value of the economic impacts applicable to a particular rulemaking. DOE also evaluates the LCC impacts of potential standards on identifiable subgroups of consumers that may be affected disproportionately by a national standard. b. Savings in Operating Costs Compared to Increase in Price (LCC and PBP) EPCA requires DOE to consider the savings in operating costs throughout the estimated average life of the covered product in the type (or class) compared to any increase in the price of, or in the initial charges for, or maintenance expenses of, the covered product that are likely to result from a standard. (42 U.S.C. 6295(o)(2)(B)(i)(II)) DOE conducts this comparison in its LCC and PBP analysis. The LCC is the sum of the purchase price of a product (including its installation) and the operating cost (including energy, maintenance, and repair expenditures) discounted over the lifetime of the product. The LCC analysis requires a variety of inputs, such as product prices, product energy consumption, energy prices, maintenance and repair costs, product lifetime, and discount rates appropriate for consumers. To account for uncertainty and variability in specific inputs, such as product lifetime and discount rate, DOE uses a distribution of values, with probabilities attached to each value. The PBP is the estimated amount of time (in years) it takes consumers to recover the increased purchase cost (including installation) of a moreefficient product through lower operating costs. DOE calculates the PBP by dividing the change in purchase cost due to a more-stringent standard by the change in annual operating cost for the year that standards are assumed to take effect. PO 00000 Frm 00010 Fmt 4701 Sfmt 4700 For its LCC and PBP analysis, DOE assumes that consumers will purchase the covered products in the first year of compliance with amended standards. The LCC savings for the considered efficiency levels are calculated relative to the case that reflects projected market trends in the absence of amended standards. DOE’s LCC and PBP analysis is discussed in further detail in section IV.F. c. Energy Savings Although significant conservation of energy is a separate statutory requirement for adopting an energy conservation standard, EPCA requires DOE, in determining the economic justification of a standard, to consider the total projected energy savings that are expected to result directly from the standard. (42 U.S.C. 6295(o)(2)(B)(i)(III)) As discussed in section IV.H, DOE uses the NIA spreadsheet models to project national energy savings. d. Lessening of Utility or Performance of Products In establishing product classes, and in evaluating design options and the impact of potential standard levels, DOE evaluates potential standards that would not lessen the utility or performance of the considered products. (42 U.S.C. 6295(o)(2)(B)(i)(IV)) Based on data available to DOE, the standards adopted in this final rule would not reduce the utility or performance of the products under consideration in this rulemaking. DOE discusses potential impacts on product utility in section IV.C.1.b of this document. e. Impact of Any Lessening of Competition EPCA directs DOE to consider the impact of any lessening of competition, as determined in writing by the Attorney General, that is likely to result from a standard. (42 U.S.C. 6295(o)(2)(B)(i)(V)) It also directs the Attorney General to determine the impact, if any, of any lessening of competition likely to result from a standard and to transmit such determination to the Secretary within 60 days of the publication of a proposed rule, together with an analysis of the nature and extent of the impact. (42 U.S.C. 6295(o)(2)(B)(ii)) DOE transmitted a copy of its proposed rule to the Attorney General with a request that the Department of Justice (DOJ) provide its determination on this issue. DOE received no adverse comments from DOJ regarding the proposed rule. E:\FR\FM\13JNR3.SGM 13JNR3 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations f. Need for National Energy Conservation DOE also considers the need for national energy conservation in determining whether a new or amended standard is economically justified. (42 U.S.C. 6295(o)(2)(B)(i)(VI)) The energy savings from the adopted standards are likely to provide improvements to the security and reliability of the nation’s energy system. Reductions in the demand for electricity also may result in reduced costs for maintaining the reliability of the nation’s electricity system. DOE conducts a utility impact analysis to estimate how standards may affect the nation’s needed power generation capacity, as discussed in section IV.M of this document. The adopted standards also are likely to result in environmental benefits in the form of reduced emissions of air pollutants and greenhouse gases associated with energy production and use. DOE conducts an emissions analysis to estimate how potential standards may affect these emissions, as discussed in section IV.K of this document; the emissions impacts are reported in section V.B.6 of this document. DOE also estimates the economic value of emissions reductions resulting from the considered TSLs, as discussed in section IV.L of this document. g. Other Factors EPCA allows the Secretary of Energy, in determining whether a standard is economically justified, to consider any other factors that the Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)) To the extent interested parties submit any relevant information regarding economic justification that does not fit into the other categories described above, DOE could consider such information under ‘‘other factors.’’ mstockstill on DSK3G9T082PROD with RULES3 2. Rebuttable Presumption As set forth in 42 U.S.C. 6295(o)(2)(B)(iii), EPCA creates a rebuttable presumption that an energy conservation standard is economically justified if the additional cost to the consumer of a product that meets the standard is less than three times the value of the first year’s energy savings resulting from the standard, as calculated under the applicable DOE test procedure. DOE’s LCC and PBP analyses generate values used to calculate the effect potential amended energy conservation standards would have on the payback period for consumers. These analyses include, but are not limited to, the 3-year payback VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 period contemplated under the rebuttable-presumption test. In addition, DOE routinely conducts an economic analysis that considers the full range of impacts to consumers, manufacturers, the nation, and the environment, as required under 42 U.S.C. 6295(o)(2)(B)(i). The results of this analysis serve as the basis for DOE’s evaluation of the economic justification for a potential standard level (thereby supporting or rebutting the results of any preliminary determination of economic justification). The rebuttable presumption payback calculation is discussed in section IV.F of this final rule. IV. Methodology and Discussion of Related Comments This section addresses the analyses DOE has performed for this rulemaking with regard to dehumidifiers. Separate subsections address each component of DOE’s analyses. DOE used several analytical tools to estimate the impact of the standards considered in this document. The first tool is a spreadsheet that calculates the LCC savings and PBP of potential amended or new energy conservation standards. The national impacts analysis uses a second spreadsheet set that provides shipments forecasts and calculates national energy savings and net present value of total consumer costs and savings expected to result from potential energy conservation standards. DOE uses the third spreadsheet tool, the Government Regulatory Impact Model (GRIM), to assess manufacturer impacts of potential standards. These three spreadsheet tools are available on the DOE Web site for this rulemaking: https:// www1.eere.energy.gov/buildings/ appliance_standards/product.aspx/ productid/55. Additionally, DOE used output from the latest version of the Energy Information Administration’s (EIA) Annual Energy Outlook (AEO), a widely known energy forecast for the United States, for the emissions and utility impact analyses. A. Market and Technology Assessment DOE develops information in the market and technology assessment that provides an overall picture of the market for the products concerned, including the purpose of the products, the industry structure, manufacturers, market characteristics, and technologies used in the products. 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 PO 00000 Frm 00011 Fmt 4701 Sfmt 4700 38347 rulemaking include: (1) A determination of the scope of the rulemaking and product classes; (2) manufacturers and industry structure; (3) existing efficiency programs; (4) shipments information; (5) market and industry trends; and (6) technologies or design options that could improve the energy efficiency of dehumidifiers. The key findings of DOE’s market assessment are summarized below. See chapter 3 of the final rule TSD for further discussion of the market and technology assessment. 1. Scope of Coverage and Product Classes EPCA defines a dehumidifier as product that is self-contained, electrically operated, mechanically encased, and a product that incorporates a refrigerated surface to condense moisture from the atmosphere. It further defines it as having a refrigerating system with an electric motor; a fan for air circulation; and a means for collecting or disposing of the condensate. (42 U.S.C. 6291(34)) In the July 2015 Test Procedure Final Rule, DOE clarified that this definition of a dehumidifier, codified at 10 CFR 430.2, does not apply to portable air conditioners, room air conditioners, or packaged terminal air conditioners. 80 FR 45801, 45804–45805 (July 31, 2015).21 In the July 2015 Test Procedure Final Rule, DOE also added definitions to 10 CFR 430.2 for portable dehumidifiers and whole-home dehumidifiers. Portable dehumidifiers are designed to operate within the dehumidified space without ducting attached, although ducting may be attached optionally. Whole-home dehumidifiers are designed to be installed with inlet ducting for return process air and outlet ducting that supplies dehumidified process air to one or more locations in the dehumidified space. In the July 2015 Test Procedure Final rule, DOE further established that dehumidifiers that are able to operate as both a portable and whole-home dehumidifier be tested and rated for both configurations. 80 FR 45801, 45805–45806 (July 31, 2015). When evaluating and establishing energy conservation standards, DOE may divide covered products into product classes by the type of energy used, by capacity, or by other performance-related features that justify 21 Room air conditioners and packaged terminal air conditioners are defined as a separate covered products under EPCA. (42 U.S.C. 6292(a)(2), 6295(c), 6311((1)(I), 6311(10)(A), and 6313(a)(3)) Portable air conditioners were determined by DOE to be covered products under EPCA in a final determination published on 80 FR 45801, 45805– 45806 (July 31, 2015). E:\FR\FM\13JNR3.SGM 13JNR3 38348 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations a different standard. In making a determination whether a performancerelated feature justifies a different standard, DOE must consider such factors as the utility of the feature to the consumer and other factors DOE determines are appropriate. (42 U.S.C. 6295(q)) Under 42 U.S.C. 6295(cc)(2), standards are established for five product classes of dehumidifiers, based on the capacity of the unit in pints of water extracted per day, as shown in Table IV.1. Representations of capacity to comply with the current dehumidifier energy conservation standards are determined based on the current DOE test procedure in appendix X, as designated in the test procedure final rule published on February 7, 2014. 79 FR 7366. TABLE IV.1—CURRENT DEHUMIDIFIER PRODUCT CLASSES Capacity (pints/day): Up to 35.00. 35.01–45.00. 45.01–54.00. 54.01–75.00. 75.00 or more. TABLE IV.4—JUNE 2015 NOPR DEHUMIDIFIER PRODUCT CLASSES a. Preliminary Analysis and NOPR Proposals In the preliminary analysis conducted for this rulemaking, DOE considered the following portable dehumidifier product classes that were based on the existing product classes, but with capacities adjusted for the lower ambient temperature proposed in the May 2014 Test Procedure NOPR. TABLE IV.2—PRELIMINARY ANALYSIS PORTABLE DEHUMIDIFIER PRODUCT CLASSES Capacity (pints/day): 20.00 or less. 20.01 to 30.00. 30.01 to 35.00. 35.01 to 45.00. 45.01 or more. mstockstill on DSK3G9T082PROD with RULES3 In the preliminary analysis, DOE also considered two product classes for whole-home dehumidifiers, differentiated by product case volume. TABLE IV.3—PRELIMINARY ANALYSIS WHOLE-HOME DEHUMIDIFIER PRODUCT CLASSES Case Volume (cubic feet): less than or equal to 8.0. greater than 8.0. In response to the preliminary analysis, DOE received comments VerDate Sep<11>2014 22:09 Jun 10, 2016 stating that the test procedure changes proposed in the May 2014 Test Procedure NOPR would increase test-totest variation and make it more difficult to establish product classes based on capacity thresholds for the portable dehumidifiers. DOE subsequently conducted additional analysis that indicated that product construction and performance under the proposed test conditions were similar for products with capacities of 20 pints/day or less and 20.01 to 30 pints/day. DOE observed the same similarities between products in the 30.01 to 35 pints/day and 35.01 to 45 pints/day product classes. DOE, therefore, proposed to establish only three portable product classes based on capacity and maintained the same two proposed product classes for whole-home dehumidifiers. DOE proposed the revised product class structure in the June 2015 NOPR. 80 FR 31645, 31656– 31658 (June 3, 2015). Jkt 238001 Portable (capacity, pints/day): 30.00 or less. 30.01 to 45.00. 45.01 or more. Whole-Home (case volume, cubic feet): less than or equal to 8.0. greater than 8.0. b. Comments and Responses Scope of Coverage Aprilaire Inc. (Aprilaire) stated that not requiring air conditioners to meet dehumidifier standards results in unfair competition because air conditioners often provide a dehumidification mode, yet are regulated only for cooling mode. (Aprilaire, No. 34 at p. 3; Aprilaire, Public Meeting Transcript, No. 35 at p. 27)22 23 DOE notes that the definition for dehumidifier in 10 CFR 430.2 22 A notation in the form ‘‘Aprilaire, No. 34 at p. 3’’ identifies a written comment: (1) Made by Aprilaire Inc.; (2) recorded in document number 34 that is filed in the docked of this standards rulemaking (Docket No. EERE–2012–BT–STD–0027) and available for review at www.regulations.gov; and (3) which appears on page 3 of document number 34. 23 A notation in the form ‘‘Aprilaire, Public Meeting Transcript, No. 35 at p. 27’’ identifies an oral comment that DOE received during the July 7, 2015, dehumidifier energy conservation standards NOPR public meeting. Oral comments were recorded in the public meeting transcript and are available the dehumidifier energy conservation standards rulemaking docket (Docket No. EERE– 2012–BT–STD–0027). This particular notation refers to a comment: (1) Made by Aprilaire Inc. during the public meeting; (2) recorded in document number 35, which is the public meeting transcript that is filed in the docket of this energy conservation standards rulemaking; and (3) which appears on page 27 of document number 35. PO 00000 Frm 00012 Fmt 4701 Sfmt 4700 specifically excludes portable air conditioners, room air conditioners, and packaged terminal air conditioners because these products are the subject of either existing energy conservation standards (e.g., room air conditioners and packaged terminal air conditioners (42 U.S.C. 6295(c) and 42 U.S.C. 6313(a)(3)) or a current rulemaking considering new standards (e.g., portable air conditioners). The existing or proposed energy conservation standards for these products address representative energy use in active, standby, and off modes. When evaluating new or amended standards, DOE will consider all relevant operating modes, including any dehumidification mode. Aprilaire does not believe that portable dehumidifiers and whole-home dehumidifiers should be classified and regulated under the same standards for the same reason that DOE does not regulate space heaters and home heaters in the same category. (Aprilaire, No. 34 at p. 3) Although portable dehumidifiers and whole-home dehumidifiers have different applications and overall performance, they both: (1) Fall under the statutory definition of a dehumidifier; (2) provide the same dehumidification function: And (3) can be characterized with the same energy efficiency performance metric. In contrast, EPCA provides separate definitions of ‘‘furnace,’’ ‘‘heat pump,’’ and ‘‘unit heater’’ as mutually exclusive covered products (42 U.S.C. 6291(23), (24), and (45)), subject to separate energy conservation standards (42 U.S.C. 6295(f), (d), and (aa)). In the absence of statutory differentiation between portable dehumidifiers and whole-home dehumidifiers, DOE is addressing both product configurations in this rulemaking for amended dehumidifier standards. DOE, however, is establishing separate product classes for portable and whole-home dehumidifiers. Definitions Aprilaire suggested that DOE reevaluate the definition for whole-home dehumidifiers because both wholehome dehumidifiers and portable dehumidifiers may or may not include ducting. Aprilaire stated that the correct distinction between the two is that whole-home dehumidifiers come with integral or external controls that allow the dehumidifier to function in concert with the central air distribution system. Aprilaire commented that a definition based on a distinction of controls compatibility with a central air system would include air conditioners, which DOE specifically excluded from E:\FR\FM\13JNR3.SGM 13JNR3 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations mstockstill on DSK3G9T082PROD with RULES3 coverage. Further, Aprilaire commented that the definitions of the two types of dehumidifiers should reflect a number of other distinctions, including: Application flexibility, air flow rates, typical installation, and necessary installation expertise. (Aprilaire, No. 34 at pp. 3–4; Aprilaire, Public Meeting Transcript, No. 35 at p. 28) In addition to establishing definitions for portable dehumidifiers and whole-home dehumidifiers, DOE acknowledged in the July 2015 Test Procedure Final Rule that certain dehumidifiers offer optional or removable ducting, and therefore can be operated as either a portable dehumidifier or a whole-home dehumidifier. DOE has addressed these types of products in appendix X1 by requiring manufacturers to test and rate these products in both configurations. For all other products available on the market, the presence of ducts or lack thereof is the only reliably identifiable characteristic to differentiate between the two product types. For certain units, the additional characteristics identified by Aprilaire may also differentiate between portable dehumidifiers and whole-home dehumidifiers, but information on those characteristics may be subjective or not publicly available. Therefore, DOE is maintaining the presence of ducts as the primary differentiator between portable dehumidifiers and whole-home dehumidifiers. Product Classes Pacific Gas and Electric Company, Southern California Gas Company, San Diego Gas and Electric, and Southern California Edison (California InvestorOwned Utilities (IOUs)) supported DOE’s proposal to consolidate dehumidifiers into fewer product classes; however, they requested that DOE consider whether capacity or physical size and weight is the more appropriate attribute for setting product classes. They stated that if dehumidifiers are typically available in two size and weight ranges and that physical size defines unique utility, product class definitions should account for physical size in addition to capacity. They warned that setting product classes based solely on capacity ratings may inadvertently encourage manufacturers to build units rated for low capacity by simply using larger components that increase weight, resulting in negative impacts on portability and a corresponding loss of utility to consumers. (California IOUs, No. 41 at pp. 1–2) Therma-Stor LLC (Therma-Stor) and Aprilaire disagreed with the proposed product classes based on capacity and/or physical size for the VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 purpose of applying substantially different minimum efficiency levels. They commented that the establishment of classes is arbitrary and may not have sufficient granularity. (Therma-Stor, No. 38 at p. 1; Aprilaire, Public Meeting Transcript, No. 35 at p. 25; Aprilaire, No. 34 at p. 2) During interviews, multiple manufacturers of portable dehumidifiers stated that their products are typically built upon two product platforms with different case sizes. They noted that the two product sizes provide consumers with unique utility because the smaller units are more portable and weigh less than the large units. Typically, condensate removal capacity is also correlated with case size. The manufacturers stated that DOE should ensure that both product platforms are maintained with any amended energy conservation standards to provide consumers the option of purchasing the smaller, more portable products. Consistent with 42 U.S.C. 6295(q), DOE retained multiple portable dehumidifier product classes based on product capacity in this final rule. In its engineering analysis, however, DOE did not consider technology changes that would significantly impact the portability of the two lower-capacity product classes. Manufacturers may choose different pathways to improve efficiency, including by increasing component sizes and weights, but DOE’s analysis shows that there are pathways to improving efficiency that would not affect consumer utility. For whole-home dehumidifiers, certain space-constrained installation locations limit the case size that may be installed. Accordingly, manufacturers of these space-constrained products would be limited in their ability to increase component sizes to achieve higher efficiencies. Because some technologies are only able to be implemented in larger case volumes, DOE continues to base the whole-home dehumidifier product classes on case volume to ensure that space-constrained wholehome dehumidifiers would be able to maintain their smaller product volumes at the analyzed efficiency levels. Electrolux Major Appliances—North America (Electrolux) suggested that the second portable dehumidifier product class include units with capacities from 30.01 to 50.00 pints/day because, under the capacity thresholds proposed in the June 2015 NOPR, units previously rated at 70 pints/day would inappropriately be categorized into the highest-capacity proposed portable dehumidifier product class. According to Electrolux, these products would be rated at 46 pints/day under appendix X1, but based on DOE’s description of products in each PO 00000 Frm 00013 Fmt 4701 Sfmt 4700 38349 proposed product class, Electrolux expects that DOE intended for these products to be classified in the middlecapacity portable dehumidifier product class. Electrolux stated that the current 70 pint/day unit, which is a very high volume and popular capacity, would effectively be eliminated from the market under the proposed standard level for the highest-capacity portable dehumidifier product class. (Electrolux, No. 36 at p. 1) AHAM noted that the reduced temperature conditions for portable dehumidifiers in appendix X1 decrease the measured capacity by about 35 percent, on average, as compared to the previous test conditions. Therefore, although AHAM and GE Appliances (GE) agreed with the establishment of three product classes, they suggested that the proposed product classes be slightly revised to reflect results from the test procedure at appendix X1. They suggested that the new portable dehumidifier product classes be: (1) less than 25.00 pints/day; (2) 25.01–50.00 pints/day; and (3) 50.01 pints/day or greater. (AHAM, No. 39 at pp. 2–4; GE, No. 42 at p. 1) Based on the comments in response to the June 2015 NOPR and on information gathered during confidential manufacturer interviews, DOE has revised the portable dehumidifier product classes, consistent with AHAM’s recommendation, to better reflect how portable dehumidifiers are expected to perform when tested according to appendix X1. DOE estimates that the distribution of portable dehumidifier models among the three revised product classes is the same as was originally determined in the NOPR analysis because the rated capacity of these models would adjust in the same proportion as the capacity thresholds between the classes. c. Final Rule Product Classes After reviewing comments received in response to the June 2015 NOPR and evaluating additional information, DOE determined that an adjustment of the portable dehumidifier product classes is appropriate. DOE notes that these revised product classes more accurately capture the intent of DOE’s original proposals when considering the impacts of the new test procedure at appendix X1, and are supported by data from manufacturers. In summary, DOE is establishing the following three portable dehumidifier product classes, based on product capacity, and two whole-home dehumidifier product classes, based on case volume, in this final rule. E:\FR\FM\13JNR3.SGM 13JNR3 38350 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations IV.B of this document and chapter 4 of the final rule TSD) to determine which technologies merited further consideration. See chapter 5 of the final rule TSD for additional information on the technology options included in the engineering analysis. TABLE IV.5—FINAL RULE DEHUMIDIFIER PRODUCT CLASSES Portable (capacity, pints/day): 25.00 or less. 25.01 to 50.00. 50.01 or more. Whole-Home (case volume, cubic feet): less than or equal to 8.0. greater than 8.0. B. Screening Analysis 2. Technology Options In the market analysis and technology assessment for the June 2015 NOPR, DOE identified 14 technology options that would be expected to improve the efficiency of dehumidifiers, as measured by the DOE test procedure (80 FR 31645, 31659 (June 3, 2015)): TABLE IV.6—NOPR TECHNOLOGY OPTIONS FOR DEHUMIDIFIERS mstockstill on DSK3G9T082PROD with RULES3 1. Built-in hygrometer/humidistat. 2. Improved compressor efficiency. 3. Improved condenser and evaporator performance. 4. Improved controls. 5. Improved defrost methods. 6. Improved demand-defrost controls. 7. Improved fan and fan-motor efficiency. 8. Improved flow-control devices. 9. Low-standby-loss electronic controls. 10. Washable air filters. 11. Pre-cooling air-to-air heat exchanger. 12. Heat pipes. 13. Improved refrigeration system insulation. 14. Refrigerant-desiccant systems. In the public meeting for the June 2015 NOPR, interested parties discussed the use of alternative refrigerants as another possible technology option for dehumidifiers. Aprilaire noted that dehumidifiers are a relatively small market and there are currently no alternative refrigerant compressors available for these products. (Aprilaire, Public Meeting Transcript, No. 35 at p. 47) Southern Company suggested that alternative refrigerants are currently being explored for refrigerators, which will likely impact the dehumidifier and other similar product’s market in the near future. (Southern Company, Public Meeting Transcript, No. 35 at p. 47) GE stated that dehumidifiers would not transition to alternative refrigerants within the next five years. (GE, Public Meeting Transcript, No. 35 at p. 48) DOE included alternative refrigerants as a technology option for consideration in the final rule analysis because available information indicates that there are potential efficiency gains associated with this change. After identifying all potential technology options for improving the efficiency of dehumidifiers, DOE performed a screening analysis (section VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 DOE uses the following four screening criteria to determine which technology options are suitable for further consideration in an energy conservation standards rulemaking: 1. Technological feasibility. Technologies that are not incorporated in commercial products or in working prototypes will not be considered further. 2. Practicability to manufacture, install, and service. If it is determined that mass production and reliable installation and servicing of a technology in commercial products could not be achieved on the scale necessary to serve the relevant market at the time of the projected compliance date of the standard, then that technology will not be considered further. 3. Impacts on product utility or product availability. If it is determined that a technology would have significant adverse impact on the utility of the product to significant subgroups of consumers or would result in the unavailability of any covered product type with performance characteristics (including reliability), features, sizes, capacities, and volumes that are substantially the same as products generally available in the United States at the time, it will not be considered further. 4. Adverse impacts on health or safety. If it is determined that a technology would have significant adverse impacts on health or safety, it will not be considered further. 10 CFR part 430, subpart C, appendix A, 4(a)(4) and 5(b). In sum, if DOE determines that a technology, or a combination of technologies, fails to meet one or more of the above four criteria, it will be excluded from further consideration in the engineering analysis. The reasons for eliminating any technology are discussed below. The subsequent sections include comments from interested parties pertinent to the screening criteria, DOE’s evaluation of each technology option against the screening analysis criteria, and whether DOE determined that a technology option should be excluded (‘‘screened out’’) based on the screening criteria. PO 00000 Frm 00014 Fmt 4701 Sfmt 4700 1. Screened-Out Technologies For the June 2015 NOPR, DOE screened out pre-cooling air-to-air heat exchangers and heat pipes for portable dehumidifiers with capacities up to 45 pints/day because the likely increases in case size and overall weight would result in adverse impacts on product utility to consumers. 80 FR 31645, 31659–31660 (June 3, 2015). Therma-Stor objected to the screening analysis determination that certain technology options are not suitable for low-capacity portable dehumidifiers. Therma-Stor believes that the improvements considered by DOE are applicable for all capacities and sizes of dehumidifiers. (Therma-Stor, No. 38 at p. 2) DOE agrees that these technology options are feasible for dehumidifiers of all capacities. However, as discussed in the June 2015 NOPR, DOE found that pre-cooling air-to-air heat exchangers and heat pipes are not currently incorporated in low-capacity portable dehumidifiers. DOE determined that including these technologies would require significantly larger case sizes for the low-capacity portable dehumidifiers, resulting in adverse impacts on consumer utility. For highcapacity portable dehumidifiers, DOE observes that certain products available on the market already incorporate air-toair heat exchangers and a similar case size increase would be required for heat pipes. Therefore, DOE has maintained air-to-air heat exchangers and heat pipes as potential design options for this larger-capacity portable dehumidifier product class. Although, as discussed in section b of this document, DOE is establishing the high-capacity portable dehumidifier product class for products with capacity greater than 50 pints/day rather than the 45 pints/day proposed in the June 2015 NOPR, the models that DOE considered to be high-capacity portable units in the preliminary analysis would remain classified in this product class based on available test data. Therefore, the determination to screen out pre-cooling air-to-air heat exchangers and heat pipes for portable dehumidifiers other than high-capacity dehumidifiers remains unchanged. DOE has retained these technology options for portable dehumidifiers with capacities greater than 50 pints/day and whole-home dehumidifiers. 2. Remaining Technologies Through a review of each technology, DOE tentatively concludes that all of the other identified technologies listed in section IV.A.2 met all four screening criteria to be examined further as design E:\FR\FM\13JNR3.SGM 13JNR3 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations options in DOE’s final rule analysis. In summary, DOE did not screen out the following technology options: TABLE IV.7—FINAL RULE REMAINING DESIGN OPTIONS FOR DEHUMIDIFIERS 1. Built-in hygrometer/humidistat. 2. Improved compressor efficiency. 3. Improved condenser and evaporator performance. 4. Improved controls. 5. Improved defrost methods. 6. Improved demand-defrost controls. 7. Improved fan and fan-motor efficiency. 8. Improved flow-control devices. 9. Low-standby-loss electronic controls. 10. Washable air filters. 11. Pre-cooling air-to-air heat exchanger (high-capacity portable and whole-home dehumidifiers). 12. Heat pipes (high-capacity portable and whole-home dehumidifiers). 13. Improved refrigeration system insulation. 14. Refrigerant-desiccant systems. 15. Alternative refrigerants. DOE determined that these design options are technologically feasible because they are technologies included in commercially available products or working prototypes. DOE also finds that all of the remaining design options meet the other screening criteria (i.e., practicable to manufacture, install, and service and do not result in adverse impacts on consumer utility, product availability, health, or safety). For additional details, see chapter 4 of the final rule TSD. mstockstill on DSK3G9T082PROD with RULES3 C. Engineering Analysis In the engineering analysis, DOE establishes the relationship between the manufacturer production cost (MPC) and improved dehumidifier efficiency. This relationship serves as the basis for cost-benefit calculations for individual consumers, manufacturers, and the Nation. DOE typically structures the engineering analysis using one of three approaches: (1) Design option; (2) efficiency level; or (3) reverse engineering (or cost assessment). The design-option approach involves adding the estimated cost and associated efficiency of various efficiencyimproving design changes to the baseline product to model different levels of efficiency. The efficiency-level approach uses estimates of costs and efficiencies of products available on the market at distinct efficiency levels to develop the cost-efficiency relationship. The reverse-engineering approach involves testing products for efficiency and determining cost from a detailed bill of materials (BOM) derived from reverse engineering representative products. The efficiency ranges from VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 that of the least-efficient dehumidifier sold today (i.e., the baseline) to the maximum technologically feasible efficiency level. At each efficiency level examined, DOE determines the MPC; this relationship is referred to as a costefficiency curve. 1. Efficiency Levels a. Baseline Efficiency Levels A baseline unit is typically a product that just meets current Federal energy conservation standards and provides basic consumer utility. DOE uses the baseline unit for comparison in several phases of its rulemaking analyses, including the engineering analysis, LCC analysis, PBP analysis, and NIA. To determine energy savings that will result from an amended energy conservation standard, DOE compares energy use at each of the higher efficiency levels to the energy consumption of the baseline unit. Similarly, to determine the changes in price to the consumer that will result from an amended energy conservation standard, DOE compares the price of a unit at each higher efficiency level to the price of a unit at the baseline. For the June 2015 NOPR, DOE determined baseline efficiency levels by adjusting the existing minimum EF levels to IEF values as would be measured under appendix X1. DOE determined the appropriate adjusted baseline efficiency levels based on its test sample, which included a marketrepresentative range of manufacturers, capacities, and efficiencies, and additional numerical adjustments for baseline features identified through market analysis. The most significant adjustments accounted for the lower ambient test temperature, and energy consumption in standby mode, off mode, and fan-only mode. Where DOE combined portable dehumidifier product classes between the preliminary analysis and the June 2015 NOPR, it set the baseline efficiency level for the combined product classes at the lower of the two baseline IEF levels considered in the preliminary analysis for the two previously separate product classes, which represents the minimum IEF, as determined according to appendix X1, that DOE expects from any dehumidifiers within the combined product class that are currently compliant with the existing standards. DOE also proposed separate baseline efficiencies for the two whole-home dehumidifier product classes. 80 FR 31645, 31661 (June 3, 2015). Table IV.8 and Table IV.9 present the baseline efficiency levels proposed in the NOPR analysis. PO 00000 Frm 00015 Fmt 4701 Sfmt 4700 38351 TABLE IV.8—NOPR PORTABLE DEHUMIDIFIER BASELINE EFFICIENCY LEVELS Capacity (pints/day) 30.00 or less ......................... 30.01–45.00 .......................... 45.01 or more ....................... IEF (L/kWh) 0.77 0.94 2.07 TABLE IV.9—NOPR WHOLE-HOME DEHUMIDIFIER BASELINE EFFICIENCY LEVELS Case Volume (cubic feet) 8.0 or less ............................. More than 8.0 ....................... IEF (L/kWh) 1.77 2.41 AHAM noted that DOE began the rulemaking analysis before the compliance date of the current energy conservation standards, and therefore the test sample may not represent products currently on the market. AHAM offered to share performance data if it received data from at least three manufacturers. (AHAM, Public Meeting Transcript, No. 35 at p. 40; AHAM, No. 39 at pp. 3–4) Although DOE conducted initial testing and analysis on units manufactured prior to October 1, 2012, DOE also supplemented that test sample when units complying with the most recent standards became available, beginning in 2013. In preparing and conducting the preliminary analysis, DOE acquired 12 additional portable dehumidifiers and conducted testing and teardowns to assess whether any technologies had changed to meet the currently applicable standards. DOE found that manufacturers incorporated more efficient compressors and larger heat exchangers to meet the new standards, but otherwise the products were similar in construction. DOE considered the more efficient components as technology options in the engineering analysis for the preliminary analysis, the June 2015 NOPR, and this final rule. DOE did not receive any additional performance data for this final rule. Following publication of the June 2015 NOPR, DOE became aware of portable dehumidifiers available on the market with capacities greater than 50 pints/day (as measured under the new test procedure in appendix X1) that were not previously considered. The dehumidifiers previously considered in this higher-capacity portable dehumidifier product class are constructed similar to whole-home dehumidifiers, with more robust construction materials and components, E:\FR\FM\13JNR3.SGM 13JNR3 38352 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations but are not designed to be installed with duct connections. The newly considered products are constructed similar to portable dehumidifiers with capacities less than 50 pints/day, with cases primarily made of plastic. DOE assessed the performance of these newly considered dehumidifiers with capacities greater than 50 pints/day and determined that they often include fan operation during off-cycle mode, as is common for portable dehumidifiers with lower capacities. Therefore, DOE determined that the baseline for this product class should be updated to account for fan operation in off-cycle mode, thereby reducing the baseline IEF. Based on test data, DOE estimated a fan power of 96.5 watts (W) for the greater than 50 pints/day product class, which was higher than the fan power estimated for the two lower-capacity portable dehumidifier product classes in order to maintain the necessary airflow through larger heat exchangers. DOE also incorporated the highest inactive mode or off-mode power, 2.12 W, observed in DOE’s test sample to estimate inactive and off-mode energy use for the high-capacity portable dehumidifier product class. Table IV.10 and Table IV.11 show the baseline efficiency levels for portable dehumidifiers and whole-home dehumidifiers covered in this final rule, respectively. Note that the whole-home dehumidifier baseline efficiency levels are unchanged from the June 2015 NOPR. TABLE IV.10—FINAL RULE PORTABLE DEHUMIDIFIER BASELINE EFFICIENCY LEVELS Capacity (pints/day) IEF (L/kWh) 25.00 or less ......................... 25.01–50.00 .......................... 50.01 or more ....................... 0.77 0.94 1.73 TABLE IV.11—FINAL RULE WHOLEHOME DEHUMIDIFIER BASELINE EFFICIENCY LEVELS Case Volume (cubic feet) IEF (L/kWh) 8.0 or less ............................. More than 8.0 ....................... 1.77 2.41 Additional details on the selection of baseline units may be found in chapter 5 of the final rule TSD. b. Higher Energy Efficiency Levels For the June 2015 NOPR, DOE considered incremental efficiency levels beyond the baseline based on existing efficiency levels (e.g., the ENERGY STAR level) available in the market and observed during investigative testing. Similar to the baseline efficiency levels discussed above, DOE adjusted the efficiency levels to reflect values that would be obtained when using appendix X1. In addition, DOE proposed that the first incremental efficiency level beyond the baseline for each portable dehumidifier product class, except for the highest-capacity product class, be achieved by the elimination of fan-only mode. DOE further proposed max-tech efficiency levels that incorporate additional design options beyond those observed in its test sample. DOE then modeled the performance associated with these design options to estimate the max-tech IEF levels. 80 FR 31645, 31662–31663 (June 3, 2015). Table IV.12 and Table IV.13 present the efficiency levels DOE considered in the June 2015 NOPR analysis. TABLE IV.12—NOPR PORTABLE DEHUMIDIFIER EFFICIENCY LEVELS Integrated energy factor efficiency levels (L/kWh) Efficiency level Efficiency level source 30.00 pints/ day or less Baseline ............. 1 ........................ 2 ........................ 3 ........................ 4 ........................ Current Baseline with Maximum Observed Off-cycle Mode Power ............ Current Baseline with no Fan Operation During Off-cycle Mode/Gap Fill 1 Gap Fill 1/Gap Fill 2 ..................................................................................... Gap Fill 2/Max Tech .................................................................................... Max Tech ..................................................................................................... 30.01–45.00 pints/day 0.77 1.10 1.20 1.30 1.57 0.94 1.20 1.40 1.60 1.80 45.01 pints/ day or more 2.07 2.40 2.80 3.66 ........................ TABLE IV.13—NOPR WHOLE-HOME DEHUMIDIFIER EFFICIENCY LEVELS Integrated energy factor efficiency levels (L/kWh) Efficiency level Efficiency level source 8.0 ft 3 or less (case volume) mstockstill on DSK3G9T082PROD with RULES3 Baseline ............ 1 ........................ 2 ........................ 3 ........................ Minimum Available .................................................................................................................... Gap Fill 1 .................................................................................................................................. Gap Fill 2/Max Tech ................................................................................................................. Max Tech .................................................................................................................................. Additional details on the selection of incremental efficiency levels may be found in chapter 5, section 5.3.2 of the June 2015 NOPR TSD. Fan Operation in Off-Cycle Mode AHAM and GE suggested that elimination of fan operation in off-cycle VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 mode at Efficiency Level 1 for portable dehumidifiers would impact air sampling and humidity control, and could require a change from active defrost to passive defrost. AHAM and GE also expect that Efficiency Level 1 would be difficult to achieve using other PO 00000 Frm 00016 Fmt 4701 Sfmt 4700 More than 8.0 ft 3 (case volume) 1.77 2.09 2.53 ........................ 2.41 2.70 3.52 4.50 technology options, should a manufacturer choose to maintain fan operation in off-cycle mode. Therefore, they suggested that DOE include a gap fill efficiency level between baseline and Efficiency Level 1 that would not require the elimination of fan operation E:\FR\FM\13JNR3.SGM 13JNR3 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations mstockstill on DSK3G9T082PROD with RULES3 in off-cycle mode. AHAM and GE further suggested that an IEF of 1.10 for portable dehumidifiers less than 30.00 pints/day is not an accurate representation of baseline efficiency with no fan operation in off-cycle mode. (AHAM, No. 39 at p. 5; GE, No. 42 at p. 2) Due to the significant IEF decrease associated with continuous fan operation in off-cycle mode and the low cost of eliminating continuous fan operation, DOE continues to expect that manufacturers would eliminate fan operation in off-cycle mode as a first step to improving efficiency. Many dehumidifiers currently available on the market do not continuously operate the fan in off-cycle mode. DOE sought comment on this issue both in the proposed rule and in manufacturer interviews conducted in support of this final rule. DOE received comments and feedback that there would be no impact on consumer utility associated with removing continuous fan operation in off-cycle mode, and that many dehumidifiers either run the fan intermittently or for a short period of time during off-cycle mode. DOE also notes that, although it expects manufacturers to remove continuous fan operation in off-cycle mode to reach Efficiency Level 1, manufacturers may elect to switch from continuous fan operation to intermittent or short periods of fan operations along with other design options to improve efficiency. For its estimates of the IEF at the baseline, DOE assumed a baseline unit with continuous operation of the highest power fan motor in off-cycle mode, as observed in DOE’s test sample. For Efficiency Level 1, DOE assumed that the continuous highest-power fan operation would be replaced by the typical off-cycle mode power consumption without a fan running, as observed in its test sample. Heat Exchanger Modifications Aprilaire agreed with DOE that adjusting the size of the heat exchanger coil is one of the primary means of improving dehumidifier efficiency, and that modifying the blower motor has less of an impact on efficiency. However, Aprilaire stated that installation size restrictions for wholehome dehumidifiers often inhibit a manufacturer’s ability to increase the heat exchanger sizes to meet higher efficiency levels. (Aprilaire, Public Meeting Transcript, No. 35 at p. 49; Aprilaire, No. 34 at p. 2) DOE recognizes the constraints on case volume for whole-home dehumidifiers based on the installation location. Therefore, DOE constructed the whole-home VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 dehumidifier product classes to ensure that units with case volume restrictions (i.e., case volume of 8.0 cubic feet or less) would not be held to the same energy conservations standards as those without size constraints (i.e., case volume more than 8.0 cubic feet). Electrolux requested additional information on how DOE determined the increased heat exchanger size. (Electrolux, Public Meeting Transcript, No. 35 at p. 52) When adjusting the heat exchanger size in its model, DOE typically either added or removed a row of tube passes. The fins and other components of the heat exchangers were adjusted accordingly to accommodate the additional tube row, and the performance impacts were determined through modeling. When discussing increased heat exchanger size, DOE often refers to the resulting change in frontal surface area, although other associated heat exchanger characteristics were also adjusted. Compressor Efficiency In a joint comment, Appliance Standards Awareness Project (ASAP), Alliance to Save Energy, American Council for an Energy-Efficient Economy, Natural Resources Defense Council, and Northwest Energy Efficiency Alliance (hereinafter the ‘‘Joint Commenters’’) commented that although variable-speed compressors, which can achieve significant energy savings in the field, would not improve dehumidifier efficiency as measured by the DOE test procedure, these compressors generally have higher efficiencies at full power compared to traditional compressors currently used in dehumidifiers. For example, the Joint Commenters stated that one compressor manufacturer offers R–410A permanentmagnet inverter rotary compressors with energy efficiency ratio (EER) values of 11.0–11.8 for cooling capacities of 7,600–13,700 British thermal units per hour. (Joint Commenters, No. 40 at p. 2) While DOE is not aware of any dehumidifiers currently available on the market or any prototypes that incorporate variable-speed compressors, DOE considered high-efficiency compressors for the higher efficiency levels. Specifically, DOE accounted for compressors with EERs up to 11.2, within the range identified by the Joint Commenters for variable-speed compressors in its engineering analysis. See chapter 5 of the final rule TSD for additional information. The California IOUs recommended that DOE account for likely changes in the room air conditioner and portable air conditioner markets, including energy conservation standards that may PO 00000 Frm 00017 Fmt 4701 Sfmt 4700 38353 lead to greater availability of high efficiency compressors in the future. (California IOUs, No. 41 at p. 3) In this engineering analysis, DOE has considered the most efficient compressors currently available that are suitable for dehumidifiers. While DOE expects that dehumidifier manufacturers may shift to using more efficient available compressors in response to these amended standards, DOE does not necessarily expect that the maximum available compressor efficiency would increase in response to standards for dehumidifiers or closely related air conditioning products. If DOE becomes aware of more efficient compressors available or in working prototypes, it may consider those as potential technology options in any future rulemaking. The California IOUs also recommended that DOE consider whether compressor availability, and the potential unavailability of dehumidifiers with certain capacities, would negatively impact consumers, assuming that other dehumidifiers with higher capacities were still available. Further, the California IOUs suggested that lower-capacity units provide no distinct utility from higher capacity units; instead, the product size and weight are more appropriate characteristics to define utility. (California IOUs, No. 41 at pp. 3–4) As discussed in section IV.A.1 of this document, DOE has established product classes for portable dehumidifiers based on product capacity, which is the primary consumer utility offered by dehumidifiers. DOE agrees with the California IOUs that lower product size and weight provide certain utility to consumers of low-capacity portable dehumidifiers. However, DOE observed that size and weight are directly correlated to product capacity, which is a measure of the primary function of the product to remove moisture from the conditioned space; therefore, DOE maintains capacity as the product class differentiator for portable dehumidifiers. Additional Portable Dehumidifier Efficiency Level The California IOUs, Joint Commenters, and ASAP recommended that DOE analyze an efficiency level for portable dehumidifiers at the maximum available efficiency, which would fall between Efficiency Level 3 and Efficiency Level 4 in the June 2015 NOPR and would closely align with Efficiency Level 4 from the preliminary analysis. According to these commenters, such an additional efficiency level would capture a E:\FR\FM\13JNR3.SGM 13JNR3 38354 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations majority of the additional energy savings that would be associated with standards at the max-tech level while remaining cost-effective. The California IOUs further requested that DOE consider evaluating an additional efficiency level at ‘‘near max-tech,’’ excluding a shift to the highestefficiency compressors. Acknowledging that the availability of high-efficiency compressors is currently a limiting factor, the California IOUs believe costeffective energy savings would be achieved by optimizing other components without the use of the highest-efficiency compressors. (California IOUs, No. 41 at pp. 2–3; Joint Commenters, No. 40 at pp. 4–6; ASAP, Public Meeting Transcript, No. 35 at pp. 10, 38) In the June 2015 NOPR analysis, DOE proposed the highest efficiency level at the maximum technologically feasible efficiency, which for dehumidifiers was slightly higher than the maximum efficiency available on the market. Because the difference between the max-tech and maximum available efficiencies was small (0.05 L/kWh) for the two lower-capacity portable dehumidifier product classes, DOE did not consider maintaining those maximum available efficiencies as separate efficiency levels in the June 2015 NOPR. Further, DOE notes that the same concerns regarding compressor availability would exist at a ‘‘near maxtech’’ level as at the max-tech. Accordingly, DOE did not analyze an additional efficiency level at the maximum available efficiency. High-Capacity Portable Dehumidifier Efficiency Levels Therma-Stor commented that the proposed efficiency levels are increased by a greater percentage for the highercapacity portable dehumidifiers than for the lower-capacity portable dehumidifiers. Therma-Stor stated that high-capacity portable dehumidifiers already incorporate one or more efficiency features, yet of its seven current higher-capacity portable dehumidifier models, only one exceeds the proposed standard level. (ThermaStor, No. 38 at pp. 2–3) For each product class analyzed in the standards rulemaking, DOE analyzed a representative sample of products to determine an appropriate baseline efficiency and improved efficiency levels. For the high-capacity portable dehumidifiers (50.01 pints/day or greater), DOE has updated the analysis for this product class to reflect new products on the market; however, DOE notes that multiple products in its test sample tested higher than the Efficiency Level 3 proposed in the June 2015 NOPR. Whole-Home Dehumidifier Efficiency Levels Aprilaire expressed concern that DOE’s analysis of whole-home dehumidifiers, with only two efficiency levels, lacked the granularity of the portable dehumidifier analysis, and therefore may not properly evaluate the whole-home dehumidifier market. (Aprilaire, No. 34 at p. 2) The efficiency levels considered in the engineering analysis are developed based on the performance of products on the market and in DOE’s test sample with different combinations of design options. Based on product testing and teardowns, DOE opted to include only one gap fill efficiency level for whole-home dehumidifiers with a case volume less than 8.0 cubic feet and two gap fill efficiency levels for whole-home dehumidifiers with case volumes greater than 8.0 cubic feet. DOE explains the design options associated with products at each of these efficiency levels in chapter 5 of the final rule TSD. Therma-Stor commented that DOE’s analysis of the whole-home dehumidifier market is incomplete due to the relatively small size of the segment, and the lack of substantial field studies. (Therma-Stor, No. 38 at p. 2) As described above for high-capacity portable dehumidifiers, DOE analyzed a representative sample of products for each whole-home dehumidifier product class to determine an appropriate baseline efficiency and improved efficiency levels. Impact of Efficiency Levels Southern Company recommended that DOE perform additional analysis to ensure that product utility is maintained at low temperatures when increasing the minimum efficiency under normal operating conditions. (Southern Company, Public Meeting Transcript, No. 35 at p. 38) In the rulemaking that established appendix X1, DOE determined that the representative operating condition for portable dehumidifiers is 65 degrees Fahrenheit (°F) dry-bulb temperature, and established this as the updated test condition for portable dehumidifiers. Accordingly, DOE based this final rule analysis on this test condition, which is lower than the dry-bulb temperature specified in the currently applicable test procedure, appendix X. As Southern Company suggested, lower operating temperatures may cause certain dehumidifiers to initiate defrosts, and thereby reduce overall performance. However, while some units designed to meet current energy conservation standards may enter a defrost mode at the 65 °F test condition, DOE expects that manufacturers would adjust their refrigeration systems to avoid defrosts due to any decrease in IEF required by amended standards. DOE does not expect the design options considered in this analysis to result in more frequent defrosts or any other impacts on performance at the representative operating conditions that would affect consumer utility compared to units currently available on the market. In sum, DOE modified the baseline efficiency level from that proposed in the June 2015 NOPR and inserted a new Efficiency Level 1 for the high-capacity portable dehumidifier product class, and maintained all other efficiency levels as analyzed in the June 2015 NOPR. Table IV.14 and Table IV.15 present the efficiency levels DOE considered in this final rule analysis. TABLE IV.14—FINAL RULE PORTABLE DEHUMIDIFIER EFFICIENCY LEVELS mstockstill on DSK3G9T082PROD with RULES3 Efficiency level Integrated energy factor efficiency levels (L/kWh) Efficiency level source 25.00 pints/ day or less Baseline ............. 1 ........................ 2 ........................ 3 ........................ 4 ........................ VerDate Sep<11>2014 Current Baseline with Maximum Observed Off-cycle Mode Power ............ Current Baseline with no Fan Operation During Off-cycle Mode ................ Gap Fill 1 ..................................................................................................... Gap Fill 2 ..................................................................................................... Max Tech ..................................................................................................... 22:09 Jun 10, 2016 Jkt 238001 PO 00000 Frm 00018 Fmt 4701 Sfmt 4700 E:\FR\FM\13JNR3.SGM 0.77 1.10 1.20 1.30 1.57 13JNR3 25.01–50.00 pints/day 0.94 1.20 1.40 1.60 1.80 50.01 pints/ day or more 1.73 2.15 2.40 2.80 3.66 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations 38355 TABLE IV.15—FINAL RULE WHOLE-HOME DEHUMIDIFIER EFFICIENCY LEVELS Integrated energy factor efficiency levels (L/kWh) Efficiency level Efficiency level source 8.0 ft 3 or less (case volume) Baseline ............ 1 ........................ 2 ........................ 3 ........................ Minimum Available .................................................................................................................... Gap Fill 1 .................................................................................................................................. Gap Fill 2/Max Tech ................................................................................................................. Max Tech .................................................................................................................................. Additional details on the selection of incremental efficiency levels may be found in chapter 5 of the final rule TSD. 2. Manufacturer Production Cost Estimates Based on product teardowns and cost modeling, DOE developed overall costefficiency relationships for each product class considered in that analysis. DOE selected products covering the range of efficiencies available on the market for the teardown analysis. During the teardown process, DOE created detailed bills of materials (BOMs) that included all components and processes used to manufacture the products. DOE used the BOMs from the teardowns as an input to a cost model, which was used to calculate the MPC for products covering the range of efficiencies available on the market. The MPC accounts for labor, material, overhead, and depreciation costs that a manufacturer would incur in producing a specific dehumidifier. DOE also developed BOMs and MPCs for theoretical units that would implement the identified max-tech components for dehumidifiers. DOE estimated that the costs for these products reflected the costs for typical units at their respective efficiency levels, consistent with the efficiencylevel approach. DOE then used the design-option approach to determine what changes would be needed for a particular unit to meet each incrementally higher efficiency level. DOE constructed cost-efficiency curves for multiple manufacturers to reflect the incremental MPC corresponding to each manufacturer’s product line and available platforms. DOE combined the individual cost-efficiency curves based on estimates of each manufacturer’s market share to develop an overall cost- More than 8.0 ft 3 (case volume) 1.77 2.09 2.53 ........................ 2.41 2.70 3.52 4.50 efficiency curve representative of the entire industry. In improving the max-tech efficiencies beyond the maximum available, as discussed in section IV.C.1.b of the June 2015 NOPR, DOE determined that this was a technologically feasible change that would improve product efficiencies. DOE’s determination was based on the general availability of these components, efficiency gains associated with these technology options, and the minimal cost impacts beyond the additional costs of the components. The MPCs for the June 2015 NOPR analysis reflected this design option, as well as others, at the max-tech efficiency level. 80 FR 31645, 31666 (June 3, 2015). Table IV.16 presents the MPC estimates DOE developed for the June 2015 NOPR. Id. TABLE IV.16—NOPR DEHUMIDIFIER INCREMENTAL MANUFACTURER PRODUCTION COSTS [2013$] Portable product class capacities (pints/day) Efficiency level mstockstill on DSK3G9T082PROD with RULES3 EL1 EL2 EL3 EL4 ≤30.00 ....................................................................................... ....................................................................................... ....................................................................................... ....................................................................................... Chapter 5 of the June 2015 NOPR TSD contains additional details on the analysis conducted in support of developing these MPC estimates. Electrolux commented that a consumer would have to pay a cost adder of approximately $40 to buy a unit rated at 30 pints/day under the new test procedure at appendix X1 instead of a unit rated at 30 pints/day under the current appendix X, because the unit rated under appendix X1 would be a larger design that achieves 50 pints/day under appendix X). Electrolux was unsure whether the rated capacities at retail would shift lower (with no cost impact) or remain the same and result VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 30.01–45.00 $— 1.69 4.27 19.38 PO 00000 Frm 00019 Fmt 4701 Sfmt 4700 >45.00 $— 2.39 8.07 22.42 in much higher costs to consumers. (Electrolux, No. 36 at p. 1) As a result of discussions with manufacturers in confidential interviews, DOE has concluded that manufacturers will likely educate consumers to explain the reduction in rated capacity under appendix X1. Therefore, DOE believes that a consumer who previously would have purchased a 70 pints/day dehumidifier rated under appendix X would now purchase a similarly constructed unit with a rated capacity between 25 and 50 pints/day. In this final rule, DOE estimated, as it did previously with portable dehumidifiers at lower capacities, that Whole-home product class case volume (ft3) $42.81 53.66 120.33 N/A ≤8.0 $15.30 129.22 N/A N/A >8.0 $6.20 37.20 161.39 N/A the cost to move from the baseline efficiency level to Efficiency Level 1 for portable dehumidifiers with capacities greater than 50 pints/day would not require any increase in manufacturer production costs, as the removal of fan operation in off-cycle mode is essentially a controls programming adjustment. DOE further notes that the same design options and subsequent efficiency improvements previously considered in the June 2015 NOPR for this product class are still applicable. In this final rule DOE also updated the MPCs to 2014$, the most recent year for which full-year data was available at the time of this analysis. DOE notes that E:\FR\FM\13JNR3.SGM 13JNR3 38356 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations when updating the costs to current dollars, some variables based on changing costs (e.g., materials, shipping, etc.) increased while others decreased. TABLE IV.17—FINAL RULE DEHUMIDIFIER INCREMENTAL MANUFACTURER PRODUCTION COSTS [2014$] Portable product class capacities (pints/day) Efficiency level Whole-Home product class case volume (ft 3) ≤25.00 EL1 EL2 EL3 EL4 ....................................................................................... ....................................................................................... ....................................................................................... ....................................................................................... >50.00 ........................ $1.69 4.29 19.63 ........................ $2.33 8.00 22.62 ........................ $49.27 61.32 173.63 D. Markups Analysis The markups analysis develops appropriate markups in the distribution chain to convert the MPC estimates derived in the engineering analysis to consumer prices. At each step in the distribution channel, companies mark up the price of the product to cover business costs and profit margin. For dehumidifiers, the main parties in the distribution chain are manufacturers and retailers. The manufacturer markup converts MPC to manufacturer selling price (MSP). DOE developed an average manufacturer markup by examining the annual Securities and Exchange Commission (SEC) 10–K reports filed by publicly traded manufacturers primarily engaged in appliance manufacturing and whose combined product range includes dehumidifiers. For retailers, DOE developed separate markups for baseline products (baseline markups) and for the incremental cost of more efficient products (incremental markups). Incremental markups are coefficients that relate the change in the MSP of higher-efficiency models to the change in the retailer sales price. DOE relied on economic data from the U.S. Census Bureau to estimate average baseline and incremental markups.24 Aprilaire urged that the analysis be expanded for whole-home dehumidifiers to include the additional costs of shipping larger and heavier products and additional installation costs for larger units. (Aprilaire, No. 34 at p. 5) As in the preliminary and NOPR analyses, DOE used two different distribution channels for portable dehumidifiers and whole-home dehumidifiers. For the final rule analysis, DOE amended the distribution channel of the high-capacity portable dehumidifier product class, PC3. A share of the PC3 market uses the same distribution channel as PC1 and PC2: Units move from manufacturer to retailer to consumer. For the other share of the PC3 market, the distribution channel reflects its larger size and uses the whole-home dehumidifier distribution channel. To represent additional steps in the purchase of a larger unit, the whole-home dehumidifier distribution channel reflects two additional markups to include wholesalers and contractors used in the purchase of the larger dehumidifiers, including the third portable dehumidifier product class and whole-home dehumidifiers. As a result, DOE concluded that the wholesaler and contractor markups for the larger units include additional costs of shipping and installation. AHAM made the following comments regarding the use of incremental markups for appliance retailers to estimate future prices of efficient products: (1) The incremental markup approach relies on an assumption of perfect competition, which is an outdated model of the economy; (2) Relatively constant percent gross margins observed in aggregated appliance retail industry data imply the use of fixed-percent markups over time; (3) Interview responses from appliance retailers are consistent with the use of fixed-percent markups. (AHAM, No. 39 at p. 7) DOE responds to these points as follows: (1) DOE’s incremental markup approach is based on the widely accepted economic view that prices closely reflect marginal costs in competitive markets and in markets with some degree of concentration.25 In the absence of data to support a 24 U.S. Census, 2012 Annual Retail Trade Survey (ARTS), Electronics and Appliance Stores sectors. 25 Pindyck, R. and Rubinfeld, D. Microeconomics. 8th Edition. Prentice Hall, 2012. Additional details on the development of the incremental cost estimates may be found in chapter 5 of the final rule TSD. mstockstill on DSK3G9T082PROD with RULES3 25.01–50.00 VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 PO 00000 Frm 00020 Fmt 4701 Sfmt 4700 ≤8.0 $15.78 125.95 N/A N/A >8.0 $6.46 38.82 183.42 N/A different assumption, DOE retains its assumption for this rulemaking. (2) In examining the relatively constant appliance retail percent margin trend and its underlying prices, DOE found that the average inflation-adjusted prices of appliances are relatively fixed during this period as well. This set of historical data has no bearing on firm markup behavior under product price increases, such as DOE projects would occur when higher-efficiency products are introduced. If prices are relatively constant, the incremental markup approach will arrive at the same price prediction as applying fixed-percent margin; hence, the historically constant percent margins do not necessarily imply a constant percent margin in the future, especially in the case of increased input prices. DOE evaluated time series margin and price data from three industries that experienced rapidly changing input prices—the LCD television retail market,26 the U.S. oil and gasoline market,27 and the U.S. housing market.28 The results indicate that dollar margins vary across different markets to reflect changes in input price, but the percent margins do not remain fixed over time in any of these industries. Appendix 6B in the TSD describes DOE’s findings. (3) Regarding the interviews with appliance retailers, it is difficult for DOE to evaluate the characterization of the responses without knowing what questions were posed to the retailers. DOE’s analysis necessarily considers a simplified version of appliance retailing: Namely, a situation in which nothing changes except for those changes in appliance offerings that 26 LCD television data from DisplaySearch, a market research company affiliated with NPD Group. 27 U.S. Energy Information Agency, Oil price: Spot price in Cushing, Oklahoma for 42 gallon barrel of oil; Retail gas price: U.S. average retail price of gasoline, all grades and formulations. 28 Standard and Poors, Case-Shiller home price index, CPI-adjusted; REAL Trends, http:// www.realtrends.com. E:\FR\FM\13JNR3.SGM 13JNR3 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations mstockstill on DSK3G9T082PROD with RULES3 occur in response to new standards. DOE implicitly asks: Assuming the product cost increases while the other costs remain constant (no change in labor, material and operating costs), are retailers still able to keep the same markup over time as before? DOE recognizes that retailers are likely to seek to maintain the same markup on appliances if the price they pay goes up as a result of appliance standards, but DOE concludes that, over time, adjustment is likely to occur due to competitive pressures. Other retailers may find that they can gain sales by reducing the markup and maintaining the same per-unit operating profit. The incremental markup approach embodies the same perspective as the ‘‘preservation of per-unit operating profit markup scenario’’ used in the MIA (see section IV.J of this document). DOE concludes that there is not sufficient evidence to support the application of fixed percent markups to the cost increment on efficient equipment. Firms generally cannot maintain fixed percent margins in the long run under changing cost conditions. Thus, DOE continues to apply the incremental markup approach to estimate the price increase for more efficient products. Chapter 6 of the final rule TSD provides details on DOE’s development of markups for dehumidifiers. E. Energy Use Analysis DOE’s energy use analysis estimated the range of energy use of dehumidifiers in the field, i.e., as they are actually used by consumers. The energy use analysis provided the basis for other analyses DOE performed, particularly assessments of the energy savings and the savings in consumer operating costs that could result from adoption of amended standards. A dehumidifier uses energy when the compressor is operating to remove moisture from the air. When the compressor is not operating, the dehumidifier may use energy by operating the fan to circulate air through the unit to sample the ambient relative humidity and to defrost the evaporator coils. When neither the fan nor the compressor is operating, energy is used in standby mode or off mode to supply power for functions such as keeping a user panel lit.29 DOE determined the annual energy consumption of dehumidifiers by multiplying the capacity (liters per day) 29 The energy use operating mode names used in this standards final rule to characterize energy use and subsequent analyses, reflect dehumidifier use in the field and are not the same as the test procedure operating mode names. VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 by the hours of operation in dehumidification mode, dividing that quantity by the product efficiency, and adding the energy use for the fan mode and the standby and off mode. The efficiency and capacity values were measured using a temperature of 73 °F for whole-home dehumidifiers, 65 °F for portable dehumidifiers, and a humidity set point of 60 percent, as stipulated in the test procedure for dehumidifiers in appendix X1. To estimate hours of operation in each mode, DOE used two recent field studies that measured daily hours of use in each operating mode for both portable and whole-home dehumidifiers.30 DOE paired these data with estimates of the number of months that dehumidifiers are used in a representative sample of U.S. households. DOE used data from the EIA’s 2009 Residential Energy Consumption Survey (RECS 2009), which was the most recent such survey available at the time of DOE’s analysis.31 RECS is a national sample survey of housing units that collects statistical information on the consumption of and expenditures for energy in housing units along with data on energy-related characteristics of the housing units and occupants. RECS 2009 questioned each household on two aspects of dehumidifier use: (1) Ownership and (2) number of months of dehumidifier use. DOE estimated that consumers leave the dehumidifier to cycle on and off for the entire month or months of the dehumidification season. DOE estimated the energy use for offcycle mode and the standby and off mode using the hours of operation described above, along with data on average power in off-cycle and standby modes from the field studies. Therma-Stor believes that there are many factors which influence dehumidifier operation and that there is no correlation between dehumidifier capacity and the amount of water vapor which must be removed. Therma-Stor stated that a dehumidifier will be run as long as required to reduce humidity until it reaches the consumer’s setting. (Therma-Stor, No. 38 at pp. 1–2) Based on available data, DOE has accounted for the factors influencing 30 Willem, H., et al., Using Field-Metered Data to Quantify Annual Energy Use of Residential Portable Unit Dehumidifiers, Lawrence Berkeley National Laboratory (Nov. 2013); Burke, T., et al., WholeHome Dehumidifiers Energy Use: A FieldMonitoring Study, Lawrence Berkeley National Laboratory (Dec. 2015). 31 U.S. Department of Energy: Energy Information Administration, Residential Energy Consumption Survey: 2009 RECS Survey Data (2013) (Available at: http://www.eia.gov/consumption/residential/ data/2009/). PO 00000 Frm 00021 Fmt 4701 Sfmt 4700 38357 dehumidifier operation in its analysis. The engineering analysis provided data on capacities and efficiencies, field metered data in available literature showed ranges of time percentages spent in different modes of operation, and the RECS household sample showed variation in months of dehumidifier use as reported by consumers. DOE assumed that consumers use readily available guides when deciding the size of dehumidifier they need to purchase given the amount of humidity they experience. Chapter 7 of the final rule TSD provides details on DOE’s energy use analysis for dehumidifiers. F. Life-Cycle Cost and Payback Period Analysis In determining whether an energy conservation standard is economically justified, DOE considers the economic impact of potential standards on consumers. The effect of new or amended energy conservation standards on individual consumers usually involves a reduction in operating cost and an increase in purchase cost. DOE used the following two metrics to measure consumer impacts: • LCC (life-cycle cost) is the total consumer cost of an appliance or product, generally over the life of the appliance or product. The LCC calculation includes total installed cost (equipment manufacturer selling price, distribution chain markups, sales tax, and installation costs), operating costs (energy, repair, and maintenance costs), equipment lifetime, and discount rate. Future operating costs are discounted to the time of purchase and summed over the lifetime of the appliance or product. • PBP (payback period) measures the amount of time it takes consumers to recover the estimated higher purchase price of a more energy-efficient product through reduced operating costs. Inputs to the payback period calculation include the installed cost to the consumer and first-year operating costs. For any given efficiency level, DOE measures the change in LCC relative to the LCC in the no-new-standards case, which reflects the market in the absence of new or amended energy conservation standards, and includes baseline products as well as products with higher efficiency. In contrast, the PBP for a given efficiency level is measured relative to the baseline product only. For each product class efficiency level, DOE calculated the LCC and PBP for a nationally representative set of housing units. As stated previously, DOE developed household samples with RECS 2009 data. For each sample household, DOE determined the energy E:\FR\FM\13JNR3.SGM 13JNR3 38358 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations consumption for the dehumidifier and the appropriate electricity price. By developing a representative sample of households, the analysis captured the variability in energy consumption and energy prices associated with the use of dehumidifiers. The LCC and PBP analyses are designed to support DOE’s consideration of the economic impact of potential standards on consumers of the products subject to the standard, as required by EPCA. (42 U.S.C. 6295(o)(2)(B)(i)(I)) The use of RECS 2009 to develop a consumer sample and to provide data for estimation of product energy use allows DOE to characterize the range of conditions in which covered appliances are operated. As a result, DOE is able to estimate how the energy savings would vary among households for each considered efficiency level. Inputs to the calculation of total installed cost include the cost of the product—which includes MPCs, manufacturer markups, retailer and distributor markups, and sales taxes— and installation costs. Inputs to the calculation of operating expenses include annual energy consumption, energy prices and price projections, repair and maintenance costs, product lifetimes, and discount rates. DOE created distributions of values for product lifetime, discount rates, and sales taxes, with probabilities attached to each value, to account for their uncertainty and variability. The computer model DOE uses to calculate the LCC and PBP, which incorporates Crystal BallTM (a commercially available software program), relies on a Monte Carlo simulation to incorporate uncertainty and variability into the analysis. The Monte Carlo simulations randomly sample input values from the probability distributions and dehumidifier user samples. The model calculated the LCC and PBP for products at each efficiency level for 10,000 housing units per simulation run. DOE calculated the LCC and PBP for all customers as if each were to purchase a new product in the expected year of compliance with amended standards. The amended standards apply to dehumidifiers manufactured 3 years after the date on which the amended standards for dehumidifiers are published. Therefore, for purposes of its analysis, DOE used 2019 as the first year of compliance with these amended standards. Table IV.18 summarizes the approach and data DOE used to derive inputs to the LCC and PBP calculations. The subsections that follow provide further discussion. Details of the spreadsheet model, and of all the inputs to the LCC and PBP analyses, are contained in chapter 8 of the final rule TSD and its appendices. TABLE IV.18—SUMMARY OF INPUTS AND METHODS FOR THE LCC AND PBP ANALYSIS * Inputs Source/Method Product Cost ....................................................... Derived by multiplying MPCs by manufacturer and retailer markups and sales tax, as appropriate. Used historical data to derive a price scaling index to forecast product costs. For portable dehumidifiers, DOE assumed no installation costs with the baseline unit and no cost with efficiency level. For whole-home dehumidifiers, baseline installation cost were determined with data from RS Means Residential Cost Data. DOE assumed incremental installation costs with efficiency level. The total annual energy use derived from power demand of each mode multiplied by the hours per year. Average number of hours based on field data. Variability: Based on the 2009 RECS. Average and Marginal Electricity: Based on EEI 2014. Variability: Regional energy prices determined for 27 regions. Based on AEO 2015 price forecasts. Assumed no change with efficiency level. Appliance Magazine (2005), ACEEE (2001), Northeast Energy Star Lighting and Appliance. Approach involves identifying all possible debt or asset classes that might be used to purchase the considered appliances, or might be affected indirectly. Primary data source was the Federal Reserve Board’s Survey of Consumer Finances** for 1995, 1998, 2001, 2004, 2007, 2010, and 2013. 2019. Installation Costs ................................................ Annual Energy Use ............................................. Energy Prices ..................................................... Energy Price Trends ........................................... Repair and Maintenance Costs .......................... Product Lifetime .................................................. Discount Rates ................................................... Compliance Date ................................................ * References for the data sources mentioned in this table are provided in the sections following the table or in chapter 8 of the final rule TSD. ** Survey of Consumer Finances. mstockstill on DSK3G9T082PROD with RULES3 1. Product Cost To calculate consumer product costs, DOE multiplied the MPCs developed in the engineering analysis by the markups described in this preamble (along with sales taxes). DOE used different markups for baseline products and higher-efficiency products, because DOE applies an incremental markup to the increase in MSP associated with higherefficiency products. 2. Installation Cost Installation cost includes labor, overhead, and any miscellaneous materials and parts needed to install the product. DOE used data from the 2015 VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 R.S. Means Residential Cost Data book to estimate the baseline installation cost for whole-home dehumidifiers. DOE assumed that installation costs would not be impacted with increased efficiency levels in the NOPR analysis. Aprilaire commented that large whole-home units will require additional installation work. (Aprilaire, No. 34 at p. 2) For this final rule, DOE reviewed the R.S. Means Residential Data, and estimated incremental installation costs for each efficiency level based on additional labor costs for larger sizes of HVAC ventilation work. See chapter 8 of the final rule TSD for further information on the derivation of PO 00000 Frm 00022 Fmt 4701 Sfmt 4700 the installation costs for whole-home dehumidifiers. 3. Annual Energy Consumption For each sampled household, DOE determined the energy consumption for a dehumidifier at different efficiency levels using the approach described in section IV.E of this document. 4. Energy Prices DOE derived marginal residential electricity and natural gas prices for 27 geographic areas.32 Marginal prices are 32 DOE characterized the geographic distribution into 27 geographic areas to be consistent with the 27 states and group of states reported in RECS 2009. E:\FR\FM\13JNR3.SGM 13JNR3 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations mstockstill on DSK3G9T082PROD with RULES3 appropriate for determining energy cost savings associated with possible changes to efficiency standards. For electricity, DOE derived marginal and average prices which vary by season, region, and baseline electricity consumption level. DOE estimated these prices using data published with the Edison Electric Institute (EEI), Typical Bill and Average Rates reports for summer and winter 2014.33 For the residential sector each report provides, for most of the major investor-owned utilities (IOUs) in the country, the total bill assuming household consumption levels of 500, 750, and 1,000 kWh for the billing period. DOE defined the average price as the ratio of the total bill to the total electricity consumption. DOE also used the EEI data to define a marginal price as the ratio of the change in the bill to the change in energy consumption. For the residential sector, DOE defined the average price as the ratio of the total bill to the total electricity consumption. DOE also used the EEI data to define a marginal price as the ratio of the change in the bill to the change in energy consumption. DOE first calculated weighted-average values for each geographic area for each type of price. Each EEI utility in an area was assigned a weight based on the number of consumers it serves. Consumer counts were taken from the most recent EIA Form 861 data (2012).34 DOE assigned seasonal average prices to all households in the LCC sample based on its location and its baseline monthly electricity consumption for an average summer or winter month. For sampled households who were assigned a product efficiency greater than or equal to the considered level for a standard, DOE then assigned marginal price to each household based on its location and the decremented electricity consumption. In the LCC sample, households could be assigned to one of 27 geographic areas. To estimate future trends in electricity and natural gas prices, DOE used price forecasts in AEO 2015. To arrive at prices in future years, DOE multiplied the average and marginal prices described above by the forecast of annual average changes in nationalaverage residential electricity and natural gas prices. Because the AEO 33 Edison Electric Institute. Typical Bills and Average Rates Report. Winter 2014 published April 2014, Summer 2014 published October 2014. Available at: http://www.eei.org/ resourcesandmedia/products/Pages/Products.aspx. 34 U. S. Department of Energy, Energy Information Administration. Form EIA–861 Annual Electric Power Industry Database. http://www.eia.doe.gov/ cneaf/electricity/page/eia861.html. VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 2015 forecasts prices only to 2040, DOE used the average rate of change during 2025–2040 to estimate the price trends beyond 2040. 5. Maintenance and Repair Costs Repair costs are associated with repairing or replacing product components that have failed in an appliance; maintenance costs are associated with maintaining the operation of the product. Typically, small incremental increases in product efficiency produce no, or only minor, changes in repair and maintenance costs. During the 2013 preliminary analysis phase of the rulemaking, DOE requested information as to whether maintenance and repair costs are a function of efficiency level and product class. Manufacturers responded that these costs would not increase with efficiency. As a result, DOE assumed that repair and maintenance costs do not scale with the efficiency of dehumidifiers. 6. Product Lifetime For portable dehumidifiers, DOE used lifetime estimates from the Appliance Magazine (2005),35 an appliance lifetime report (Kubo, et al., 2001),36 and Northeast Energy Star Lighting and Appliance.37 DOE assumed whole-home dehumidifiers have the same life span as residential room air conditioners and applied the lifetime parameters derived for room air conditioners in the 2011 rulemaking to whole-home dehumidifiers.38 The analysis yielded an estimate of mean lifetime of approximately 11 years for portable dehumidifiers and approximately 19 years for whole-home dehumidifiers. DOE also used the data to develop a survival function that was incorporated as a probability distribution in the LCC analysis. See chapter 8, section 8.2.2.8 of the final rule TSD for further details 35 The Life Expectancy/Replacement Picture. Appliance Magazine, September, 2005. Vol. 62, No. 9. 36 Kubo, T., S. Nadel, and H. Sachs. Opportunities for New Appliance and Equipment Efficiency Standards: Energy and Economic Savings Beyond Current Standards Programs, September, 2001. Washington, DC: American Council for an Energy Efficient Economy (ACEEE). Report Number A016. <http://aceee.org/research-report/a016>. 37 Northeast Energy Star Lighting and Appliance. Dehumidifiers. Accessed June 26, 2006. <http:// www.myenergystar.com/Dehumidifiers.aspx> 38 DOE-Energy Efficiency and Renewable Energy, Energy Conservation Program for Consumer Products, Technical Support Document: Energy Efficiency Program for Consumer Products and Commercial and Industrial Equipment, Residential Clothes Dryers and Room Air Conditioners (2011) (Available at: http://www.regulations.gov/ #!documentDetail;D=EERE-2007-BT-STD-00100053). PO 00000 Frm 00023 Fmt 4701 Sfmt 4700 38359 on the method and sources DOE used to develop product lifetimes. AHAM commented that DOE should use 10 years as the lifetime for portable dehumidifiers. (AHAM, No. 39 at p. 5) DOE used publically data and information including the three studies cited above to conclude that 11 years is the average lifetime for portable dehumidifiers. 7. Discount Rates In the calculation of LCC, DOE applies discount rates appropriate to households to estimate the present value of future operating costs. DOE estimated a distribution of residential discount rates for dehumidifiers based on consumer financing costs and opportunity cost of funds related to appliance energy cost savings and maintenance costs. To establish residential discount rates for the LCC analysis, DOE identified all relevant household debt or asset classes in order to approximate a consumer’s opportunity cost of funds related to appliance energy cost savings and maintenance costs. DOE then estimated the average percentage shares of the various types of debt and equity by household income group using data from the Federal Reserve Board’s Survey of Consumer Finances (SCF) for 1995, 1998, 2001, 2004, 2007, 2010, and 2013.39 Using the SCF and other sources, DOE then developed a distribution of rates for each type of debt and asset by income group to represent the rates that may apply in the year in which amended standards would take effect. DOE assigned each sample household a specific discount rate drawn from one of the distributions. The average rate across all types of household debt and equity and income groups, weighted by the shares of each class, is 4.4 percent. See chapter 8, section 8.2.3 of the final rule TSD for further details on the development of consumer discount rates. 8. Efficiency Distribution in the NoNew-Standards Case To accurately estimate the share of consumers that would be affected by a standard at a particular efficiency level, DOE’s LCC analysis considered the projected distribution of product efficiencies in the no-new-standards case (i.e., the case without new energy 39 Note that two older versions of the SCF are also available (1989 and 1992). These surveys were not used in this analysis because they do not provide all of the necessary types of data (e.g., credit card interest rates). DOE determines that the 15-year span covered by the six surveys included is sufficiently representative of recent debt and equity shares and interest rates. E:\FR\FM\13JNR3.SGM 13JNR3 38360 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations efficiency standards). DOE refers to this distribution of product efficiencies as a no-new-standards case efficiency distribution. To estimate the efficiency distribution of dehumidifiers for 2019, DOE analyzed its Compliance Certification Database for dehumidifiers. To project the efficiency trend between 2019 and 2048, DOE used a 0.25 percent annual increase in shipment-weighted efficiency, as discussed in section IV.H. See chapter 8 of the final rule TSD for further information on the derivation of the efficiency distributions. mstockstill on DSK3G9T082PROD with RULES3 9. Payback Period Analysis The PBP is the amount of time it takes the consumer to recover the additional installed cost of more efficient products, compared to baseline products, through energy cost savings. PBPs are expressed in years. PBPs that exceed the life of the product mean that the increased total installed cost is not recovered in reduced operating expenses. The inputs to the PBP calculation for each efficiency level are the change in total installed cost of the product and the change in the first-year annual operating expenditures relative to the baseline. The PBP calculation uses the same inputs as the LCC analysis, except that discount rates are not needed. As noted above, EPCA, as amended, establishes a rebuttable presumption that a standard is economically justified if the Secretary finds that the additional cost to the consumer of purchasing a product complying with an energy conservation standard level will be less than three times the value of the first year’s energy savings resulting from the standard, as calculated under the applicable test procedure. (42 U.S.C. 6295(o)(2)(B)(iii)) For each considered efficiency level, DOE determined the value of the first year’s energy savings by multiplying the energy savings by the average energy price forecast for the year in which compliance with the amended standard would be required. The results of the rebuttable presumption PBP analysis are summarized in section V.B.1.c of this document. G. Shipments Analysis DOE uses forecasts of annual product shipments to calculate the national impacts of potential amended energy conservation standards on energy use, VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 NPV, and future manufacturer cash flows.40 The shipments model takes an accounting approach, tracking market shares of each product class and the vintage of units in the stock. Stock accounting uses product shipments as inputs to estimate the age distribution of in-service product stocks for all years. The age distribution of in-service product stocks is a key input to calculations of both the NES and NPV, because operating costs for any year depend on the age distribution of the stock. To determine shipments to the replacement market, DOE estimated a stock of dehumidifiers by vintage by integrating historical shipments starting from 1972 for portable dehumidifiers and from 2004 for whole-home dehumidifiers. Over time, some units are retired and removed from the stock, triggering the shipment of a replacement unit. Depending on the vintage, a certain percentage of each type of unit will fail and need to be replaced. DOE based the retirement function on a probability distribution for the product lifetime that was developed in the LCC analysis. The shipments model assumes that no units are retired below a minimum product lifetime and that all units are retired before exceeding a maximum product lifetime. To calibrate the estimated shipments with the historical data, DOE introduced into the model a market segment identified as existing households without dehumidifiers, also referred to as first-time owners. Based on the calibration, DOE estimated that 0.35 percent of existing households without a dehumidifier would annually purchase this product over the analysis period, 2019–2048. For the final rule analysis, DOE applied price and efficiency elasticity parameters to estimate the effect of new standards on dehumidifier shipments. DOE estimated the price and efficiency elasticity parameters from a regression analysis that incorporated shipments, purchase price, and efficiency data specific to several residential appliances during 1989–2009. Based on evidence that the price elasticity of demand is significantly different over the short run 40 DOE uses data on manufacturer shipments as a proxy for national sales, as aggregate data on sales are lacking. In general one would expect a close correspondence between shipments and sales. PO 00000 Frm 00024 Fmt 4701 Sfmt 4700 and long run for other consumer goods (i.e., automobiles), DOE assumed that these elasticities decline over time. DOE estimated shipments in each standards case using the price and efficiency elasticity along with the change in the product price and operating costs between a standards case and the nonew-standards case. For details on the shipments analysis, see chapter 9 of the final rule TSD. H. National Impact Analysis The NIA assesses the national energy savings (NES) and the national net present value (NPV) from a national perspective of total consumer costs and savings that would be expected to result from new or amended standards at specific efficiency levels.41 (‘‘Consumer’’ in this context refers to consumers of the product being regulated.) DOE calculates the NES and NPV based on projections of annual product shipments, along with the annual energy consumption and total installed cost data from the energy use and LCC analyses.42 For the present analysis, DOE forecasted the energy savings, operating cost savings, product costs, and NPV of consumer benefits over the lifetime of dehumidifiers sold from 2019 through 2048. DOE evaluates the impacts of new and amended standards by comparing a case without such standards with standardscase projections. The no-new-standards case characterizes energy use and consumer costs for each product class in the absence of new or amended energy conservation standards. For this projection, DOE considers historical trends in efficiency and various forces that are likely to affect the mix of efficiencies over time. DOE compares the no-new-standards case with projections characterizing the market for each product class if DOE adopted new or amended standards at specific energy efficiency levels (i.e., the TSLs or standards cases) for that class. For the standards cases, DOE considers how a given standard would likely affect the market shares of products with efficiencies greater than the standard. 41 The NIA accounts for impacts in the 50 states and U.S. territories. 42 For the NIA, DOE adjusts the installed cost data from the LCC analysis to exclude sales tax, which is a transfer. E:\FR\FM\13JNR3.SGM 13JNR3 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations DOE uses a spreadsheet model to calculate the energy savings and the national consumer costs and savings from each TSL. Interested parties can review DOE’s analyses by changing various input quantities within the spreadsheet. The NIA spreadsheet model uses typical values (as opposed to probability distributions) as inputs. Table IV.19 summarizes the inputs and methods DOE used for the NIA analysis for the final rule. Discussion of 38361 these inputs and methods follows the table. See chapter 10 of the final rule TSD for further details. TABLE IV.19—SUMMARY OF INPUTS AND METHODS FOR THE NATIONAL IMPACT ANALYSIS Inputs Method Shipments ....................................... Compliance Date of Standard ........ Efficiency Trends ............................ Annual shipments from shipments model. 2019. No-New-Standards case: Shipment-Weighted Integrated Energy Factor (SWIEF) determined in 2019 for each of the considered products classes. Annual growth rate of 0.25 percent assumed for determining SWIEF between 2019 and 2048. Standard cases: Roll-up and shift scenario for 2019. Annual weighted-average values are a function of energy use at each TSL. Annual Energy Consumption per Unit. Total Installed Cost per Unit ........... Annual Energy Cost per Unit .......... Repair and Maintenance Cost per Unit. Energy Prices .................................. Energy Site-to-Primary and FFC Conversion. Discount Rate ................................. Present Year ................................... Annual weighted-average values are a function of cost at each TSL. Incorporates forecast of future product prices based on historical data. Annual weighted-average values as a function of the annual energy consumption per unit and energy prices. Annual values do not change with efficiency level. AEO 2015 forecasts (to 2040) and extrapolation through 2048. A time-series conversion factor derived from AEO 2015. Three and seven percent real. Future costs and savings are discounted to 2015. mstockstill on DSK3G9T082PROD with RULES3 1. Product Efficiency Trends A key component of the NIA is the trend in energy efficiency projected for the no-new-standards case and each of the standards cases. Section IV.8 of this document describes how DOE developed an energy efficiency distribution for the no-new-standards case (which yields a shipment-weighted average efficiency) for each of the considered product classes for the first year of the forecast period. To project the trend in efficiency for dehumidifiers over the entire shipments projection period, DOE employed shipmentsweighted integrated energy factors (SWIEF) as a starting point for 2014 and assumed a 0.25 percent annual increase in shipment-weighted efficiency between 2014 and 2048. The approach is further described in chapter 10 of the final rule TSD. For the standards cases, DOE used a ‘‘roll-up’’ scenario to establish the shipment-weighted efficiency for the year that standards are assumed to become effective (2019). In this scenario, the market of products in the no-new-standards case that do not meet the standard under consideration would ‘‘roll up’’ to meet the new standard level, and the market share of products above the standard would remain unchanged. For its projected efficiencies of TSLs, in addition to a ‘‘roll-up’’ scenario, DOE developed a shift scenario. In the shift scenario DOE developed growth trends for each trial VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 standard level that maintained the same per-unit average total installed cost difference for the year 2019 between the no-new-standards case and each standards case over the entire projection period (2019–2048). 2. National Energy Savings In 2011, in response to the recommendations of a committee on ‘‘Point-of-Use and Full-Fuel-Cycle Measurement Approaches to Energy Efficiency Standards’’ appointed by the National Academy of Sciences, DOE announced its intention to use FFC measures of energy use and greenhouse gas and other emissions in the national impact analyses and emissions analyses included in future energy conservation standards rulemakings. 76 FR 51281 (Aug. 18, 2011). After evaluating the approaches discussed in the August 18, 2011 notice, DOE published a statement of amended policy in which DOE explained its determination that EIA’s National Energy Modeling System (NEMS) is the most appropriate tool for its FFC analysis and its intention to use NEMS for that purpose. 77 FR 49701 (August 17, 2012). NEMS is a public domain, multi-sector, partial equilibrium model of the U.S. energy sector 43 that EIA uses to prepare its Annual Energy Outlook. The approach 43 For more information on NEMS, refer to The National Energy Modeling System: An Overview, DOE/EIA–0581 (98) (Feb.1998) (Available at: http:// www.eia.gov/oiaf/aeo/overview/). PO 00000 Frm 00025 Fmt 4701 Sfmt 4700 used for deriving FFC measures of energy use and emissions is described in appendix 10C of the final rule TSD. Aprilaire commented that DOE should separately show energy savings of whole-home dehumidifiers and portable dehumidifiers and stated that DOE has not shown that whole-home dehumidifier regulation will meet the requirement of ‘‘substantial’’ energy savings nor has DOE shown it meets the term used in the public meeting as ‘‘non-trivial.’’ (Aprilaire, No. 38 at p. 5) DOE shows energy savings for each product class in the National Impact Analysis. However when analyzing whether standards meet the EPCA requirement of ‘‘significant’’ energy savings, DOE considers the product type as a whole. 3. Net Present Value Analysis The inputs for determining the NPV of the total costs and benefits experienced by consumers are: (1) Total annual installed cost; (2) total annual savings in operating costs; and (3) a discount factor to calculate the present value of costs and savings. DOE calculates net savings each year as the difference between the no-newstandards case and each standards case in terms of total savings in operating costs versus total increases in installed costs. DOE calculates operating cost savings over the lifetime of each product shipped during the forecast period. As discussed in section IV.F.1 of this document, DOE developed dehumidifier E:\FR\FM\13JNR3.SGM 13JNR3 mstockstill on DSK3G9T082PROD with RULES3 38362 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations price trends based on historical Producer Price Index (PPI) data. Within the portable and whole-home product groups, DOE applied the same trends to forecast prices for each product class at each considered efficiency level. By 2048, which is the end date of the forecast period, the average dehumidifier price is forecasted to drop 37 percent relative to 2013. DOE’s projection of product prices for dehumidifiers is described in further detail in appendix 10C of the final rule TSD. To evaluate the effect of uncertainty regarding price trends, DOE examined the effect of various product price forecasts on the consumer NPV for the considered TSLs for dehumidifiers. In addition to the default price trend, DOE considered separate product price sensitivity cases for portable dehumidifiers and whole-home dehumidifiers. For portable dehumidifiers, DOE considered a case for a low price decline based on estimating an experience curve using PPI data for ‘‘small electric household appliances’’ from 1990 to 2009. A case for high price decline was based on the price forecast of the ‘‘furniture and appliances’’ series from AEO 2015. For whole-home dehumidifiers, a case for a low price decline was based on an exponential fit to the PPI from 1978 to 2014 for ‘‘air-conditioning, refrigeration, and forced air heating equipment.’’ The high price decline was based on the price forecast of the ‘‘furniture and appliances’’ series from AEO 2015. The approach used to forecast the price trends and the results of the sensitivity cases are described in appendix 10C of the final rule TSD. The operating cost savings are energy cost savings, which are calculated using the estimated energy savings in each year and the projected price of the appropriate form of energy. To estimate energy prices in future years, DOE multiplied the average and marginal energy prices by the forecast of annual national-average residential energy price changes in the reference case from AEO 2015, which has an end year of 2040. To estimate price trends after 2040, DOE used the average annual rate of change in prices from 2020 to 2040. As part of the NIA, DOE also analyzed scenarios that used inputs from the AEO 2015 Low Economic Growth and High Economic Growth cases. Those cases have higher and lower energy price trends compared to the Reference case. NIA results based on these cases are presented in appendix 10C of the final rule TSD. In calculating the NPV, DOE multiplies the net savings in future VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 years by a discount factor to determine their present value. For this final rule, DOE estimated the NPV of consumer benefits using both a 3-percent and a 7-percent real discount rate. DOE uses these discount rates in accordance with guidance provided by the Office of Management and Budget (OMB) to Federal agencies on the development of regulatory analysis.44 The discount rates for the determination of NPV are in contrast to the discount rates used in the LCC analysis, which are designed to reflect a consumer’s perspective. The 7-percent real value is an estimate of the average before-tax rate of return to private capital in the U.S. economy. The 3-percent real value represents the ‘‘social rate of time preference,’’ which is the rate at which society discounts future consumption flows to their present value. I. Consumer Subgroup Analysis In analyzing the potential impact of new or amended standards on consumers, DOE evaluates the impact on identifiable subgroups of consumers that may be disproportionately affected by a national standard. DOE evaluates impacts on particular subgroups of consumers by analyzing the LCC impacts and PBP for those particular consumers from alternative standard levels. For this final rule, DOE analyzed the impacts of the considered standard levels on low-income households and senior-only households. Chapter 11 in the final rule TSD describes the consumer subgroup analysis. J. Manufacturer Impact Analysis 1. Overview DOE performed an MIA to estimate the financial impacts of amended energy conservation standards on manufacturers of dehumidifiers and to estimate the potential impacts of such standards on employment and manufacturing capacity. The MIA has both quantitative and qualitative aspects and includes analyses of forecasted industry cash flows, the INPV, investments in research and development (R&D) and manufacturing capital, and domestic manufacturing employment. Additionally, the MIA seeks to determine how amended energy conservation standards might affect manufacturing employment, capacity, and competition, as well as how standards contribute to overall 44 United States Office of Management and Budget, ‘‘Circular A–4: Regulatory Analysis,’’ Section E (Sept. 17, 2003) (Available at: www.whitehouse.gov/omb/memoranda/m0321.html.http://www.whitehouse.gov/omb/circulars_ a004_a-4/). PO 00000 Frm 00026 Fmt 4701 Sfmt 4700 regulatory burden. Finally, the MIA serves to identify any disproportionate impacts on manufacturer subgroups, including small business manufacturers. The quantitative part of the MIA primarily relies on the Government Regulatory Impact Model (GRIM), an industry cash flow model with inputs specific to this rulemaking. The key GRIM inputs include data on the industry cost structure, unit production costs, product shipments, manufacturer markups, and investments in R&D and manufacturing capital required to produce compliant products. The key GRIM outputs are the INPV, which is the sum of industry annual cash flows over the analysis period, discounted using the industry-weighted average cost of capital, and the impact to domestic manufacturing employment. The model uses standard accounting principles to estimate the impacts of more-stringent energy conservation standards on a given industry by comparing changes in INPV and domestic manufacturing employment between a no-new-standards case and the various TSLs. To capture the uncertainty relating to manufacturer pricing strategy following amended standards, the GRIM estimates a range of possible impacts under different markup scenarios. The qualitative part of the MIA addresses manufacturer characteristics and market trends. Specifically, the MIA considers such factors as manufacturing capacity, competition within the industry, the cumulative impact of other DOE and non-DOE regulations, and impacts on manufacturer subgroups. The complete MIA is outlined in chapter 12 of the final rule TSD. DOE conducted the MIA for this rulemaking in three phases. In Phase 1 of the MIA, DOE conducted detailed interviews with manufacturers and prepared a profile of the dehumidifier manufacturing industry. During manufacturer interviews, DOE discussed engineering, manufacturing, and financial topics in order to identify concerns and to inform and validate assumptions used in the GRIM. See appendix 5A and 5B of the final rule TSD for a copy of the interview guides. See section IV.J.4 for a description of the key issues raised by manufacturers during the interviews. Based on these manufacturer interviews, the market and technology assessment, and publicly available information, DOE derived financial inputs for the GRIM (e.g., revenues; materials, labor, overhead, and depreciation expenses; selling, general, and administrative expenses (SG&A); and R&D expenses). The public sources E:\FR\FM\13JNR3.SGM 13JNR3 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations mstockstill on DSK3G9T082PROD with RULES3 of information DOE used in developing its characterization of the dehumidifier manufacturing industry, include company filings of form SEC 10–K filings,45 corporate annual reports, the U.S. Census Bureau’s Economic Census,46 and Hoover’s reports.47 In Phase 2 of the MIA, DOE prepared an industry cash-flow analysis to quantify the potential impacts of amended energy conservation standards. The GRIM uses several factors to determine a series of annual cash flows starting with the announcement of the standard and extending over a 30-year period following the compliance date of the standard. These factors include annual expected revenues, costs of sales, SG&A and R&D expenses, taxes, and capital expenditures (derived during Phase 1). In general, energy conservation standards can affect manufacturer cash flow in three distinct ways: (1) Create a need for increased investment; (2) raise production costs per unit; and (3) alter revenue due to higher per-unit prices and changes in sales volumes. In Phase 3 of the MIA, DOE evaluated subgroups of manufacturers that may be disproportionately impacted by amended standards or that may not be accurately represented by the average cost assumptions used to develop the industry cash flow analysis. Such manufacturer subgroups always include small business manufacturers, but may also include low-volume manufacturers (LVMs), niche players, and/or manufacturers exhibiting a cost structure that largely differs from the industry average. DOE identified one dehumidifier manufacturer subgroup for which average cost assumptions may not hold: Small businesses. To identify small businesses for this analysis, DOE applied the size standards published by the Small Business Administration (SBA) to determine whether a company is considered a small business. See 13 CFR part 121. To be categorized as a small business manufacturer of dehumidifiers under North American Industry Classification System (NAICS) codes 333415 (‘‘AirConditioning and Warm Air Heating Equipment and Commercial and Industrial Refrigeration Equipment Manufacturing’’) or 335210 (‘‘Small 45 U.S. Securities and Exchange Commission, Annual 10–K Reports (Various Years) (Available at: http://www.sec.gov/edgar/searchedgar/ companysearch.html). 46 U.S. Census Bureau, Annual Survey of Manufacturers: General Statistics: Statistics for Industry Groups and Industries (2011) (Available at: http://factfinder2.census.gov/faces/nav/jsf/pages/ searchresults.xhtml?refresh=t). 47 Hoovers Inc. Company Profiles. Various Companies. www.hoovers.com. VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 Electrical Appliance Manufacturing’’), a dehumidifier manufacturer and its affiliates may employ a maximum of 1,250 employees or 1,500 employees, respectively. These thresholds include all employees in a business’ parent company and any other subsidiaries. Using these classifications in conjunction with a search of industry databases and the SBA member directory, DOE identified five manufacturers of dehumidifiers that qualify as small businesses, all of which are manufacturers of whole-home dehumidifiers and high-capacity portable dehumidifiers. The dehumidifier manufacturer subgroup analysis is discussed in greater detail in chapter 12 of the final rule TSD and in section V.B.2.d of this document. In Phase 3, DOE also analyzed impacts of amended energy conservation standards for dehumidifiers on manufacturing capacity, direct employment, and cumulative regulatory burdens. Section V.B.2 discusses the findings of these analyses. 2. Government Regulatory Impact Model (GRIM) DOE uses the GRIM to quantify the changes in industry cash flows resulting from amended energy conservation standards. The GRIM uses manufacturer costs, markups, shipments, and industry financial information to arrive at a series of no-new-standards-case annual cash flows absent new or amended standards, beginning with the present year, 2016, and continuing through 2048. The GRIM then models changes in costs, investments, shipments, and manufacturer margins that may result from new or amended energy conservation standards and compares these results against those in the nonew-standards-case forecast of annual cash flows. The primary quantitative output of the GRIM is the INPV, which DOE calculates by summing the stream of annual discounted cash flows over the full analysis period. For manufacturers of dehumidifiers, DOE used a real discount rate of 8.43 percent, the weighted-average cost of capital derived from industry financials and modified based on feedback received during confidential interviews with manufacturers. The GRIM calculates cash flows using standard accounting principles and compares changes in INPV between the no-new-standards case and the various TSLs. The difference in INPV between the no-new-standards case and a standards case represents the financial impact of the amended standard on PO 00000 Frm 00027 Fmt 4701 Sfmt 4700 38363 manufacturers at that particular TSL. As discussed previously, DOE collected the necessary information to develop key GRIM inputs from a number of sources, including publicly available data and interviews with manufacturers (described in section IV.J.4 of this document). The GRIM results are shown in section V.B.2.a of this document. Additional details about the GRIM can be found in chapter 12 of the final rule TSD. a. Government Regulatory Impact Model Key Inputs Manufacturer Production Costs Manufacturing a higher efficiency product is typically more expensive than manufacturing a baseline product due to the use of more complex and typically more costly components. The changes in the MPCs of the analyzed products can affect the revenues, gross margins, and cash flow of the industry, making product cost data key GRIM inputs for DOE’s analysis. For each efficiency level for each product class, DOE used the MPCs developed in the engineering analysis, as described in section IV.C.2 of this document and further detailed in chapter 5 of the final rule TSD. Additionally, DOE used information from its teardown analysis, described in section IV.C of this final rule, to disaggregate the MPCs into material and labor costs. These cost breakdowns and equipment markups were validated with manufacturers during interviews. No-New-Standards-Case Shipments Forecast The GRIM estimates manufacturer revenues based on total unit shipment forecasts and the distribution of shipments by efficiency level. Changes in sales volumes and efficiency mix over time can significantly affect manufacturer finances. For this analysis, the GRIM used the NIA’s annual shipment forecasts derived from the shipments analysis from 2016 (the base year) to 2048 (the end of the analysis period). See chapter 9 of the final rule TSD for additional details on the shipments analysis. Standards-Case Shipments Forecast For each standards case, the GRIM assumes a small, constant percentage shift in shipments to higher efficiency levels, reflecting the idea that some efficiency improvements will occur independent of amended standards. The GRIM also assumes all remaining shipments of products below the projected minimum standard levels would roll up (i.e., be added) to the standard efficiency levels in response to E:\FR\FM\13JNR3.SGM 13JNR3 38364 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations investment figures used in the GRIM can be found in section V.B.2 of this document. For additional information on the estimated product conversion and capital conversion costs, see chapter 12 of the final rule TSD. Product and Capital Conversion Costs Amended energy conservation standards may cause manufacturers to incur conversion costs to bring their production facilities and product designs into compliance with the new standards. For the purpose of the MIA, DOE classified these conversion costs into two major groups: (1) Product conversion costs and (2) capital conversion costs. Product conversion costs are investments in research, development, testing, and marketing, focused on making product designs comply with the new energy conservation standard. Capital conversion expenditures are investments in property, plant, and equipment to adapt or change existing production facilities so that new product designs can be fabricated and assembled. mstockstill on DSK3G9T082PROD with RULES3 an increase in energy conservation standards. The GRIM also assumes that demand for higher-efficiency products (that are above the minimally compliant level) is a function of price, and is independent of the standard level. b. Government Regulatory Impact Model Scenarios Stranded Assets If new or amended energy conservation standards require investment in new manufacturing capital, there also exists the possibility that they will render existing manufacturing capital obsolete. If the obsolete manufacturing capital is not fully depreciated at the time new or amended standards go into effect, these assets would be stranded and the manufacturer would have to write-down the residual value that had not yet been depreciated. DOE used multiple sources of data to evaluate the level of product and capital conversion costs and stranded assets manufacturers would likely face to comply with amended dehumidifier energy conservation standards. DOE used manufacturer interviews to gather data on the level of investment anticipated at each proposed efficiency level and validated these assumptions using estimates of capital requirements derived from the product teardown analysis and engineering model described in section IV.C of this final rule. These estimates were then aggregated and scaled to derive total industry estimates of product and capital conversion costs and to protect confidential information. In general, DOE assumes that all conversion-related investments occur between the year the final rule is published and the year by which manufacturers must comply with the new or amended standards. The VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 No-New-Standards-Case Markup As discussed in section IV.D of this final rule, MSPs include direct manufacturing production costs (i.e., labor, material, overhead, and depreciation estimated in DOE’s MPCs) and all non-production costs (i.e., SG&A, R&D, and interest), along with profit. To calculate the MSPs in the GRIM, DOE applied manufacturer markups to the MPCs estimated in the engineering analysis. Based on publicly available financial information for manufacturers of dehumidifiers and comments from manufacturer interviews, DOE assumed the industry average no-new-standards-case markup on production costs to be 1.45. This markup takes into account the twotiered sourcing structure of the majority of the portable dehumidifier segment, detailed below, in addition to the traditional one-tiered structure of the domestically-produced whole-home (and similarly constructed high-capacity portable) dehumidifier segment. Lower-capacity portable dehumidifiers (product classes 1 and 2) and some high-capacity dehumidifiers (product class 3) are manufactured under contract by an overseas original equipment manufacturer (OEM). The engineering analysis, as detailed in chapter 5 of the final rule TSD, estimates the cost of manufacturing at the OEM. This production cost is marked up once by the OEM to the company contracting its manufacturer and again by the contracting company who imports the product and sells it to retailers. For imported portable dehumidifiers, the industry average baseline markup breaks down as follows: impacts on manufacturers. For the MIA, DOE modeled two standards-case markup scenarios to represent the uncertainty regarding the potential impacts on prices and profitability for manufacturers following the implementation of amended energy conservation standards: (1) A preservation of gross margin 48 (percentage) scenario; and (2) a preservation of per-unit operating profits scenario. These scenarios lead to different markups values that, when applied to the MPCs, result in varying revenue and cash flow impacts. The preservation of gross margin as a percentage of revenues markup scenario assumes that the baseline markup of 1.45 is maintained for all products in the standards case. Typically, this scenario represents the upper bound of industry profitability as manufacturers are able to fully pass through additional costs due to standards to their customers under this scenario. The preservation of per-unit operating profits markup scenario is similar to the preservation of gross margin as a percentage of revenues markup scenario with the exception that in the standards case, minimally compliant products lose a fraction of the baseline markup. Typically, this scenario represents the lower bound profitability and a more substantial impact on the industry as manufacturers accept a lower margin in an attempt to offer price competitive entry level products while maintaining the same level of absolute operating profits, on a per-unit basis, that they saw prior to amended standards. Under this scenario, gross margin as a percentage decreases in the standards case. 3. Discussion of Comments Manufacturers and trade organizations provided several comments on the potential impact of amended energy conservation standards on manufacturers. These comments are outlined below. DOE considered these comments when updating the analysis for this final rule. AHAM cautioned that DOE not TABLE IV.20—INDUSTRY-AVERAGE overlook the considerable capital and BASELINE MARKUPS product conversion expenditures that manufacturers must face in redesigning OEM to Contracting Company significant component systems to meet Markup ........................................ 1.20 TSL 3 with the new test procedure, Contracting Company to First Cusappendix X1. AHAM commented that tomer Markup .............................. 1.21 DOE should revise its analysis based on Overall OEM to First Customer Markup ........................................ 1.45 Markup Scenarios Modifying the aforementioned nonew-standards-case markups in the standards case yields different sets of PO 00000 Frm 00028 Fmt 4701 Sfmt 4700 48 ‘‘Gross margin’’ is defined as revenues minus cost of goods sold. On a unit basis, gross margin is selling price minus manufacturer production cost. In the GRIMs, markups determine the gross margin because various markups are applied to the manufacturer production costs to reach manufacturer selling price. E:\FR\FM\13JNR3.SGM 13JNR3 mstockstill on DSK3G9T082PROD with RULES3 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations additional data from AHAM and manufacturer interviews, which may show that TSL 3 is no longer justified. (AHAM, No. 39 at p. 6) Additionally, AHAM commented that DOE should consider marketing costs necessary to explain to the public the change in capacities of units. (AHAM, No. 39 at p. 3) DOE recognizes that the revised test procedure resulted in changes in capacity and efficiency. 80 FR 45802 (July 31, 2015). To ensure that the conversion cost estimates provided by manufacturers were reflective of the conversion costs dehumidifier manufacturers will face as a result of amended energy conservation standards, DOE conducted another round of manufacturer interviews following the June 2015 NOPR publication. DOE solicited information on all conversion costs during these interviews and was particularly interested in understanding the product conversion costs necessary for marketing, training, consumer education, and labeling that would help buyers of these products understand the new ranges of capacity and efficiency. (See the final rule TSD appendix 12A for the list of topics included in postNOPR manufacturer interviews.) Based on feedback from these interviews, DOE has revised its conversion cost estimates, where applicable, for this final rule. See section V.B.2 of this final rule and chapter 12 of the final rule TSD for details on the revised industry conversion costs. Aprilaire and Therma-Stor provided comments describing the potential impacts on the high-capacity portable dehumidifier and whole-home dehumidifier market segments. Aprilaire commented that it does not support DOE regulating the whole-home dehumidifier industry at this time, as it believes the small American-based businesses would face high, disproportionate impacts. (Aprilaire, No. 34 at p. 1) Additionally, Aprilaire commented that any decrease in market size and jobs for whole-home dehumidifiers would have a disproportionate effect on employment in the United States, and the job market specifically in Wisconsin. (Aprilaire, No. 34 at p. 5) Therma-Stor, also a small manufacturer located in Wisconsin, commented that if the June 2015 NOPR proposal goes into effect unchanged, it could put them and other domestic manufacturers out of business. ThermaStor stated that it expects to reduce its employment headcount by one-half under the June 2015 NOPR proposal, which it stated was biased against manufacturers of high-capacity portable VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 dehumidifiers and whole-home dehumidifiers. (Therma-Stor, No. 38 at p. 3) DOE acknowledges that amended energy conservation standards for dehumidifiers could disproportionately impact small domestic manufacturers. As mentioned above, as a result of these and other comments submitted in response to the June 2015 NOPR, DOE solicited additional information from small and large dehumidifier manufacturers on the expected financial burdens related to compliance with the standard levels considered in the NOPR. Based on new feedback, for this final rule, DOE has updated the MIA, including its analysis of small business impacts and discussions of potential impacts on domestic production employment and manufacturing capacity. DOE based its selection of efficiency levels in this final rule on its updated analysis. See section V.B.2 of this final rule for DOE’s updated analysis of INPV impacts, and direct employment and manufacturing capacity impacts. See section VII.B of this final rule for a discussion of disproportionate impacts on small domestic dehumidifier manufacturers. Regarding the baseline and incremental efficiency levels analyzed in the June 2015 NOPR, Therma-Stor commented that DOE’s determination that low-capacity portable dehumidifiers cannot be designed with efficiency enhancements to establish a minimum efficiency level two to three times less than high capacity portable dehumidifiers and whole-home dehumidifiers leads to an unfair and anti-competitive bias in favor of the manufacturers and importers of lowcapacity portable dehumidifiers. (Therma-Stor, No. 38 at p. 2) Aprilaire commented that the whole-home dehumidifier industry has been analyzed at only two efficiency levels and asked why DOE did not analyze other efficiency levels, which may have less of an impact on the small businesses and the whole-home dehumidifier industry. (Aprilaire, Public Meeting Transcript, No. 35 at p. 83) As described in section IV.C.1 of this final rule, DOE analyzed a representative sample of products in each product class to determine an appropriate baseline efficiency level and subsequent improved efficiency levels. For high-capacity portable dehumidifiers (50.01 pints/day or greater), DOE has updated the analysis and included an additional efficiency level for this product class to reflect products currently available on the market. Based on product testing and PO 00000 Frm 00029 Fmt 4701 Sfmt 4700 38365 teardowns, DOE included only one gap fill efficiency level for whole-home dehumidifiers with a case volume less than 8.0 cubic feet and two gap fill efficiency levels for whole-home dehumidifiers with case volumes greater than 8.0 cubic feet. Based on the new feedback from interested parties, DOE has updated the MIA in this final rule, including its analysis of small, domestic business impacts, and its analysis of potential impacts on domestic production employment and manufacturing capacity. This updated analysis has directly impacted the selection of standard efficiency levels in this final rule. See section V.B.2 of this final rule for DOE’s updated analysis of INPV impacts, and direct employment and manufacturing capacity impacts. 4. Manufacturer Interviews As a result of public comments received from interested parties following the publication of the June 2015 NOPR and DOE’s amended test procedure,49 DOE conducted additional confidential interviews with manufacturers. During interviews, DOE asked manufacturers to describe their recommendations relating to updates to the June 2015 NOPR analyses, particularly those that would be affected by the new dehumidifier test procedure. Specifically, DOE solicited feedback on product classes, efficiency levels, and industry conversion costs. Technical data obtained during these interviews informed updates to the engineering analysis for this final rule, where applicable. See sections IV.A.1 and IV.C.1 of this document for information about the changes to product classes and efficiency levels for this final rule. The following sections describe the issues identified by manufacturers relating to DOE’s June 2015 NOPR analyses. These concerns are also presented in chapter 12 of the final rule TSD. Unavailability of Products Most manufacturers interviewed expressed concern that the proposed dehumidifier standards were too aggressive and could result in the unavailability of products of certain capacities. In particular, manufacturers stated that the efficiency levels proposed in the June 2015 NOPR for high-capacity portable dehumidifiers and whole-home dehumidifiers are too stringent relative to those for lowercapacity dehumidifiers. Manufacturers stated that this would reduce the 49 Section IV.C.1.a describes the updated engineering analysis based on the test procedure in appendix X1. E:\FR\FM\13JNR3.SGM 13JNR3 38366 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations competitiveness of high-capacity portable dehumidifiers and whole-home dehumidifiers, making them uneconomical to produce. Relatedly, other manufacturers noted that they would not enter the high-capacity portable dehumidifier market in the future because the high standard efficiency levels for these products would make it difficult to meet their price targets. Public comments relating to the impact of this rulemaking on the availability of certain product types are discussed in sections IV.J.3 and V.C of this final rule. mstockstill on DSK3G9T082PROD with RULES3 Impacts on Small Business Similarly, manufacturers expressed concerns that small business manufacturers currently producing high-capacity portable dehumidifiers and whole-home dehumidifiers may have to exit the market if the standards proposed in the June 2015 NOPR become final. This would negatively impact domestic manufacturing employment and capacity in the dehumidifier market. In addition to the prohibitive capital costs associated with compliance with the standard levels proposed in the June 2015 NOPR, small manufacturers of whole-home dehumidifiers cited the reeducation of distributors as a source of substantial financial burden resulting from the new test procedure and amended standards for whole-home products. Public comments relating to small business impacts are addressed in section IV.J.3 of this final rule. Consumer Confusion Finally, manufacturers expressed concerns regarding the potential confusion faced by consumers as a result of new product capacity ratings under the appendix X1 test procedure. Manufacturers believe this confusion will be particularly detrimental in the short-term, when consumers will have a selection of both newly rated products and the existing inventory of products rated using the appendix X test procedure. One manufacturer commented that it would like DOE to develop a standardized label for dehumidifiers to help educate consumers on the new ratings. Public comments relating to consumer confusion and labeling are discussed in section IV.J.3 of this final rule. Additionally, as stated in section II.A of this final rule, the FTC is primarily responsible for the labeling of consumer products. K. Emissions Analysis The emissions analysis consists of two components. The first component VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 estimates the effect of potential energy conservation standards on power sector and site (where applicable) combustion emissions of CO2, NOX, SO2, and Hg. The second component estimates the impacts of potential standards on emissions of two additional greenhouse gases, CH4 and N2O, as well as the reductions to emissions of all species due to ‘‘upstream’’ activities in the fuel production chain. These upstream activities comprise extraction, processing, and transporting fuels to the site of combustion. The associated emissions are referred to as upstream emissions. The analysis of power sector emissions uses marginal emissions factors that were derived from data in AEO 2015, as described in section IV.M. The methodology is described in chapter 13 and 15 of the final rule TSD. Combustion emissions of CH4 and N2O are estimated using emissions intensity factors published by the EPA, GHG Emissions Factors Hub.50 The FFC upstream emissions are estimated based on the methodology described in chapter 15 of the final rule TSD. The upstream emissions include both emissions from fuel combustion during extraction, processing, and transportation of fuel, and ‘‘fugitive’’ emissions (direct leakage to the atmosphere) of CH4 and CO2. The emissions intensity factors are expressed in terms of physical units per MWh or MMBtu of site energy savings. Total emissions reductions are estimated using the energy savings calculated in the national impact analysis. For CH4 and N2O, DOE calculated emissions reduction in tons and also in terms of units of carbon dioxide equivalent (CO2eq). Gases are converted to CO2eq by multiplying each ton of gas by the gas’ global warming potential (GWP) over a 100-year time horizon. Based on the Fifth Assessment Report of the Intergovernmental Panel on Climate Change,51 DOE used GWP values of 28 for CH4 and 265 for N2O. The AEO incorporates the projected impacts of existing air quality regulations on emissions. AEO 2015 generally represents current legislation and environmental regulations, 50 Available at: http://www2.epa.gov/ climateleadership/center-corporate-climateleadership-ghg-emission-factors-hub. 51 IPCC, 2013: Climate Change 2013: The Physical Science Basis. Contribution of Working Group I to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change [Stocker, T.F., D. Qin, G.-K. Plattner, M. Tignor, S.K. Allen, J. Boschung, A. Nauels, Y. Xia, V. Bex and P.M. Midgley (eds.)]. Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA. Chapter 8. PO 00000 Frm 00030 Fmt 4701 Sfmt 4700 including recent government actions, for which implementing regulations were available as of October 31, 2014. DOE’s estimation of impacts accounts for the presence of the emissions control programs discussed in the following paragraphs. SO2 emissions from affected electric generating units (EGUs) are subject to nationwide and regional emissions capand-trade programs. Title IV of the Clean Air Act sets an annual emissions cap on SO2 for affected EGUs in the 48 contiguous States and the District of Columbia (DC). (42 U.S.C. 7651 et seq.) SO2 emissions from 28 eastern States and DC were also limited under the Clean Air Interstate Rule (CAIR). 70 FR 25162 (May 12, 2005). CAIR created an allowance-based trading program that operates along with the Title IV program. In 2008, CAIR was remanded to EPA by the U.S. Court of Appeals for the District of Columbia Circuit, but it remained in effect.52 In 2011, EPA issued a replacement for CAIR, the Cross-State Air Pollution Rule (CSAPR). 76 FR 48208 (August 8, 2011). On August 21, 2012, the DC Circuit issued a decision to vacate CSAPR,53 and the court ordered EPA to continue administering CAIR. On April 29, 2014, the U.S. Supreme Court reversed the judgment of the DC Circuit and remanded the case for further proceedings consistent with the Supreme Court’s opinion.54 On October 23, 2014, the DC Circuit lifted the stay of CSAPR.55 Pursuant to this action, CSAPR went into effect (and CAIR ceased to be in effect) as of January 1, 2015. EIA was not able to incorporate CSAPR into AEO 2015, so it assumes implementation of CAIR. Although DOE’s analysis used emissions factors that assume that CAIR, not CSAPR, is the regulation in force, the difference between CAIR and CSAPR is not significant for the purpose of DOE’s analysis of emissions impacts from energy conservation standards. The attainment of emissions caps is typically flexible among EGUs and is 52 See North Carolina v. EPA, 550 F.3d 1176 (D.C. Cir. 2008); North Carolina v. EPA, 531 F.3d 896 (D.C. Cir. 2008). 53 See EME Homer City Generation, LP v. EPA, 696 F.3d 7, 38 (D.C. Cir. 2012), cert. granted, 81 U.S.L.W. 3567, 81 U.S.L.W. 3696, 81 U.S.L.W. 3702 (U.S. June 24, 2013) (No. 12–1182). 54 See EPA v. EME Homer City Generation, 134 S.Ct. 1584, 1610 (U.S. 2014). The Supreme Court held in part that EPA’s methodology for quantifying emissions that must be eliminated in certain States due to their impacts in other downwind States was based on a permissible, workable, and equitable interpretation of the Clean Air Act provision that provides statutory authority for CSAPR. 55 See Georgia v. EPA, Order (D.C. Cir. filed October 23, 2014) (No. 11–1302). E:\FR\FM\13JNR3.SGM 13JNR3 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations mstockstill on DSK3G9T082PROD with RULES3 enforced through the use of emissions allowances and tradable permits. Under existing EPA regulations, any excess SO2 emissions allowances resulting from the lower electricity demand caused by the adoption of an efficiency standard could be used to permit offsetting increases in SO2 emissions by any regulated EGU. In past rulemakings, DOE recognized that there was uncertainty about the effects of efficiency standards on SO2 emissions covered by the existing cap-and-trade system, but it concluded that negligible reductions in power sector SO2 emissions would occur as a result of standards. Beginning in 2016, however, SO2 emissions will fall as a result of the Mercury and Air Toxics Standards (MATS) for power plants. 77 FR 9304 (Feb. 16, 2012). In the MATS rule, EPA established a standard for hydrogen chloride as a surrogate for acid gas hazardous air pollutants (HAP), and also established a standard for SO2 (a nonHAP acid gas) as an alternative equivalent surrogate standard for acid gas HAP. The same controls are used to reduce HAP and non-HAP acid gas; thus, SO2 emissions will be reduced as a result of the control technologies installed on coal-fired power plants to comply with the MATS requirements for acid gas. AEO 2015 assumes that, in order to continue operating, coal plants must have either flue gas desulfurization or dry sorbent injection systems installed by 2016. Both technologies, which are used to reduce acid gas emissions, also reduce SO2 emissions. Under the MATS, emissions will be far below the cap established by CAIR, so it is unlikely that excess SO2 emissions allowances resulting from the lower electricity demand would be needed or used to permit offsetting increases in SO2 emissions by any regulated EGU.56 Therefore, DOE believes that energy conservation standards will generally reduce SO2 emissions in 2016 and beyond. CAIR established a cap on NOX emissions in 28 eastern States and the 56 DOE notes that the Supreme Court remanded EPA’s 2012 rule regarding national emission standards for hazardous air pollutants from certain electric utility steam generating units. See Michigan v. EPA (Case No. 14–46, 2015). DOE has tentatively determined that the remand of the MATS rule does not change the assumptions regarding the impact of energy efficiency standards on SO2 emissions. Further, while the remand of the MATS rule may have an impact on the overall amount of mercury emitted by power plants, it does not change the impact of the energy efficiency standards on mercury emissions. DOE will continue to monitor developments related to this case and respond to them as appropriate. VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 District of Columbia.57 Energy conservation standards are expected to have little effect on NOX emissions in those States covered by CAIR because excess NOX emissions allowances resulting from the lower electricity demand could be used to permit offsetting increases in NOX emissions from other facilities. However, standards would be expected to reduce NOX emissions in the States not affected by the caps, so DOE estimated NOX emissions reductions from the standards considered in this final rule for these States. The MATS limit mercury emissions from power plants, but they do not include emissions caps and, as such, DOE’s energy conservation standards would likely reduce Hg emissions. DOE estimated mercury emissions reduction using emissions factors based on AEO 2015, which incorporates the MATS. L. Monetizing Carbon Dioxide and Other Emissions Impacts As part of the development of this rule, DOE considered the estimated monetary benefits from the reduced emissions of CO2 and NOX that are expected to result from each of the TSLs considered. In order to make this calculation analogous to the calculation of the NPV of consumer benefit, DOE considered the reduced emissions expected to result over the lifetime of products shipped in the forecast period for each TSL. This section summarizes the basis for the monetary values used for CO2 and NOX emissions and presents the values considered in this final rule. For this final rule, DOE relied on a set of values for the social cost of carbon (SCC) that was developed by a Federal interagency process. The basis for these values is summarized in the next section, and a more detailed description of the methodologies used is provided as an appendix to chapter 14 of the final rule TSD. 1. Social Cost of Carbon The SCC is an estimate of the monetized damages associated with an incremental increase in carbon emissions in a given year. It is intended to include (but is not limited to) climate-change-related changes in net agricultural productivity, human health, property damages from increased flood risk, and the value of ecosystem services. Estimates of the SCC are 57 CSAPR also applies to NO and it supersedes X the regulation of NOX under CAIR. As stated previously, the current analysis assumes that CAIR, not CSAPR, is the regulation in force. The difference between CAIR and CSAPR with regard to DOE’s analysis of NOX emissions is slight. PO 00000 Frm 00031 Fmt 4701 Sfmt 4700 38367 provided in dollars per metric ton of CO2. A domestic SCC value is meant to reflect the value of damages in the United States resulting from a unit change in CO2 emissions, while a global SCC value is meant to reflect the value of damages worldwide. Under section 1(b)(6) of Executive Order 12866, ‘‘Regulatory Planning and Review,’’ 58 FR 51735 (Oct. 4, 1993), agencies must, to the extent permitted by law, ‘‘assess both the costs and the benefits of the intended regulation and, recognizing that some costs and benefits are difficult to quantify, propose or adopt a regulation only upon a reasoned determination that the benefits of the intended regulation justify its costs.’’ The purpose of the SCC estimates presented here is to allow agencies to incorporate the monetized social benefits of reducing CO2 emissions into cost-benefit analyses of regulatory actions. The estimates are presented with an acknowledgement of the many uncertainties involved and with a clear understanding that they should be updated over time to reflect increasing knowledge of the science and economics of climate impacts. As part of the interagency process that developed these SCC estimates, technical experts from numerous agencies met on a regular basis to consider public comments, explore the technical literature in relevant fields, and discuss key model inputs and assumptions. The main objective of this process was to develop a range of SCC values using a defensible set of input assumptions grounded in the existing scientific and economic literatures. In this way, key uncertainties and model differences transparently and consistently inform the range of SCC estimates used in the rulemaking process. a. Monetizing Carbon Dioxide Emissions When attempting to assess the incremental economic impacts of CO2 emissions, the analyst faces a number of challenges. A report from the National Research Council 58 points out that any assessment will suffer from uncertainty, speculation, and lack of information about: (1) Future emissions of GHGs; (2) the effects of past and future emissions on the climate system; (3) the impact of changes in climate on the physical and biological environment; and (4) the translation of these environmental impacts into economic damages. As a result, any effort to quantify and 58 National Research Council, Hidden Costs of Energy: Unpriced Consequences of Energy Production and Use, National Academies Press: Washington, DC (2009). E:\FR\FM\13JNR3.SGM 13JNR3 38368 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations monetize the harms associated with climate change will raise questions of science, economics, and ethics and should be viewed as provisional. Despite the limits of both quantification and monetization, SCC estimates can be useful in estimating the social benefits of reducing CO2 emissions. The agency can estimate the benefits from reduced (or costs from increased) emissions in any future year by multiplying the change in emissions in that year by the SCC values appropriate for that year. The NPV of the benefits can then be calculated by multiplying each of these future benefits by an appropriate discount factor and summing across all affected years. It is important to emphasize that the interagency process is committed to updating these estimates as the science and economic understanding of climate change and its impacts on society improves over time. In the meantime, the interagency group will continue to explore the issues raised by this analysis and consider public comments as part of the ongoing interagency process. b. Development of Social Cost of Carbon Values In 2009, an interagency process was initiated to offer a preliminary assessment of how best to quantify the benefits from reducing carbon dioxide emissions. To ensure consistency in how benefits are evaluated across Federal agencies, the Administration sought to develop a transparent and defensible method, specifically designed for the rulemaking process, to quantify avoided climate change damages from reduced CO2 emissions. The interagency group did not undertake any original analysis. Instead, it combined SCC estimates from the existing literature to use as interim values until a more comprehensive analysis could be conducted. The outcome of the preliminary assessment by the interagency group was a set of five interim values: Global SCC estimates for 2007 (in 2006$) of $55, $33, $19, $10, and $5 per metric ton of CO2. These interim values represented the first sustained interagency effort within the U.S. government to develop an SCC for use in regulatory analysis. The results of this preliminary effort were presented in several proposed and final rules. c. Current Approach and Key Assumptions After the release of the interim values, the interagency group reconvened on a regular basis to generate improved SCC estimates. Specially, the group considered public comments and further explored the technical literature in relevant fields. The interagency group relied on three integrated assessment models commonly used to estimate the SCC: The FUND, DICE, and PAGE models. These models are frequently cited in the peer-reviewed literature and were used in the last assessment of the Intergovernmental Panel on Climate Change (IPCC). Each model was given equal weight in the SCC values that were developed. Each model takes a slightly different approach to model how changes in emissions result in changes in economic damages. A key objective of the interagency process was to enable a consistent exploration of the three models, while respecting the different approaches to quantifying damages taken by the key modelers in the field. An extensive review of the literature was conducted to select three sets of input parameters for these models: Climate sensitivity, socio-economic and emissions trajectories, and discount rates. A probability distribution for climate sensitivity was specified as an input into all three models. In addition, the interagency group used a range of scenarios for the socio-economic parameters and a range of values for the discount rate. All other model features were left unchanged, relying on the model developers’ best estimates and judgments. In 2010, the interagency group selected four sets of SCC values for use in regulatory analyses. Three sets of values are based on the average SCC from the three integrated assessment models, at discount rates of 2.5, 3, and 5 percent. The fourth set, which represents the 95th percentile SCC estimate across all three models at a 3percent discount rate, was included to represent higher-than-expected impacts from climate change further out in the tails of the SCC distribution. The values grow in real terms over time. Additionally, the interagency group determined that a range of values from 7 percent to 23 percent should be used to adjust the global SCC to calculate domestic effects,59 although preference is given to consideration of the global benefits of reducing CO2 emissions. Table IV.21 presents the values in the 2010 interagency group report,60 which is reproduced in appendix 14A of the final rule TSD. TABLE IV.21—ANNUAL SCC VALUES FROM 2010 INTERAGENCY REPORT, 2010–2050 [2007$ per metric ton CO2] Discount rate Year mstockstill on DSK3G9T082PROD with RULES3 3% 2.5% 3% Average 2010 2015 2020 2025 2030 2035 2040 2045 2050 5% Average Average 95th percentile ................................................................................................................. ................................................................................................................. ................................................................................................................. ................................................................................................................. ................................................................................................................. ................................................................................................................. ................................................................................................................. ................................................................................................................. ................................................................................................................. 59 It is recognized that this calculation for domestic values is approximate, provisional, and highly speculative. There is no a priori reason why domestic benefits should be a constant fraction of net global damages over time. VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 4.7 5.7 6.8 8.2 9.7 11.2 12.7 14.2 15.7 60 Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866. Interagency Working Group on Social Cost of Carbon, United States Government (February 2010) (Available at: www.whitehouse.gov/sites/default/files/omb/ PO 00000 Frm 00032 Fmt 4701 Sfmt 4700 21.4 23.8 26.3 29.6 32.8 36.0 39.2 42.1 44.9 35.1 38.4 41.7 45.9 50.0 54.2 58.4 61.7 65.0 64.9 72.8 80.7 90.4 100.0 109.7 119.3 127.8 136.2 inforeg/for-agencies/Social-Cost-of-Carbon-forRIA.pdf). E:\FR\FM\13JNR3.SGM 13JNR3 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations The SCC values used for this document were generated using the most recent versions of the three integrated assessment models that have been published in the peer-reviewed literature, as described in the 2013 update from the interagency working group (revised July 2015).61 Table IV.22 shows the updated sets of SCC estimates from the latest interagency update in 5year increments from 2010 to 2050. The full set of annual SCC estimates between 2010 and 2050 is reported in appendix 14B of the final rule TSD. The central 38369 value that emerges is the average SCC across models at the 3-percent discount rate. However, for purposes of capturing the uncertainties involved in regulatory impact analysis, the interagency group emphasizes the importance of including all four sets of SCC values. TABLE IV.22—ANNUAL SCC VALUES FROM 2013 INTERAGENCY UPDATE (REVISED JULY 2015), 2010–2050 [2007$ per metric ton CO2] Discount Rate Year 3% 2.5% 3% Average 2010 2015 2020 2025 2030 2035 2040 2045 2050 5% Average Average 95th percentile ................................................................................................................. ................................................................................................................. ................................................................................................................. ................................................................................................................. ................................................................................................................. ................................................................................................................. ................................................................................................................. ................................................................................................................. ................................................................................................................. 10 11 12 14 16 18 21 23 26 31 36 42 46 50 55 60 64 69 50 56 62 68 73 78 84 89 95 86 105 123 138 152 168 183 197 212 mstockstill on DSK3G9T082PROD with RULES3 It is important to recognize that a number of key uncertainties remain, and that current SCC estimates should be treated as provisional and revisable because they will evolve with improved scientific and economic understanding. The interagency group also recognizes that the existing models are imperfect and incomplete. The National Research Council report mentioned previously points out that there is tension between the goal of producing quantified estimates of the economic damages from an incremental ton of carbon and the limits of existing efforts to model these effects. There are a number of analytical challenges that are being addressed by the research community, including research programs housed in many of the Federal agencies participating in the interagency process to estimate the SCC. The interagency group intends to periodically review and reconsider those estimates to reflect increasing knowledge of the science and economics of climate impacts, as well as improvements in modeling.62 In summary, in considering the potential global benefits resulting from reduced CO2 emissions, DOE used the 2. Social Cost of Other Air Pollutants As noted previously, DOE has estimated how the considered energy conservation standards would decrease power sector NOX emissions in those 22 States not affected by the CAIR. DOE estimated the monetized value of NOX emissions reductions using benefit per ton estimates from the Regulatory Impact Analysis for the Clean Power Plan Final Rule, published in August 2015 by EPA’s Office of Air Quality Planning and Standards.63 The report includes high and low values for NOX (as PM2.5) for 2020, 2025, and 2030 discounted at 3 percent and 7 percent; 64 these values are presented in chapter 14 of the final rule TSD. DOE assigned values for 2021–2024 and 2026–2029 using, respectively, the values for 2020 and 2025. DOE assigned values after 2030 using the value for 2030. DOE developed values specific to the end-use category for dehumidifiers using a method described in appendix 14C. DOE multiplied the emissions reduction (tons) in each year by the associated $/ton values, and then discounted each series using discount rates of 3-percent and 7-percent as appropriate. DOE will continue to evaluate the monetization of avoided NOX emissions and will make any appropriate updates in energy conservation standards rulemakings. DOE is evaluating appropriate monetization of avoided SO2 and Hg emissions in energy conservation standards rulemakings. DOE has not 61 Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866, Interagency Working Group on Social Cost of Carbon, United States Government (May 2013; revised July 2015) (Available at: http:// www.whitehouse.gov/sites/default/files/omb/ inforeg/scc-tsd-final-july-2015.pdf). 62 In November 2013, OMB announced a new opportunity for public comment on the interagency technical support document underlying the revised SCC estimates. 78 FR 70586. In July 2015 OMB published a detailed summary and formal response to the many comments that were received. https:// www.whitehouse.gov/blog/2015/07/02/estimatingbenefits-carbon-dioxide-emissions-reductions. It also stated its intention to seek independent expert advice on opportunities to improve the estimates, including many of the approaches suggested by commenters. 63 Available at: http://www.epa.gov/ cleanpowerplan/clean-power-plan-final-ruleregulatory-impact-analysis. See Tables 4A–3, 4A–4, and 4A–5 in the report. 64 For the monetized NO benefits associated X with PM2.5, the related benefits (derived from benefit-per-ton values) are primarily based on an estimate of premature mortality derived from the ACS study (Krewski et al., 2009), which is the lower of the two EPA central tendencies. Using the lower value is more conservative when making the policy decision concerning whether a particular standard level is economically justified. If the benefit-per-ton estimates were based on the Six Cities study (Lepuele et al., 2012), the values would be nearly two-and-a-half times larger. (See chapter 14 of the final rule TSD for further description of the studies mentioned in this preamble.) VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 values from the 2013 interagency report (revised July 2015), adjusted to 2014$ using the implicit price deflator for gross domestic product (GDP) from the Bureau of Economic Analysis. For each of the four sets of SCC cases specified, the values for emissions in 2015 were $12.2, $40.0, $62.3, and $117 per metric ton avoided (values expressed in 2014$). DOE derived values after 2050 based on the trend in 2010–2050 in each of the four cases. DOE multiplied the CO2 emissions reduction estimated for each year by the SCC value for that year in each of the four cases. To calculate a present value of the stream of monetary values, DOE discounted the values in each of the four cases using the specific discount rate that had been used to obtain the SCC values in each case. PO 00000 Frm 00033 Fmt 4701 Sfmt 4700 E:\FR\FM\13JNR3.SGM 13JNR3 mstockstill on DSK3G9T082PROD with RULES3 38370 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations included monetization of those emissions in the current analysis. AHAM commented that monetization of avoided CO2 emissions should include a more comprehensive analysis to understand the total environmental impact. It stated that any CO2 analysis should include CO2 emissions that are caused indirectly, as well as directly, from a standards change, such as increased carbon emissions required to manufacture a given standard level, the increased transportation and related emissions required for a given standard level, and reduced carbon emissions from peak load reductions. (AHAM, No. 39 at p. 7) In response, DOE notes that EPCA directs DOE to consider the total projected amount of energy, or as applicable, water, savings likely to result directly from the imposition of the standard when determining whether a standard is economically justified. (42 U.S.C. 6295(o)(2)(B)(i)(III)) DOE interprets this to include energy used in the generation, transmission, and distribution of fuels used by appliances or equipment. In addition, DOE is using the FFC measure, which includes the energy consumed in extracting, processing, and transporting primary fuels. DOE’s current accounting of primary energy savings and the FFC measure are directly linked to the energy used by appliances or equipment. DOE believes that energy used in manufacturing or transporting appliances or equipment falls outside the boundaries of ‘‘directly’’ as intended by EPCA. Thus, DOE did not consider such energy use and air emissions in the NIA or in the emissions analysis. DOE’s analysis does account for impacts on CO2 emissions from electricity load reduction. The U.S. Chamber of Commerce objected to the continued use of the SCC in the cost-benefit analysis performed. AHAM stated that DOE should wait for comments on the 2013 interagency report to be resolved before it relies on the 2013 estimates, and, until that time DOE should rely on the 2010 estimates as it has done in rulemakings prior to May 2013. (U.S. Chamber of Commerce, No. 37 at p. 4; AHAM, No. 39 at p. 7) The 2013 report provides an update of the SCC estimates based solely on the latest peer-reviewed version of the models, replacing model versions that were developed up to ten years ago in a rapidly evolving field. It does not revisit other assumptions with regard to the discount rate, reference case socioeconomic and emission scenarios, or equilibrium climate sensitivity. Improvements in the way damages are modeled are confined to those that have VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 been incorporated into the latest versions of the models by the developers themselves in the peerreviewed literature. Given the above, using the 2010 estimates would be inconsistent with DOE’s objective of using the best available information in its analyses. As noted previously, OMB published a detailed summary and formal response to the many comments that were received on the 2013 interagency report. M. Utility Impact Analysis The utility impact analysis estimates several effects on the electric power generation industry that would result from the adoption of new or amended energy conservation standards. The utility impact analysis estimates the changes in installed electrical capacity and generation that would result for each TSL. The analysis is based on published output from the NEMS associated with AEO 2015. NEMS produces the AEO Reference case, as well as a number of side cases that estimate the economy-wide impacts of changes to energy supply and demand. DOE uses published side cases to estimate the marginal impacts of reduced energy demand on the utility sector. These marginal factors are estimated based on the changes to electricity sector generation, installed capacity, fuel consumption and emissions in the AEO Reference case and various side cases. Details of the methodology are provided in the appendices to chapters 13 and 15 of the final rule TSD. The output of this analysis is a set of time-dependent coefficients that capture the change in electricity generation, primary fuel consumption, installed capacity and power sector emissions due to a unit reduction in demand for a given end use. These coefficients are multiplied by the stream of electricity savings calculated in the NIA to provide estimates of selected utility impacts of new or amended energy conservation standards. N. Employment Impact Analysis DOE considers employment impacts in the domestic economy as one factor in selecting a standard. Employment impacts from new or amended energy conservation standards include both direct and indirect impacts. Direct employment impacts are any changes in the number of employees of manufacturers of the products subject to standards, their suppliers, and related service firms. The MIA addresses those impacts. Indirect employment impacts are changes in national employment that occur due to the shift in PO 00000 Frm 00034 Fmt 4701 Sfmt 4700 expenditures and capital investment caused by the purchase and operation of more-efficient appliances. Indirect employment impacts from standards consist of the net jobs created or eliminated in the national economy, other than in the manufacturing sector being regulated, caused by: (1) Reduced spending by end users on energy; (2) reduced spending on new energy supply by the utility industry; (3) increased consumer spending on new products to which the new standards apply; and (4) the effects of those three factors throughout the economy. One method for assessing the possible effects on the demand for labor of such shifts in economic activity is to compare sector employment statistics developed by the Labor Department’s Bureau of Labor Statistics (BLS).65 BLS regularly publishes its estimates of the number of jobs per million dollars of economic activity in different sectors of the economy, as well as the jobs created elsewhere in the economy by this same economic activity. Data from BLS indicate that expenditures in the utility sector generally create fewer jobs (both directly and indirectly) than expenditures in other sectors of the economy.66 There are many reasons for these differences, including wage differences and the fact that the utility sector is more capital-intensive and less labor-intensive than other sectors. Energy conservation standards have the effect of reducing consumer utility bills. Because reduced consumer expenditures for energy likely lead to increased expenditures in other sectors of the economy, the general effect of efficiency standards is to shift economic activity from a less labor-intensive sector (i.e., the utility sector) to more labor-intensive sectors (e.g., the retail and service sectors). Thus, the BLS data suggest that net national employment may increase due to shifts in economic activity resulting from energy conservation standards. DOE estimated indirect national employment impacts for the standard levels considered in this final rule using an input/output model of the U.S. economy called Impact of Sector Energy Technologies version 3.1.1 (ImSET).67 65 Data on industry employment, hours, labor compensation, value of production, and the implicit price deflator for output for these industries are available upon request by calling the Division of Industry Productivity Studies (202–691–5618) or by sending a request by email to dipsweb@bls.gov. 66 See Bureau of Economic Analysis, Regional Multipliers: A User Handbook for the Regional Input-Output Modeling System (RIMS II), U.S. Department of Commerce (1992). 67 J.M. Roop, M.J. Scott, and R.W. Schultz, ImSET 3.1: Impact of Sector Energy Technologies, PNNL– 18412, Pacific Northwest National Laboratory E:\FR\FM\13JNR3.SGM 13JNR3 38371 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations ImSET is a special-purpose version of the ‘‘U.S. Benchmark National InputOutput’’ (I–O) model, which was designed to estimate the national employment and income effects of energy-saving technologies. The ImSET software includes a computer-based I–O model having structural coefficients that characterize economic flows among 187 sectors most relevant to industrial, commercial, and residential building energy use. DOE notes that ImSET is not a general equilibrium forecasting model, and understands the uncertainties involved in projecting employment impacts, especially changes in the later years of the analysis. Because ImSET does not incorporate price changes, the employment effects predicted by ImSET may over-estimate actual job impacts over the long run for this rule. Therefore, DOE generated results for near-term timeframes, where these uncertainties are reduced. For more details on the employment impact analysis, see chapter 16 of the final rule TSD. V. Analytical Results and Conclusions The following section addresses the results from DOE’s analyses with respect to the considered energy conservation standards for dehumidifiers. It addresses the TSLs examined by DOE, the projected impacts of each of these levels if adopted as energy conservation standards for dehumidifiers, and the standards levels that DOE is adopting in this final rule. Additional details regarding DOE’s analyses are contained in the final rule TSD supporting this document. A. Trial Standard Levels DOE analyzed the benefits and burdens of four TSLs for dehumidifiers. These TSLs were developed by combining specific efficiency levels for each of the five product classes analyzed by DOE. DOE presents the results for the TSLs in this document, while the results for all efficiency levels that DOE analyzed are in the final rule TSD. Table V.1 presents the TSLs and the corresponding efficiency levels for dehumidifiers. TSL 4 represents the max-tech energy efficiency for all product classes. TSL 3 consists of the efficiency levels below the max-tech level for all product classes. The efficiency level for TSL 2 for product classes 1, 2, and 3 is one below the maxtech level, the same level as TSL3. The efficiency level for TSL 2 for product classes 4 and 5 is the baseline. TSL 1 consists of Efficiency Level 2 for product classes 1, 2, and 3 and the baseline for product classes 4 and 5. TABLE V.1—TRIAL STANDARD LEVELS FOR DEHUMIDIFIERS PC1 PC3 PC4 PC5 ≤25.00 pints/day TSL PC2 25.01–50.00 pints/day ≥50.01 pints/day ≤8.0 ft3 >8.0 ft3 AEU (kWh/yr) EL 1 2 3 4 ............................... ............................... ............................... ............................... 0 2 3 3 4 505 460 422 422 351 B. Economic Justification and Energy Savings 1. Economic Impacts on Individual Consumers DOE analyzed the economic impacts on dehumidifier consumers by looking at the effects potential amended standards at each TSL would have on the LCC and PBP. DOE also examined the impacts of potential standards on consumer subgroups. These analyses are discussed below. mstockstill on DSK3G9T082PROD with RULES3 a. Life-Cycle Cost and Payback Period In general, higher-efficiency products affect consumers in two ways: (1) Purchase price increases, and (2) annual operating costs decrease. Inputs used for (2009) (Available at: www.pnl.gov/main/ VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 AEU (kWh/yr) EL 0 2 3 3 4 AEU (kWh/yr) EL 808 688 603 603 534 0 2 3 3 4 867 778 665 665 509 calculating the LCC and PBP include total installed costs (i.e., product price plus installation costs), and operating costs (i.e., annual energy use, energy prices, energy price trends, repair costs, and maintenance costs). The LCC calculation also uses product lifetime and a discount rate. Chapter 8 of the final rule TSD provides detailed information on the LCC and PBP analyses. Table V.2 through Table V.3 show the LCC and PBP results for the TSL efficiency levels considered for each product class. In the first of each pair of tables, the simple payback is measured relative to the baseline product. In the second table, the impacts are measured AEU (kWh/yr) EL 0 0 0 1 2 Frm 00035 Fmt 4701 Sfmt 4700 0 0 0 2 3 967 967 967 660 519 relative to the efficiency distribution in the no-new-standards case in the compliance year (see section IV.F.8 of this document). Because some consumers purchase products with higher efficiency in the no-newstandards case, the average savings are less than the difference between the average LCC of Efficiency Level 0 (baseline) and the average LCC at each TSL. The savings refer only to consumers who are affected by a standard at a given TSL. Those who already purchase a product with efficiency at or above a given TSL are not affected. Consumers for whom the LCC increases at a given TSL experience a net cost. publications/external/technical_reports/PNNL18412.pdf.) PO 00000 809 809 809 681 565 AEU (kWh/yr) EL E:\FR\FM\13JNR3.SGM 13JNR3 38372 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations TABLE V.2—AVERAGE LCC AND PBP RESULTS BY EFFICIENCY LEVEL FOR DEHUMIDIFIER PC1 [≤25.00 pints/day] Average costs (2014$) TSL Simple payback (years) EL Installed cost 0 2 3 4 1 ................................... 2, 3 ............................... 4 ................................... First year’s operating cost Lifetime operating cost 78 71 66 56 736 674 622 525 208 210 214 238 LCC 944 884 836 763 Average lifetime (years) 11 11 11 11 0.4 0.5 1.3 Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the baseline (EL 0) product. TABLE V.3—AVERAGE LCC SAVINGS RELATIVE TO THE NO-NEW-STANDARDS CASE FOR DEHUMIDIFIER PC1 [≤25.00 pints/day] Life-cycle cost savings TSL EL Percent of consumers that experience net cost (%) Average LCC savings * (2014$) 1 ........................................................................................................................................... 2, 3 ....................................................................................................................................... 4 ........................................................................................................................................... 2 3 4 60 107 110 0 0.1 11.5 * The savings represent the average LCC for affected consumers. TABLE V.4—AVERAGE LCC AND PBP RESULTS BY EFFICIENCY LEVEL FOR DEHUMIDIFIER PC2 [25.01–50.00 pints/day] Average costs (2014$) TSL Simple PBP (years) EL Installed cost 1 ................................... 2, 3 ............................... 4 ................................... 0 2 3 4 First year’s operating cost Lifetime operating cost 124 107 95 85 1,173 1,010 895 800 252 255 264 286 LCC 1,425 1,265 1,158 1,086 Average lifetime (years) 11 11 11 11 0.2 0.4 0.9 Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the baseline product. TABLE V.5—AVERAGE LCC SAVINGS RELATIVE TO THE BASE-CASE EFFICIENCY DISTRIBUTION FOR DEHUMIDIFIER PC2 [25.01–50.00 pints/day] Life-cycle cost savings TSL EL mstockstill on DSK3G9T082PROD with RULES3 1 ........................................................................................................................................... 2,3 ........................................................................................................................................ 4 ........................................................................................................................................... Average LCC savings * (2014$) 2 3 4 * The savings represent the average LCC for affected consumers. VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 PO 00000 Frm 00036 Fmt 4701 Sfmt 4700 E:\FR\FM\13JNR3.SGM 13JNR3 157 119 191 Percent of consumers that experience net cost (%) 0 0.7 5.1 38373 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations TABLE V.6—AVERAGE LCC AND PBP RESULTS BY EFFICIENCY LEVEL FOR DEHUMIDIFIER PC3 [>50.00 pints/day] Average costs (2014$) TSL Installed cost 0 2 3 4 1 ................................... 2,3 ................................ 4 ................................... First year’s operating cost Lifetime operating cost 134 121 105 83 1,269 1,147 994 782 1,302 1,407 1,433 1,673 Average lifetime (years) Simple PBP (years) EL LCC 2,571 2,554 2,427 2,455 ........................ 8.2 4.5 7.2 11 11 11 11 Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the baseline product. TABLE V.7—AVERAGE LCC SAVINGS RELATIVE TO THE BASE-CASE EFFICIENCY DISTRIBUTION FOR DEHUMIDIFIER PC3 [>50.00 pints/day] Life-cycle cost savings TSL EL Average LCC savings * (2014$) 1 ........................................................................................................................................... 2,3 ........................................................................................................................................ 4 ........................................................................................................................................... 2 3 4 Percent of consumers that experience net cost (%) 17 142 96 44.9 28.7 54.3 * The savings represent the average LCC for affected consumers. TABLE V.8—AVERAGE LCC AND PBP RESULTS BY EFFICIENCY LEVEL FOR DEHUMIDIFIER PC4 [≤8.0 ft3] Average costs (2014$) TSL Installed cost 1,2 ................................ 3 ................................... 4 ................................... 0 1 2 First year’s operating cost Lifetime operating cost 129 110 93 1,893 1,613 1,361 1,733 1,769 1,977 Average lifetime (years) Simple PBP (years) EL LCC 3,626 3,382 3,339 ........................ 1.9 6.8 19 19 19 Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the baseline product. TABLE V.9—AVERAGE LCC SAVINGS RELATIVE TO THE BASE-CASE EFFICIENCY DISTRIBUTION FOR DEHUMIDIFIER PC4 [≤8.0 ft3] Life-cycle cost savings TSL EL Average LCC savings * (2014$) 1,2 ........................................................................................................................................ 3 ........................................................................................................................................... 4 ........................................................................................................................................... 0 1 2 Percent of consumers that experience net cost (%) 242 242 9.9 42.6 * The savings represent the average LCC for affected consumers. mstockstill on DSK3G9T082PROD with RULES3 TABLE V.10—AVERAGE LCC AND PBP RESULTS BY EFFICIENCY LEVEL FOR DEHUMIDIFIER PC5 [>8.0 ft3] Average costs (2014$) TSL Installed cost 1,2 ................................ VerDate Sep<11>2014 Simple PBP (years) EL 22:09 Jun 10, 2016 0 Jkt 238001 First year’s operating cost Lifetime operating cost 153 2,250 2,233 PO 00000 Frm 00037 Fmt 4701 Sfmt 4700 LCC E:\FR\FM\13JNR3.SGM 4,483 13JNR3 ........................ Average lifetime (years) 19 38374 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations TABLE V.10—AVERAGE LCC AND PBP RESULTS BY EFFICIENCY LEVEL FOR DEHUMIDIFIER PC5—Continued [>8.0 ft3] Average costs (2014$) TSL Installed cost 3 ................................... 4 ................................... 2 3 First year’s operating cost Lifetime operating cost 108 87 1,581 1,273 2,325 2,617 Average lifetime (years) Simple PBP (years) EL LCC 3,906 3,890 2.0 5.8 19 19 Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the baseline product. TABLE V.11—AVERAGE LCC SAVINGS RELATIVE TO THE BASE-CASE EFFICIENCY DISTRIBUTION FOR DEHUMIDIFIER PC5 [>8.0 ft3] Life-cycle cost savings TSL Average LCC savings * (2014$) Percent of consumers that experience net cost (%) ............................ 479 386 ............................ 10.8 43.4 EL 1,2 ........................................................................................................................................ 3 ........................................................................................................................................... 4 ........................................................................................................................................... 1 2 3 * The savings represent the average LCC for affected consumers. b. Consumer Subgroup Analysis As described in section IV.I of this document, DOE estimated the impact of the considered TSLs on low-income households and senior-only households. Table V.12 through Table V.16 compare the average LCC savings at each efficiency level for the two consumer subgroups, along with the average LCC savings for the entire sample. In most cases, the average LCC savings and PBP for low-income households and senior- only households at the considered efficiency levels are not substantially different from the average for all households. Chapter 11 of the final rule TSD presents the complete LCC and PBP results for the two subgroups. TABLE V.12—DEHUMIDIFIER PC1 (>25.00 PINTS/DAY): COMPARISON OF IMPACTS FOR CONSUMER SUBGROUPS AND ALL HOUSEHOLDS Average life-cycle cost savings (2014$) Simple payback period (years) TSL Low-income households 1 ............................................................... 2,3 ............................................................ 4 ............................................................... Senior-only households 55 99 101 All households 48 86 85 Low-income households 60 107 110 0.4 0.6 1.4 Senior-only households All households 0.5 0.7 1.6 0.4 0.5 1.3 TABLE V.13—DEHUMIDIFIER PC2 (25.01–50.00 PINTS/DAY): COMPARISON OF IMPACTS FOR CONSUMER SUBGROUPS AND ALL HOUSEHOLDS Average life-cycle cost savings (2014$) Simple payback period (years) TSL Low-income households mstockstill on DSK3G9T082PROD with RULES3 1 ............................................................... 2,3 ............................................................ 4 ............................................................... VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 Senior-only households 149 112 178 PO 00000 Frm 00038 All households 127 97 151 Fmt 4701 Sfmt 4700 Low-income households 157 119 191 E:\FR\FM\13JNR3.SGM 0.2 0.4 0.9 13JNR3 Senior-only households 0.2 0.5 1.1 All households 0.2 0.4 0.9 38375 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations TABLE V.14—DEHUMIDIFIER PC3 (>50.00 PINTS/DAY): COMPARISON OF IMPACTS FOR CONSUMER SUBGROUPS AND ALL HOUSEHOLDS Average life-cycle cost savings (2014$) Simple payback period (years) TSL Low-income households 1 ............................................................... 2,3 ............................................................ 4 ............................................................... Senior-only households 9 126 69 All households (6) 95 17 Low-income households 17 142 96 Senior-only households 8.6 4.7 7.5 All households 9.9 5.5 8.7 8.2 4.5 7.2 TABLE V.15—DEHUMIDIFIER PC4 (>8.0 FT3): COMPARISON OF IMPACTS FOR CONSUMER SUBGROUPS AND ALL HOUSEHOLDS Average life-cycle cost savings (2014$) Simple payback period (years) TSL Low-income households 1,2 ............................................................ 3 ............................................................... 4 ............................................................... Senior-only households All households Low-income households Senior-only households All households ........................ 135 64 ........................ 251 259 ........................ 242 242 ........................ 2.7 9.6 ........................ 1.8 6.5 ........................ 1.9 6.8 TABLE V.16—DEHUMIDIFIER PC5 (>8.0 FT3): COMPARISON OF IMPACTS FOR CONSUMER SUBGROUPS AND ALL HOUSEHOLDS Average life-cycle cost savings (2014$) Simple payback period (years) TSL Low-income households 1,2 ............................................................ 3 ............................................................... 4 ............................................................... Senior-only households All households Low-income households Senior-only households All households ........................ 261 105 ........................ 496 409 ........................ 479 386 ........................ 2.9 8.3 ........................ 2.0 5.6 ........................ 2.0 5.8 c. Rebuttable Presumption Payback As discussed in this preamble, EPCA provides a rebuttable presumption that an energy conservation standard is economically justified if the increased purchase cost for a product that meets the standard is less than three times the value of the first-year energy savings resulting from the standard. In calculating a rebuttable presumption PBP for the considered standard levels, DOE used discrete values and, as required by EPCA, based the energy use calculation on the DOE test procedure for dehumidifiers in appendix X1. In contrast, the PBPs presented in section V.B.1.a were calculated using distributions for input values, with energy use based on field studies and RECS data. Table V.17 presents the rebuttablepresumption PBPs for the considered TSLs.68 While DOE examined the rebuttable-presumption criterion, it further considered whether the standard levels considered for the NOPR are economically justified through a more detailed analysis of the economic impacts of those levels pursuant to 42 U.S.C. 6295(o)(2)(B)(i). The results of that analysis serve as the basis for DOE to evaluate the economic justification for a potential standard level (thereby supporting or rebutting the results of any preliminary determination of economic justification). TABLE V.17—DEHUMIDIFIERS: REBUTTABLE PAYBACK PERIOD (YEARS) Trial standard level Product class 1 mstockstill on DSK3G9T082PROD with RULES3 PC1 PC2 PC3 PC4 PC5 (≤25.00 pints/day) .................................................................................... (25.00–50.00 pints/day) ........................................................................... (≥50.01 pints/day) .................................................................................... (≤8.0 ft3) ................................................................................................... (>8.0 ft3) ................................................................................................... 68 The PBPs in Table V.17 differ from those shown in Tables V.2, V.4, V.6, V.8 and V.10 because VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 2 0.5 0.2 8.7 ........................ ........................ 0.6 0.5 4.8 ........................ ........................ the rebuttable PBPs are calculated with energy use based on the DOE test procedure, whereas the PBPs PO 00000 Frm 00039 Fmt 4701 Sfmt 4700 3 4 0.6 0.5 4.8 2.2 2.3 1.6 1.0 7.7 7.8 6.7 in the earlier tables are calculated with energy use based on field studies and RECS data. E:\FR\FM\13JNR3.SGM 13JNR3 38376 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations 2. Economic Impacts on Manufacturers DOE performed an MIA to estimate the impact of amended energy conservation standards on manufacturers of dehumidifiers. The section below describes the expected impacts on manufacturers at each TSL. Chapter 12 of the final rule TSD explains the analysis in further detail. a. Industry Cash Flow Analysis Results The following tables illustrate the estimated financial impacts (represented by changes in INPV) of amended energy conservation standards on manufacturers of dehumidifiers, as well as the conversion costs that DOE estimates manufacturers would incur for each product class at each TSL. To evaluate the range of cash-flow impacts on the dehumidifier manufacturing industry, DOE used two different markup scenarios to model the range of anticipated market responses to amended energy conservation standards. To assess the lower (less severe) end of the range of potential impacts, DOE modeled a preservation of gross margin percentage markup scenario, in which a flat markup of 1.45 (i.e., the baseline manufacturer markup) is applied across all efficiency levels. In this scenario, DOE assumed that a manufacturer’s absolute dollar markup would increase as production costs increase in the amended energy conservation standards case. Manufacturers have indicated that it is optimistic to assume that they would be able to maintain the same gross margin markup as their production costs increase in response to a new or amended energy conservation standard, particularly at higher TSLs. To assess the higher (more severe) end of the range of potential impacts, DOE modeled the preservation of per-unit operating profit markup scenario, which assumes that manufacturers would not be able to preserve the same overall gross margin, but instead would cut their markup for minimally compliant products to maintain a cost competitive product offering while maintaining the same overall level of operating profit in absolute dollars as in the no-newstandards case. The two tables below show the range of potential INPV impacts for manufacturers of dehumidifiers. Table V.18 reflects the lower bound of impacts (higher profitability) and Table V.19 represents the upper bound of impacts (lower profitability). Each scenario results in a unique set of cash flows and corresponding industry values at each TSL. In the following discussion, the INPV results refer to the sum of discounted cash flows through 2048, the difference in INPV between the no-new-standards case and each standards case, and the total industry conversion costs required for each standards case. TABLE V.18—MANUFACTURER IMPACT ANALYSIS UNDER THE PRESERVATION OF GROSS MARGIN PERCENTAGE MARKUP SCENARIO FOR ANALYSIS PERIOD [2016–2048] No-newstandards case Units INPV .................................................... Change in INPV .................................. Trial standard level 1 2 3 4 Free Cash Flow (2018) ....................... Change in Free Cash Flow (2018) ..... Product Conversion Costs .................. Capital Conversion Costs ................... 2014$ Millions .... 2014$ Millions .... (%) ...................... 2014$ Millions .... (%) ...................... 2014$ Millions .... 2014$ Millions .... 179.5 ........................ ........................ 15.0 ........................ ........................ ........................ 176.5 (3.0) (1.7%) 13.2 (12.4%) 3.0 2.1 145.5 (34.0) (18.9%) (4.2) (128.3%) 29.9 22.6 140.7 (38.7) (21.6%) (6.7) (144.9%) 35.4 24.5 126.9 (52.6) (29.3%) (19.7) (231.4%) 55.2 39.1 Total Conversion Costs ............... 2014$ Millions .... ........................ 5.1 52.5 59.8 94.3 Parentheses indicate negative (¥) values. TABLE V.19—MANUFACTURER IMPACT ANALYSIS UNDER THE PRESERVATION OF PER-UNIT OPERATING PROFIT MARKUP SCENARIO FOR ANALYSIS PERIOD [2016–2048] No-newstandards case Units 1 2 3 4 Free Cash Flow (2018) ....................... Decrease in Free Cash Flow (2018) .. Product Conversion Costs .................. Capital Conversion Costs ................... 2014$ Millions .... 2014$ Millions .... (%) ...................... 2014$ Millions .... (%) ...................... 2014$ Millions .... 2014$ Millions .... 179.5 ........................ ........................ 15.0 ........................ ........................ ........................ 175.8 (3.6) (2.0%) 13.2 (12.4%) 3.0 2.1 142.0 (37.5) (20.9%) (4.2) (128.3%) 29.9 22.6 137.1 (42.4) (23.6%) (6.7) (144.9%) 35.4 24.5 106.8 (72.7) (40.5%) (19.7) (231.4%) 55.2 39.1 Total Conversion Costs ............... mstockstill on DSK3G9T082PROD with RULES3 INPV .................................................... Change in INPV .................................. Trial standard level 2014$ Millions .... ........................ 5.1 52.5 59.8 94.3 Parentheses indicate negative (¥) values. Beyond impacts on INPV, DOE includes a comparison of free cash flow between the no-new-standards case and the standards case at each TSL in the year before amended standards take VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 effect to provide perspective on the short-run cash flow impacts in the discussion of the results below. At TSL 1, DOE estimates the impact on INPV for manufacturers of PO 00000 Frm 00040 Fmt 4701 Sfmt 4700 dehumidifiers to range from ¥$3.6 million to ¥$3.0 million, or a change in INPV of ¥2.0 percent to ¥1.7 percent under the preservation of per-unit operating profit markup scenario and E:\FR\FM\13JNR3.SGM 13JNR3 mstockstill on DSK3G9T082PROD with RULES3 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations preservation of gross margin percentage markup scenario, respectively. At this TSL, industry free cash flow is estimated to decrease by approximately 12.4 percent to $13.2 million, compared to the no-new-standards-case value of $15.0 million in 2018, the year before the projected compliance date. At TSL 1, the industry as a whole is expected to incur $3.0 million in product conversion costs attributed to upfront research, development, testing, and certification, as well as $2.1 million in investments in property, plant and equipment (PP&E) necessary to manufacture redesigned platforms. Industry conversion cost burden at TSL 1 would be felt by manufacturers of both lower-capacity and high-capacity portable dehumidifiers, although 83 percent of conversion costs relate to higher-capacity portable dehumidifier platform redesigns. At TSL 1, approximately 1 percent of portable platforms will require complete platform redesigns to reach the improved efficiency, which involve moving to a new case size to accommodate larger heat exchangers. These changes require upfront capital investments for new tooling to manufacturing production lines, among other changes. Additionally, it is assumed that manufacturers of highcapacity portable dehumidifiers, the majority of which are small business manufacturers, will have to outsource testing of their products to third-party testing facilities, contributing to greater product conversion costs. In contrast, the large manufacturers of portable dehumidifiers are assumed to have inhouse testing capabilities, which significantly reduce the cost of testing. DOE confirmed these assumptions regarding testing burdens during manufacturer interviews. At TSL 2, DOE estimates the impact on INPV for dehumidifier manufacturers to range from ¥$37.5 million to ¥$34.0 million, or a change in INPV of ¥20.9 percent to ¥18.9 percent under the preservation of per-unit operating profit markup scenario and the preservation of gross margin percentage markup scenario, respectively. At this TSL, industry free cash flow is estimated to decrease by approximately 128.3 percent to ¥$4.2 million, compared to the no-new-standards-case free cash flow of $15.0 million in 2018, the year before the projected compliance date. At TSL 2, the industry as a whole is expected to incur $29.9 million in product conversion costs associated with upfront research, development, testing, and certification, as well as $22.6 million in investments in PP&E to manufacture products requiring VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 platform redesigns. At TSL 2, the industry conversion cost burden will be felt by manufacturers of both lowcapacity and high-capacity portable dehumidifiers, as approximately 50 percent of portable dehumidifier platforms will require complete platform redesigns. Platform redesigns at TSL 2 will include moving to a new case size to accommodate larger heat exchangers, and will necessitate upfront capital investments for new tooling. Because lower-capacity portable units represent approximately 98.5 percent of the market, conversion costs associated with this segment have a significant impact on total industry conversion costs for TSL 2. At TSL 3, DOE estimates the impact on INPV for dehumidifier manufacturers to range from ¥$42.4 million to ¥$38.7 million, or a change in INPV of ¥23.6 percent to ¥21.6 percent under the preservation of per-unit operating profit markup scenario and the preservation of gross margin percentage markup scenario, respectively. At this TSL, industry free cash flow is estimated to decrease by approximately 144.9 percent to ¥$6.7 million, compared to the no-new-standards-case free cash flow of $15.0 million in 2018, the year before the projected compliance date. At TSL 3, the industry as a whole is expected to spend $35.4 million in product conversion costs associated with upfront research, development, testing, and certification, as well as $24.5 million in investments in PP&E to manufacture redesigned platforms. While conversion costs remain constant for manufacturers of portable dehumidifiers between TSLs 2 and 3, the conversion costs for manufacturers of whole-home dehumidifiers increase substantially at TSL 3, as nearly 80 percent of these products will require total platform redesigns. As with the portable dehumidifier market segment, platform redesigns for whole-home units will consist of moving products to a new case size to accommodate larger heat exchangers, and in turn will require capital investments in new tooling for larger cases. This upfront investment is in addition to higher R&D and testing expenditures. Despite increased conversion costs associated with the whole-home segment, because lower-capacity portable units represent approximately 98.5 percent of the market, conversion costs associated with this segment have a significant impact on total industry conversion costs for TSL 3. At TSL 4, DOE estimates the impact on INPV for manufacturers of dehumidifiers to range from ¥$72.7 million to ¥$52.6 million, or a change PO 00000 Frm 00041 Fmt 4701 Sfmt 4700 38377 in INPV of ¥40.5 percent to ¥29.3 percent the preservation of per-unit operating profit markup scenario and the preservation of gross margin percentage markup scenario, respectively. At this TSL, industry free cash flow is estimated to decrease by approximately 231.4 percent to ¥$19.7 million, compared to the no-newstandards-case free cash flow of $15.0 million in 2018, the year before the projected compliance date. At TSL 4, the industry as a whole is expected to spend $55.2 million in product conversion costs associated with upfront research, development, testing, and certification, as well as $40.5 million in investments in PP&E for platform redesigns. At TSL 4, approximately 63 percent of dehumidifier platforms will require complete redesigns in the form of larger chassis. Again, since lower-capacity portable units represent approximately 98.5 percent of the market, conversion costs associated with this segment have a significant impact on total industry conversion costs for TSL 4. b. Impacts on Direct Employment DOE used the GRIM to estimate the domestic labor expenditures and number of domestic production workers in the no-new-standards case and at each TSL from 2016 to 2048. DOE used statistical data from the U.S. Census Bureau’s 2013 Annual Survey of Manufactures, the results of the engineering analysis, and interviews with manufacturers to determine the inputs necessary to calculate industrywide labor expenditures and domestic employment levels at each TSL. Labor expenditures for the manufacture of a product are a function of the labor intensity of the product, the sales volume, and an assumption that wages in real terms remain constant. The total labor expenditures in each year are calculated by multiplying the MPCs by the labor percentage of MPCs. DOE estimates that all whole-home dehumidifiers and 50 percent of highcapacity portable dehumidifiers are produced domestically. This represents approximately 1 percent of dehumidifiers sold in the United States. The total labor expenditures in the GRIM were then converted to domestic production employment levels by dividing production labor expenditures by the annual payment per production worker (production worker hours times the labor rate found in the U.S. Census Bureau’s 2013 Annual Survey of Manufactures). The production worker estimates in this section only cover workers up to the line-supervisor level who are directly involved in fabricating E:\FR\FM\13JNR3.SGM 13JNR3 38378 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations and assembling a product within an original equipment manufacturer (OEM) facility. Workers performing services that are closely associated with production operations, such as materials handling tasks using forklifts, are also included as production labor. DOE’s estimates only account for production workers who manufacture the specific products covered by this rulemaking. Because production employment expenditures are assumed to be a fixed percentage of cost of goods sold and the MPCs typically increase with more efficient products, labor tracks the increased prices in the GRIM. As efficiency of dehumidifiers increase, so does the complexity of the products, generally requiring more labor to produce. Based on industry feedback, DOE believes that manufacturers that use domestic production currently will continue to produce the same scope of covered products in domestic production facilities. DOE does not expect production to shift to lower labor cost countries. However, in public comments submitted in response to the NOPR and in manufacturer interviews, stakeholders provided feedback indicating that amended energy conservation standards could have a negative impact on domestic production employment, depending on the standard level. Using the GRIM, DOE estimates that in the absence of amended energy conservation standards, there would be 88 domestic production workers in the dehumidifier industry. As noted previously, DOE estimates that 1 percent of dehumidifier units sold in the United States are manufactured domestically. Table V.20 shows the range of the impacts of potential amended energy conservation standards on U.S. production workers of dehumidifiers. A complete description of the assumptions used to generate these upper and lower bounds can be found in chapter 12 of the final rule TSD. TABLE V.20—CHANGE IN TOTAL NUMBER OF DOMESTIC PRODUCTION EMPLOYEES IN 2019 IN THE DEHUMIDIFIER INDUSTRY No-newstandards case * Change in Total Number of Domestic Production Workers in 2019.** TSL 1 TSL 2 TSL 3 ........................ 0 to 1 ............. 0 to 1 ............. (44) to 2 ......... TSL 4 (88) to 11 mstockstill on DSK3G9T082PROD with RULES3 * No-new-standards case estimates 88 domestic production workers in the dehumidifier industry in 2019. ** Parentheses indicate negative values. The upper end of the range estimates the maximum increase in the number of production workers in the dehumidifier industry after implementation of an emended energy conservation standard. It assumes that manufacturers would continue to produce the same scope of covered products within the United States and would require some additional labor to produce more efficient products. The lower end of the range represents the maximum decrease in total number of U.S. production workers that could result from an amended energy conservation standard and is based on direct feedback from interested parties. Feedback from manufacturers during interviews indicated that some domestic small businesses in the dehumidifier industry (specifically in the highcapacity portable dehumidifier and whole-home dehumidifier segments) may be forced to reduce employment, shift production abroad, or exit the dehumidifier market as a result of amended energy conservation standards. This lower bound of direct employment impacts reflects the worstcase scenario of impacts. This conclusion is independent of any conclusions regarding indirect employment impacts in the broader U.S. economy, which are documented in Chapter 16 of the TSD. VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 c. Impacts on Manufacturing Capacity As noted previously, the majority of dehumidifiers sold in the United States are not produced domestically. However, in response to standard levels analyzed in the June 2015 NOPR, domestic manufacturers of highcapacity portable dehumidifiers and whole-home dehumidifiers commented that production of these products could shift to lower-cost countries or halt altogether as a result of amended energy conservation standards, depending on the level selected. This could lead to a permanently lower production capacity within the dehumidifier industry. d. Impacts on Subgroups of Manufacturers Small manufacturers, niche equipment manufacturers, and manufacturers exhibiting a cost structure substantially different from the industry average could be affected disproportionately. Using average cost assumptions to develop an industry cash-flow estimate is inadequate to assess differential impacts among manufacturer subgroups. For dehumidifier equipment, DOE identified and evaluated the impact of amended energy conservation standards on one subgroup: Small manufacturers. The SBA defines a ‘‘small business’’ as having 1,250 employees or less for NAICS 333415 (‘‘Air-Conditioning and Warm Air Heating Equipment and PO 00000 Frm 00042 Fmt 4701 Sfmt 4700 Commercial and Industrial Refrigeration Equipment Manufacturing’’) or 1,500 employees or less for NAICS 335210 (‘‘Small Electrical Appliance Manufacturing’’). Based on this definition, DOE identified five manufacturers in the dehumidifier equipment industry that are small businesses. For a discussion of the impacts on the small manufacturer subgroup, see the Regulatory Flexibility Analysis in section VII.B of this final rule and chapter 12 of the final rule TSD. e. Cumulative Regulatory Burden One aspect of assessing manufacturer burden involves looking at the cumulative impact of multiple DOE standards and the regulatory actions of other Federal agencies and States that affect the manufacturers of a covered product or equipment. DOE believes that a standard level is not economically justified if it contributes to an unacceptable cumulative regulatory burden. While any one regulation may not impose a significant burden on manufacturers, the combined effects of several existing or impending regulations may have serious consequences for some manufacturers, groups of manufacturers, or an entire industry. Multiple regulations affecting the same manufacturer can strain profits and lead companies to abandon product lines or markets with lower expected E:\FR\FM\13JNR3.SGM 13JNR3 38379 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations future returns than competing products. In addition to DOE’s energy conservation regulations for dehumidifiers, several other existing and pending regulations apply to these products and other equipment produced by the same manufacturers. DOE looks at these regulations that could affect dehumidifier manufacturers that will take effect approximately 3 years before or after the 2019 compliance date of amended energy conservation standards for dehumidifiers. Additionally, DOE will evaluate its approach to assessing cumulative regulatory burden for use in future rulemakings to ensure that it is effectively capturing the overlapping impacts of its regulations. In particular, DOE will assess whether looking at rules where any portion of the compliance period potentially overlaps with the compliance period for the subject rulemaking would yield a more accurate reflection of cumulative regulatory burden. For example, DOE recognizes that if it were to undertake a rulemaking to amend the standards for room air conditioners pursuant to the 6year look back requirement under 42 U.S.C. 6295(m), any future room air conditioner rule could have a cumulative impact on manufacturers of dehumidifiers during the compliance period for these dehumidifiers standards. The compliance years and expected industry conversion costs of energy conservation standards that may also impact dehumidifier manufacturers are indicated in Table V.21. For each rule, the table also contains the number of affected dehumidifier original equipment manufacturers (OEMs). DOE excludes companies that import and relabel dehumidifiers from this count, as DOE’s analysis indicates that OEMs bear the majority of the economic burden for a given rule. Only 50 percent of the companies selling dehumidifiers in the United States are OEMs (12 of 24). None of the OEMs identified in this table are domestic in terms of ownership or manufacturing site. TABLE V.21—OTHER FEDERAL ENERGY CONSERVATION STANDARDS AFFECTING DEHUMIDIFIER OEMS Number of manufacturers * DOE Regulation Microwave Ovens, 78 FR 36316 (June 17, 2013). Residential Clothes Washers, 77 FR 32308 (May 31, 2012). Ceiling Fans, 81 FR 1688, (January 13, 2016). Furnace Fans, 79 FR 38129 (July 3, 2014) Portable Air Conditioners Pre-publication NOPR issued on April 27, 2016. 12 16 31 37 29 Estimated INPV *** (No new standards case) 1,386.5 Million (2011$). 2,586.0 Million (2010$). 1,308.7 Million (2014$). 349.6 Million (2013$) 725.5 Million (2014$) Estimated total industry conversion costs Compliance date Number of affected dehumidifier OEMs 43.1 Million (2011$) 2016 1 418.5 Million (2010$) 2018 2 9.4 Million (2014$) ... ** 2019 1 40.6 Million (2013$) 302.8 Million (2014$) 2019 ** 2021 2 4 * The number of manufacturers listed in the final rule for the energy conservation standard that is contributing to cumulative regulatory burden. ** The dates listed are an approximation. The exact dates are pending final DOE action. *** The industry net present value (INPV) is the sum of the discounted cash flows to the industry from the base year through the end of the analysis period of the rulemaking (typically 30 years). In addition to other Federal energy conservation standards, manufacturers cited third-party certification programs (e.g., UL safety standards certification for dehumidifiers) as a source of cumulative regulatory burden for dehumidifier manufacturers. For more details, see chapter 12 of the final rule TSD. 3. National Impact Analysis a. Significance of Energy Savings To estimate the energy savings attributable to potential standards for dehumidifiers, DOE compared the energy consumption of those products under the base case to their anticipated energy consumption under each TSL. Table V.22 presents DOE’s projections of the national energy savings for each TSL considered for dehumidifiers shipped in the 2019–2048 period. The savings were calculated using the approach described in section IV.H.1 of this document. TABLE V.22—DEHUMIDIFIERS: CUMULATIVE NATIONAL ENERGY SAVINGS [Shipments in 2019–2048] Trial standard level Savings 1 mstockstill on DSK3G9T082PROD with RULES3 Primary Energy Savings (quads) ..................................................................... FFC Energy Savings (quads) .......................................................................... OMB Circular A–4 69 requires agencies to present analytical results, including separate schedules of the monetized benefits and costs that show 69 U.S. Office of Management and Budget, ‘‘Circular A–4: Regulatory Analysis’’ (Sept. 17, 2003) (Available at: http://www.whitehouse.gov/ omb/circulars_a004_a-4/). VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 2 0.07 0.07 the type and timing of benefits and costs. Circular A–4 also directs agencies to consider the variability of key elements underlying the estimates of benefits and costs. For this rulemaking, DOE undertook a sensitivity analysis using 9, rather than 30, years of product shipments. The choice of a 9-year period is a proxy for the timeline in PO 00000 Frm 00043 Fmt 4701 Sfmt 4700 3 0.29 0.30 4 0.30 0.31 0.79 0.82 EPCA for the review of certain energy conservation standards and potential revision of, and compliance with, such revised standards.70 The review 70 Under 42 U.S.C. 6295(m)(1), no later than 6 years after DOE issues a final rule establishing or amending an energy conservation standard, DOE must publish a notice of determination that E:\FR\FM\13JNR3.SGM Continued 13JNR3 38380 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations timeframe established in EPCA is generally not synchronized with the product lifetime, product manufacturing cycles, or other factors specific to dehumidifiers. Thus, such results are presented for informational purposes only and are not indicative of any change in DOE’s analytical methodology. The NES sensitivity analysis results based on a 9-year analytical period are presented in Table V.23. The impacts are counted over the lifetime of dehumidifiers purchased in 2019–2027. TABLE V.23—DEHUMIDIFIERS: CUMULATIVE NATIONAL ENERGY SAVINGS FOR PRODUCTS SHIPPED IN 2019–2027 Trial standard level Savings 1 Primary Energy Savings (quads) ..................................................................... FFC Energy Savings (quads) .......................................................................... b. Net Present Value of Consumer Costs and Benefits DOE estimated the cumulative NPV of the total costs and savings for consumers that would result from the 2 0.02 0.02 standard levels considered for dehumidifiers. In accordance with the OMB’s guidelines on regulatory analysis,71 DOE calculated NPV using both a 7-percent and a 3-percent real discount rate. 3 0.09 0.10 4 0.10 0.10 0.23 0.25 Table V.24 shows the consumer NPV results for each TSL DOE considered for dehumidifiers. The impacts are counted over the lifetime of products purchased in 2019–2048. TABLE V.24—DEHUMIDIFIERS: CUMULATIVE NET PRESENT VALUE OF CONSUMER BENEFITS FOR PRODUCTS SHIPPED IN 2019–2048 Trial standard level (Billion 2014$) Discount rate 1 3 percent .......................................................................................................... 7 percent .......................................................................................................... The NPV results based on the aforementioned 9-year analytical period are presented in Table V.25. The impacts are counted over the lifetime of 2 0.61 0.28 products purchased in 2019–2027. As mentioned previously, such results are presented for informational purposes only and are not indicative of any 3 2.71 1.28 4 2.77 1.30 6.74 3.04 change in DOE’s analytical methodology or decision criteria. TABLE V.25—DEHUMIDIFIERS: CUMULATIVE NET PRESENT VALUE OF CONSUMER BENEFITS FOR PRODUCTS SHIPPED IN 2019–2027 Trial standard level (Billion 2014$) Discount rate 1 mstockstill on DSK3G9T082PROD with RULES3 3 percent .......................................................................................................... 7 percent .......................................................................................................... 2 0.22 0.14 The above results reflect the use of a default trend to estimate the change in price for dehumidifiers over the analysis period (see section IV.F.1 of this document). DOE also conducted a sensitivity analysis that considered one scenario with a lower rate of price decline than the reference case and one scenario with a higher rate of price decline than the reference case. The results of these alternative cases are presented in appendix 10C of the final rule TSD. In the high price decline case, the NPV of consumer benefits is higher than in the default case. In the low price decline case, the NPV of consumer benefits is lower than in the default case. standards for the product do not need to be amended or a NOPR that includes new proposed standards. The 9-year analytical period includes this 6-year period and an additional 3 years to issue the final rule and allow time for industry compliance. 71 U.S. Office of Management and Budget, ‘‘Circular A–4: Regulatory Analysis,’’ Section E, VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 c. Indirect Impacts on Employment DOE expects energy conservation standards for dehumidifiers to reduce energy bills for consumers of those products, with the resulting net savings being redirected to other forms of economic activity. These expected shifts in spending and economic activity could affect the demand for labor. As PO 00000 Frm 00044 Fmt 4701 Sfmt 4700 3 1.05 0.65 4 1.07 0.66 2.41 1.47 described in section IV.N of this document, DOE used an input/output model of the U.S. economy to estimate indirect employment impacts of the TSLs that DOE considered in this rulemaking. DOE understands that there are uncertainties involved in projecting employment impacts, especially changes in the later years of the analysis. Therefore, DOE generated results for near-term timeframes (2019– 2048), where these uncertainties are reduced. (September 17, 2003) (Available at: http:// www.whitehouse.gov/omb/circulars_a004_a-4/). E:\FR\FM\13JNR3.SGM 13JNR3 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations The results suggest that the adopted standards are likely to have a negligible impact on the net demand for labor in the economy. The net change in jobs is so small that it would be imperceptible in national labor statistics and might be offset by other, unanticipated effects on employment. Chapter 16 of the final rule TSD presents detailed results regarding anticipated indirect employment impacts. 4. Impact on Utility or Performance of Products Based on testing conducted in support of this rule, discussed in section IV.C of this document, DOE has concluded that the standards adopted in this final rule would not reduce the utility or performance of the dehumidifiers under consideration in this rulemaking. Manufacturers of these products currently offer units that meet or exceed the adopted standards. 5. Impact of Any Lessening of Competition As discussed in section e, the Attorney General of the United States (Attorney General) determines the impact, if any, of any lessening of competition likely to result from a proposed standard and to transmit such determination in writing to the Secretary within 60 days of the publication of a proposed rule, together with an analysis of the nature and extent of the impact. To assist the Attorney General in making such determination, DOE provided the Department of Justice (DOJ) with copies of the NOPR and the TSD for review. In its assessment letter responding to DOE, DOJ concluded that the proposed energy conservation standards for dehumidifiers are unlikely to have a significant adverse impact on competition. DOE is publishing the Attorney General’s assessment at the end of this final rule. 6. Need of the Nation To Conserve Energy Enhanced energy efficiency, where economically justified, improves the nation’s energy security, strengthens the economy, and reduces the environmental impacts (costs) of energy 38381 production. Reduced electricity demand due to energy conservation standards is also likely to reduce the cost of maintaining the reliability of the electricity system, particularly during peak-load periods. As a measure of this reduced demand, chapter 15 in the final rule TSD presents the estimated reduction in generating capacity, relative to the no-new-standards case, for the TSLs that DOE considered in this rulemaking. Energy conservation resulting from amended standards for dehumidifiers is expected to yield environmental benefits in the form of reduced emissions of air pollutants and greenhouse gases. Table V.26 provides DOE’s estimate of cumulative emissions reductions expected to result from the TSLs considered in this rulemaking. The table includes both power sector emissions and upstream emissions. The emissions were calculated using the multipliers discussed in section IV.K. DOE reports annual emissions reductions for each TSL in chapter 13 of the final rule TSD. TABLE V.26—CUMULATIVE EMISSIONS REDUCTION FOR DEHUMIDIFIERS SHIPPED IN 2019–2048 Trial standard level 1 2 3 4 Power Sector Emissions CO2 (million metric tons) .................................................................................. SO2 (thousand tons) ........................................................................................ NOX (thousand tons) ....................................................................................... Hg (tons) .......................................................................................................... CH4 (thousand tons) ........................................................................................ N2O (thousand tons) ........................................................................................ 4.0 2.4 4.4 0.01 0.4 0.05 17.7 10.8 19.3 0.04 1.5 0.22 18.1 11.1 19.7 0.04 1.6 0.22 47.5 29.0 52.0 0.11 4.1 0.59 0.2 0.0 3.2 0.0 17.4 0.00 1.0 0.2 13.8 0.0 76.4 0.01 1.0 0.2 14.1 0.0 78.1 0.01 2.6 0.5 37.4 0.0 206.6 0.02 4.2 2.5 7.5 0.01 17.8 498 0.05 13.7 18.6 11.0 33.1 0.04 77.9 2,182 0.23 60.5 19.0 11.3 33.9 0.04 79.7 2,231 0.23 61.8 50.1 29.5 89.4 0.11 210.7 5,900 0.61 162.2 Upstream Emissions CO2 (million metric tons) .................................................................................. SO2 (thousand tons) ........................................................................................ NOX (thousand tons) ....................................................................................... Hg (tons) .......................................................................................................... CH4 (thousand tons) ........................................................................................ N2O (thousand tons) ........................................................................................ Total FFC Emissions mstockstill on DSK3G9T082PROD with RULES3 CO2 (million metric tons) .................................................................................. SO2 (thousand tons) ........................................................................................ NOX (thousand tons) ....................................................................................... Hg (tons) .......................................................................................................... CH4 (thousand tons) ........................................................................................ CH4 (thousand tons CO2eq) * .......................................................................... N2O (thousand tons) ........................................................................................ N2O (thousand tons CO2eq) * .......................................................................... * CO2eq is the quantity of CO2 that would have the same global warming potential (GWP). As part of the analysis for this rule, DOE estimated monetary benefits likely to result from the reduced emissions of CO2 and NOX that DOE estimated for each of the considered TSLs for VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 dehumidifiers. As discussed in section IV.K of this document, for CO2, DOE used the most recent values for the SCC developed by an interagency process. The four sets of SCC values for CO2 PO 00000 Frm 00045 Fmt 4701 Sfmt 4700 emissions reductions in 2015 resulting from that process (expressed in 2014$) are represented by $12.2/metric ton (the average value from a distribution that uses a 5-percent discount rate), $40.0/ E:\FR\FM\13JNR3.SGM 13JNR3 38382 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations metric ton (the average value from a distribution that uses a 3-percent discount rate), $62.3/metric ton (the average value from a distribution that uses a 2.5-percent discount rate), and $117/metric ton (the 95th-percentile value from a distribution that uses a 3percent discount rate). The values for later years are higher due to increasing damages (public health, economic and environmental) as the projected magnitude of climate change increases. Table V.27 presents the global value of CO2 emissions reductions at each TSL. For each of the four cases, DOE calculated a present value of the stream of annual values using the same discount rate as was used in the studies upon which the dollar-per-ton values are based. DOE calculated domestic values as a range from 7 percent to 23 percent of the global values; these results are presented in chapter 14 of the final rule TSD. TABLE V.27—ESTIMATES OF GLOBAL PRESENT VALUE OF CO2 EMISSIONS REDUCTION FOR PRODUCTS SHIPPED IN 2019– 2048 SCC case * (million 2014$) TSL 5% discount rate, average 3% discount rate, average 2.5% discount rate, average 3% discount rate, 95th percentile Power Sector Emissions 1 2 3 4 ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... 29.2 129.7 132.6 343.9 131.0 580.0 592.9 1,547 207.2 916.2 936.6 2,447 398.6 1,763 1,802 4,705 1.6 7.0 7.1 18.5 7.1 31.4 32.1 84.2 11.3 49.7 50.8 133.4 21.7 95.6 97.7 256.3 30.8 136.7 139.7 362.4 138.2 611.4 625.0 1,631 218.5 965.9 987.4 2,580 420.3 1,859 1,900 4,961 Upstream Emissions 1 2 3 4 ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... Total FFC Emissions 1 2 3 4 ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... mstockstill on DSK3G9T082PROD with RULES3 * For each of the four cases, the corresponding SCC value for emissions in 2015 is $12.2, $40.0, $62.3, and $117 per metric ton (2014$). The values are for CO2 only (i.e., not CO2eq of other greenhouse gases). DOE is well aware that scientific and economic knowledge about the contribution of CO2 and other GHG emissions to changes in the future global climate and the potential resulting damages to the world economy continues to evolve rapidly. Thus, any value placed on reduced CO2 emissions in this rulemaking is subject to change. DOE, together with other Federal agencies, will continue to review various methodologies for estimating the monetary value of reductions in CO2 and other GHG emissions. This ongoing review will consider the comments on this subject that are part of the public record for this and other rulemakings, as well as other methodological assumptions and issues. However, consistent with DOE’s legal obligations, and taking into account the uncertainty involved with this particular issue, DOE has included in this rule the most recent values and analyses resulting from the interagency review process. DOE also estimated the cumulative monetary value of the economic benefits associated with NOX emissions reductions anticipated to result from the VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 considered TSLs for dehumidifiers. The dollar-per-ton values that DOE used are discussed in section IV.L of this document. Table V.28 presents the cumulative present value for NOX emissions for each TSL calculated using 7-percent and 3-percent discount rates. This table presents values that use the low dollar-per-ton values, which reflect DOE’s primary estimate. Results that reflect the range of NOX dollar-per-ton values are presented in Table V.29. TABLE V.28—ESTIMATES OF PRESENT VALUE OF NOX EMISSIONS REDUCTION FOR DEHUMIDIFIERS SHIPPED IN 2019–2048 * Million 2014$ TSL 3% discount rate 7% discount rate ................ ................ ................ ................ PO 00000 Frm 00046 8.7 38.9 39.7 102.9 Fmt 4701 Sfmt 4700 Million 2014$ TSL 3% discount rate 7% discount rate Upstream Emissions 1 2 3 4 ................ ................ ................ ................ 6.2 27.7 28.3 73.6 2.7 12.2 12.5 31.8 Total FFC Emissions 1 2 3 4 ................ ................ ................ ................ 15.0 66.6 68.0 176.5 6.6 29.8 30.4 77.4 * Results are based on the low benefit-perton values. Power Sector Emissions 1 2 3 4 TABLE V.28—ESTIMATES OF PRESENT VALUE OF NOX EMISSIONS REDUCTION FOR DEHUMIDIFIERS SHIPPED IN 2019–2048 *—Continued 3.9 17.6 18.0 45.7 7. Other Factors The Secretary of Energy, in determining whether a standard is economically justified, may consider E:\FR\FM\13JNR3.SGM 13JNR3 38383 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations any other factors that the Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)) No other factors were considered in this analysis. can be viewed as a complement to the NPV of the consumer savings calculated for each TSL considered in this rulemaking. Table V.29 presents the NPV values that result from adding the estimates of the potential economic benefits resulting from reduced CO2 and NOX emissions in each of four valuation 8. Summary of National Economic Impacts The NPV of the monetized benefits associated with emissions reductions scenarios to the NPV of consumer savings calculated for each TSL considered in this rulemaking, at both a 7-percent and 3-percent discount rate. The CO2 values used in the columns of each table correspond to the four sets of SCC values discussed above. TABLE V.29—NET PRESENT VALUE OF CONSUMER SAVINGS COMBINED WITH PRESENT VALUE OF MONETIZED BENEFITS FROM CO2 AND NOX EMISSIONS REDUCTIONS Consumer NPV at 3% discount rate added with: (Billion 2014$) TSL 1 2 3 4 SCC case $12.2/metric ton and 3% low NOX value ............................................................................................... ............................................................................................... ............................................................................................... ............................................................................................... SCC case $40.0/metric ton and 3% low NOX value 0.7 2.9 3.0 7.3 SCC case $62.3/metric ton and 3% low NOX value 0.8 3.4 3.5 8.5 SCC case $117/metric ton and 3% low NOX value 0.8 3.7 3.8 9.5 1.0 4.6 4.7 11.9 Consumer NPV at 7% discount rate added with: (billion 2014$) TSL 1 2 3 4 SCC Case $12.2/ metric ton and 7% low NOX value SCC Case $40.0/ metric ton and 7% low NOX value SCC Case $62.3/ metric ton and 7% low NOX value SCC Case $117/ metric ton and 7% low NOX value 0.3 1.4 1.5 3.5 0.4 1.9 2.0 4.7 0.5 2.3 2.3 5.7 0.7 3.2 3.2 8.1 ............................................................................................... ............................................................................................... ............................................................................................... ............................................................................................... Note: The SCC case values represent the global SCC in 2015, in 2014$, for each case. In considering the above results, two issues are relevant. First, the national operating cost savings are domestic U.S. monetary savings that occur as a result of market transactions, while the value of CO2 reductions is based on a global value. Second, the assessments of operating cost savings and the SCC are performed with different methods that use different time frames for analysis. The national operating cost savings is measured for the lifetime of products shipped in 2019 to 2048. Because CO2 emissions have a very long residence time in the atmosphere,72 the SCC values in future years reflect future climate-related impacts that continue beyond 2100. mstockstill on DSK3G9T082PROD with RULES3 C. Conclusion When considering standards, the new or amended energy conservation standards that DOE adopts for any type (or class) of covered product must be designed to achieve the maximum improvement in energy efficiency that the Secretary determines is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A)) In determining whether a standard is economically justified, the Secretary must determine whether the benefits of the standard exceed its burdens by, to the greatest extent practicable, considering the seven statutory factors discussed previously. (42 U.S.C. 6295(o)(2)(B)(i)). The new or amended standard must also result in significant conservation of energy. (42 U.S.C. 6295(o)(3)(B)) In the June 2015 NOPR, DOE proposed energy conservation standards for dehumidifiers at TSL 3, as constructed for that analysis. The minimum IEFs corresponding to TSL 3 from the June 2015 NOPR are shown in Table V.30. 80 FR 31645, 31696 (June 3, 2015). 72 The atmospheric lifetime of CO is estimated of 2 the order of 30–95 years. Jacobson, MZ, ‘‘Correction to ‘Control of fossil-fuel particulate black carbon and organic matter, possibly the most effective method of slowing global warming,’ ’’ J. Geophys. Res. 110. pp. D14105 (2005). VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 PO 00000 Frm 00047 Fmt 4701 Sfmt 4700 TABLE V.30—NOPR PROPOSED AMENDED ENERGY CONSERVATION STANDARDS FOR DEHUMIDIFIERS Portable dehumidifier product capacity (pints/day) Minimum integrated energy factor (L/kWh) 30.00 or less ......................... 30.01–45.00 .......................... 45.01 or more ....................... 1.30 1.60 2.80 Whole-home dehumidifier product case volume (cubic feet) 8.0 or less ............................. More than 8.0 ....................... 2.09 3.52 Aprilaire encouraged DOE to analyze portable dehumidifiers and whole-home dehumidifiers as separate markets with separate regulations and test procedures and to suspend proposed regulations on the whole-home dehumidifier market. Aprilaire suggested that in lieu of proposing whole-home dehumidifier standards, that DOE use the Build America program to better understand the market and applications. (Aprilaire, No. 34 at pp. 1, 3) Further, Aprilaire commented that because whole-home E:\FR\FM\13JNR3.SGM 13JNR3 mstockstill on DSK3G9T082PROD with RULES3 38384 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations dehumidifiers are a subsystem of energy control in the home, regulating that market may have a detrimental effect on the overall goal of reducing energy use in the home. (Aprilaire, Public Meeting Transcript, No. 35 at pp. 94–95) In this final rule, DOE considered multiple TSLs representing both energy conservation standards at the baseline efficiency level and higher efficiency levels for whole-home dehumidifiers. Section V.C.1 of this document describes how DOE selected the energy conservation standards established in this final rule. Therma-Stor recommended a single minimum efficiency level be established for all portable dehumidifiers and a single minimum efficiency level be established for whole-home dehumidifiers based upon the test procedure in appendix X1. (ThermaStor, No. 38 at pp. 2–3) As discussed in section IV.A.1 of this document, DOE separated both portable dehumidifiers and whole-home dehumidifiers into multiple product classes to ensure that consumer utility is maintained under any amended energy conservation standards. Section IV.C.1 of this final rule explains the efficiency levels DOE analyzed for each of the product classes. In that discussion, DOE explains how different IEF values define each efficiency level for the different product classes. In constructing TSLs for this final rule, DOE selected efficiency levels for each individual product class. Accordingly, DOE considered different minimum efficiency levels for the individual product classes in each TSL. Therma-Stor commented that only two of its seven whole-home dehumidifier models exceed the proposed minimum efficiency level from the June 2015 NOPR. Therma-Stor cautioned that the proposed regulation would reduce the number of efficient high-capacity portable dehumidifier and whole-home dehumidifier choices available to consumers who would instead purchase one, or multiple, inefficient low-capacity portable dehumidifiers. (Therma-Stor, No. 38 at pp. 2–3) In this final rule analysis, DOE updated its estimates of manufacturer impacts at the different analyzed efficiency levels. (See section IV.J of this document.) DOE considered these impacts for each TSL when determining appropriate standards for dehumidifiers. Section V.C.1 of this document details the benefits and burdens of each TSL considered in this final rule. Therma-Stor stated that the test procedure for whole-home dehumidifiers in appendix X1 specifies an external static pressure which increases the necessary fan power VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 beyond that specified for portable dehumidifiers. Therefore, Therma-Stor expressed concern that, although there are no whole-home dehumidifiers currently in the market that are more efficient than a similar-capacity portable dehumidifier, the proposed efficiency level for ‘‘large’’ whole-home dehumidifiers is 26 percent higher than the level proposed for high-capacity portable dehumidifiers. (Therma-Stor, No. 38 at pp. 2–3) Although wholehome dehumidifiers are tested with a ducted setup that imposes an external static pressure on the unit, which increases power consumption, the higher ambient test temperature increases overall dehumidification capacity compared to a portable dehumidifier. As a result, a whole-home dehumidifier would typically have a higher rated IEF than a portable dehumidifier with similar components. ASAP and the Joint Commenters supported the proposed levels for highcapacity portable dehumidifiers and whole-home dehumidifiers, while they urged DOE to consider adopting TSL 4 in the final rule for the two portable dehumidifier product classes with capacities less than or equal to 45 pints/ day. (ASAP, Public Meeting Transcript, No. 35 at pp. 9–10; Joint Commenters, No. 40 at pp. 1–4) The Joint Commenters stated that multiple market and policy changes will likely increase the demand for high-efficiency compressors for room air conditioners, which would increase the availability of high-efficiency compressors for dehumidifiers. The Joint Commenters commented that impacts on manufacturers would be substantially reduced by maintaining the proposed TSL 3 for high-capacity portable dehumidifiers and whole-home dehumidifiers while adopting the proposed TSL 4 for portable dehumidifiers with capacities ≤45 pints/ day. They stated that adopting the proposed TSL 3 for high-capacity portable dehumidifiers and whole-home dehumidifiers would limit impacts on small domestic manufacturers and eliminate DOE’s concern regarding the availability of high-efficiency compressors for high-capacity portable dehumidifiers and whole-home dehumidifiers. (Joint Commenters, No. 40 at pp. 1, 3–4) AHAM disagreed with adopting the proposed TSL 4 instead of the proposed TSL 3 for portable dehumidifiers less than 45 pints per day. AHAM noted that TSL 4 is the max-tech level for which no units are currently on the market, and stated that selecting TSL 4 may contribute to the potential unavailability of products at certain capacities across PO 00000 Frm 00048 Fmt 4701 Sfmt 4700 that product class. To meet TSL 4, AHAM suggested that manufacturers would have to incorporate the highest efficiency compressors, but few are available; therefore, several dehumidifier platforms could be unable to meet the max-tech IEF. (AHAM, No. 39 at p. 6) DOE reviewed the comments submitted by ASAP, the Joint Commenters, and AHAM that directly addressed the proposed standards and TSLs analyzed in the June 2015 NOPR. In this final rule, DOE reassessed the benefits and burdens of the TSLs, including newly constructed TSLs for this final rule analysis, while considering all comments received, as detailed below. For this final rule, DOE considered the impacts of amended standards for dehumidifiers at each TSL, beginning with the maximum technologically feasible level, to determine whether that level was economically justified. Where the max-tech level was not justified, DOE then considered the next most efficient level and undertook the same evaluation until it reached the highest efficiency level that is both technologically feasible and economically justified and saves a significant amount of energy. To aid the reader as DOE discusses the benefits and/or burdens of each TSL, tables in this section present a summary of the results of DOE’s quantitative analysis for each TSL. In addition to the quantitative results presented in the tables, DOE also considers other burdens and benefits that affect economic justification. These include the impacts on identifiable subgroups of consumers who may be disproportionately affected by a national standard and impacts on employment. DOE also notes that the economics literature provides a wide-ranging discussion of how consumers trade off upfront costs and energy savings in the absence of government intervention. Much of this literature attempts to explain why consumers appear to undervalue energy efficiency improvements. There is evidence that consumers undervalue future energy savings as a result of: (1) A lack of information; (2) a lack of sufficient salience of the long-term or aggregate benefits; (3) a lack of sufficient savings to warrant delaying or altering purchases; (4) excessive focus on the short term, in the form of inconsistent weighting of future energy cost savings relative to available returns on other investments; (5) computational or other difficulties associated with the evaluation of relevant tradeoffs; and (6) a divergence in incentives (for example, E:\FR\FM\13JNR3.SGM 13JNR3 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations between renters and owners, or builders and purchasers). Having less than perfect foresight and a high degree of uncertainty about the future, consumers may trade off these types of investments at a higher than expected rate between current consumption and uncertain future energy cost savings. In DOE’s current regulatory analysis, potential changes in the benefits and costs of a regulation due to changes in consumer purchase decisions are included in two ways. First, if consumers forego the purchase of a product in the standards case, this decreases sales for product manufacturers, and the impact on manufacturers attributed to lost revenue is included in the MIA. Second, DOE accounts for energy savings attributable only to products actually used by consumers in the standards case; if a regulatory option decreases the number of products purchased by consumers, this decreases the potential energy savings from an energy conservation standard. DOE provides estimates of shipments and changes in the volume of product purchases in chapter 9 of the final rule TSD. However, DOE’s current analysis does not explicitly control for heterogeneity in consumer preferences, preferences across subcategories of products or specific features, or consumer price sensitivity variation according to household income.73 While DOE is not prepared at present to provide a fuller quantifiable framework for estimating the benefits and costs of changes in consumer purchase decisions due to an energy conservation standard, DOE is committed to developing a framework that can support empirical quantitative tools for improved assessment of the consumer welfare impacts of appliance 38385 standards. DOE has posted a paper that discusses the issue of consumer welfare impacts of appliance energy conservation standards, and potential enhancements to the methodology by which these impacts are defined and estimated in the regulatory process.74 DOE welcomes comments on how to more fully assess the potential impact of energy conservation standards on consumer choice and how to quantify this impact in its regulatory analysis in future rulemakings. 1. Benefits and Burdens of TSLs Considered for Dehumidifier Standards Table V.31 and Table V.32 summarize the quantitative impacts estimated for each TSL for dehumidifiers. The efficiency levels contained in each TSL are described in section V.A of this document. TABLE V.31—DEHUMIDIFIER TRIAL STANDARD LEVELS: NATIONAL IMPACTS Category TSL 1 TSL 2 TSL 3 TSL 4 Cumulative FFC Energy Savings (quads) 0.07 ........................... 0.30 ........................... 0.31 ........................... 0.82. 2.77 ........................... 1.30 ........................... 6.74. 3.04. 19.0 ........................... 33.9 ........................... 0.04 ........................... 0.23 ........................... 61.8 ........................... 79.7 ........................... 2,231 ......................... 11.3 ........................... 50.1. 89.4. 0.11. 0.61. 162.2. 210.7. 5,900. 29.5. 140 to 1,900 .............. 68.0 to 155.1 ............. 30.4 to 68.6 ............... 362 to 4,961. 176.5 to 402.3. 77.4 to 174.6. NPV of Customer Benefits (2014$ billion) 3% discount rate .............................................. 7% discount rate .............................................. 0.61 ........................... 0.28 ........................... 2.71 ........................... 1.28 ........................... Cumulative FFC Emissions Reduction CO2 (million metric tons) .................................. NOX (thousand tons) ....................................... Hg (tons) .......................................................... N2O (thousand tons) ........................................ N2O (thousand tons CO2eq *) .......................... CH4 (thousand tons) ........................................ CH4 (thousand tons CO2eq *) .......................... SO2 (thousand tons) ........................................ 4.2 ............................. 7.5 ............................. 0.01 ........................... 0.05 ........................... 13.7 ........................... 17.8 ........................... 498 ............................ 2.5 ............................. 18.6 ........................... 33.1 ........................... 0.04 ........................... 0.23 ........................... 60.5 ........................... 77.9 ........................... 2,182 ......................... 11.0 ........................... Value of Emissions Reduction CO2 (2014$ million) ** ...................................... NOX—3% discount rate (2014$ million) .......... NOX—7% discount rate (2014$ million) .......... 31 to 420 ................... 15.0 to 34.2 ............... 6.6 to 14.9 ................. 137 to 1,859 .............. 66.6 to 151.8 ............. 29.8 to 67.1 ............... Parentheses indicate negative (¥) values. * CO2eq is the quantity of CO2 that would have the same GWP. ** Range of the economic value of CO2 reductions is based on estimates of the global benefit of reduced CO2 emissions. TABLE V.32—DEHUMIDIFIER TRIAL STANDARD LEVELS: MANUFACTURER AND CONSUMER IMPACTS Category TSL 1 TSL 2 TSL 3 TSL 4 mstockstill on DSK3G9T082PROD with RULES3 Manufacturer Impacts Industry NPV (2014$ millions) (No-NewStandards INPV = 179.5). Industry NPV (% change) ................................ 73 P.C. Reiss and M.W. White, Household Electricity Demand, Revisited, Review of Economic Studies (2005) 72, 853–883. VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 175.8 to 176.5 ........... 142.0 to 145.5 ........... 137.1 to 140.7 ........... 106.8 to 126.9. (2.0%) to (1.7%) ........ (20.9%) to (18.9%) .... (23.6%) to (21.6%) .... (40.5%) to (29.3%). 74 Alan Sanstad, Notes on the Economics of Household Energy Consumption and Technology Choice. Lawrence Berkeley National Laboratory PO 00000 Frm 00049 Fmt 4701 Sfmt 4700 (2010) (Available online at: http:// www1.eere.energy.gov/buildings/appliance_ standards/pdfs/consumer_ee_theory.pdf). E:\FR\FM\13JNR3.SGM 13JNR3 38386 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations TABLE V.32—DEHUMIDIFIER TRIAL STANDARD LEVELS: MANUFACTURER AND CONSUMER IMPACTS—Continued Category TSL 1 TSL 2 TSL 3 TSL 4 Consumer Average LCC Savings (2014$) PC1 PC2 PC3 PC4 PC5 (≤25.00 pints/day) .................................... (25.01–50.00 pints/day) ........................... (>50.00 pints/day) .................................... (≤8.0 ft 3) .................................................. (≤8.0 ft 3) .................................................. 60 .............................. 157 ............................ 17 .............................. .................................... .................................... 107 ............................ 119 ............................ 142 ............................ .................................... .................................... 107 119 142 242 479 ............................ ............................ ............................ ............................ ............................ 110. 191. 96. 242. 386. 0.5 0.4 4.5 1.9 2.0 ............................. ............................. ............................. ............................. ............................. 1.3. 0.9. 7.2. 6.8. 5.8. Consumer Simple PBP (years) PC1 PC2 PC3 PC4 PC5 (≤25.00 pints/day) .................................... (25.01–50.00 pints/day) ........................... (>50.00 pints/day) .................................... (≤8.0 ft 3) .................................................. (≤8.0 ft 3) .................................................. 0.4 ............................. 0.2 ............................. 8.2 ............................. .................................... .................................... 0.5 ............................. 0.4 ............................. 4.5 ............................. .................................... .................................... % of Consumers That Experience Net Cost PC1 PC2 PC3 PC4 PC5 (≤25.00 pints/day) .................................... (25.01–50.00 pints/day) ........................... (>50.00 pints/day) .................................... (≤8.0 ft 3) .................................................. (≤8.0 ft 3) .................................................. 0 ................................ 0 ................................ 44.9 ........................... .................................... .................................... 0.1 ............................. 0.7 ............................. 28.7 ........................... .................................... .................................... 0.1 ............................. 0.7 ............................. 28.7 ........................... 9.9 ............................. 10.8 ........................... 11.5. 5.1. 54.3. 42.6. 43.4. mstockstill on DSK3G9T082PROD with RULES3 Parentheses indicate negative (¥) values. DOE first considered TSL 4, which represents the max-tech efficiency levels. TSL 4 would save 0.82 quads of energy, an amount DOE considers significant. Under TSL 4, the NPV of consumer benefit would be $3.04 billion using a discount rate of 7 percent, and $6.74 billion using a discount rate of 3 percent. The cumulative emissions reductions at TSL 4 are 50.1 Mt of CO2, 89.4 thousand tons of NOX, 29.5 thousand tons of SO2, 0.11 ton of Hg, 0.61 thousand tons of N2O, and 210.7 thousand tons of CH4. The estimated monetary value of the CO2 emissions reductions at TSL 4 ranges from $362 million to $4,961 million. At TSL 4, the average LCC impact is a savings of $110 for PC1, $191 for PC2, $96 for PC3, $242 for PC4, and $386 for PC5. The simple PBP is 1.3 years for PC1, 0.9 years for PC2, 7.2 years for PC3, 6.8 years for PC4, and 5.8 years for PC5. The fraction of consumers experiencing a net LCC cost is 11.5 percent for PC1, 5.1 percent for PC2, 54.3 percent for PC3, 42.6 percent for PC4, and 43.4 percent for PC5. At TSL 4, the projected change in INPV ranges from a decrease of $72.7 million to a decrease of $52.6 million. If the high end of the range of impacts is reached, TSL 4 could result in a net loss of up to 40.5 percent in INPV for manufacturers. Products that meet the efficiency standards specified by this TSL are estimated to represent less than 2 percent of current annual shipments. As such, manufacturers would have to redesign nearly all products by the VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 expected 2019 projected compliance date to meet demand. Redesigning all units to meet the current max-tech efficiency levels would require considerable capital and product conversion expenditures. At TSL 4, the capital conversion costs total as much as $39.1 million, 3.8 times the industry annual ordinary capital expenditure in 2018 (the year leading up to amended standards). DOE estimates that complete platform redesigns would cost the industry $55.2 million in product conversion costs. These conversion costs largely relate to the extensive research programs required to develop new products that meet the efficiency standards at TSL 4. These costs are equivalent to 10.9 times the industry annual budget for research and development. As such, the conversion costs associated with the changes in products and manufacturing facilities required at TSL 4 would require significant use of manufacturers’ financial reserves (manufacturer capital pools), impacting other areas of business that compete for these resources and significantly reducing INPV. In addition, manufacturers could face a substantial impact on profitability at TSL 4. Because manufacturers are more likely to reduce their margins to maintain a price-competitive product at higher TSLs, especially in the lowercapacity portable dehumidifier segment, DOE expects that TSL 4 would yield impacts closer to the high end of the range of INPV impacts. If the high end of the range of impacts is reached, as DOE expects, TSL 4 could result in a net PO 00000 Frm 00050 Fmt 4701 Sfmt 4700 loss to manufacturers of 40.5 percent of INPV. Additionally, TSL 4 could result in a net loss to whole-home dehumidifier manufacturers of 174.7 percent of INPV, or cause some domestic manufacturers to exit the whole-home dehumidifier market altogether. Beyond the direct financial impact on manufacturers, TSL 4 may also contribute to the potential unavailability of products at certain capacities across the five product classes. To meet TSL 4, all products would be required to incorporate the highest efficiency compressors; however, manufacturers indicated that few such compressors are available in the range of compressor capacities suitable for dehumidifiers, and it is unlikely that substantially more would become available if standards at TSL 4 were adopted. In addition, the specific compressor capacities available at any given time are driven largely by the markets for other products with higher shipments (e.g., room air conditioners), and thus dehumidifier manufacturers may be constrained in their design choices. Because DOE assumed manufacturers would optimize all components at TSL 4, including the use of high-efficiency compressors as well as larger heat exchangers and permanent-magnet blower motors, DOE expects that those dehumidifier platforms for which a suitable high efficiency compressor is not available would be unable to meet the max-tech efficiency levels associated with TSL 4. While this would likely not eliminate entire product classes from the market, E:\FR\FM\13JNR3.SGM 13JNR3 mstockstill on DSK3G9T082PROD with RULES3 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations it has the potential to eliminate dehumidifiers of certain capacities within a given product class. The potential for this impact on manufacturers of high-capacity portable dehumidifiers and whole-home dehumidifiers is exacerbated by this segment’s low production volumes, which limits manufacturers’ ability to influence the availability of higher efficiency components from their vendors. Therefore, the Secretary concludes that at TSL 4 for dehumidifiers, the benefits of energy savings, positive NPV of consumer benefits, emission reductions, and the estimated monetary value of the CO2 emissions reductions would be outweighed by the economic burden on some consumers, the potential impact on product availability, and the impacts on manufacturers, including significantly negative impacts on small domestic manufacturers of high-capacity portable and whole-home dehumidifiers. Consequently, the Secretary has concluded that TSL 4 is not economically justified. DOE then considered TSL 3, which would save an estimated 0.31 quads of energy, an amount DOE considers significant. Under TSL 3, the NPV of consumer benefit would be $1.30 billion using a discount rate of 7 percent, and $2.77 billion using a discount rate of 3 percent. The cumulative emissions reductions at TSL 3 are 19.0 Mt of CO2, 33.9 thousand tons of NOX, 11.3 thousand tons of SO2, 0.04 tons of Hg, 0.23 thousand tons of N2O, and 79.7 thousand tons of CH4. The estimated monetary value of the CO2 emissions reductions at TSL 3 ranges from $140 million to $1,900 million. At TSL 3, the average LCC impact is a savings of $107 for PC1, $119 for PC2, $142 for PC3, $242 for PC4, and $479 for PC5. The simple PBP is 0.5 years for PC1, 0.4 and PC2, 4.5 years for PC3, 1.9 years for PC4, and 2.0 years for PC5. The fraction of consumers experiencing a net LCC cost is 0.1 percent for PC1, 0.7 percent for PC2, 28.7 percent for PC3, 9.9 percent for PC4, and 10.8 percent for PC5. At TSL 3, the projected change in INPV ranges from a decrease of $42.4 million to a decrease of $38.7 million. If the high end of the range of impacts is reached, TSL 3 could result in a net loss of up to 23.6 percent in INPV for manufacturers, with high disproportionate impacts to small, domestic manufacturers of whole-home and high-capacity portable dehumidifiers. The capital conversion costs required by whole-home dehumidifier manufacturers (which VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 includes four small, domestic manufacturers and one larger foreign manufacturer) in order to comply with TSL 3 are estimated to be $1.8 million, 5.4 times the whole-home dehumidifier industry annual ordinary capital expenditure in 2018 (the year leading up to amended standards). DOE estimates that complete platform redesigns would cost the industry $5.5 million in product conversion costs, equivalent to 32.7 times the wholehome dehumidifier industry annual budget for research and development. As a result, TSL 3 could result in a net loss to whole-home dehumidifier industry of 101.4 percent of INPV or cause some domestic manufacturers to exit the whole-home dehumidifier market altogether. Additionally, the manufacturers with the greatest share of the whole-home dehumidifier market are small and domestic and also produce high-capacity portable dehumidifiers. Accordingly, these manufacturers will incur the added burden of compliance with EL 3 for their high-capacity portable dehumidifiers as well as with standards above the baseline for their whole-home dehumidifiers. In aggregate, as detailed in section VII.B of this document, at TSL 3, the typical small manufacturer may incur $2.3 million in capital and product conversion costs in order to maintain existing product lines for both portable and whole-home dehumidifiers. This equates to approximately 56.1 percent of the typical small manufacturer’s annual revenue and 945.1 percent of its annual operating profit. Although some portable dehumidifiers may require higher efficiency compressors, the efficiency levels specified at TSL 3 offer manufacturers multiple design pathways to meet the standard. This in turn would allow manufacturers to maintain product offerings should a high efficiency compressor be unavailable at a given compressor capacity. In addition, a wide variety of units are already available that meet the efficiency levels for portable dehumidifiers specified at TSL 3. The Secretary concludes that at TSL 3 for dehumidifiers, the benefits of energy savings, positive NPV of consumer benefits, emission reductions, and the estimated monetary value of the CO2 emissions reductions would be outweighed by the significantly negative impacts on small domestic manufacturers of high-capacity portable and whole-home dehumidifiers. Consequently, the Secretary has concluded that TSL 3 is not economically justified. PO 00000 Frm 00051 Fmt 4701 Sfmt 4700 38387 DOE then considered TSL 2, which would save an estimated 0.30 quads of energy, an amount DOE considers significant. Under TSL 3, the NPV of consumer benefit would be $1.28 billion using a discount rate of 7 percent, and $2.71 billion using a discount rate of 3 percent. The cumulative emissions reductions at TSL 2 are 18.6 Mt of CO2, 33.1 thousand tons of NOX, 11.0 thousand tons of SO2, 0.04 tons of Hg, 0.23 thousand tons of N2O, and 77.9 thousand tons of CH4. The estimated monetary value of the CO2 emissions reductions at TSL 3 ranges from $137 million to $1,859 million. At TSL 2, the average LCC impact is a savings of $107 for PC1, $119 for PC2, $142 for PC3, $0 for PC4, and $0 for PC5. The simple PBP is 0.5 years for PC1, 0.4 and PC2, 4.5 years for PC3, and zero years for PC4 and PC5. The fraction of consumers experiencing a net LCC cost is 0.1 percent for PC1, 0.7 percent for PC2, 28.7 percent for PC3, and zero percent for PC4 and PC5 because TSL 2 is set at the baseline efficiency level for PC4 and PC5. At TSL 2, the projected change in INPV ranges from a decrease of $37.5 million to a decrease of $34.0 million. If the high end of the range of impacts is reached, TSL 2 could result in a net loss of up to 20.9 percent in INPV for manufacturers. In contrast to TSL 3 and TSL 4, TSL 2 would not result in disproportionate impacts to the wholehome dehumidifier industry because TSL 2 corresponds to the baseline efficiency level for the whole-home product classes. Products that meet the efficiency standards specified at this TSL level represent 39 percent of shipments of all dehumidifiers in 2018 (the year leading up to amended standards). In order to bring the remaining products into compliance with TSL 2, the portable dehumidifier industry may incur capital and product conversion costs of $22.6 million and $29.9 million, respectively. Although, at TSL 2, three out of the five small, domestic manufacturers will incur some costs associated with redesigning highcapacity portable products, only one of these five manufacturers limits its product offerings in the dehumidifier market to the high-capacity portable segment, with most of its products comprising commercial units that are not covered products under this rulemaking. The other two small, domestic manufacturers that produce high-capacity portable products also manufacture whole-home dehumidifiers, and thus their impacts at TSL 2 will be significantly lower than at TSL 3 and TSL 4. TSL 2 will result E:\FR\FM\13JNR3.SGM 13JNR3 38388 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations in little to no adverse impacts for wholehome dehumidifier manufacturing, including the two small, domestic manufacturers that focus exclusively on these dehumidifiers. For these reasons, TSL 2 will minimize disproportionate impacts to small, domestic dehumidifier manufacturers relative to TSL 3 and TSL 4. Although some dehumidifiers may require higher efficiency compressors, the efficiency levels specified at TSL 2 offer manufacturers multiple design pathways to meet the standard. This allows manufacturers to maintain product offerings should a high efficiency compressor be unavailable at a given compressor capacity. In addition, units are already available that meet the efficiency levels specified at TSL 2. The Secretary concludes that at TSL 2 for dehumidifiers, the benefits of energy savings, positive NPV of consumer benefits, emission reductions, estimated monetary value of the CO2 emissions reductions, and positive average LCC savings would outweigh the negative impacts on some consumers and on manufacturers, including the conversion costs that could result in a reduction in INPV for manufacturers of portable dehumidifiers. After carefully considering the analysis and the benefits and burdens of TSL 2, the Secretary concludes that this TSL will offer the maximum improvement in energy efficiency that is technologically feasible and economically justified, and will result in significant conservation of energy without eliminating or making unavailable any product classes or portions of product classes. Therefore, DOE is establishing amended energy conservation standards for dehumidifiers at TSL 2, as indicated in Table V.33. TABLE V.33—AMENDED ENERGY CONSERVATION STANDARDS FOR DEHUMIDIFIERS Portable dehumidifier product capacity (pints/day) Minimum integrated energy factor (L/kWh) 25.00 or less ......................... 25.01–50.00 .......................... 50.01 or more ....................... 1.30 1.60 2.80 Whole-home dehumidifier product case volume (cubic feet) 8.0 or less ............................. More than 8.0 ....................... 1.77 2.41 2. Summary of Annualized Benefits and Costs of the Adopted Standards The benefits and costs of the proposed standards can also be expressed in terms of annualized values. The annualized net benefit is the sum of: (1) The annualized national economic value of the benefits from operating products that meet the proposed standards (consisting primarily of operating cost savings from using less energy, minus increases in product purchase costs, which is another way of representing consumer NPV), and (2) the monetary value of the benefits of CO2 and NOX emission reductions.75 Table V.34 shows the annualized values for dehumidifiers under TSL 3, expressed in 2014$. The results under the primary estimate are as follows. Using a 7-percent discount rate for benefits and costs other than CO2 reductions, for which DOE used a 3percent discount rate along with the SCC series corresponding to a value of $40.5/ton in 2015 (in 2014$), the estimated cost of the proposed standards for dehumidifiers is $11 million per year in increased equipment costs, while the estimated annualized benefits are $136 million per year in reduced equipment operating costs, $34 million per year in CO2 reductions, and $2.9 million per year in reduced NOX emissions. In this case, the net benefit amounts to $163 million per year. Using a 3-percent discount rate for all benefits and costs and the SCC series corresponding to a value of $40.5/ton in 2015 (in 2014$), the estimated cost of the proposed standards for dehumidifiers in today’s rule is $10 million per year in increased equipment costs, while the benefits are $162 million per year in reduced operating costs, $34 million per year in CO2 reductions, and $3.7 million per year in reduced NOX emissions. In this case, the net benefit amounts to $189 million per year. TABLE V.34—ANNUALIZED BENEFITS AND COSTS OF PROPOSED AMENDED STANDARDS (TSL 3) FOR DEHUMIDIFIERS SOLD IN 2019–2048 Million 2014$/year Discount rate Primary estimate * Low net benefits estimate * 136 ................... 162 ................... 10 ..................... 34 ..................... 50 ..................... 104 ................... 2.9 .................... 3.7 .................... 150 to 243 ........ 173 ................... 131 ................... 154 ................... 10 ..................... 34 ..................... 49 ..................... 102 ................... 2.9 .................... 3.7 .................... 144 to 236 ........ 167 ................... High net benefits estimate * Benefits Consumer Operating Cost Savings ............................................ mstockstill on DSK3G9T082PROD with RULES3 CO2 Reduction at $12.2/t ** ........................................................ CO2 Reduction at $40.0/t ** ........................................................ CO2 Reduction at $62.3/t ** ........................................................ CO2 Reduction at $117/t ** ......................................................... NOX Reduction † ......................................................................... Total Benefits †† ......................................................................... 75 To convert the time-series of costs and benefits into annualized values, DOE calculated a present value in 2014, the year used for discounting the NPV of total consumer costs and savings. For the benefits, DOE calculated a present value associated with each year’s shipments in the year in which the VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 7% ............................. 3% ............................. 5% ............................. 3% ............................. 2.5% .......................... 3% ............................. 7% ............................. 3% ............................. 7% plus CO2 range ... 7% ............................. shipments occur (2020, 2030, etc.), and then discounted the present value from each year to 2014. The calculation uses discount rates of 3 and 7 percent for all costs and benefits except for the value of CO2 reductions, for which DOE used casespecific discount rates, as shown in Table V.22. PO 00000 Frm 00052 Fmt 4701 Sfmt 4700 141. 169. 11. 35. 51. 106. 6.7. 8.6. 159 to 254. 183. Using the present value, DOE then calculated the fixed annual payment over a 30-year period, starting in the compliance year that yields the same present value. E:\FR\FM\13JNR3.SGM 13JNR3 38389 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations TABLE V.34—ANNUALIZED BENEFITS AND COSTS OF PROPOSED AMENDED STANDARDS (TSL 3) FOR DEHUMIDIFIERS SOLD IN 2019–2048—Continued Million 2014$/year Discount rate Primary estimate * Low net benefits estimate * High net benefits estimate * 3% plus CO2 range ... 3% ............................. 176 to 269 ........ 200 ................... 168 to 260 ........ 192 ................... 188 to 284. 213. 11 ..................... 10 ..................... 11 ..................... 12 ..................... 10. 10. 139 163 165 189 132 156 157 180 148 to 244. 173. 178 to 274. 203. Costs Consumer Incremental Product Costs ........................................ 7% ............................. 3% ............................. Total Net Benefits Total †† ........................................................................................ 7% 7% 3% 3% plus CO2 range ... ............................. plus CO2 range ... ............................. to 232 ........ ................... to 259 ........ ................... to 224 ........ ................... to 248 ........ ................... * This table presents the costs and benefits associated with dehumidifiers shipped in 2019–2048. These results include benefits to consumers which accrue after 2048 from the products purchased in 2019–2048. The costs account for the incremental variable and fixed costs incurred by manufacturers due to the standard, some of which may be incurred in preparation for the rule. ** The CO2 values represent global monetized values of the SCC, in 2014$, in 2015 under several scenarios of the updated SCC values. The first three cases use the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The SCC time series incorporate an escalation factor. † The $/ton values used for NOX are described in section 0. DOE estimated the monetized value of NOX emissions reductions using benefit per ton estimates from the Regulatory Impact Analysis for the Clean Power Plan Final Rule, published in August 2015 by EPA’s Office of Air Quality Planning and Standards. (Available at: http://www.epa.gov/cleanpowerplan/clean-power-plan-final-rule-regulatory-impact-analysis.) See section IV.L.2 for further discussion. Note that the agency is primarily using a national benefit-per-ton estimate for NOX emitted from the Electricity Generating Unit sector based on an estimate of premature mortality derived from the ACS study (Krewski et al., 2009). If the benefit-perton estimates were based on the Six Cities study (Lepuele et al., 2011), the values would be nearly two-and-a-half times larger. †† Total Benefits for both the 3% and 7% cases are derived using the series corresponding to average SCC with 3-percent discount rate ($40.0/t case). mstockstill on DSK3G9T082PROD with RULES3 VI. Certification Reporting and Enforcement Requirements VII. Procedural Issues and Regulatory Review In the July 2015 Test Procedure Final Rule, DOE amended the sampling plan and certification reporting requirements for dehumidifiers in 10 CFR 429.36 to clarify how manufacturers must make representations of capacity, and for whole-home dehumidifiers, the case volume of a basic model. DOE also amended the certification reporting requirements to specify the productspecific information that must be reported for each basic model. 80 FR 45801, 45819 (July 31, 2015). In this final rule, DOE further amends section 10 CFR 429.36(a) to provide rounding instructions for the reported IEF and to require that products capable of operating as both a portable and whole-home dehumidifier be rated and certified under both configurations, and section 10 CFR 429.36(b)(2) to detail the specific reporting requirements when testing according to appendix X and appendix X1. In the July 2015 Test Procedure Final Rule, DOE amended the enforcement requirements for dehumidifiers in 10 CFR 429.134(f). Id. In this final rule, DOE amends the enforcement provisions to update the referenced efficiency metric to also include IEF. A. Review Under Executive Orders 12866 and 13563 VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 Section 1(b)(1) of Executive Order 12866, ‘‘Regulatory Planning and Review,’’ 58 FR 51735 (Oct. 4, 1993), requires each agency to identify the problem that it intends to address, including, where applicable, the failures of private markets or public institutions that warrant new agency action, as well as to assess the significance of that problem. The problems that the adopted standards for dehumidifiers are intended to address are as follows: (1) Insufficient information and the high costs of gathering and analyzing relevant information leads some consumers to miss opportunities to make cost-effective investments in energy efficiency. (2) In some cases the benefits of more efficient equipment are not realized due to misaligned incentives between purchasers and users. An example of such a case is when the equipment purchase decision is made by a building contractor or building owner who does not pay the energy costs. (3) There are external benefits resulting from improved energy efficiency of appliances that are not PO 00000 Frm 00053 Fmt 4701 Sfmt 4700 captured by the users of such equipment. These benefits include externalities related to public health, environmental protection and national energy security that are not reflected in energy prices, such as reduced emissions of air pollutants and greenhouse gases that impact human health and global warming. DOE attempts to qualify some of the external benefits through use of social cost of carbon values. The Administrator of the Office of Information and Regulatory Affairs (OIRA) in the OMB has determined that the proposed regulatory action is a significant regulatory action under section (3)(f) of Executive Order 12866. Accordingly, pursuant to section 6(a)(3)(B) of the Order, DOE has provided to OIRA: (i) The text of the draft regulatory action, together with a reasonably detailed description of the need for the regulatory action and an explanation of how the regulatory action will meet that need; and (ii) An assessment of the potential costs and benefits of the regulatory action, including an explanation of the manner in which the regulatory action is consistent with a statutory mandate. DOE has included these documents in the rulemaking record. E:\FR\FM\13JNR3.SGM 13JNR3 mstockstill on DSK3G9T082PROD with RULES3 38390 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations In addition, the Administrator of OIRA has determined that the proposed regulatory action is an ‘‘economically’’ significant regulatory action under section (3)(f)(1) of Executive Order 12866. Accordingly, pursuant to section 6(a)(3)(C) of the Order, DOE has provided to OIRA an assessment, including the underlying analysis, of benefits and costs anticipated from the regulatory action, together with, to the extent feasible, a quantification of those costs; and an assessment, including the underlying analysis, of costs and benefits of potentially effective and reasonably feasible alternatives to the planned regulation, and an explanation why the planned regulatory action is preferable to the identified potential alternatives. These assessments can be found in the technical support document for this rulemaking. DOE has also reviewed this regulation pursuant to Executive Order 13563, issued on January 18, 2011. (76 FR 3281, Jan. 21, 2011) Executive Order 13563 is supplemental to and explicitly reaffirms the principles, structures, and definitions governing regulatory review established in Executive Order 12866. To the extent permitted by law, agencies are required by Executive Order 13563 to: (1) Propose or adopt a regulation only upon a reasoned determination that its benefits justify its costs (recognizing that some benefits and costs are difficult to quantify); (2) tailor regulations to impose the least burden on society, consistent with obtaining regulatory objectives, taking into account, among other things, and to the extent practicable, the costs of cumulative regulations; (3) select, in choosing among alternative regulatory approaches, those approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity); (4) to the extent feasible, specify performance objectives, rather than specifying the behavior or manner of compliance that regulated entities must adopt; and (5) identify and assess available alternatives to direct regulation, including providing economic incentives to encourage the desired behavior, such as user fees or marketable permits, or providing information upon which choices can be made by the public. DOE emphasizes as well that Executive Order 13563 requires agencies to use the best available techniques to quantify anticipated present and future benefits and costs as accurately as possible. In its guidance, OIRA has emphasized that such techniques may include identifying changing future VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 compliance costs that might result from technological innovation or anticipated behavioral changes. For the reasons stated in the preamble, DOE believes that this final rule is consistent with these principles, including the requirement that, to the extent permitted by law, benefits justify costs and that net benefits are maximized. B. Review Under the Regulatory Flexibility Act The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires preparation of a final regulatory flexibility analysis (FRFA) for any final rule where the agency was first required by law to publish a proposed rule for public comment. As required by Executive Order 13272, ‘‘Proper Consideration of Small Entities in Agency Rulemaking,’’ 67 FR 53461 (Aug. 16, 2002), DOE published procedures and policies on February 19, 2003, to ensure that the potential impacts of its rules on small entities are properly considered during the rulemaking process. 68 FR 7990. DOE has made its procedures and policies available on the Office of the General Counsel’s Web site (http:// energy.gov/gc/office-general-counsel). DOE has prepared the following FRFA for the products that are the subject of this rulemaking. 1. Statement of the Need for, and Objectives of, the Rule The need for, and objectives of this final rule are stated elsewhere in the preamble and not repeated here. 2. Significant Issues Raised by Public Comment Significant issues raised by public comment in response to the initial regulatory flexibility analysis and the economic impacts of the rule are provided in section IV.J.3 and not repeated here. As discussed in section IV.J.3, based on those comments, DOE updated its analysis of manufacturer impacts, including small business impacts, for this final rule. The standard levels adopted in this final rule were selected based on updated engineering and economic analyses. 3. Response to Comments From the Small Business Administration’s Chief Counsel for Advocacy The SBA’s Chief Counsel for Advocacy did not submit comments on this rulemaking. PO 00000 Frm 00054 Fmt 4701 Sfmt 4700 4. Description and Estimated Number of Small Entities Regulated a. Methodology for Estimating the Number of Small Entities For the manufacturers of dehumidifiers, the SBA has set a size threshold, which defines those entities classified as ‘‘small businesses’’ for the purposes of the Regulatory Flexibility Act. DOE used the SBA’s small business size standards to determine whether any small entities would be subject to the requirements of the rule. See 13 CFR part 121. The size standards are listed by North American Industry Classification System (NAICS) code and industry description and are available at: www.sba.gov/sites/default/files/files/ Size_Standards_Table.pdf. Manufacturing of whole-home dehumidifiers is classified under NAICS codes 333415: Air-Conditioning and Warm Air Heating Equipment and Commercial and Industrial Refrigeration Equipment Manufacturing, whereas manufacturing of portable dehumidifiers is classified under 335210: Small Electrical Appliance Manufacturing. The SBA sets a threshold of 1,250 employees or less and 1,500 employees or less for an entity to be considered as a small business in these industry categories, respectively. To estimate the number of companies that could be small business manufacturers of products covered by this rulemaking, DOE conducted a market survey using available public information to identify potential small manufacturers. DOE’s research included searches of public databases (e.g., DOE’s Compliance Certification Database,76 the SBA Database 77), individual company Web sites, and market research tools (e.g., Hoovers Web site 78) to create a list of companies that manufacture or sell products covered by this rulemaking. DOE also asked stakeholders and industry representatives if they were aware of any other small manufacturers during manufacturer interviews and at DOE public meetings. DOE reviewed publicly available data and contacted select companies on its list, as necessary, to determine whether they met the SBA’s definition of a small business manufacturer of covered dehumidifiers. DOE screened out companies that do not manufacture products covered by this rulemaking, do not meet the 76 See http://www.regulations.doe.gov/ certification-data/. 77 See http://dsbs.sba.gov/dsbs/search/dsp_ dsbs.cfm. 78 See http://www.hoovers.com/. E:\FR\FM\13JNR3.SGM 13JNR3 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations definition of a ‘‘small business,’’ or are foreign owned and operated. DOE initially identified 25 manufacturers of dehumidifier products sold in the United States. DOE then determined that of the 25 companies, 20 were either large manufacturers, exclusively import products manufactured overseas, or are foreign owned and operated. DOE identified the remaining five manufacturers as domestic manufacturers that meet the SBA’s definition of a ‘‘small business’’ and manufacture products covered by this rulemaking. The five domestic small business manufacturers of dehumidifiers identified account for a small fraction of total industry shipments. In 2015, 98.5 percent of dehumidifiers sold in the United States were small portable units (belonging to product classes 1 and 2) and were made by large, diversified manufacturers. The remaining 1.5 percent of the market consists of highcapacity portable and whole-home dehumidifiers, which are primarily manufactured by small business manufacturers. It is estimated that small, domestic manufacturers account for 50 percent of high-capacity portable U.S. shipments and the overwhelming majority of whole-home dehumidifier U.S. shipments. The two small, domestic manufacturers that account for the greatest share of the combined highcapacity portable and whole-home market segments manufacture both high-capacity portable and whole-home products. Of the remaining small, domestic manufacturers, one produces only high-capacity portable dehumidifiers and two produce only whole-home dehumidifiers. mstockstill on DSK3G9T082PROD with RULES3 b. Manufacturer Participation Before issuing this final rule, DOE attempted to contact all the small business manufacturers of dehumidifiers identified. Two of these small business manufacturers responded to DOE and consented to being interviewed as part of the manufacturing impact analysis. DOE also obtained information about small business impacts while interviewing large manufacturers. c. Comparison of Large and Small Entities Several factors may contribute to a disproportionate burden on small business manufacturers from amended energy conservation standards for dehumidifiers relative to their larger counterparts. One way in which small manufacturers could be at a disadvantage is that they may be disproportionately affected by product VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 and capital conversion costs. Product redesign, testing, and certification costs tend to be fixed per basic model and do not scale with sales volume. Both large and small business manufacturers must make investments in R&D to redesign their products, but small businesses lack the sales volumes to sufficiently recoup these upfront investments without substantially marking up their products. Similarly, upfront capital investments in new manufacturing capital for platform redesigns, as well as depreciated manufacturing capital, can be spread across a lower volume of shipments for small business manufacturers. In addition, because small business manufacturers typically have fewer engineers than large manufacturers, they must allocate a greater portion of their available human resources to meet an amended regulatory standard. Because engineers may need to spend more time redesigning and testing existing models as a result of the amended standard, they may have less time to develop new products. Furthermore, smaller manufacturers may lack the purchasing power of larger manufacturers. For example, because fan motor suppliers give volume discounts to manufacturers based on the number of motors they purchase, larger manufacturers may have a pricing advantage because they make higher volume purchases. This purchasing power difference between high-volume and low-volume orders applies to other dehumidifier components as well, including compressors and heat exchangers. DOE expects that certain larger manufacturers of lower-capacity portable dehumidifiers may even manufacture heat exchangers in-house. Additionally, because small business manufacturers produce higher-capacity dehumidifiers, they typically require larger and/or custom-made components (e.g., larger compressors and heat exchangers), compared to the lowercapacity portable dehumidifier manufacturers that account for the majority of the dehumidifier market. Because of the low-volume nature of the high-capacity portable dehumidifier and whole-home dehumidifier market, certain technological improvements to components may be developed only for lower-capacity portable products, or with significant lag time for application in high-capacity portable dehumidifier and whole-home dehumidifier products. In terms of cumulative regulatory burden faced by small domestic dehumidifier manufacturers, the small manufacturers with the greatest dehumidifier market share are more PO 00000 Frm 00055 Fmt 4701 Sfmt 4700 38391 specialized and concentrated in dehumidifier manufacturing and, thus, manufacture a smaller range of products than larger companies. The other products that some of the small manufacturers also produce include humidifiers, air purifiers and desiccant wheels. None of these are currently regulated by DOE. However, one small manufacturer (with low market share among small dehumidifier manufacturers) also produces residential furnaces. This small manufacturer produces only whole-home dehumidifiers and would not be burdened by the whole-home standard level established in this document. In terms of access to the capital required to cover the conversion costs associated with reaching the proposed standards, small business manufacturers would likely need to take on additional debt, whereas larger diversified manufacturers of small portable products would be better equipped to fund purchases with existing cash flow from operations. Additionally, since the recession of 2007 and 2008, small business lending has dropped substantially due to a combination of tightened lending standards, increasing collateral requirements and reduced focus on small business credit markets. Thus, small businesses generally have less access to capital than larger companies. 5. Description and Estimate of Compliance Requirements DOE derived industry conversion costs using a top-down approach described in section IV.J.2.a. Using product platform counts by product class and manufacturer, DOE estimated the distribution of industry conversion costs between small manufacturers and large manufacturers. Using its count of manufacturers, DOE calculated capital conversion costs (Table VII.1) and product conversion costs (Table VII.2) for an average small manufacturer versus an average large manufacturer. To provide context on the size of the conversion costs relative to the size of the businesses, DOE presents the conversion costs relative to annual revenue and annual operating profit at each TSL for the average small manufacturer (Table VII.3) and the average large manufacturer (Table VII.4). The current annual revenue and annual operating profit estimates are derived from the GRIM’s industry revenue calculations and the market share breakdowns of small versus large manufacturers. E:\FR\FM\13JNR3.SGM 13JNR3 38392 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations TABLE VII.1—COMPARISON OF TYPICAL SMALL AND LARGE MANUFACTURER’S CAPITAL CONVERSION COSTS Capital conversion costs for typical small manufacturer (2014 $M) Trial standard level TSL TSL TSL TSL 1 2 3 4 ............................................................................................................................... ............................................................................................................................... ............................................................................................................................... ............................................................................................................................... Capital conversion costs for typical large manufacturer (2014 $M) $0.2 0.2 0.6 0.8 $0.1 1.3 1.3 2.1 TABLE VII.2—COMPARISON OF TYPICAL SMALL AND LARGE MANUFACTURER’S PRODUCT CONVERSION COSTS Product conversion costs for typical small manufacturer (2014 $M) Trial standard level TSL TSL TSL TSL 1 2 3 4 ............................................................................................................................... ............................................................................................................................... ............................................................................................................................... ............................................................................................................................... Product conversion costs for typical large manufacturer (2014 $M) $0.5 0.8 1.7 2.4 $0.0 1.5 1.5 2.5 TABLE VII.3—IMPACTS OF CONVERSION COSTS ON A TYPICAL SMALL MANUFACTURER Capital conversion costs (2014 $M) Trial standard level TSL TSL TSL TSL 1 2 3 4 ....................................................... ....................................................... ....................................................... ....................................................... $0.2 0.2 0.6 0.8 Conversion costs/ annual revenue (%) Product conversion costs (2014 $M) $0.5 0.8 1.9 2.5 Conversion costs/ annual operating profit (%) 15.3 24.9 56.1 78.0 258.1 419.1 945.1 1313.8 Conversion costs/ conversion period revenue * (%) 5.1 8.3 18.7 26.0 Conversion costs/ conversion period operating profit * (%) 86.0 139.7 315.0 437.9 * Note: The conversion period, the time between the final rule publication year and the compliance year for this rulemaking, is 3 years. Annual Revenues, and Operating Profit figures are for 2015. TABLE VII.4—IMPACTS OF CONVERSION COSTS ON A TYPICAL LARGE MANUFACTURER Capital conversion costs (2014 $M) Trial standard level TSL TSL TSL TSL 1 2 3 4 ....................................................... ....................................................... ....................................................... ....................................................... $0.1 1.3 1.3 2.1 Conversion costs/ annual revenue (%) Product conversion costs (2014 $M) $0.0 1.5 1.5 2.5 Conversion costs/ annual operating profit (%) 0.0 0.8 0.8 1.3 0.6 13.1 13.1 21.4 Conversion costs/ conversion period revenue * (%) Conversion costs/ conversion period operating profit * (%) 0.0 0.3 0.3 0.4 0.2 4.4 4.4 7.1 mstockstill on DSK3G9T082PROD with RULES3 * Note: The conversion period, the time between the final rule publication year and the compliance year for this rulemaking, is 3 years. Annual Revenues, and Operating Profit figures are for 2015. At the established standard level (TSL 2), DOE estimates total conversion costs associated with amended energy conservation standards for an average small manufacturer to be $1.01 million, which is approximately 24.9 percent of annual revenue and 419.1 percent of annual operating profit. This suggests that an average small manufacturer would need to reinvest roughly 139.7 percent of its operating profit per year over the conversion period to comply with standards. At this TSL, the standard level for whole-home VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 dehumidifiers is the baseline. Accordingly three of the five small, domestic manufacturers may incur costs associated only with the high-capacity portable segment of their business. The total conversion costs associated with new and amended energy conservation standards for an average large manufacturer is $2.79 million, which is approximately 0.8 percent of annual revenue and 13.1 percent of annual operating profit. This suggests that an average large manufacturer would need to reinvest roughly 4.4 PO 00000 Frm 00056 Fmt 4701 Sfmt 4700 percent of its operating profit per year over the 3-year conversion period. 6. Significant Alternatives to the Rule The discussion in the previous section analyzes impacts on small businesses that would result from the adopted standards, represented by TSL 2. In reviewing alternatives to the adopted standards, DOE examined an energy conservation standard set at both higher and lower efficiency levels. As discussed in section V. C., DOE’s analysis shows that TSL 3 achieves E:\FR\FM\13JNR3.SGM 13JNR3 mstockstill on DSK3G9T082PROD with RULES3 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations approximately 3 percent higher energy savings than TSL 2. TSL 4 achieves approximately 173 percent higher savings than TSL 2. However, as discussed in section V.C., DOE rejected these TSLs in part due to the negative INPV results and substantial small business impacts. The estimated conversion costs for small business manufacturers are significantly higher at TSL 3 and TSL 4 than at TSL 2. To comply with TSL 3, the average small manufacturer must make $2.27 million in conversion cost investments, which is $1.26 million more than at TSL 2. At TSL 3, the projected change in INPV also ranges from a decrease of $42.4 million to a decrease of $38.7 million. If the high end of the range of impacts is reached, TSL 3 could result in a net loss of up to 23.6 percent in INPV for manufacturers, with high disproportionate impacts to wholehome dehumidifier manufacturers, the majority of which are small, domestic companies. The capital conversion costs required by whole-home dehumidifier manufacturers to comply with TSL 3 are estimated to be $1.8 million, 5.4 times the whole-home dehumidifier industry annual ordinary capital expenditure in 2018 (the year leading up to amended standards). DOE estimates that complete platform redesigns would cost the industry $5.5 million in product conversion costs, equivalent to 32.7 times the whole-home dehumidifier industry annual budget for research and development. As a result, TSL 3 could result in a net loss to whole-home dehumidifier manufacturers of 101.4 percent of INPV (compared to no impacts at TSL 2) or cause some domestic manufacturers to exit the whole-home dehumidifier market altogether. To comply with TSL 4, the average small manufacturer must make $3.15 million in conversion cost investments, which is $2.15 million more than at TSL 2. INPV losses and impacts to the industry, and particularly to small manufacturers, would be even more significant than at TSL 3. DOE’s analysis also shows that while TSL 1 would reduce the impacts on small business manufacturers ($0.62 million conversion costs for the typical small manufacturers), it would come at the expense of a reduction in energy savings. TSL 1 achieves 77-percent lower energy savings compared to the energy savings at TSL 2. DOE has concluded that establishing standards at TSL 2 balances the benefits of the energy savings at TSL 2 with the potential burdens placed on dehumidifier manufacturers, including small business manufacturers. As VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 required by EPCA, DOE adopts in this final rule the energy conservation standards that achieve the maximum improvement in energy efficiency that is technologically feasible and economically justified. Accordingly, DOE is not adopting one of the other TSLs considered in the analysis, or the other policy alternatives examined as part of the regulatory impacts analysis and included in chapter 17 of the final rule TSD. Additional compliance flexibilities may be available through other means. For example, individual manufacturers may petition for a waiver of the applicable test procedure. (See 10 CFR 431.401) Further, EPCA provides that a manufacturer whose annual gross revenue from all of its operations does not exceed $8 million may apply for an exemption from all or part of an energy conservation standard for a period not longer than 24 months after the effective date of a final rule establishing the standard. Additionally, Section 504 of the Department of Energy Organization Act, 42 U.S.C. 7194, provides authority for the Secretary to adjust a rule issued under EPCA in order to prevent ‘‘special hardship, inequity, or unfair distribution of burdens’’ that may be imposed on that manufacturer as a result of such rule. Manufacturers should refer to 10 CFR part 430, subpart E, and part 1003 for additional details. C. Review Under the Paperwork Reduction Act Manufacturers of dehumidifiers must certify to DOE that their products comply with any applicable energy conservation standards. In certifying compliance, manufacturers must test their products according to the DOE test procedures for dehumidifiers, including any amendments adopted for those test procedures. DOE has established regulations for the certification and recordkeeping requirements for all covered consumer products and commercial equipment, including dehumidifiers. See generally 10 CFR part 429. The collection-of-information requirement for the certification and recordkeeping is subject to review and approval by OMB under the Paperwork Reduction Act (PRA). This requirement has been approved by OMB under OMB control number 1910–1400. Public reporting burden for the certification is estimated to average 30 hours per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. PO 00000 Frm 00057 Fmt 4701 Sfmt 4700 38393 Notwithstanding any other provision of the law, no person is required to respond to, nor shall any person be subject to a penalty for failure to comply with, a collection of information subject to the requirements of the PRA, unless that collection of information displays a currently valid OMB Control Number. D. Review Under the National Environmental Policy Act of 1969 Pursuant to the National Environmental Policy Act (NEPA) of 1969, DOE has determined that the rule fits within the category of actions included in Categorical Exclusion (CX) B5.1 and otherwise meets the requirements for application of a CX. See 10 CFR part 1021, App. B, B5.1(b); 1021.410(b) and App. B, B(1)–(5). The rule fits within this category of actions because it is a rulemaking that establishes energy conservation standards for consumer products or industrial equipment, and for which none of the exceptions identified in CX B5.1(b) apply. Therefore, DOE has made a CX determination for this rulemaking, and DOE does not need to prepare an Environmental Assessment or Environmental Impact Statement for this rule. DOE’s CX determination for this rule is available at http:// energy.gov/nepa/categorical-exclusioncx-determinations-cx. E. Review Under Executive Order 13132 Executive Order 13132, ‘‘Federalism.’’ 64 FR 43255 (Aug. 10, 1999) imposes certain requirements on Federal agencies formulating and implementing policies or regulations that preempt State law or that have Federalism implications. The Executive Order requires agencies to examine the constitutional and statutory authority supporting any action that would limit the policymaking discretion of the States and to carefully assess the necessity for such actions. The Executive Order also requires agencies to have an accountable process to ensure meaningful and timely input by State and local officials in the development of regulatory policies that have Federalism implications. On March 14, 2000, DOE published a statement of policy describing the intergovernmental consultation process it will follow in the development of such regulations. 65 FR 13735. DOE has examined this rule and has determined that it would not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. EPCA governs and E:\FR\FM\13JNR3.SGM 13JNR3 38394 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations prescribes Federal preemption of State regulations as to energy conservation for the products that are the subject of this final rule. States can petition DOE for exemption from such preemption to the extent, and based on criteria, set forth in EPCA. (42 U.S.C. 6297) Therefore, no further action is required by Executive Order 13132. mstockstill on DSK3G9T082PROD with RULES3 F. Review Under Executive Order 12988 With respect to the review of existing regulations and the promulgation of new regulations, section 3(a) of Executive Order 12988, ‘‘Civil Justice Reform,’’ imposes on Federal agencies the general duty to adhere to the following requirements: (1) Eliminate drafting errors and ambiguity; (2) write regulations to minimize litigation; (3) provide a clear legal standard for affected conduct rather than a general standard; and (4) promote simplification and burden reduction. 61 FR 4729 (Feb. 7, 1996). Regarding 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, to the extent permitted by law, this final rule meets the relevant standards of Executive Order 12988. G. Review Under the Unfunded Mandates Reform Act of 1995 Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) requires each Federal agency to assess the effects of Federal regulatory actions on State, local, and Tribal governments and the private sector. Public Law 104–4, sec. 201 (codified at 2 U.S.C. 1531). For a 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 VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 to publish a written statement that estimates the resulting costs, benefits, and other effects on the national economy. (2 U.S.C. 1532(a), (b)) The UMRA also requires a Federal agency to develop an effective process to permit timely input by elected officers of State, local, and Tribal governments on a ‘‘significant intergovernmental mandate,’’ and requires an agency plan for giving notice and opportunity for timely input to potentially affected small governments before establishing any requirements that might significantly or uniquely affect them. On March 18, 1997, DOE published a statement of policy on its process for intergovernmental consultation under UMRA. 62 FR 12820. DOE’s policy statement is also available at http:// energy.gov/sites/prod/files/gcprod/ documents/umra_97.pdf. DOE has concluded that this final rule does not require expenditures of $100 million or more in any one year on the private sector. The final rule is likely to result in expenditures of $100 million or more, but there is no requirement that mandates that result. Such expenditures may include: (1) Investment in research and development and in capital expenditures by dehumidifier manufacturers in the years between the final rule and the compliance date for the new standards, and (2) incremental additional expenditures by consumers to purchase higher-efficiency dehumidifiers, starting at the compliance date for the applicable standard. Section 202 of UMRA authorizes a Federal agency to respond to the content requirements of UMRA in any other statement or analysis that accompanies the final 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 document and chapter 17 of the TSD for this final rule respond to those requirements. Under section 205 of UMRA, the Department is obligated to identify and consider a reasonable number of regulatory alternatives before promulgating a rule for which a written statement under section 202 is required. (2 U.S.C. 1535(a)) DOE is required to select from those alternatives the most cost-effective and least burdensome alternative that achieves the objectives of the rule unless DOE publishes an explanation for doing otherwise, or the selection of such an alternative is inconsistent with law. In accordance PO 00000 Frm 00058 Fmt 4701 Sfmt 4700 with the statutory provisions discussed in this document, this final rule establishes amended energy conservation standards for dehumidifiers 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 chapter 17 of the TSD for this final rule. H. Review Under the Treasury and General Government Appropriations Act, 1999 Section 654 of the Treasury and General Government Appropriations Act, 1999 (Pub. L. 105–277) requires Federal agencies to issue a Family Policymaking Assessment for any rule that may affect family well-being. This rule would not have any impact on the autonomy or integrity of the family as an institution. Accordingly, DOE has concluded that it is not necessary to prepare a Family Policymaking Assessment. I. Review Under Executive Order 12630 Pursuant to Executive Order 12630, ‘‘Governmental Actions and Interference with Constitutionally Protected Property Rights’’ 53 FR 8859 (March 18, 1988), DOE has determined that this rule would not result in any takings that might require compensation under the Fifth Amendment to the U.S. Constitution. J. Review Under the Treasury and General Government Appropriations Act, 2001 Section 515 of the Treasury and General Government Appropriations Act, 2001 (44 U.S.C. 3516, note) provides for Federal agencies to review most disseminations of information to the public under information quality guidelines established by each agency pursuant to general guidelines issued by OMB. OMB’s guidelines were published at 67 FR 8452 (Feb. 22, 2002), and DOE’s guidelines were published at 67 FR 62446 (Oct. 7, 2002). DOE has reviewed this final rule under the OMB and DOE guidelines and has concluded that it is consistent with applicable policies in those guidelines. K. Review Under Executive Order 13211 Executive Order 13211, ‘‘Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use,’’ 66 FR 28355 (May 22, 2001), requires Federal agencies to prepare and submit to OIRA at OMB, a Statement of Energy Effects for any significant energy action. A ‘‘significant E:\FR\FM\13JNR3.SGM 13JNR3 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations mstockstill on DSK3G9T082PROD with RULES3 energy action’’ is defined as any action by an agency that promulgates or is expected to lead to promulgation of a final rule, and that: (1) Is a significant regulatory action under Executive Order 12866, or any successor order; and (2) is likely to have a significant adverse effect on the supply, distribution, or use of energy, or (3) is designated by the Administrator of OIRA as a significant energy action. For any significant energy action, the agency must give a detailed statement of any adverse effects on energy supply, distribution, or use should the proposal be implemented, and of reasonable alternatives to the action and their expected benefits on energy supply, distribution, and use. DOE has concluded that this regulatory action, which sets forth amended energy conservation standards for dehumidifiers, is not a significant energy action because the standards are not likely to have a significant adverse effect on the supply, distribution, or use of energy, nor has it been designated as such by the Administrator at OIRA. Accordingly, DOE has not prepared a Statement of Energy Effects on this final rule. L. Review Under the Information Quality Bulletin for Peer Review On December 16, 2004, OMB, in consultation with the Office of Science and Technology Policy (OSTP), issued its Final Information Quality Bulletin for Peer Review (the Bulletin). 70 FR 2664 (Jan. 14, 2005). The Bulletin establishes that certain scientific information shall be peer reviewed by qualified specialists before it is disseminated by the Federal Government, including influential scientific information related to agency regulatory actions. The purpose of the bulletin is to enhance the quality and credibility of the Government’s scientific information. Under the Bulletin, the energy conservation standards rulemaking analyses are ‘‘influential scientific information,’’ which the Bulletin defines as ‘‘scientific information the agency reasonably can determine will have, or does have, a clear and substantial impact on important public policies or private sector decisions.’’ Id at FR 2667. In response to OMB’s Bulletin, DOE conducted formal in-progress peer reviews of the energy conservation standards development process and analyses and has prepared a Peer Review Report pertaining to the energy conservation standards rulemaking analyses. Generation of this report involved a rigorous, formal, and documented evaluation using objective criteria and qualified and independent VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 reviewers to make a judgment as to the technical/scientific/business merit, the actual or anticipated results, and the productivity and management effectiveness of programs and/or projects. The ‘‘Energy Conservation Standards Rulemaking Peer Review Report’’ dated February 2007 has been disseminated and is available at the following Web site: www1.eere.energy.gov/buildings/ appliance_standards/peer_review.html. M. Congressional Notification As required by 5 U.S.C. 801, DOE will report to Congress on the promulgation of this rule prior to its effective date. The report will state that it has been determined that the rule is a ‘‘major rule’’ as defined by 5 U.S.C. 804(2). VIII. Approval of the Office of the Secretary The Secretary of Energy has approved publication of this final rule. List of Subjects 10 CFR Part 429 Energy conservation, Household appliances, Imports. 10 CFR Part 430 Issued in Washington, DC, on May 20, 2016. David Friedman, Principal Deputy Assistant Secretary, Energy Efficiency and Renewable Energy. For the reasons set forth in the preamble, DOE amends parts 429 and 430 of chapter II of title 10 of the Code of Federal Regulations, as set forth below: PART 429—CERTIFICATION, COMPLIANCE, AND ENFORCEMENT FOR CONSUMER PRODUCTS AND COMMERCIAL AND INDUSTRIAL EQUIPMENT 1. The authority citation for part 429 continues to read as follows: ■ Authority: 42 U.S.C. 6291–6317. 2. Section 429.36 is amended by adding paragraphs (a)(5) and (6) and revising paragraph (b)(2) to read as follows: ■ § 429.36 Dehumidifiers. (a) * * * PO 00000 Frm 00059 Fmt 4701 (5) Round the value of energy factor or integrated energy factor for a basic model to two decimal places. (6) Dehumidifiers distributed in commerce by the manufacturer with the ability to operate as both a portable and whole-home dehumidifier by means of installation or removal of an optional ducting kit, must be rated and certified under both configurations. (b) * * * (2) Pursuant to § 429.12(b)(13), a certification report must include the following public product-specific information: (i) For dehumidifiers tested in accordance with appendix X: The energy factor in liters per kilowatt hour (liters/kWh) and capacity in pints per day. (ii) For dehumidifiers tested in accordance with appendix X1: The integrated energy factor in liters per kilowatt hour (liters/kWh), capacity in pints per day, and for whole-home dehumidifiers, case volume in cubic feet. ■ 3. Section 429.134 is amended by revising paragraph (f) to read as follows: § 429.134 Product-specific enforcement provisions. * Administrative practice and procedure, Confidential business information, Energy conservation, Household appliances, Imports, Incorporation by reference, Intergovernmental relations, Small businesses. Sfmt 4700 38395 * * * * (f) Dehumidifiers—(1) Verification of capacity. The capacity will be measured pursuant to the test requirements of part 430 for each unit tested. The results of the measurement(s) will be averaged and compared to the value of capacity certified by the manufacturer for the basic model. The certified capacity will be considered valid only if the measurement is within five percent, or 1.00 pint per day, whichever is greater, of the certified capacity. (i) If the certified capacity is found to be valid, the certified capacity will be used as the basis for determining the minimum energy factor or integrated energy factor allowed for the basic model. (ii) If the certified capacity is found to be invalid, the average measured capacity of the units in the sample will be used as the basis for determining the minimum energy factor or integrated energy factor allowed for the basic model. (2) Verification of whole-home dehumidifier case volume. The case volume will be measured pursuant to the test requirements of part 430 for each unit tested. The results of the measurement(s) will be averaged and compared to the value of case volume certified by the manufacturer for the basic model. The certified case volume will be considered valid only if the measurement is within two percent, or E:\FR\FM\13JNR3.SGM 13JNR3 38396 Federal Register / Vol. 81, No. 113 / Monday, June 13, 2016 / Rules and Regulations mstockstill on DSK3G9T082PROD with RULES3 0.2 cubic feet, whichever is greater, of the certified case volume. (i) If the certified case volume is found to be valid, the certified case volume will be used as the basis for determining the minimum integrated energy factor allowed for the basic model. (ii) If the certified case volume is found to be invalid, the average measured case volume of the units in the sample will be used as the basis for determining the minimum integrated energy factor allowed for the basic model. * * * * * VerDate Sep<11>2014 22:09 Jun 10, 2016 Jkt 238001 PART 430—ENERGY CONSERVATION PROGRAM FOR CONSUMER PRODUCTS Minimum integrated energy efficiency factor (liters/kWh) 4. The authority citation for part 430 continues to read as follows: ■ Authority: 42 U.S.C. 6291–6309; 28 U.S.C. 2461 note. 5. Section 430.32 is amended by adding paragraph (v)(3) to read as follows: ■ § 430.32 Energy and water conservation standards and their effective dates. * * * * * (v) * * * (3) Dehumidifiers manufactured on or after June 13, 2019, shall have an integrated energy efficiency ratio that meets or exceeds the following values: PO 00000 Frm 00060 Fmt 4701 Sfmt 9990 Portable dehumidifier Product Capacity (pints/day) 25.00 or less ............... 25.01–50.00 ................ 50.01 or more ............. 1.30 1.60 2.80 Whole-home dehumidifier product case volume (cubic feet) 8.0 or less ................... More than 8.0 ............. * * * * 1.77 2.41 * [FR Doc. 2016–12881 Filed 6–10–16; 8:45 am] BILLING CODE 6450–01–P E:\FR\FM\13JNR3.SGM 13JNR3

Agencies

[Federal Register Volume 81, Number 113 (Monday, June 13, 2016)]
[Rules and Regulations]
[Pages 38337-38396]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-12881]



[[Page 38337]]

Vol. 81

Monday,

No. 113

June 13, 2016

Part III





Department of Energy





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10 CFR Parts 429 and 430





Energy Conservation Program: Energy Conservation Standards for 
Dehumidifiers; Final Rule

Federal Register / Vol. 81 , No. 113 / Monday, June 13, 2016 / Rules 
and Regulations

[[Page 38338]]


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DEPARTMENT OF ENERGY

10 CFR Parts 429 and 430

[Docket Number EERE-2012-BT-STD-0027]
RIN 1904-AC81


Energy Conservation Program: Energy Conservation Standards for 
Dehumidifiers

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

ACTION: Final rule.

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SUMMARY: The Energy Policy and Conservation Act of 1975 (EPCA), as 
amended, prescribes energy conservation standards for various consumer 
products and certain commercial and industrial equipment, including 
dehumidifiers. EPCA also requires the U.S. Department of Energy (DOE) 
to periodically determine whether more-stringent standards would be 
technologically feasible and economically justified, and would save a 
significant amount of energy. In this final rule, DOE is adopting more-
stringent energy conservation standards for dehumidifiers. It has 
determined that the amended energy conservation standards for these 
products would result in significant conservation of energy, and are 
technologically feasible and economically justified.

DATES: The effective date of this rule is August 12, 2016. Compliance 
with the amended standards established for dehumidifiers in this final 
rule is required on and after June 13, 2019.

ADDRESSES: The docket for this rulemaking, which includes Federal 
Register notices, public meeting attendee lists and transcripts, 
comments, and other supporting documents/materials, is available for 
review at www.regulations.gov. All documents in the docket are listed 
in the www.regulations.gov index. However, not all documents listed in 
the index may be publicly available, such as information that is exempt 
from public disclosure.
    A link to the docket Web page can be found at: http://www.regulations.gov/#!docketDetail;D=EERE-2012-BT-STD-0027. The 
www.regulations.gov Web page will contain instructions on how to access 
all documents, including public comments, in the docket.
    For further information on how to review the docket, contact Ms. 
Brenda Edwards at (202) 586-2945 or by email: 
Brenda.Edwards@ee.doe.gov.

FOR FURTHER INFORMATION CONTACT: Mr. Bryan Berringer, U.S. Department 
of Energy, Office of Energy Efficiency and Renewable Energy, Building 
Technologies Office, EE-5B, 1000 Independence Avenue SW., Washington, 
DC 20585-0121. Telephone: (202) 586-0371. Email: 
dehumidifiers@EE.Doe.Gov.
    Ms. Elizabeth Kohl, U.S. Department of Energy, Office of the 
General Counsel, GC-33, 1000 Independence Avenue SW., Washington, DC 
20585-0121. Telephone: (202) 586-7796. Email: 
Elizabeth.Kohl@hq.doe.gov.

SUPPLEMENTARY INFORMATION:


Table of Contents

I. Synopsis of the Final Rule
    A. Benefits and Costs to Consumers
    B. Impact on Manufacturers
    C. National Benefits and Costs
    D. Conclusion
II. Introduction
    A. Authority
    B. Background
    1. Current Standards
    2. History of Standards Rulemaking for Dehumidifiers
III. General Discussion
    A. Product Classes and Scope of Coverage
    B. Test Procedure
    C. Technological Feasibility
    1. General
    2. Maximum Technologically Feasible Levels
    D. Energy Savings
    1. Determination of Savings
    2. Significance of Savings
    E. Economic Justification
    1. Specific Criteria
    a. Economic Impact on Manufacturers and Consumers
    b. Savings in Operating Costs Compared to Increase in Price (LCC 
and PBP)
    c. Energy Savings
    d. Lessening of Utility or Performance of Products
    e. Impact of Any Lessening of Competition
    f. Need for National Energy Conservation
    g. Other Factors
    2. Rebuttable Presumption
IV. Methodology and Discussion of Related Comments
    A. Market and Technology Assessment
    1. Scope of Coverage and Product Classes
    a. Preliminary Analysis and NOPR Proposals
    b. Comments and Responses
    c. Final Rule Product Classes
    2. Technology Options
    B. Screening Analysis
    1. Screened-Out Technologies
    2. Remaining Technologies
    C. Engineering Analysis
    1. Efficiency Levels
    a. Baseline Efficiency Levels
    b. Higher Energy Efficiency Levels
    2. Manufacturer Production Cost Estimates
    D. Markups Analysis
    E. Energy Use Analysis
    F. Life-Cycle Cost and Payback Period Analysis
    1. Product Cost
    2. Installation Cost
    3. Annual Energy Consumption
    4. Energy Prices
    5. Maintenance and Repair Costs
    6. Product Lifetime
    7. Discount Rates
    8. Efficiency Distribution in the No-New-Standards Case
    9. Payback Period Analysis
    G. Shipments Analysis
    H. National Impact Analysis
    1. Product Efficiency Trends
    2. National Energy Savings
    3. Net Present Value Analysis
    I. Consumer Subgroup Analysis
    J. Manufacturer Impact Analysis
    1. Overview
    2. Government Regulatory Impact Model (GRIM)
    a. Government Regulatory Impact Model Key Inputs
    b. Government Regulatory Impact Model Scenarios
    3. Discussion of Comments
    4. Manufacturer Interviews
    K. Emissions Analysis
    L. Monetizing Carbon Dioxide and Other Emissions Impacts
    1. Social Cost of Carbon
    a. Monetizing Carbon Dioxide Emissions
    b. Development of Social Cost of Carbon Values
    c. Current Approach and Key Assumptions
    2. Social Cost of Other Air Pollutants
    M. Utility Impact Analysis
    N. Employment Impact Analysis
V. Analytical Results and Conclusions
    A. Trial Standard Levels
    B. Economic Justification and Energy Savings
    1. Economic Impacts on Individual Consumers
    a. Life-Cycle Cost and Payback Period
    b. Consumer Subgroup Analysis
    c. Rebuttable Presumption Payback
    2. Economic Impacts on Manufacturers
    a. Industry Cash Flow Analysis Results
    b. Impacts on Direct Employment
    c. Impacts on Manufacturing Capacity
    d. Impacts on Subgroups of Manufacturers
    e. Cumulative Regulatory Burden
    3. National Impact Analysis
    a. Significance of Energy Savings
    b. Net Present Value of Consumer Costs and Benefits
    c. Indirect Impacts on Employment
    4. Impact on Utility or Performance of Products
    5. Impact of Any Lessening of Competition
    6. Need of the Nation To Conserve Energy
    7. Other Factors
    8. Summary of National Economic Impacts
    C. Conclusion
    1. Benefits and Burdens of TSLs Considered for Dehumidifier 
Standards
    2. Summary of Annualized Benefits and Costs of the Adopted 
Standards
VI. Certification Reporting and Enforcement Requirements
VII. Procedural Issues and Regulatory Review
    A. Review Under Executive Orders 12866 and 13563
    B. Review Under the Regulatory Flexibility Act
    1. Statement of the Need for, and Objectives of, the Rule
    2. Significant Issues Raised by Public Comment

[[Page 38339]]

    3. Response to Comments From the Small Business Administration's 
Chief Counsel for Advocacy
    4. Description and Estimated Number of Small Entities Regulated
    a. Methodology for Estimating the Number of Small Entities
    b. Manufacturer Participation
    c. Comparison of Large and Small Entities
    5. Description and Estimate of Compliance Requirements
    6. Significant Alternatives to the Rule
    C. Review Under the Paperwork Reduction Act
    D. Review Under the National Environmental Policy Act of 1969
    E. Review Under Executive Order 13132
    F. Review Under Executive Order 12988
    G. Review Under the Unfunded Mandates Reform Act of 1995
    H. Review Under the Treasury and General Government 
Appropriations Act, 1999
    I. Review Under Executive Order 12630
    J. Review Under the Treasury and General Government 
Appropriations Act, 2001
    K. Review Under Executive Order 13211
    L. Review Under the Information Quality Bulletin for Peer Review
    M. Congressional Notification
VIII. Approval of the Office of the Secretary

I. Synopsis of the Final Rule

    Title III, Part B \1\ of the Energy Policy and Conservation Act of 
1975 (EPCA or the Act), Public Law 94-163 (42 U.S.C. 6291-6309, as 
codified), established the Energy Conservation Program for Consumer 
Products Other Than Automobiles.\2\ These products include 
dehumidifiers, the subject of this document.
---------------------------------------------------------------------------

    \1\ For editorial reasons, upon codification in the U.S. Code, 
Part B was redesignated Part A.
    \2\ All references to EPCA in this document refer to the statute 
as amended through the Energy Efficiency Improvement Act of 2015, 
Public Law 114-11 (Apr. 30, 2015).
---------------------------------------------------------------------------

    Pursuant to EPCA, any new or amended energy conservation standard 
must be designed to achieve the maximum improvement in energy 
efficiency that DOE determines is technologically feasible and 
economically justified. (42 U.S.C. 6295(o)(2)(A)) Furthermore, the new 
or amended standard must result in significant conservation of energy. 
(42 U.S.C. 6295(o)(3)(B)) EPCA also provides that not later than 6 
years after issuance of any final rule establishing or amending a 
standard, DOE must publish either a notice of determination that 
standards for the product do not need to be amended, or a notice of 
proposed rulemaking including new proposed energy conservation 
standards. (42 U.S.C. 6295(m))
    In accordance with these and other statutory provisions discussed 
in this document, DOE is adopting amended energy conservation standards 
for dehumidifiers. The amended standards, which are expressed in the 
minimum allowable integrated energy factor (IEF), expressed in liters 
(L) of moisture removed per kilowatt-hour (kWh), are shown in Table 
I.1. These standards apply to all products listed in Table I.1 and 
manufactured in, or imported into, the United States on and after June 
13, 2019.

 Table I.1--Energy Conservation Standards for Dehumidifiers (Compliance
                         Starting June 13, 2019)
------------------------------------------------------------------------
                                                              Minimum
                                                            integrated
   Portable dehumidifier product capacity (pints/day)      energy factor
                                                              (L/kWh)
------------------------------------------------------------------------
25.00 or less...........................................            1.30
25.01-50.00.............................................            1.60
50.01 or more...........................................            2.80
------------------------------------------------------------------------
Whole-home dehumidifier product case volume (cubic feet)
------------------------------------------------------------------------
8.0 or less.............................................            1.77
More than 8.0...........................................            2.41
------------------------------------------------------------------------

A. Benefits and Costs to Consumers

    Table I.2 presents DOE's evaluation of the economic impacts of the 
adopted standards on consumers of dehumidifiers, as measured by the 
average life-cycle cost (LCC) savings and the simple payback period 
(PBP).\3\ The average LCC savings are positive or zero for all product 
classes, and the PBP is less than the average lifetime of portable and 
whole-home dehumidifiers, which is estimated to be 11 years and 19 
years, respectively (see section IV.F).
---------------------------------------------------------------------------

    \3\ The average LCC savings are measured relative to the 
efficiency distribution in the no-new-standards case, which depicts 
the market in the compliance year in the absence of standards (see 
section IV.F.9). The simple PBP, which is designed to compare 
specific dehumidifier efficiency levels, is measured relative to the 
baseline model (see section IV.C.1.a).

Table I.2--Impacts of Amended Energy Conservation Standards on Consumers
                            of Dehumidifiers
------------------------------------------------------------------------
                                         Average LCC     Simple payback
            Product class              savings (2014$)   period (years)
------------------------------------------------------------------------
PC1: Portable Dehumidifier: <=25.00                107               0.5
 pints/day..........................
PC2: Portable Dehumidifier: 25.01-                 119               0.4
 50.00 pints/day....................
PC3: Portable Dehumidifier: >=50.01                142               4.5
 pints/day..........................
PC4: Whole-home Dehumidifier:
 <=8ft\3\...........................
PC5: Whole-home Dehumidifier:
 >8ft\3\............................
------------------------------------------------------------------------

    DOE's analysis of the impacts of the adopted standards on consumers 
is described in section IV.F of this document.

B. Impact on Manufacturers

    The industry net present value (INPV) is the sum of the discounted 
cash flows to the industry from the base year through the end of the 
analysis period (2016 to 2048). Using a real discount rate of 8.4 
percent, DOE estimates that the INPV for manufacturers of dehumidifiers 
in the case without amended standards is $179.5 million in 2014$. Under 
the adopted standards, DOE expects that manufacturers may lose up to 
20.9 percent of this INPV, which is approximately $37.5 million. 
Additionally, DOE identified five other DOE regulations that impact 
dehumidifier manufacturers and considered potential manufacturer 
impacts associated with the cumulative burden of these regulations, as 
discussed in section V.B.2.e of this document. Based on DOE's 
interviews with the manufacturers of dehumidifiers and impacts 
analysis, DOE does not expect significant impacts on manufacturing 
capacity or loss of employment for the industry as a whole to result 
from the standards for dehumidifiers.
    DOE's analysis of the impacts of the adopted standards on 
manufacturers is described in section IV.J of this document.

[[Page 38340]]

C. National Benefits and Costs 4
---------------------------------------------------------------------------

    \4\ All monetary values in this section are expressed in 2014 
dollars and, where appropriate, are discounted to 2015 unless 
explicitly stated otherwise. Energy savings in this section refer to 
the full-fuel-cycle savings (see section IV.H for discussion).
---------------------------------------------------------------------------

    DOE's analyses indicate that the adopted energy conservation 
standards for dehumidifiers would save a significant amount of energy. 
Relative to the case without amended standards the lifetime energy 
savings for dehumidifiers purchased in the 30-year period that begins 
in the anticipated year of compliance with the amended standards (2019-
2048), amount to 0.30 quadrillion Btu (quads).\5\ This represents a 
savings of 7.4 percent relative to the energy use of these products in 
the case without amended standards (referred to as the ``no-new-
standards case'').
---------------------------------------------------------------------------

    \5\ The quantity refers to full-fuel-cycle (FFC) energy savings. 
FFC energy savings includes the energy consumed in extracting, 
processing, and transporting primary fuels (i.e., coal, natural gas, 
petroleum fuels), and, thus, presents a more complete picture of the 
impacts of energy efficiency standards. For more information on the 
FFC metric, see section IV.H.2.
---------------------------------------------------------------------------

    The cumulative net present value (NPV) of total consumer costs and 
savings of the standards for dehumidifiers ranges from $1.28 billion 
(at a 7-percent discount rate) to $2.71 billion (at a 3-percent 
discount rate). This NPV expresses the estimated total value of future 
operating-cost savings minus the estimated increased product costs for 
dehumidifiers purchased in 2019-2048.
    In addition, the standards for dehumidifiers are projected to yield 
significant environmental benefits. DOE estimates that the standards 
would result in cumulative greenhouse gas emission reductions (over the 
same period as for energy savings) of 18.6 million metric tons (Mt) \6\ 
of carbon dioxide (CO2), 11.0 thousand tons of sulfur 
dioxide (SO2), 33.1 tons of nitrogen oxides 
(NOX), 77.9 thousand tons of methane (CH4), 0.23 
thousand tons of nitrous oxide (N2O), and 0.04 tons of 
mercury (Hg).\7\ The cumulative reduction in CO2 emissions 
through 2030 amounts to 5.3 Mt.
---------------------------------------------------------------------------

    \6\ A metric ton is equivalent to 1.1 short tons. Results for 
NOX and Hg are presented in short tons.
    \7\ DOE calculated emissions reductions relative to the no-new-
standards-case, which reflects key assumptions in the Annual Energy 
Outlook 2015 (AEO 2015) Reference case, which generally represents 
current legislation and environmental regulations for which 
implementing regulations were available as of October 31, 2014.
---------------------------------------------------------------------------

    The value of the CO2 reductions is calculated using a 
range of values per metric ton of CO2 (otherwise known as 
the ``Social Cost of Carbon,'' or SCC) developed by a Federal 
interagency working group.\8\ The derivation of the SCC values is 
discussed in section 0. Using discount rates appropriate for each set 
of SCC values, DOE estimates that the net present monetary value of the 
CO2 emissions reduction (not including CO2 
equivalent emissions of other gases with global warming potential) is 
between $0.1 billion and $1.9 billion, with a value of $0.6 billion 
using the central SCC case represented by $40.0/t in 2015. DOE also 
estimates that the net present monetary value of the NOX 
emissions reduction to be $0.03 billion at a 7-percent discount rate, 
and $0.07 billion at a 3-percent discount rate.\9\
---------------------------------------------------------------------------

    \8\ Technical Update of the Social Cost of Carbon for Regulatory 
Impact Analysis Under Executive Order 12866. Interagency Working 
Group on Social Cost of Carbon, United States Government. May 2013; 
revised November 2013. Available at: http://www.whitehouse.gov/sites/default/files/omb/assets/inforeg/technical-update-social-cost-of-carbon-for-regulator-impact-analysis.pdf.
    \9\ DOE estimated the monetized value of NOX 
emissions reductions using benefit per ton estimates from the 
Regulatory Impact Analysis for the Clean Power Plan Final Rule, 
published in August 2015 by EPA's Office of Air Quality Planning and 
Standards. (Available at: http://www.epa.gov/cleanpowerplan/clean-power-plan-final-rule-regulatory-impact-analysis.) See section 
IV.L.2 for further discussion. Note that the agency is primarily 
using a national benefit-per-ton estimate for NOX emitted 
from the Electricity Generating Unit sector based on an estimate of 
premature mortality derived from the ACS study (Krewski et al., 
2009). If the benefit-per-ton estimates were based on the Six Cities 
study (Lepuele et al., 2011), the values would be nearly two-and-a-
half times larger.
---------------------------------------------------------------------------

    Table I.3 summarizes the national economic benefits and costs 
expected to result from the adopted standards for dehumidifiers.

  Table I.3--Summary of National Economic Benefits and Costs of Amended
            Energy Conservation Standards for Dehumidifiers *
------------------------------------------------------------------------
                                         Present value
               Category                    (billion       Discount rate
                                            2014$)             (%)
------------------------------------------------------------------------
                                Benefits
------------------------------------------------------------------------
Consumer Operating Cost Savings.......             1.4               7
                                                   2.9               3
CO2 Reduction Value ($12.2/t case) **.             0.1               5
CO2 Reduction Value ($40.0/t case) **.             0.6               3
CO2 Reduction Value ($62.3/t case) **.             1.0               2.5
CO2 Reduction Value ($117/t case) **..             1.9               3
NOX Reduction Value [dagger]..........            0.03               7
                                                  0.07               3
Total Benefits [dagger][dagger].......             2.0               7
                                                   3.6               3
------------------------------------------------------------------------
                                  Costs
------------------------------------------------------------------------
Consumer Incremental Installed Costs..            0.11               7
                                                  0.19               3
------------------------------------------------------------------------
                              Net Benefits
------------------------------------------------------------------------
Including CO2 and NOX Reduction                    1.9               7
 Monetized Value [dagger][dagger].....             3.4               3
------------------------------------------------------------------------
* This table presents the costs and benefits associated with
  dehumidifiers shipped in 2019-2048. These results include benefits to
  consumers which accrue after 2048 from the products purchased in 2019-
  2048. The costs account for the incremental variable and fixed costs
  incurred by manufacturers due to the standard, some of which may be
  incurred in preparation for the rule.

[[Page 38341]]

 
** The CO2 values represent global monetized values of the SCC, in
  2014$, in 2015 under several scenarios of the updated SCC values. The
  first three cases use the averages of SCC distributions calculated
  using 5%, 3%, and 2.5% discount rates, respectively. The fourth case
  represents the 95th percentile of the SCC distribution calculated
  using a 3% discount rate. The SCC time series incorporate an
  escalation factor.
[dagger] The $/ton values used for NOX are described in section 0. DOE
  estimated the monetized value of NOX emissions reductions using
  benefit per ton estimates from the Regulatory Impact Analysis for the
  Clean Power Plan Final Rule, published in August 2015 by EPA's Office
  of Air Quality Planning and Standards. (Available at: http://www.epa.gov/cleanpowerplan/clean-power-plan-final-rule-regulatory-impact-analysis.) See section IV.L.2 for further discussion. Note that
  the agency is primarily using a national benefit-per-ton estimate for
  NOX emitted from the Electricity Generating Unit sector based on an
  estimate of premature mortality derived from the ACS study (Krewski et
  al., 2009). If the benefit-per-ton estimates were based on the Six
  Cities study (Lepuele et al., 2011), the values would be nearly two-
  and-a-half times larger.
[dagger][dagger] Total Benefits for both the 3% and 7% cases are derived
  using the series corresponding to average SCC with 3-percent discount
  rate ($40.0/t case).

    The benefits and costs of the adopted standards, for dehumidifiers 
sold in 2019-2048, can also be expressed in terms of annualized values. 
The monetary values for the total annualized net benefits are the sum 
of (1) the national economic value of the benefits in reduced consumer 
operating costs, minus (2) the increases in product purchase prices and 
installation costs, plus (3) the value of the benefits of 
CO2 and NOX emission reductions, all 
annualized.\10\
---------------------------------------------------------------------------

    \10\ To convert the time-series of costs and benefits into 
annualized values, DOE calculated a present value in 2015, the year 
used for discounting the NPV of total consumer costs and savings. 
For the benefits, DOE calculated a present value associated with 
each year's shipments in the year in which the shipments occur 
(e.g., 2020 or 2030), and then discounted the present value from 
each year to 2015. The calculation uses discount rates of 3 and 7 
percent for all costs and benefits except for the value of 
CO2 reductions, for which DOE used case-specific discount 
rates, as shown in Table I.3. Using the present value, DOE then 
calculated the fixed annual payment over a 30-year period, starting 
in the compliance year that yields the same present value.
---------------------------------------------------------------------------

    Although the value of operating cost savings and CO2 
emission reductions are both important, two issues are relevant. First, 
the national operating cost savings are domestic U.S. consumer monetary 
savings that occur as a result of market transactions, whereas the 
value of CO2 reductions is based on a global value. Second, 
the assessments of operating cost savings and CO2 savings 
are performed with different methods that use different time frames for 
analysis. The national operating cost savings is measured for the 
lifetime of dehumidifiers shipped in 2019-2048. Because CO2 
emissions have a very long residence time in the atmosphere,\11\ the 
SCC values in future years reflect future CO2-emissions 
impacts that continue beyond 2100.
---------------------------------------------------------------------------

    \11\ The atmospheric lifetime of CO2 is estimated of 
the order of 30-95 years. Jacobson, MZ (2005), ``Correction to 
`Control of fossil-fuel particulate black carbon and organic matter, 
possibly the most effective method of slowing global warming,' '' J. 
Geophys. Res. 110. pp. D14105.
---------------------------------------------------------------------------

    Estimates of annualized benefits and costs of the adopted standards 
are shown in Table I.4. The results under the primary estimate are as 
follows. Using a 7-percent discount rate for benefits and costs other 
than CO2 reduction, (for which DOE used a 3-percent discount 
rate along with the SCC series that has a value of $40.0/t in 
2015),\12\ the estimated cost of the standards in this rule is $11 
million per year in increased equipment costs, while the estimated 
annual benefits are $136 million in reduced equipment operating costs, 
$34 million in CO2 reductions, and $2.9 million in reduced 
NOX emissions. In this case, the net benefit amounts to $163 
million per year. Using a 3-percent discount rate for all benefits and 
costs and the SCC series has a value of $40.0/t in 2015, the estimated 
cost of the standards is $10 million per year in increased equipment 
costs, while the estimated annual benefits are $162 million in reduced 
operating costs, $34 million in CO2 reductions, and $3.7 
million in reduced NOX emissions. In this case, the net 
benefit amounts to $189 million per year.
---------------------------------------------------------------------------

    \12\ DOE used a 3-percent discount rate because the SCC values 
for the series used in the calculation were derived using a 3-
percent discount rate (see section IV.L).

                                    Table I.4--Annualized Benefits and Costs of Amended Standards for Dehumidifiers *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                      Million 2014$/year
                                                                     -----------------------------------------------------------------------------------
                                              Discount rate                                                                       High net  benefits
                                                                           Primary estimate        Low net benefits estimate           estimate
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings...  7%..............................  136.......................  131.......................  141.
                                    3%..............................  162.......................  154.......................  169.
CO2 Reduction Value ($12.2/t case)  5%..............................  10........................  10........................  11.
 **.
CO2 Reduction Value ($40.0/t case)  3%..............................  34........................  34........................  35.
 **.
CO2 Reduction Value ($62.3/t case)  2.5%............................  50........................  49........................  51.
 **.
CO2 Reduction Value ($117/t case)   3%..............................  104.......................  102.......................  106.
 **.
NOX Reduction Value [dagger]......  7%..............................  2.9.......................  2.9.......................  6.7.
                                    3%..............................  3.7.......................  3.7.......................  8.6.
Total Benefits [dagger][dagger]...  7% plus CO2 range...............  150 to 243................  144 to 236................  159 to 254.
                                    7%..............................  173.......................  167.......................  183.
                                    3% plus CO2 range...............  176 to 269................  168 to 260................  188 to 284.
                                    3%..............................  200.......................  192.......................  213.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                          Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Incremental Product Costs  7%..............................  11........................  11........................  10.
                                    3%..............................  10........................  12........................  10.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      Net Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
    Total [dagger][dagger]........  7% plus CO2 range...............  139 to 232................  132 to 224................  148 to 244.

[[Page 38342]]

 
                                    7%..............................  163.......................  156.......................  173.
                                    3% plus CO2 range...............  165 to 259................  157 to 248................  178 to 274.
                                    3%..............................  189.......................  180.......................  203.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* This table presents the annualized costs and benefits associated with dehumidifiers shipped in 2019-2048. These results include benefits to consumers
  which accrue after 2048 from the dehumidifiers purchased from 2019-2048. The results account for the incremental variable and fixed costs incurred by
  manufacturers due to the standard, some of which may be incurred in preparation for the rule. The Primary, Low Benefits, and High Benefits Estimates
  utilize projections of energy prices from the AEO 2015 Reference case, Low Economic Growth case, and High Economic Growth case, respectively. In
  addition, incremental product costs reflect a medium decline rate in the Primary Estimate, a low decline rate in the Low Benefits Estimate, and a high
  decline rate in the High Benefits Estimate. The methods used to derive projected price trends are explained in section IV.F.
** The CO2 values represent global monetized values of the SCC, in 2014$, in 2015 under several scenarios of the updated SCC values. The first three
  cases use the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The fourth case represents the 95th
  percentile of the SCC distribution calculated using a 3% discount rate. The SCC time series incorporate an escalation factor.
[dagger] DOE estimated the monetized value of NOX emissions reductions using benefit per ton estimates from the Regulatory Impact Analysis for the Clean
  Power Plan Final Rule, published in August 2015 by EPA's Office of Air Quality Planning and Standards. (Available at: http://www.epa.gov/cleanpowerplan/clean-power-plan-final-rule-regulatory-impact-analysis.) See section IV.L.2 for further discussion. For DOE's Primary Estimate and Low
  Net Benefits Estimate, the agency used a national benefit-per-ton estimate for particulate matter emitted from the Electric Generating Unit sector
  based on an estimate of premature mortality derived from the ACS study (Krewski et al., 2009). For DOE's High Net Benefits Estimate, the benefit-per-
  ton estimates were based on the Six Cities study (Lepuele et al., 2011), which are nearly two-and-a-half times larger than those from the ACS study.
[dagger][dagger] Total Benefits for both the 3% and 7% cases are derived using the series corresponding to the average SCC with 3-percent discount rate
  ($40.0/t case). In the rows labeled ``7% plus CO2 range'' and ``3% plus CO2 range,'' the operating cost and NOX benefits are calculated using the
  labeled discount rate, and those values are added to the full range of CO2 values.

    DOE's analysis of the national impacts of the adopted standards is 
described in sections IV.H, IV.K, and IV.L of this document.

D. Conclusion

    Based on the analyses culminating in this final rule, DOE found the 
benefits to the nation of the standards (energy savings, consumer LCC 
savings, positive NPV of consumer benefit, and emission reductions) 
outweigh the burdens (loss of INPV and LCC increases for some users of 
these products). DOE has concluded that the standards in this final 
rule represent the maximum improvement in energy efficiency that is 
technologically feasible and economically justified, and would result 
in significant conservation of energy.

II. Introduction

    The following section briefly discusses the statutory authority 
underlying this final rule, as well as some of the relevant historical 
background related to the establishment of standards for dehumidifiers.

A. Authority

    Title III, Part B of the Energy Policy and Conservation Act of 1975 
(EPCA or the Act), Public Law 94-163 (42 U.S.C. 6291-6309, as codified) 
established the Energy Conservation Program for Consumer Products Other 
Than Automobiles, a program covering most major household appliances 
(collectively referred to as ``covered products''), which includes the 
dehumidifiers that are the subject of this rulemaking. (42 U.S.C. 
6295(cc)) EPCA, as amended, prescribed energy conservation standards 
for dehumidifiers \13\ manufactured on or after October 1, 2007, and 
more stringent energy conservation standards for dehumidifiers 
manufactured on or after October 1, 2012. (42 U.S.C. 6295(cc)) Under 42 
U.S.C. 6295(m), the agency must periodically review its already 
established energy conservation standards for a covered product.
---------------------------------------------------------------------------

    \13\ Dehumidifiers are defined as self-contained, electrically 
operated, and mechanically encased assemblies consisting of: (1) A 
refrigerated surface (evaporator) that condenses moisture from the 
atmosphere; (2) a refrigerating system, including an electric motor; 
(3) an air-circulating fan; and (4) a means for collecting or 
disposing of the condensate. (42 U.S.C. 6291(34))
---------------------------------------------------------------------------

    Pursuant to EPCA, DOE's energy conservation program for covered 
products consists essentially of four parts: (1) Testing; (2) labeling; 
(3) the establishment of Federal energy conservation standards; and (4) 
certification and enforcement procedures. The Federal Trade Commission 
(FTC) is primarily responsible for labeling, and DOE implements the 
remainder of the program. Subject to certain criteria and conditions, 
DOE is required to develop test procedures to measure the energy 
efficiency, energy use, or estimated annual operating cost of each 
covered product. (42 U.S.C. 6295(o)(3)(A)) Manufacturers of covered 
products must use the prescribed DOE test procedure as the basis for 
certifying to DOE that their products comply with the applicable energy 
conservation standards adopted under EPCA and when making 
representations to the public regarding the energy use or efficiency of 
those products. (42 U.S.C. 6293(c) and 6295(s)) Similarly, DOE must use 
these test procedures to determine whether the products comply with 
standards adopted pursuant to EPCA. (42 U.S.C. 6295(s)) The DOE test 
procedures for dehumidifiers currently appear at title 10 of the Code 
of Federal Regulations (CFR) part 430, subpart B, appendix X.
    DOE must follow specific statutory criteria for prescribing new or 
amended standards for covered products, including dehumidifiers. Any 
new or amended standard for a covered product must be designed to 
achieve the maximum improvement in energy efficiency that is 
technologically feasible and economically justified. (42 U.S.C. 
6295(o)(2)(A) and (3)(B)) Furthermore, DOE may not adopt any standard 
that would not result in the significant conservation of energy. (42 
U.S.C. 6295(o)(3)) Moreover, DOE may not prescribe a standard: (1) For 
certain products, including dehumidifiers, if no test procedure has 
been established for the product, or (2) if DOE determines by rule that 
the standard is not technologically feasible or economically justified. 
(42 U.S.C. 6295(o)(3)(A)-(B)) In deciding whether a proposed standard 
is economically justified, DOE must determine whether the benefits of 
the standard exceed its burdens. (42

[[Page 38343]]

U.S.C. 6295(o)(2)(B)(i)) DOE must make this determination after 
receiving comments on the proposed standard, and by considering, to the 
greatest extent practicable, the following seven statutory factors:
    (1) The economic impact of the standard on manufacturers and 
consumers of the products subject to the standard;
    (2) The savings in operating costs throughout the estimated average 
life of the covered products in the type (or class) compared to any 
increase in the price, initial charges, or maintenance expenses for the 
covered products that are likely to result from the standard;
    (3) The total projected amount of energy (or as applicable, water) 
savings likely to result directly from the standard;
    (4) Any lessening of the utility or the performance of the covered 
products likely to result from 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 
standard;
    (6) The need for national energy and water conservation; and
    (7) Other factors the Secretary of Energy (Secretary) considers 
relevant. (42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII))
    Further, EPCA, as codified, establishes a rebuttable presumption 
that a standard is economically justified if the Secretary finds that 
the additional cost to the consumer of purchasing a product complying 
with an energy conservation standard level will be less than three 
times the value of the energy savings during the first year that the 
consumer will receive as a result of the standard, as calculated under 
the applicable test procedure. (42 U.S.C. 6295(o)(2)(B)(iii))
    EPCA, as codified, also contains what is known as an ``anti-
backsliding'' provision, which prevents the Secretary from prescribing 
any amended standard that either increases the maximum allowable energy 
use or decreases the minimum required energy efficiency of a covered 
product. (42 U.S.C. 6295(o)(1)) Also, the Secretary may not prescribe 
an amended or new standard if interested persons have established by a 
preponderance of the evidence that the standard is likely to result in 
the unavailability in the United States in any covered product type (or 
class) of performance characteristics (including reliability), 
features, sizes, capacities, and volumes that are substantially the 
same as those generally available in the United States. (42 U.S.C. 
6295(o)(4))
    Additionally, 42 U.S.C. 6295(q)(1) specifies requirements when 
promulgating an energy conservation standard for a covered product that 
has two or more subcategories. DOE must specify a different standard 
level for a type or class of products that has the same function or 
intended use if DOE determines that products within such group: (A) 
Consume a different kind of energy from that consumed by other covered 
products within such type (or class); or (B) have a capacity or other 
performance-related feature which other products within such type (or 
class) do not have and such feature justifies a higher or lower 
standard. (42 U.S.C. 6295(q)(1)) In determining whether a performance-
related feature justifies a different standard for a group of products, 
DOE must consider such factors as the utility to the consumer of such a 
feature and other factors DOE deems appropriate. Id. Any rule 
prescribing such a standard must include an explanation of the basis on 
which such higher or lower level was established. (42 U.S.C. 
6295(q)(2))
    Federal energy conservation requirements generally supersede State 
laws or regulations concerning energy conservation testing, labeling, 
and standards. (42 U.S.C. 6297(a)-(c)) DOE may, however, grant waivers 
of Federal preemption for particular State laws or regulations, in 
accordance with the procedures and other provisions set forth under 42 
U.S.C. 6297(d)).
    EPCA also requires that, for any final rule for new or amended 
energy conservation standards promulgated after July 1, 2010, DOE must 
address standby mode and off mode energy use. (42 U.S.C. 6295(gg)(3)) 
Specifically, when DOE adopts a standard for a covered product after 
that date, it must, if justified by the criteria for adoption of 
standards under EPCA (42 U.S.C. 6295(o)), incorporate standby mode and 
off mode energy use into a single standard, or, if that is not 
feasible, adopt a separate standard for such energy use for that 
product. (42 U.S.C. 6295(gg)(3)(A)-(B)) DOE's test procedures for 
dehumidifiers address standby mode and off mode energy use, as do the 
amended standards adopted in this final rule.

B. Background

1. Current Standards
    EPCA prescribes energy conservation standards for dehumidifiers 
manufactured on or after October 1, 2012. In a final rule published on 
March 23, 2009, DOE codified these standards at 10 CFR 430.32(v)(2). 74 
FR 12058. These standards are set forth in Table II.1.

   Table II.1--Federal Energy Efficiency Standards for Dehumidifiers *
------------------------------------------------------------------------
                                                           Energy factor
               Product class * (pints/day)                  (EF) ** (L/
                                                               kWh)
------------------------------------------------------------------------
Up to 35.00.............................................            1.35
35.01-45.00.............................................            1.50
45.01-54.00.............................................            1.60
54.01-75.00.............................................            1.70
75.01 or more...........................................             2.5
------------------------------------------------------------------------
* Product capacity in pints/day is measured according to the DOE test
  procedure in appendix X of 10 CFR 430.
** EF is a measure of the water removed from the air per unit of energy
  consumed by a dehumidifier and is calculated according to appendix X.

2. History of Standards Rulemaking for Dehumidifiers
    EPCA, as amended, established the first energy conservation 
standards for dehumidifiers manufactured as of October 1, 2007, based 
on the EF metric. As discussed in section II.B.1, subsequent amendments 
prescribed energy conservation standards for dehumidifiers manufactured 
on or after October 1, 2012. DOE is conducting this rulemaking pursuant 
to 42 U.S.C. 6295(m)(1), which requires DOE, no later than 6 years 
after issuance of any final rule establishing or amending a standard, 
to publish either a notice of determination that standards for the 
product do not need to be amended, or a NOPR that includes new proposed 
energy conservation standards.
    DOE initiated this rulemaking by issuing an analytical Framework 
Document, ``Energy Conservation Standards Rulemaking Framework Document 
for Dehumidifiers.'' 77 FR 49739 (Aug. 17, 2012). The Framework 
Document explained the issues, analyses, and process that DOE 
anticipated using to develop energy conservation standards for 
dehumidifiers.
    DOE held a public meeting on September 24, 2012, to solicit 
comments from interested parties regarding the Framework Document and 
DOE's proposed analytical approach. DOE sought feedback from interested 
parties on these subjects and provided information regarding the 
rulemaking process that DOE would follow. Interested parties discussed 
the following major issues at the public meeting: Rulemaking schedule; 
test procedure revisions; product classes; technology options; 
efficiency levels; and approaches for each of the analyses performed by 
DOE as part of the rulemaking process.

[[Page 38344]]

    Comments received following the publication of the framework 
document helped DOE identify and resolve issues related to the 
subsequent preliminary analysis. In the preliminary analysis, DOE 
conducted in-depth technical analyses in the following areas: (1) 
Engineering; (2) markups to determine product price; (3) energy use; 
(4) life-cycle cost and payback period; and (5) national impacts. The 
preliminary technical support document (TSD) that presented the 
methodology and results of each of these analyses is available at 
http://www.regulations.gov/#!documentDetail;D=EERE-2012-BT-STD-0027-
0015.
    DOE also conducted, and included in the preliminary TSD, several 
other analyses that supported the major analyses. These analyses 
included: (1) The market and technology assessment; (2) the screening 
analysis, which contributes to the engineering analysis; and (3) the 
shipments analysis,\14\ which contributes to the LCC and PBP analysis 
and national impact analysis (NIA). In addition to these analyses, DOE 
began preliminary work on the manufacturer impact analysis (MIA) and 
identified the methods to be used for the consumer subgroup analysis, 
the emissions analysis, the employment impact analysis, the regulatory 
impact analysis, and the utility impact analysis.
---------------------------------------------------------------------------

    \14\ Industry data track shipments from manufacturers into the 
distribution chain. Data on national unit retail sales are lacking, 
but are presumed to be close to shipments under normal 
circumstances.
---------------------------------------------------------------------------

    DOE published a notice of public meeting and availability of the 
preliminary TSD on May 22, 2014. 79 FR 29380. DOE subsequently held a 
public meeting on June 13, 2014, to discuss and receive comments on the 
preliminary TSD. DOE received comments on topics including: Whole-home 
dehumidifier coverage and test procedures, product classes, design 
options, efficiency levels, use of experience curves, shipments 
projections, social cost of carbon estimates and the associated 
monetization of carbon dioxide, and small business impacts. After 
reviewing these comments, DOE gathered additional information, held 
further discussions with manufacturers, and completed and revised the 
various analyses described in the preliminary analysis.
    On June 3, 2015, DOE published a notice of proposed rulemaking 
(hereafter, the ``June 2015 NOPR'') and notice of public meeting. 80 FR 
31645. The June 2015 NOPR and accompanying TSD presented the results of 
DOE's updated analyses and proposed amended standards for 
dehumidifiers. On July 7, 2015, DOE held a public meeting to discuss 
the issues detailed in the June 2015 NOPR. Interested parties commented 
on various aspects of the proposed rule and submitted supplemental 
written comments. Following the public meeting, DOE gathered additional 
information and performed additional analyses to supplement the 
analyses presented in the June 2015 NOPR. The results of these analyses 
are detailed in the TSD accompanying this final rule, available in the 
docket at the regulations.gov Web site. DOE considered the comments 
received since publication of the June 2015 NOPR, including those 
received at the NOPR public meeting, in developing amended standards 
for dehumidifiers.

III. General Discussion

    DOE developed this final rule after considering comments, data, and 
information from interested parties that represent a variety of 
interests. The following discussion addresses issues raised by these 
commenters.

A. Product Classes and Scope of Coverage

    When evaluating and establishing energy conservation standards, DOE 
divides covered products into product classes by the type of energy 
used or by capacity or other performance-related features that justify 
differing standards. In making a determination whether a performance-
related feature justifies a different standard, DOE must consider such 
factors as the utility of the feature to the consumer and other factors 
DOE determines are appropriate. (42 U.S.C. 6295(q))
    Existing energy conservation standards divide portable and whole 
home dehumidifiers into five product classes based on product capacity 
in the number of pints per day (pints/day) of moisture that the product 
removes from ambient air at test conditions, as measured by the 
applicable DOE test procedure, appendix X. In this rulemaking, DOE is 
establishing new product classes that differentiate dehumidifiers not 
only by product capacity but by product configuration as well (i.e., 
between portable and whole-home configurations). For portable 
dehumidifiers, DOE is establishing the following three product classes 
based on the product capacity:\15\ (1) 25.00 pints/day or less; (2) 
25.01 to 50.00 pints/day; and (3) 50.01 pints/day or more. For whole-
home dehumidifiers, DOE is adopting the following two product classes 
based on product case volume:\16\ (1) Less than or equal to 8.0 ft\3\; 
and (2) greater than 8.0 ft\3\.
---------------------------------------------------------------------------

    \15\ Note that the test conditions for the new product classes 
are different from those for the existing product classes.
    \16\ Product case volume is the rectangular volume that the 
product case occupies, exclusive of any duct attachment collars or 
other external components.
---------------------------------------------------------------------------

    The product classes for portable dehumidifiers analyzed for this 
final rule are different from those examined in DOE's initial analysis 
and the June 2015 NOPR, while the product classes for whole-home 
dehumidifiers are the same. In the May 2014 Preliminary TSD, DOE 
initially analyzed five product classes for portable dehumidifiers 
based on product capacity. Due, in part, to comments received on the 
preliminary TSD, DOE proposed only three product classes for portable 
dehumidifiers in the June 2015 NOPR: (1) 30.00 pints/day or less; (2) 
30.01 to 45.00 pints/day; and (3) 45.01 pints/day or more. For this 
final rule, DOE adjusted the product capacity thresholds between these 
three product classes after considering comments and conducting 
additional discussions with manufacturers and further analysis. 
Comments received relating to the scope of coverage and product classes 
are discussed in section IV.A of this final rule.

B. Test Procedure

    DOE's current energy conservation standards for dehumidifiers are 
expressed in terms of EF, in L/kWh, and are a function of the product 
capacity, expressed in pints/day. (See 10 CFR 430.32(v)(2)).
    EPCA specifies that the dehumidifier test criteria used under the 
ENERGY STAR \17\ program in effect as of January 1, 2001,\18\ must 
serve as the basis for the DOE test procedure for dehumidifiers, unless 
revised by DOE. (42 U.S.C. 6293(b)(13)) The ENERGY STAR test criteria 
required that American National Standards Institute (ANSI)/Association 
of Home Appliance Manufacturers (AHAM) Standard DH-1, 
``Dehumidifiers,'' be used to measure product capacity while the 
Canadian Standards Association (CAN/CSA) standard CAN/CSA-C749-1994 
(R2005), ``Performance of Dehumidifiers,'' be used to calculate the EF. 
The version of AHAM Standard DH-1 in use at the time the ENERGY STAR 
test criteria were adopted was AHAM Standard DH-1-1992. In 2006, DOE 
adopted these test criteria, along

[[Page 38345]]

with related definitions and tolerances, as its test procedure for 
dehumidifiers at 10 CFR part 430, subpart B, appendix X. 71 FR 71340, 
71347, 71366-71368 (Dec. 8, 2006).
---------------------------------------------------------------------------

    \17\ For more information on the ENERGY STAR program, please 
visit www.energystar.gov.
    \18\ ``Energy Star Program Requirements for Dehumidifiers'', 
Version 1.0, U.S. Environmental Protection Agency (EPA), available 
online at: www.energystar.gov/products/specs/system/files/DehumProgReqV1.0.pdf.
---------------------------------------------------------------------------

    On October 31, 2012, DOE published a final rule to establish a new 
test procedure for dehumidifiers that references ANSI/AHAM Standard DH-
1-2008, ``Dehumidifiers,'' (ANSI/AHAM DH-1-2008) for both energy use 
and product capacity measurements. 77 FR 65995 (Oct. 31, 2012). The 
final rule also adopted standby and off mode provisions that satisfy 
the requirement in EPCA for DOE to include measures of standby mode and 
off mode energy consumption in its test procedures for residential 
products, if technically feasible. (42 U.S.C. 6295(gg)(2)(A)) This new 
DOE test procedure, codified at that time at 10 CFR part 430, subpart 
B, appendix X1, established a new metric, IEF, which incorporates 
measures of active, standby, and off mode energy use, in addition to 
the existing EF metric.
    DOE subsequently removed the existing test procedures at appendix X 
and redesignated the test procedures at appendix X1 as appendix X. 79 
FR 7366 (Feb. 7, 2014). Any representations of energy use, including 
standby mode or off mode energy consumption, or efficiency of portable 
dehumidifiers must be made in accordance with the results of testing 
pursuant to the redesignated appendix X.
    On May 21, 2014, DOE published a NOPR (the ``May 2014 Test 
Procedure NOPR'') proposing further amendments to the dehumidifier test 
procedures in appendix X. 79 FR 29272. In addition to making 
clarifications and corrections in appendix X, DOE proposed creating a 
new appendix, appendix X1, which would: (1) Require certain active mode 
testing at a lower ambient temperature; (2) add a measure of fan-only 
mode energy consumption in the IEF metric; and (3) include testing 
methodology and measures of performance for whole-home dehumidifiers.
    On February 4, 2015, DOE published a supplemental notice of 
proposed rulemaking (the ``February 2015 Test Procedure SNOPR''). 80 FR 
5994. In the SNOPR, DOE maintained its proposals from the NOPR, except 
that DOE proposed: (1) Adjustments and clarifications to the whole-home 
dehumidifier test setup and conduct; (2) a method to determine whole-
home dehumidifier case volume; (3) a method for measuring energy use in 
off-cycle mode, including any fan operation; (4) a clarification to the 
relative humidity and product capacity equations; and (5) additional 
technical corrections and clarifications.
    In response to the May 2014 Test Procedure NOPR, June 2014 public 
meeting, and February 2015 Test Procedure SNOPR, DOE received comments 
from interested parties related to the test procedure. DOE addressed 
these issues in the test procedure final rule to establish a new 
appendix X1 published on July 31, 2015 (the ``July 2015 Test Procedure 
Final Rule,'' 80 FR 45801), and based its analysis in this notice on 
product capacities and efficiencies determined according to the 
appendix X1 test procedure.

C. Technological Feasibility

1. General
    In each energy conservation standards rulemaking, DOE conducts a 
screening analysis based on information gathered on all current 
technology options and prototype designs that could improve the 
efficiency of the products or equipment that are the subject of the 
rulemaking. As the first step in such an analysis, DOE develops a list 
of technology options for consideration in consultation with 
manufacturers, design engineers, and other interested parties. DOE then 
determines which of those means for improving efficiency are 
technologically feasible. DOE considers technologies incorporated in 
commercially available products or in working prototypes to be 
technologically feasible. 10 CFR part 430, subpart C, appendix A, 
section 4(a)(4)(i).
    After DOE has determined that particular technology options are 
technologically feasible, it further evaluates each technology option 
in light of the following additional screening criteria: (1) 
Practicability to manufacture, install, and service; (2) adverse 
impacts on product utility or availability; and (3) adverse impacts on 
health or safety. 10 CFR part 430, subpart C, appendix A, section 
4(a)(4)(ii)-(iv). Additionally, it is DOE policy not to include in its 
analysis any proprietary technology that is a unique pathway to 
achieving a certain efficiency level. Section IV.B of this document 
discusses the results of the screening analysis for dehumidifiers, 
particularly the designs DOE considered, those it screened out, and 
those that are the basis for the standards considered in this 
rulemaking. For further details on the screening analysis for this 
rulemaking, see chapter 4 of the final rule TSD.
2. Maximum Technologically Feasible Levels
    When DOE proposes to adopt an amended standard for a type or class 
of covered product, it must determine the maximum improvement in energy 
efficiency or maximum reduction in energy use that is technologically 
feasible for such product. (42 U.S.C. 6295(p)(1)) Accordingly, in the 
engineering analysis, DOE determined the maximum technologically 
feasible (``max-tech'') improvements in energy efficiency for 
dehumidifiers, using the design parameters for the most efficient 
products available on the market or in working prototypes. The max-tech 
levels that DOE determined for this rulemaking are described in section 
IV.C of this final rule and in chapter 5 of the final rule TSD.

D. Energy Savings

1. Determination of Savings
    For each trial standard level (TSL), DOE projected energy savings 
from application of the TSL to dehumidifiers purchased in the 30-year 
period that begins in the year of compliance with any amended standards 
(2019-2048).\19\ The savings are measured over the entire lifetime of 
products purchased in the 30-year analysis period. DOE quantified the 
energy savings attributable to each TSL as the difference in energy 
consumption between each standards case and the no-new-standards case. 
The no-new-standards case represents a projection of energy consumption 
that reflects how the market for a product would likely evolve in the 
absence of amended energy conservation standards.
---------------------------------------------------------------------------

    \19\ DOE also presents a sensitivity analysis that considers 
impacts for products shipped in a 9-year period.
---------------------------------------------------------------------------

    DOE used its NIA spreadsheet models to estimate energy savings from 
potential amended standards for dehumidifiers. The NIA spreadsheet 
model (described in section IV.H of this document) calculates savings 
in site energy, which is the energy directly consumed by products at 
the locations where they are used. Based on the site energy, DOE 
calculates national energy savings (NES) in terms of primary energy 
savings at the site or at power plants, and also in terms of full-fuel-
cycle (FFC) energy savings. The FFC metric includes the energy consumed 
in extracting, processing, and transporting primary fuels (i.e., coal, 
natural gas, petroleum fuels), and thus presents a more complete 
picture of the impacts of

[[Page 38346]]

energy conservation standards.\20\ DOE's approach is based on the 
calculation of an FFC multiplier for each of the energy types used by 
covered products or equipment. For more information on FFC energy 
savings, see section IV.H.2 of this document. For natural gas, the 
primary energy savings are considered to be equal to the site energy 
savings.
---------------------------------------------------------------------------

    \20\ The FFC metric is discussed in DOE's statement of policy 
and notice of policy amendment. 76 FR 51282 (Aug. 18, 2011), as 
amended at 77 FR 49701 (Aug. 17, 2012).
---------------------------------------------------------------------------

2. Significance of Savings
    To adopt standards for a covered product, DOE must determine that 
such action would result in ``significant'' energy savings. (42 U.S.C. 
6295(o)(3)(B)) Although the term ``significant'' is not defined in the 
Act, the U.S. Court of Appeals, for the District of Columbia Circuit in 
Natural Resources Defense Council v. Herrington, 768 F.2d 1355, 1373 
(D.C. Cir. 1985), indicated opined that Congress intended 
``significant'' energy savings in the context of EPCA to be savings 
that were not ``genuinely trivial.'' The energy savings for all the 
TSLs considered in this rulemaking, including the adopted standards, 
are nontrivial, and, therefore, DOE considers them ``significant'' 
within the meaning of section 325 of EPCA.

E. Economic Justification

1. Specific Criteria
    As noted in this preamble, EPCA provides seven factors to be 
evaluated in determining whether a potential energy conservation 
standard is economically justified. (42 U.S.C. 
6295(o)(2)(B)(i)(I)(VII)) The following sections discuss how DOE has 
addressed each of those seven factors in this rulemaking.
a. Economic Impact on Manufacturers and Consumers
    In determining the impacts of a potential amended standard on 
manufacturers, DOE conducts an MIA, as discussed in section IV.J. DOE 
first uses an annual cash-flow approach to determine the quantitative 
impacts. This step includes both a short-term assessment--based on the 
cost and capital requirements during the period between when a 
regulation is issued and when entities must comply with the 
regulation--and a long-term assessment over a 30-year period. The 
industry-wide impacts analyzed include: (1) INPV, which values the 
industry on the basis of expected future cash flows; (2) cash flows by 
year; (3) changes in revenue and income; and (4) other measures of 
impact, as appropriate. Second, DOE analyzes and reports the impacts on 
different types of manufacturers, including impacts on small 
manufacturers. Third, DOE considers the impact of standards on domestic 
manufacturer employment and manufacturing capacity, as well as the 
potential for standards to result in plant closures and loss of capital 
investment. Finally, DOE takes into account cumulative impacts of 
various DOE regulations and other regulatory requirements on 
manufacturers.
    For individual consumers, measures of economic impact include the 
changes in LCC and PBP associated with new or amended standards. These 
measures are discussed further in the following section. For consumers 
in the aggregate, DOE also calculates the national net present value of 
the economic impacts applicable to a particular rulemaking. DOE also 
evaluates the LCC impacts of potential standards on identifiable 
subgroups of consumers that may be affected disproportionately by a 
national standard.
b. Savings in Operating Costs Compared to Increase in Price (LCC and 
PBP)
    EPCA requires DOE to consider the savings in operating costs 
throughout the estimated average life of the covered product in the 
type (or class) compared to any increase in the price of, or in the 
initial charges for, or maintenance expenses of, the covered product 
that are likely to result from a standard. (42 U.S.C. 
6295(o)(2)(B)(i)(II)) DOE conducts this comparison in its LCC and PBP 
analysis.
    The LCC is the sum of the purchase price of a product (including 
its installation) and the operating cost (including energy, 
maintenance, and repair expenditures) discounted over the lifetime of 
the product. The LCC analysis requires a variety of inputs, such as 
product prices, product energy consumption, energy prices, maintenance 
and repair costs, product lifetime, and discount rates appropriate for 
consumers. To account for uncertainty and variability in specific 
inputs, such as product lifetime and discount rate, DOE uses a 
distribution of values, with probabilities attached to each value.
    The PBP is the estimated amount of time (in years) it takes 
consumers to recover the increased purchase cost (including 
installation) of a more-efficient product through lower operating 
costs. DOE calculates the PBP by dividing the change in purchase cost 
due to a more-stringent standard by the change in annual operating cost 
for the year that standards are assumed to take effect.
    For its LCC and PBP analysis, DOE assumes that consumers will 
purchase the covered products in the first year of compliance with 
amended standards. The LCC savings for the considered efficiency levels 
are calculated relative to the case that reflects projected market 
trends in the absence of amended standards. DOE's LCC and PBP analysis 
is discussed in further detail in section IV.F.
c. Energy Savings
    Although significant conservation of energy is a separate statutory 
requirement for adopting an energy conservation standard, EPCA requires 
DOE, in determining the economic justification of a standard, to 
consider the total projected energy savings that are expected to result 
directly from the standard. (42 U.S.C. 6295(o)(2)(B)(i)(III)) As 
discussed in section IV.H, DOE uses the NIA spreadsheet models to 
project national energy savings.
d. Lessening of Utility or Performance of Products
    In establishing product classes, and in evaluating design options 
and the impact of potential standard levels, DOE evaluates potential 
standards that would not lessen the utility or performance of the 
considered products. (42 U.S.C. 6295(o)(2)(B)(i)(IV)) Based on data 
available to DOE, the standards adopted in this final rule would not 
reduce the utility or performance of the products under consideration 
in this rulemaking. DOE discusses potential impacts on product utility 
in section IV.C.1.b of this document.
e. Impact of Any Lessening of Competition
    EPCA directs DOE to consider the impact of any lessening of 
competition, as determined in writing by the Attorney General, that is 
likely to result from a standard. (42 U.S.C. 6295(o)(2)(B)(i)(V)) It 
also directs the Attorney General to determine the impact, if any, of 
any lessening of competition likely to result from a standard and to 
transmit such determination to the Secretary within 60 days of the 
publication of a proposed rule, together with an analysis of the nature 
and extent of the impact. (42 U.S.C. 6295(o)(2)(B)(ii)) DOE transmitted 
a copy of its proposed rule to the Attorney General with a request that 
the Department of Justice (DOJ) provide its determination on this 
issue. DOE received no adverse comments from DOJ regarding the proposed 
rule.

[[Page 38347]]

f. Need for National Energy Conservation
    DOE also considers the need for national energy conservation in 
determining whether a new or amended standard is economically 
justified. (42 U.S.C. 6295(o)(2)(B)(i)(VI)) The energy savings from the 
adopted standards are likely to provide improvements to the security 
and reliability of the nation's energy system. Reductions in the demand 
for electricity also may result in reduced costs for maintaining the 
reliability of the nation's electricity system. DOE conducts a utility 
impact analysis to estimate how standards may affect the nation's 
needed power generation capacity, as discussed in section IV.M of this 
document.
    The adopted standards also are likely to result in environmental 
benefits in the form of reduced emissions of air pollutants and 
greenhouse gases associated with energy production and use. DOE 
conducts an emissions analysis to estimate how potential standards may 
affect these emissions, as discussed in section IV.K of this document; 
the emissions impacts are reported in section V.B.6 of this document. 
DOE also estimates the economic value of emissions reductions resulting 
from the considered TSLs, as discussed in section IV.L of this 
document.
g. Other Factors
    EPCA allows the Secretary of Energy, in determining whether a 
standard is economically justified, to consider any other factors that 
the Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)) 
To the extent interested parties submit any relevant information 
regarding economic justification that does not fit into the other 
categories described above, DOE could consider such information under 
``other factors.''
2. Rebuttable Presumption
    As set forth in 42 U.S.C. 6295(o)(2)(B)(iii), EPCA creates a 
rebuttable presumption that an energy conservation standard is 
economically justified if the additional cost to the consumer of a 
product that meets the standard is less than three times the value of 
the first year's energy savings resulting from the standard, as 
calculated under the applicable DOE test procedure. DOE's LCC and PBP 
analyses generate values used to calculate the effect potential amended 
energy conservation standards would have on the payback period for 
consumers. These analyses include, but are not limited to, the 3-year 
payback period contemplated under the rebuttable-presumption test. In 
addition, DOE routinely conducts an economic analysis that considers 
the full range of impacts to consumers, manufacturers, the nation, and 
the environment, as required under 42 U.S.C. 6295(o)(2)(B)(i). The 
results of this analysis serve as the basis for DOE's evaluation of the 
economic justification for a potential standard level (thereby 
supporting or rebutting the results of any preliminary determination of 
economic justification). The rebuttable presumption payback calculation 
is discussed in section IV.F of this final rule.

IV. Methodology and Discussion of Related Comments

    This section addresses the analyses DOE has performed for this 
rulemaking with regard to dehumidifiers. Separate subsections address 
each component of DOE's analyses.
    DOE used several analytical tools to estimate the impact of the 
standards considered in this document. The first tool is a spreadsheet 
that calculates the LCC savings and PBP of potential amended or new 
energy conservation standards. The national impacts analysis uses a 
second spreadsheet set that provides shipments forecasts and calculates 
national energy savings and net present value of total consumer costs 
and savings expected to result from potential energy conservation 
standards. DOE uses the third spreadsheet tool, the Government 
Regulatory Impact Model (GRIM), to assess manufacturer impacts of 
potential standards. These three spreadsheet tools are available on the 
DOE Web site for this rulemaking: https://www1.eere.energy.gov/buildings/appliance_standards/product.aspx/productid/55. Additionally, 
DOE used output from the latest version of the Energy Information 
Administration's (EIA) Annual Energy Outlook (AEO), a widely known 
energy forecast for the United States, for the emissions and utility 
impact analyses.

A. Market and Technology Assessment

    DOE develops information in the market and technology assessment 
that provides an overall picture of the market for the products 
concerned, including the purpose of the products, the industry 
structure, manufacturers, market characteristics, and technologies used 
in the products. 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: (1) A determination of the 
scope of the rulemaking and product classes; (2) manufacturers and 
industry structure; (3) existing efficiency programs; (4) shipments 
information; (5) market and industry trends; and (6) technologies or 
design options that could improve the energy efficiency of 
dehumidifiers. The key findings of DOE's market assessment are 
summarized below. See chapter 3 of the final rule TSD for further 
discussion of the market and technology assessment.
1. Scope of Coverage and Product Classes
    EPCA defines a dehumidifier as product that is self-contained, 
electrically operated, mechanically encased, and a product that 
incorporates a refrigerated surface to condense moisture from the 
atmosphere. It further defines it as having a refrigerating system with 
an electric motor; a fan for air circulation; and a means for 
collecting or disposing of the condensate. (42 U.S.C. 6291(34)) In the 
July 2015 Test Procedure Final Rule, DOE clarified that this definition 
of a dehumidifier, codified at 10 CFR 430.2, does not apply to portable 
air conditioners, room air conditioners, or packaged terminal air 
conditioners. 80 FR 45801, 45804-45805 (July 31, 2015).\21\
---------------------------------------------------------------------------

    \21\ Room air conditioners and packaged terminal air 
conditioners are defined as a separate covered products under EPCA. 
(42 U.S.C. 6292(a)(2), 6295(c), 6311((1)(I), 6311(10)(A), and 
6313(a)(3)) Portable air conditioners were determined by DOE to be 
covered products under EPCA in a final determination published on 80 
FR 45801, 45805-45806 (July 31, 2015).
---------------------------------------------------------------------------

    In the July 2015 Test Procedure Final Rule, DOE also added 
definitions to 10 CFR 430.2 for portable dehumidifiers and whole-home 
dehumidifiers. Portable dehumidifiers are designed to operate within 
the dehumidified space without ducting attached, although ducting may 
be attached optionally. Whole-home dehumidifiers are designed to be 
installed with inlet ducting for return process air and outlet ducting 
that supplies dehumidified process air to one or more locations in the 
dehumidified space. In the July 2015 Test Procedure Final rule, DOE 
further established that dehumidifiers that are able to operate as both 
a portable and whole-home dehumidifier be tested and rated for both 
configurations. 80 FR 45801, 45805-45806 (July 31, 2015).
    When evaluating and establishing energy conservation standards, DOE 
may divide covered products into product classes by the type of energy 
used, by capacity, or by other performance-related features that 
justify

[[Page 38348]]

a different standard. In making a determination whether a performance-
related feature justifies a different standard, DOE must consider such 
factors as the utility of the feature to the consumer and other factors 
DOE determines are appropriate. (42 U.S.C. 6295(q))
    Under 42 U.S.C. 6295(cc)(2), standards are established for five 
product classes of dehumidifiers, based on the capacity of the unit in 
pints of water extracted per day, as shown in Table IV.1. 
Representations of capacity to comply with the current dehumidifier 
energy conservation standards are determined based on the current DOE 
test procedure in appendix X, as designated in the test procedure final 
rule published on February 7, 2014. 79 FR 7366.

            Table IV.1--Current Dehumidifier Product Classes
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
Capacity (pints/day):
    Up to 35.00.
    35.01-45.00.
    45.01-54.00.
    54.01-75.00.
    75.00 or more.
------------------------------------------------------------------------

a. Preliminary Analysis and NOPR Proposals
    In the preliminary analysis conducted for this rulemaking, DOE 
considered the following portable dehumidifier product classes that 
were based on the existing product classes, but with capacities 
adjusted for the lower ambient temperature proposed in the May 2014 
Test Procedure NOPR.

 Table IV.2--Preliminary Analysis Portable Dehumidifier Product Classes
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
Capacity (pints/day):
    20.00 or less.
    20.01 to 30.00.
    30.01 to 35.00.
    35.01 to 45.00.
    45.01 or more.
------------------------------------------------------------------------

    In the preliminary analysis, DOE also considered two product 
classes for whole-home dehumidifiers, differentiated by product case 
volume.

Table IV.3--Preliminary Analysis Whole-Home Dehumidifier Product Classes
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
Case Volume (cubic feet):
    less than or equal to 8.0.
    greater than 8.0.
------------------------------------------------------------------------

    In response to the preliminary analysis, DOE received comments 
stating that the test procedure changes proposed in the May 2014 Test 
Procedure NOPR would increase test-to-test variation and make it more 
difficult to establish product classes based on capacity thresholds for 
the portable dehumidifiers. DOE subsequently conducted additional 
analysis that indicated that product construction and performance under 
the proposed test conditions were similar for products with capacities 
of 20 pints/day or less and 20.01 to 30 pints/day. DOE observed the 
same similarities between products in the 30.01 to 35 pints/day and 
35.01 to 45 pints/day product classes. DOE, therefore, proposed to 
establish only three portable product classes based on capacity and 
maintained the same two proposed product classes for whole-home 
dehumidifiers. DOE proposed the revised product class structure in the 
June 2015 NOPR. 80 FR 31645, 31656-31658 (June 3, 2015).

         Table IV.4--June 2015 NOPR Dehumidifier Product Classes
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
Portable (capacity, pints/day):
    30.00 or less.
    30.01 to 45.00.
    45.01 or more.
Whole-Home (case volume, cubic feet):
    less than or equal to 8.0.
    greater than 8.0.
------------------------------------------------------------------------

b. Comments and Responses
Scope of Coverage
    Aprilaire Inc. (Aprilaire) stated that not requiring air 
conditioners to meet dehumidifier standards results in unfair 
competition because air conditioners often provide a dehumidification 
mode, yet are regulated only for cooling mode. (Aprilaire, No. 34 at p. 
3; Aprilaire, Public Meeting Transcript, No. 35 at p. 
27)22 23 DOE notes that the definition for dehumidifier in 
10 CFR 430.2 specifically excludes portable air conditioners, room air 
conditioners, and packaged terminal air conditioners because these 
products are the subject of either existing energy conservation 
standards (e.g., room air conditioners and packaged terminal air 
conditioners (42 U.S.C. 6295(c) and 42 U.S.C. 6313(a)(3)) or a current 
rulemaking considering new standards (e.g., portable air conditioners). 
The existing or proposed energy conservation standards for these 
products address representative energy use in active, standby, and off 
modes. When evaluating new or amended standards, DOE will consider all 
relevant operating modes, including any dehumidification mode.
---------------------------------------------------------------------------

    \22\ A notation in the form ``Aprilaire, No. 34 at p. 3'' 
identifies a written comment: (1) Made by Aprilaire Inc.; (2) 
recorded in document number 34 that is filed in the docked of this 
standards rulemaking (Docket No. EERE-2012-BT-STD-0027) and 
available for review at www.regulations.gov; and (3) which appears 
on page 3 of document number 34.
    \23\ A notation in the form ``Aprilaire, Public Meeting 
Transcript, No. 35 at p. 27'' identifies an oral comment that DOE 
received during the July 7, 2015, dehumidifier energy conservation 
standards NOPR public meeting. Oral comments were recorded in the 
public meeting transcript and are available the dehumidifier energy 
conservation standards rulemaking docket (Docket No. EERE-2012-BT-
STD-0027). This particular notation refers to a comment: (1) Made by 
Aprilaire Inc. during the public meeting; (2) recorded in document 
number 35, which is the public meeting transcript that is filed in 
the docket of this energy conservation standards rulemaking; and (3) 
which appears on page 27 of document number 35.
---------------------------------------------------------------------------

    Aprilaire does not believe that portable dehumidifiers and whole-
home dehumidifiers should be classified and regulated under the same 
standards for the same reason that DOE does not regulate space heaters 
and home heaters in the same category. (Aprilaire, No. 34 at p. 3) 
Although portable dehumidifiers and whole-home dehumidifiers have 
different applications and overall performance, they both: (1) Fall 
under the statutory definition of a dehumidifier; (2) provide the same 
dehumidification function: And (3) can be characterized with the same 
energy efficiency performance metric. In contrast, EPCA provides 
separate definitions of ``furnace,'' ``heat pump,'' and ``unit heater'' 
as mutually exclusive covered products (42 U.S.C. 6291(23), (24), and 
(45)), subject to separate energy conservation standards (42 U.S.C. 
6295(f), (d), and (aa)). In the absence of statutory differentiation 
between portable dehumidifiers and whole-home dehumidifiers, DOE is 
addressing both product configurations in this rulemaking for amended 
dehumidifier standards. DOE, however, is establishing separate product 
classes for portable and whole-home dehumidifiers.
Definitions
    Aprilaire suggested that DOE re-evaluate the definition for whole-
home dehumidifiers because both whole-home dehumidifiers and portable 
dehumidifiers may or may not include ducting. Aprilaire stated that the 
correct distinction between the two is that whole-home dehumidifiers 
come with integral or external controls that allow the dehumidifier to 
function in concert with the central air distribution system. Aprilaire 
commented that a definition based on a distinction of controls 
compatibility with a central air system would include air conditioners, 
which DOE specifically excluded from

[[Page 38349]]

coverage. Further, Aprilaire commented that the definitions of the two 
types of dehumidifiers should reflect a number of other distinctions, 
including: Application flexibility, air flow rates, typical 
installation, and necessary installation expertise. (Aprilaire, No. 34 
at pp. 3-4; Aprilaire, Public Meeting Transcript, No. 35 at p. 28) In 
addition to establishing definitions for portable dehumidifiers and 
whole-home dehumidifiers, DOE acknowledged in the July 2015 Test 
Procedure Final Rule that certain dehumidifiers offer optional or 
removable ducting, and therefore can be operated as either a portable 
dehumidifier or a whole-home dehumidifier. DOE has addressed these 
types of products in appendix X1 by requiring manufacturers to test and 
rate these products in both configurations. For all other products 
available on the market, the presence of ducts or lack thereof is the 
only reliably identifiable characteristic to differentiate between the 
two product types. For certain units, the additional characteristics 
identified by Aprilaire may also differentiate between portable 
dehumidifiers and whole-home dehumidifiers, but information on those 
characteristics may be subjective or not publicly available. Therefore, 
DOE is maintaining the presence of ducts as the primary differentiator 
between portable dehumidifiers and whole-home dehumidifiers.

Product Classes

    Pacific Gas and Electric Company, Southern California Gas Company, 
San Diego Gas and Electric, and Southern California Edison (California 
Investor-Owned Utilities (IOUs)) supported DOE's proposal to 
consolidate dehumidifiers into fewer product classes; however, they 
requested that DOE consider whether capacity or physical size and 
weight is the more appropriate attribute for setting product classes. 
They stated that if dehumidifiers are typically available in two size 
and weight ranges and that physical size defines unique utility, 
product class definitions should account for physical size in addition 
to capacity. They warned that setting product classes based solely on 
capacity ratings may inadvertently encourage manufacturers to build 
units rated for low capacity by simply using larger components that 
increase weight, resulting in negative impacts on portability and a 
corresponding loss of utility to consumers. (California IOUs, No. 41 at 
pp. 1-2) Therma-Stor LLC (Therma-Stor) and Aprilaire disagreed with the 
proposed product classes based on capacity and/or physical size for the 
purpose of applying substantially different minimum efficiency levels. 
They commented that the establishment of classes is arbitrary and may 
not have sufficient granularity. (Therma-Stor, No. 38 at p. 1; 
Aprilaire, Public Meeting Transcript, No. 35 at p. 25; Aprilaire, No. 
34 at p. 2) During interviews, multiple manufacturers of portable 
dehumidifiers stated that their products are typically built upon two 
product platforms with different case sizes. They noted that the two 
product sizes provide consumers with unique utility because the smaller 
units are more portable and weigh less than the large units. Typically, 
condensate removal capacity is also correlated with case size. The 
manufacturers stated that DOE should ensure that both product platforms 
are maintained with any amended energy conservation standards to 
provide consumers the option of purchasing the smaller, more portable 
products. Consistent with 42 U.S.C. 6295(q), DOE retained multiple 
portable dehumidifier product classes based on product capacity in this 
final rule. In its engineering analysis, however, DOE did not consider 
technology changes that would significantly impact the portability of 
the two lower-capacity product classes. Manufacturers may choose 
different pathways to improve efficiency, including by increasing 
component sizes and weights, but DOE's analysis shows that there are 
pathways to improving efficiency that would not affect consumer 
utility.
    For whole-home dehumidifiers, certain space-constrained 
installation locations limit the case size that may be installed. 
Accordingly, manufacturers of these space-constrained products would be 
limited in their ability to increase component sizes to achieve higher 
efficiencies. Because some technologies are only able to be implemented 
in larger case volumes, DOE continues to base the whole-home 
dehumidifier product classes on case volume to ensure that space-
constrained whole-home dehumidifiers would be able to maintain their 
smaller product volumes at the analyzed efficiency levels.
    Electrolux Major Appliances--North America (Electrolux) suggested 
that the second portable dehumidifier product class include units with 
capacities from 30.01 to 50.00 pints/day because, under the capacity 
thresholds proposed in the June 2015 NOPR, units previously rated at 70 
pints/day would inappropriately be categorized into the highest-
capacity proposed portable dehumidifier product class. According to 
Electrolux, these products would be rated at 46 pints/day under 
appendix X1, but based on DOE's description of products in each 
proposed product class, Electrolux expects that DOE intended for these 
products to be classified in the middle-capacity portable dehumidifier 
product class. Electrolux stated that the current 70 pint/day unit, 
which is a very high volume and popular capacity, would effectively be 
eliminated from the market under the proposed standard level for the 
highest-capacity portable dehumidifier product class. (Electrolux, No. 
36 at p. 1)
    AHAM noted that the reduced temperature conditions for portable 
dehumidifiers in appendix X1 decrease the measured capacity by about 35 
percent, on average, as compared to the previous test conditions. 
Therefore, although AHAM and GE Appliances (GE) agreed with the 
establishment of three product classes, they suggested that the 
proposed product classes be slightly revised to reflect results from 
the test procedure at appendix X1. They suggested that the new portable 
dehumidifier product classes be: (1) less than 25.00 pints/day; (2) 
25.01-50.00 pints/day; and (3) 50.01 pints/day or greater. (AHAM, No. 
39 at pp. 2-4; GE, No. 42 at p. 1) Based on the comments in response to 
the June 2015 NOPR and on information gathered during confidential 
manufacturer interviews, DOE has revised the portable dehumidifier 
product classes, consistent with AHAM's recommendation, to better 
reflect how portable dehumidifiers are expected to perform when tested 
according to appendix X1. DOE estimates that the distribution of 
portable dehumidifier models among the three revised product classes is 
the same as was originally determined in the NOPR analysis because the 
rated capacity of these models would adjust in the same proportion as 
the capacity thresholds between the classes.
c. Final Rule Product Classes
    After reviewing comments received in response to the June 2015 NOPR 
and evaluating additional information, DOE determined that an 
adjustment of the portable dehumidifier product classes is appropriate. 
DOE notes that these revised product classes more accurately capture 
the intent of DOE's original proposals when considering the impacts of 
the new test procedure at appendix X1, and are supported by data from 
manufacturers. In summary, DOE is establishing the following three 
portable dehumidifier product classes, based on product capacity, and 
two whole-home dehumidifier product classes, based on case volume, in 
this final rule.

[[Page 38350]]



           Table IV.5--Final Rule Dehumidifier Product Classes
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
Portable (capacity, pints/day):
    25.00 or less.
    25.01 to 50.00.
    50.01 or more.
Whole-Home (case volume, cubic feet):
    less than or equal to 8.0.
    greater than 8.0.
------------------------------------------------------------------------

2. Technology Options
    In the market analysis and technology assessment for the June 2015 
NOPR, DOE identified 14 technology options that would be expected to 
improve the efficiency of dehumidifiers, as measured by the DOE test 
procedure (80 FR 31645, 31659 (June 3, 2015)):

          Table IV.6--NOPR Technology Options for Dehumidifiers
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
1. Built-in hygrometer/humidistat.
2. Improved compressor efficiency.
3. Improved condenser and evaporator performance.
4. Improved controls.
5. Improved defrost methods.
6. Improved demand-defrost controls.
7. Improved fan and fan-motor efficiency.
8. Improved flow-control devices.
9. Low-standby-loss electronic controls.
10. Washable air filters.
11. Pre-cooling air-to-air heat exchanger.
12. Heat pipes.
13. Improved refrigeration system insulation.
14. Refrigerant-desiccant systems.
------------------------------------------------------------------------

    In the public meeting for the June 2015 NOPR, interested parties 
discussed the use of alternative refrigerants as another possible 
technology option for dehumidifiers. Aprilaire noted that dehumidifiers 
are a relatively small market and there are currently no alternative 
refrigerant compressors available for these products. (Aprilaire, 
Public Meeting Transcript, No. 35 at p. 47) Southern Company suggested 
that alternative refrigerants are currently being explored for 
refrigerators, which will likely impact the dehumidifier and other 
similar product's market in the near future. (Southern Company, Public 
Meeting Transcript, No. 35 at p. 47) GE stated that dehumidifiers would 
not transition to alternative refrigerants within the next five years. 
(GE, Public Meeting Transcript, No. 35 at p. 48) DOE included 
alternative refrigerants as a technology option for consideration in 
the final rule analysis because available information indicates that 
there are potential efficiency gains associated with this change.
    After identifying all potential technology options for improving 
the efficiency of dehumidifiers, DOE performed a screening analysis 
(section IV.B of this document and chapter 4 of the final rule TSD) to 
determine which technologies merited further consideration. See chapter 
5 of the final rule TSD for additional information on the technology 
options included in the engineering analysis.

B. Screening Analysis

    DOE uses the following four screening criteria to determine which 
technology options are suitable for further consideration in an energy 
conservation standards rulemaking:
    1. Technological feasibility. Technologies that are not 
incorporated in commercial products or in working prototypes will not 
be considered further.
    2. Practicability to manufacture, install, and service. If it is 
determined that mass production and reliable installation and servicing 
of a technology in commercial products could not be achieved on the 
scale necessary to serve the relevant market at the time of the 
projected compliance date of the standard, then that technology will 
not be considered further.
    3. Impacts on product utility or product availability. If it is 
determined that a technology would have significant adverse impact on 
the utility of the product to significant subgroups of consumers or 
would result in the unavailability of any covered product type with 
performance characteristics (including reliability), features, sizes, 
capacities, and volumes that are substantially the same as products 
generally available in the United States at the time, it will not be 
considered further.
    4. Adverse impacts on health or safety. If it is determined that a 
technology would have significant adverse impacts on health or safety, 
it will not be considered further. 10 CFR part 430, subpart C, appendix 
A, 4(a)(4) and 5(b).
    In sum, if DOE determines that a technology, or a combination of 
technologies, fails to meet one or more of the above four criteria, it 
will be excluded from further consideration in the engineering 
analysis. The reasons for eliminating any technology are discussed 
below.
    The subsequent sections include comments from interested parties 
pertinent to the screening criteria, DOE's evaluation of each 
technology option against the screening analysis criteria, and whether 
DOE determined that a technology option should be excluded (``screened 
out'') based on the screening criteria.
1. Screened-Out Technologies
    For the June 2015 NOPR, DOE screened out pre-cooling air-to-air 
heat exchangers and heat pipes for portable dehumidifiers with 
capacities up to 45 pints/day because the likely increases in case size 
and overall weight would result in adverse impacts on product utility 
to consumers. 80 FR 31645, 31659-31660 (June 3, 2015).
    Therma-Stor objected to the screening analysis determination that 
certain technology options are not suitable for low-capacity portable 
dehumidifiers. Therma-Stor believes that the improvements considered by 
DOE are applicable for all capacities and sizes of dehumidifiers. 
(Therma-Stor, No. 38 at p. 2) DOE agrees that these technology options 
are feasible for dehumidifiers of all capacities. However, as discussed 
in the June 2015 NOPR, DOE found that pre-cooling air-to-air heat 
exchangers and heat pipes are not currently incorporated in low-
capacity portable dehumidifiers. DOE determined that including these 
technologies would require significantly larger case sizes for the low-
capacity portable dehumidifiers, resulting in adverse impacts on 
consumer utility. For high-capacity portable dehumidifiers, DOE 
observes that certain products available on the market already 
incorporate air-to-air heat exchangers and a similar case size increase 
would be required for heat pipes. Therefore, DOE has maintained air-to-
air heat exchangers and heat pipes as potential design options for this 
larger-capacity portable dehumidifier product class.
    Although, as discussed in section b of this document, DOE is 
establishing the high-capacity portable dehumidifier product class for 
products with capacity greater than 50 pints/day rather than the 45 
pints/day proposed in the June 2015 NOPR, the models that DOE 
considered to be high-capacity portable units in the preliminary 
analysis would remain classified in this product class based on 
available test data. Therefore, the determination to screen out pre-
cooling air-to-air heat exchangers and heat pipes for portable 
dehumidifiers other than high-capacity dehumidifiers remains unchanged. 
DOE has retained these technology options for portable dehumidifiers 
with capacities greater than 50 pints/day and whole-home dehumidifiers.
2. Remaining Technologies
    Through a review of each technology, DOE tentatively concludes that 
all of the other identified technologies listed in section IV.A.2 met 
all four screening criteria to be examined further as design

[[Page 38351]]

options in DOE's final rule analysis. In summary, DOE did not screen 
out the following technology options:

    Table IV.7--Final Rule Remaining Design Options for Dehumidifiers
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
1. Built-in hygrometer/humidistat.
2. Improved compressor efficiency.
3. Improved condenser and evaporator performance.
4. Improved controls.
5. Improved defrost methods.
6. Improved demand-defrost controls.
7. Improved fan and fan-motor efficiency.
8. Improved flow-control devices.
9. Low-standby-loss electronic controls.
10. Washable air filters.
11. Pre-cooling air-to-air heat exchanger (high-capacity portable and
 whole-home dehumidifiers).
12. Heat pipes (high-capacity portable and whole-home dehumidifiers).
13. Improved refrigeration system insulation.
14. Refrigerant-desiccant systems.
15. Alternative refrigerants.
------------------------------------------------------------------------

    DOE determined that these design options are technologically 
feasible because they are technologies included in commercially 
available products or working prototypes. DOE also finds that all of 
the remaining design options meet the other screening criteria (i.e., 
practicable to manufacture, install, and service and do not result in 
adverse impacts on consumer utility, product availability, health, or 
safety). For additional details, see chapter 4 of the final rule TSD.

C. Engineering Analysis

    In the engineering analysis, DOE establishes the relationship 
between the manufacturer production cost (MPC) and improved 
dehumidifier efficiency. This relationship serves as the basis for 
cost-benefit calculations for individual consumers, manufacturers, and 
the Nation. DOE typically structures the engineering analysis using one 
of three approaches: (1) Design option; (2) efficiency level; or (3) 
reverse engineering (or cost assessment). The design-option approach 
involves adding the estimated cost and associated efficiency of various 
efficiency-improving design changes to the baseline product to model 
different levels of efficiency. The efficiency-level approach uses 
estimates of costs and efficiencies of products available on the market 
at distinct efficiency levels to develop the cost-efficiency 
relationship. The reverse-engineering approach involves testing 
products for efficiency and determining cost from a detailed bill of 
materials (BOM) derived from reverse engineering representative 
products. The efficiency ranges from that of the least-efficient 
dehumidifier sold today (i.e., the baseline) to the maximum 
technologically feasible efficiency level. At each efficiency level 
examined, DOE determines the MPC; this relationship is referred to as a 
cost-efficiency curve.
1. Efficiency Levels
a. Baseline Efficiency Levels
    A baseline unit is typically a product that just meets current 
Federal energy conservation standards and provides basic consumer 
utility. DOE uses the baseline unit for comparison in several phases of 
its rulemaking analyses, including the engineering analysis, LCC 
analysis, PBP analysis, and NIA. To determine energy savings that will 
result from an amended energy conservation standard, DOE compares 
energy use at each of the higher efficiency levels to the energy 
consumption of the baseline unit. Similarly, to determine the changes 
in price to the consumer that will result from an amended energy 
conservation standard, DOE compares the price of a unit at each higher 
efficiency level to the price of a unit at the baseline.
    For the June 2015 NOPR, DOE determined baseline efficiency levels 
by adjusting the existing minimum EF levels to IEF values as would be 
measured under appendix X1. DOE determined the appropriate adjusted 
baseline efficiency levels based on its test sample, which included a 
market-representative range of manufacturers, capacities, and 
efficiencies, and additional numerical adjustments for baseline 
features identified through market analysis. The most significant 
adjustments accounted for the lower ambient test temperature, and 
energy consumption in standby mode, off mode, and fan-only mode. Where 
DOE combined portable dehumidifier product classes between the 
preliminary analysis and the June 2015 NOPR, it set the baseline 
efficiency level for the combined product classes at the lower of the 
two baseline IEF levels considered in the preliminary analysis for the 
two previously separate product classes, which represents the minimum 
IEF, as determined according to appendix X1, that DOE expects from any 
dehumidifiers within the combined product class that are currently 
compliant with the existing standards. DOE also proposed separate 
baseline efficiencies for the two whole-home dehumidifier product 
classes. 80 FR 31645, 31661 (June 3, 2015). Table IV.8 and Table IV.9 
present the baseline efficiency levels proposed in the NOPR analysis.

    Table IV.8--NOPR Portable Dehumidifier Baseline Efficiency Levels
------------------------------------------------------------------------
                  Capacity  (pints/day)                    IEF  (L/kWh)
------------------------------------------------------------------------
30.00 or less...........................................            0.77
30.01-45.00.............................................            0.94
45.01 or more...........................................            2.07
------------------------------------------------------------------------


   Table IV.9--NOPR Whole-Home Dehumidifier Baseline Efficiency Levels
------------------------------------------------------------------------
                Case Volume  (cubic feet)                  IEF  (L/kWh)
------------------------------------------------------------------------
8.0 or less.............................................            1.77
More than 8.0...........................................            2.41
------------------------------------------------------------------------

    AHAM noted that DOE began the rulemaking analysis before the 
compliance date of the current energy conservation standards, and 
therefore the test sample may not represent products currently on the 
market. AHAM offered to share performance data if it received data from 
at least three manufacturers. (AHAM, Public Meeting Transcript, No. 35 
at p. 40; AHAM, No. 39 at pp. 3-4) Although DOE conducted initial 
testing and analysis on units manufactured prior to October 1, 2012, 
DOE also supplemented that test sample when units complying with the 
most recent standards became available, beginning in 2013. In preparing 
and conducting the preliminary analysis, DOE acquired 12 additional 
portable dehumidifiers and conducted testing and teardowns to assess 
whether any technologies had changed to meet the currently applicable 
standards. DOE found that manufacturers incorporated more efficient 
compressors and larger heat exchangers to meet the new standards, but 
otherwise the products were similar in construction. DOE considered the 
more efficient components as technology options in the engineering 
analysis for the preliminary analysis, the June 2015 NOPR, and this 
final rule. DOE did not receive any additional performance data for 
this final rule.
    Following publication of the June 2015 NOPR, DOE became aware of 
portable dehumidifiers available on the market with capacities greater 
than 50 pints/day (as measured under the new test procedure in appendix 
X1) that were not previously considered. The dehumidifiers previously 
considered in this higher-capacity portable dehumidifier product class 
are constructed similar to whole-home dehumidifiers, with more robust 
construction materials and components,

[[Page 38352]]

but are not designed to be installed with duct connections. The newly 
considered products are constructed similar to portable dehumidifiers 
with capacities less than 50 pints/day, with cases primarily made of 
plastic. DOE assessed the performance of these newly considered 
dehumidifiers with capacities greater than 50 pints/day and determined 
that they often include fan operation during off-cycle mode, as is 
common for portable dehumidifiers with lower capacities. Therefore, DOE 
determined that the baseline for this product class should be updated 
to account for fan operation in off-cycle mode, thereby reducing the 
baseline IEF. Based on test data, DOE estimated a fan power of 96.5 
watts (W) for the greater than 50 pints/day product class, which was 
higher than the fan power estimated for the two lower-capacity portable 
dehumidifier product classes in order to maintain the necessary airflow 
through larger heat exchangers. DOE also incorporated the highest 
inactive mode or off-mode power, 2.12 W, observed in DOE's test sample 
to estimate inactive and off-mode energy use for the high-capacity 
portable dehumidifier product class.
    Table IV.10 and Table IV.11 show the baseline efficiency levels for 
portable dehumidifiers and whole-home dehumidifiers covered in this 
final rule, respectively. Note that the whole-home dehumidifier 
baseline efficiency levels are unchanged from the June 2015 NOPR.

Table IV.10--Final Rule Portable Dehumidifier Baseline Efficiency Levels
------------------------------------------------------------------------
                  Capacity  (pints/day)                    IEF  (L/kWh)
------------------------------------------------------------------------
25.00 or less...........................................            0.77
25.01-50.00.............................................            0.94
50.01 or more...........................................            1.73
------------------------------------------------------------------------


   Table IV.11--Final Rule Whole-Home Dehumidifier Baseline Efficiency
                                 Levels
------------------------------------------------------------------------
                Case Volume  (cubic feet)                  IEF  (L/kWh)
------------------------------------------------------------------------
8.0 or less.............................................            1.77
More than 8.0...........................................            2.41
------------------------------------------------------------------------

    Additional details on the selection of baseline units may be found 
in chapter 5 of the final rule TSD.
b. Higher Energy Efficiency Levels
    For the June 2015 NOPR, DOE considered incremental efficiency 
levels beyond the baseline based on existing efficiency levels (e.g., 
the ENERGY STAR level) available in the market and observed during 
investigative testing. Similar to the baseline efficiency levels 
discussed above, DOE adjusted the efficiency levels to reflect values 
that would be obtained when using appendix X1. In addition, DOE 
proposed that the first incremental efficiency level beyond the 
baseline for each portable dehumidifier product class, except for the 
highest-capacity product class, be achieved by the elimination of fan-
only mode.
    DOE further proposed max-tech efficiency levels that incorporate 
additional design options beyond those observed in its test sample. DOE 
then modeled the performance associated with these design options to 
estimate the max-tech IEF levels. 80 FR 31645, 31662-31663 (June 3, 
2015).
    Table IV.12 and Table IV.13 present the efficiency levels DOE 
considered in the June 2015 NOPR analysis.

                            Table IV.12--NOPR Portable Dehumidifier Efficiency Levels
----------------------------------------------------------------------------------------------------------------
                                                                  Integrated energy factor efficiency levels  (L/
                                                                                       kWh)
        Efficiency level             Efficiency level source     -----------------------------------------------
                                                                   30.00 pints/     30.01-45.00    45.01 pints/
                                                                    day or less      pints/day      day or more
----------------------------------------------------------------------------------------------------------------
Baseline.......................  Current Baseline with Maximum              0.77            0.94            2.07
                                  Observed Off-cycle Mode Power.
1..............................  Current Baseline with no Fan               1.10            1.20            2.40
                                  Operation During Off-cycle
                                  Mode/Gap Fill 1.
2..............................  Gap Fill 1/Gap Fill 2..........            1.20            1.40            2.80
3..............................  Gap Fill 2/Max Tech............            1.30            1.60            3.66
4..............................  Max Tech.......................            1.57            1.80  ..............
----------------------------------------------------------------------------------------------------------------


                           Table IV.13--NOPR Whole-Home Dehumidifier Efficiency Levels
----------------------------------------------------------------------------------------------------------------
                                                                                     Integrated energy factor
                                                                                    efficiency levels  (L/kWh)
                                                                                 -------------------------------
            Efficiency level                     Efficiency level source           8.0 ft \3\ or   More than 8.0
                                                                                    less  (case    ft \3\ (case
                                                                                      volume)         volume)
----------------------------------------------------------------------------------------------------------------
Baseline...............................  Minimum Available......................            1.77            2.41
1......................................  Gap Fill 1.............................            2.09            2.70
2......................................  Gap Fill 2/Max Tech....................            2.53            3.52
3......................................  Max Tech...............................  ..............            4.50
----------------------------------------------------------------------------------------------------------------

    Additional details on the selection of incremental efficiency 
levels may be found in chapter 5, section 5.3.2 of the June 2015 NOPR 
TSD.

Fan Operation in Off-Cycle Mode

    AHAM and GE suggested that elimination of fan operation in off-
cycle mode at Efficiency Level 1 for portable dehumidifiers would 
impact air sampling and humidity control, and could require a change 
from active defrost to passive defrost. AHAM and GE also expect that 
Efficiency Level 1 would be difficult to achieve using other technology 
options, should a manufacturer choose to maintain fan operation in off-
cycle mode. Therefore, they suggested that DOE include a gap fill 
efficiency level between baseline and Efficiency Level 1 that would not 
require the elimination of fan operation

[[Page 38353]]

in off-cycle mode. AHAM and GE further suggested that an IEF of 1.10 
for portable dehumidifiers less than 30.00 pints/day is not an accurate 
representation of baseline efficiency with no fan operation in off-
cycle mode. (AHAM, No. 39 at p. 5; GE, No. 42 at p. 2)
    Due to the significant IEF decrease associated with continuous fan 
operation in off-cycle mode and the low cost of eliminating continuous 
fan operation, DOE continues to expect that manufacturers would 
eliminate fan operation in off-cycle mode as a first step to improving 
efficiency. Many dehumidifiers currently available on the market do not 
continuously operate the fan in off-cycle mode. DOE sought comment on 
this issue both in the proposed rule and in manufacturer interviews 
conducted in support of this final rule. DOE received comments and 
feedback that there would be no impact on consumer utility associated 
with removing continuous fan operation in off-cycle mode, and that many 
dehumidifiers either run the fan intermittently or for a short period 
of time during off-cycle mode. DOE also notes that, although it expects 
manufacturers to remove continuous fan operation in off-cycle mode to 
reach Efficiency Level 1, manufacturers may elect to switch from 
continuous fan operation to intermittent or short periods of fan 
operations along with other design options to improve efficiency. For 
its estimates of the IEF at the baseline, DOE assumed a baseline unit 
with continuous operation of the highest power fan motor in off-cycle 
mode, as observed in DOE's test sample. For Efficiency Level 1, DOE 
assumed that the continuous highest-power fan operation would be 
replaced by the typical off-cycle mode power consumption without a fan 
running, as observed in its test sample.
Heat Exchanger Modifications
    Aprilaire agreed with DOE that adjusting the size of the heat 
exchanger coil is one of the primary means of improving dehumidifier 
efficiency, and that modifying the blower motor has less of an impact 
on efficiency. However, Aprilaire stated that installation size 
restrictions for whole-home dehumidifiers often inhibit a 
manufacturer's ability to increase the heat exchanger sizes to meet 
higher efficiency levels. (Aprilaire, Public Meeting Transcript, No. 35 
at p. 49; Aprilaire, No. 34 at p. 2) DOE recognizes the constraints on 
case volume for whole-home dehumidifiers based on the installation 
location. Therefore, DOE constructed the whole-home dehumidifier 
product classes to ensure that units with case volume restrictions 
(i.e., case volume of 8.0 cubic feet or less) would not be held to the 
same energy conservations standards as those without size constraints 
(i.e., case volume more than 8.0 cubic feet).
    Electrolux requested additional information on how DOE determined 
the increased heat exchanger size. (Electrolux, Public Meeting 
Transcript, No. 35 at p. 52) When adjusting the heat exchanger size in 
its model, DOE typically either added or removed a row of tube passes. 
The fins and other components of the heat exchangers were adjusted 
accordingly to accommodate the additional tube row, and the performance 
impacts were determined through modeling. When discussing increased 
heat exchanger size, DOE often refers to the resulting change in 
frontal surface area, although other associated heat exchanger 
characteristics were also adjusted.

Compressor Efficiency

    In a joint comment, Appliance Standards Awareness Project (ASAP), 
Alliance to Save Energy, American Council for an Energy-Efficient 
Economy, Natural Resources Defense Council, and Northwest Energy 
Efficiency Alliance (hereinafter the ``Joint Commenters'') commented 
that although variable-speed compressors, which can achieve significant 
energy savings in the field, would not improve dehumidifier efficiency 
as measured by the DOE test procedure, these compressors generally have 
higher efficiencies at full power compared to traditional compressors 
currently used in dehumidifiers. For example, the Joint Commenters 
stated that one compressor manufacturer offers R-410A permanent-magnet 
inverter rotary compressors with energy efficiency ratio (EER) values 
of 11.0-11.8 for cooling capacities of 7,600-13,700 British thermal 
units per hour. (Joint Commenters, No. 40 at p. 2) While DOE is not 
aware of any dehumidifiers currently available on the market or any 
prototypes that incorporate variable-speed compressors, DOE considered 
high-efficiency compressors for the higher efficiency levels. 
Specifically, DOE accounted for compressors with EERs up to 11.2, 
within the range identified by the Joint Commenters for variable-speed 
compressors in its engineering analysis. See chapter 5 of the final 
rule TSD for additional information.
    The California IOUs recommended that DOE account for likely changes 
in the room air conditioner and portable air conditioner markets, 
including energy conservation standards that may lead to greater 
availability of high efficiency compressors in the future. (California 
IOUs, No. 41 at p. 3) In this engineering analysis, DOE has considered 
the most efficient compressors currently available that are suitable 
for dehumidifiers. While DOE expects that dehumidifier manufacturers 
may shift to using more efficient available compressors in response to 
these amended standards, DOE does not necessarily expect that the 
maximum available compressor efficiency would increase in response to 
standards for dehumidifiers or closely related air conditioning 
products. If DOE becomes aware of more efficient compressors available 
or in working prototypes, it may consider those as potential technology 
options in any future rulemaking.
    The California IOUs also recommended that DOE consider whether 
compressor availability, and the potential unavailability of 
dehumidifiers with certain capacities, would negatively impact 
consumers, assuming that other dehumidifiers with higher capacities 
were still available. Further, the California IOUs suggested that 
lower-capacity units provide no distinct utility from higher capacity 
units; instead, the product size and weight are more appropriate 
characteristics to define utility. (California IOUs, No. 41 at pp. 3-4) 
As discussed in section IV.A.1 of this document, DOE has established 
product classes for portable dehumidifiers based on product capacity, 
which is the primary consumer utility offered by dehumidifiers. DOE 
agrees with the California IOUs that lower product size and weight 
provide certain utility to consumers of low-capacity portable 
dehumidifiers. However, DOE observed that size and weight are directly 
correlated to product capacity, which is a measure of the primary 
function of the product to remove moisture from the conditioned space; 
therefore, DOE maintains capacity as the product class differentiator 
for portable dehumidifiers.
Additional Portable Dehumidifier Efficiency Level
    The California IOUs, Joint Commenters, and ASAP recommended that 
DOE analyze an efficiency level for portable dehumidifiers at the 
maximum available efficiency, which would fall between Efficiency Level 
3 and Efficiency Level 4 in the June 2015 NOPR and would closely align 
with Efficiency Level 4 from the preliminary analysis. According to 
these commenters, such an additional efficiency level would capture a

[[Page 38354]]

majority of the additional energy savings that would be associated with 
standards at the max-tech level while remaining cost-effective. The 
California IOUs further requested that DOE consider evaluating an 
additional efficiency level at ``near max-tech,'' excluding a shift to 
the highest-efficiency compressors. Acknowledging that the availability 
of high-efficiency compressors is currently a limiting factor, the 
California IOUs believe cost-effective energy savings would be achieved 
by optimizing other components without the use of the highest-
efficiency compressors. (California IOUs, No. 41 at pp. 2-3; Joint 
Commenters, No. 40 at pp. 4-6; ASAP, Public Meeting Transcript, No. 35 
at pp. 10, 38)
    In the June 2015 NOPR analysis, DOE proposed the highest efficiency 
level at the maximum technologically feasible efficiency, which for 
dehumidifiers was slightly higher than the maximum efficiency available 
on the market. Because the difference between the max-tech and maximum 
available efficiencies was small (0.05 L/kWh) for the two lower-
capacity portable dehumidifier product classes, DOE did not consider 
maintaining those maximum available efficiencies as separate efficiency 
levels in the June 2015 NOPR. Further, DOE notes that the same concerns 
regarding compressor availability would exist at a ``near max-tech'' 
level as at the max-tech. Accordingly, DOE did not analyze an 
additional efficiency level at the maximum available efficiency.
High-Capacity Portable Dehumidifier Efficiency Levels
    Therma-Stor commented that the proposed efficiency levels are 
increased by a greater percentage for the higher-capacity portable 
dehumidifiers than for the lower-capacity portable dehumidifiers. 
Therma-Stor stated that high-capacity portable dehumidifiers already 
incorporate one or more efficiency features, yet of its seven current 
higher-capacity portable dehumidifier models, only one exceeds the 
proposed standard level. (Therma-Stor, No. 38 at pp. 2-3) For each 
product class analyzed in the standards rulemaking, DOE analyzed a 
representative sample of products to determine an appropriate baseline 
efficiency and improved efficiency levels. For the high-capacity 
portable dehumidifiers (50.01 pints/day or greater), DOE has updated 
the analysis for this product class to reflect new products on the 
market; however, DOE notes that multiple products in its test sample 
tested higher than the Efficiency Level 3 proposed in the June 2015 
NOPR.
Whole-Home Dehumidifier Efficiency Levels
    Aprilaire expressed concern that DOE's analysis of whole-home 
dehumidifiers, with only two efficiency levels, lacked the granularity 
of the portable dehumidifier analysis, and therefore may not properly 
evaluate the whole-home dehumidifier market. (Aprilaire, No. 34 at p. 
2) The efficiency levels considered in the engineering analysis are 
developed based on the performance of products on the market and in 
DOE's test sample with different combinations of design options. Based 
on product testing and teardowns, DOE opted to include only one gap 
fill efficiency level for whole-home dehumidifiers with a case volume 
less than 8.0 cubic feet and two gap fill efficiency levels for whole-
home dehumidifiers with case volumes greater than 8.0 cubic feet. DOE 
explains the design options associated with products at each of these 
efficiency levels in chapter 5 of the final rule TSD.
    Therma-Stor commented that DOE's analysis of the whole-home 
dehumidifier market is incomplete due to the relatively small size of 
the segment, and the lack of substantial field studies. (Therma-Stor, 
No. 38 at p. 2) As described above for high-capacity portable 
dehumidifiers, DOE analyzed a representative sample of products for 
each whole-home dehumidifier product class to determine an appropriate 
baseline efficiency and improved efficiency levels.
Impact of Efficiency Levels
    Southern Company recommended that DOE perform additional analysis 
to ensure that product utility is maintained at low temperatures when 
increasing the minimum efficiency under normal operating conditions. 
(Southern Company, Public Meeting Transcript, No. 35 at p. 38) In the 
rulemaking that established appendix X1, DOE determined that the 
representative operating condition for portable dehumidifiers is 65 
degrees Fahrenheit ([deg]F) dry-bulb temperature, and established this 
as the updated test condition for portable dehumidifiers. Accordingly, 
DOE based this final rule analysis on this test condition, which is 
lower than the dry-bulb temperature specified in the currently 
applicable test procedure, appendix X. As Southern Company suggested, 
lower operating temperatures may cause certain dehumidifiers to 
initiate defrosts, and thereby reduce overall performance. However, 
while some units designed to meet current energy conservation standards 
may enter a defrost mode at the 65[emsp14][deg]F test condition, DOE 
expects that manufacturers would adjust their refrigeration systems to 
avoid defrosts due to any decrease in IEF required by amended 
standards. DOE does not expect the design options considered in this 
analysis to result in more frequent defrosts or any other impacts on 
performance at the representative operating conditions that would 
affect consumer utility compared to units currently available on the 
market.
    In sum, DOE modified the baseline efficiency level from that 
proposed in the June 2015 NOPR and inserted a new Efficiency Level 1 
for the high-capacity portable dehumidifier product class, and 
maintained all other efficiency levels as analyzed in the June 2015 
NOPR. Table IV.14 and Table IV.15 present the efficiency levels DOE 
considered in this final rule analysis.

                         Table IV.14--Final Rule Portable Dehumidifier Efficiency Levels
----------------------------------------------------------------------------------------------------------------
                                                                    Integrated energy factor  efficiency levels
                                                                                      (L/kWh)
        Efficiency level             Efficiency level source     -----------------------------------------------
                                                                   25.00 pints/     25.01-50.00    50.01 pints/
                                                                    day or less      pints/day      day or more
----------------------------------------------------------------------------------------------------------------
Baseline.......................  Current Baseline with Maximum              0.77            0.94            1.73
                                  Observed Off-cycle Mode Power.
1..............................  Current Baseline with no Fan               1.10            1.20            2.15
                                  Operation During Off-cycle
                                  Mode.
2..............................  Gap Fill 1.....................            1.20            1.40            2.40
3..............................  Gap Fill 2.....................            1.30            1.60            2.80
4..............................  Max Tech.......................            1.57            1.80            3.66
----------------------------------------------------------------------------------------------------------------


[[Page 38355]]


                        Table IV.15--Final Rule Whole-Home Dehumidifier Efficiency Levels
----------------------------------------------------------------------------------------------------------------
                                                                                     Integrated energy factor
                                                                                     efficiency levels (L/kWh)
                                                                                 -------------------------------
            Efficiency level                     Efficiency level source           8.0 ft \3\ or   More than 8.0
                                                                                    less  (case    ft \3\ (case
                                                                                      volume)         volume)
----------------------------------------------------------------------------------------------------------------
Baseline...............................  Minimum Available......................            1.77            2.41
1......................................  Gap Fill 1.............................            2.09            2.70
2......................................  Gap Fill 2/Max Tech....................            2.53            3.52
3......................................  Max Tech...............................  ..............            4.50
----------------------------------------------------------------------------------------------------------------

    Additional details on the selection of incremental efficiency 
levels may be found in chapter 5 of the final rule TSD.
2. Manufacturer Production Cost Estimates
    Based on product teardowns and cost modeling, DOE developed overall 
cost-efficiency relationships for each product class considered in that 
analysis. DOE selected products covering the range of efficiencies 
available on the market for the teardown analysis. During the teardown 
process, DOE created detailed bills of materials (BOMs) that included 
all components and processes used to manufacture the products. DOE used 
the BOMs from the teardowns as an input to a cost model, which was used 
to calculate the MPC for products covering the range of efficiencies 
available on the market. The MPC accounts for labor, material, 
overhead, and depreciation costs that a manufacturer would incur in 
producing a specific dehumidifier. DOE also developed BOMs and MPCs for 
theoretical units that would implement the identified max-tech 
components for dehumidifiers.
    DOE estimated that the costs for these products reflected the costs 
for typical units at their respective efficiency levels, consistent 
with the efficiency-level approach. DOE then used the design-option 
approach to determine what changes would be needed for a particular 
unit to meet each incrementally higher efficiency level. DOE 
constructed cost-efficiency curves for multiple manufacturers to 
reflect the incremental MPC corresponding to each manufacturer's 
product line and available platforms. DOE combined the individual cost-
efficiency curves based on estimates of each manufacturer's market 
share to develop an overall cost-efficiency curve representative of the 
entire industry.
    In improving the max-tech efficiencies beyond the maximum 
available, as discussed in section IV.C.1.b of the June 2015 NOPR, DOE 
determined that this was a technologically feasible change that would 
improve product efficiencies. DOE's determination was based on the 
general availability of these components, efficiency gains associated 
with these technology options, and the minimal cost impacts beyond the 
additional costs of the components. The MPCs for the June 2015 NOPR 
analysis reflected this design option, as well as others, at the max-
tech efficiency level. 80 FR 31645, 31666 (June 3, 2015).
    Table IV.16 presents the MPC estimates DOE developed for the June 
2015 NOPR. Id.

                    Table IV.16--NOPR Dehumidifier Incremental Manufacturer Production Costs
                                                     [2013$]
----------------------------------------------------------------------------------------------------------------
                                   Portable product class capacities (pints/day)   Whole-home product class case
---------------------------------------------------------------------------------         volume (ft\3\)
                                                                                 -------------------------------
        Efficiency level              <=30.00       30.01-45.00       >45.00           <=8.0           >8.0
----------------------------------------------------------------------------------------------------------------
EL1.............................             $--             $--          $42.81          $15.30           $6.20
EL2.............................            1.69            2.39           53.66          129.22           37.20
EL3.............................            4.27            8.07          120.33             N/A          161.39
EL4.............................           19.38           22.42             N/A             N/A             N/A
----------------------------------------------------------------------------------------------------------------

    Chapter 5 of the June 2015 NOPR TSD contains additional details on 
the analysis conducted in support of developing these MPC estimates.
    Electrolux commented that a consumer would have to pay a cost adder 
of approximately $40 to buy a unit rated at 30 pints/day under the new 
test procedure at appendix X1 instead of a unit rated at 30 pints/day 
under the current appendix X, because the unit rated under appendix X1 
would be a larger design that achieves 50 pints/day under appendix X). 
Electrolux was unsure whether the rated capacities at retail would 
shift lower (with no cost impact) or remain the same and result in much 
higher costs to consumers. (Electrolux, No. 36 at p. 1) As a result of 
discussions with manufacturers in confidential interviews, DOE has 
concluded that manufacturers will likely educate consumers to explain 
the reduction in rated capacity under appendix X1. Therefore, DOE 
believes that a consumer who previously would have purchased a 70 
pints/day dehumidifier rated under appendix X would now purchase a 
similarly constructed unit with a rated capacity between 25 and 50 
pints/day.
    In this final rule, DOE estimated, as it did previously with 
portable dehumidifiers at lower capacities, that the cost to move from 
the baseline efficiency level to Efficiency Level 1 for portable 
dehumidifiers with capacities greater than 50 pints/day would not 
require any increase in manufacturer production costs, as the removal 
of fan operation in off-cycle mode is essentially a controls 
programming adjustment. DOE further notes that the same design options 
and subsequent efficiency improvements previously considered in the 
June 2015 NOPR for this product class are still applicable.
    In this final rule DOE also updated the MPCs to 2014$, the most 
recent year for which full-year data was available at the time of this 
analysis. DOE notes that

[[Page 38356]]

when updating the costs to current dollars, some variables based on 
changing costs (e.g., materials, shipping, etc.) increased while others 
decreased.

                 Table IV.17--Final Rule Dehumidifier Incremental Manufacturer Production Costs
                                                     [2014$]
----------------------------------------------------------------------------------------------------------------
                                  Portable product class capacities  (pints/day)   Whole-Home product class case
                                 ------------------------------------------------         volume (ft \3\)
        Efficiency level                                                         -------------------------------
                                      <=25.00       25.01-50.00       >50.00           <=8.0           >8.0
----------------------------------------------------------------------------------------------------------------
EL1.............................  ..............  ..............  ..............          $15.78           $6.46
EL2.............................           $1.69           $2.33          $49.27          125.95           38.82
EL3.............................            4.29            8.00           61.32             N/A          183.42
EL4.............................           19.63           22.62          173.63             N/A             N/A
----------------------------------------------------------------------------------------------------------------

    Additional details on the development of the incremental cost 
estimates may be found in chapter 5 of the final rule TSD.

D. Markups Analysis

    The markups analysis develops appropriate markups in the 
distribution chain to convert the MPC estimates derived in the 
engineering analysis to consumer prices. At each step in the 
distribution channel, companies mark up the price of the product to 
cover business costs and profit margin. For dehumidifiers, the main 
parties in the distribution chain are manufacturers and retailers.
    The manufacturer markup converts MPC to manufacturer selling price 
(MSP). DOE developed an average manufacturer markup by examining the 
annual Securities and Exchange Commission (SEC) 10-K reports filed by 
publicly traded manufacturers primarily engaged in appliance 
manufacturing and whose combined product range includes dehumidifiers.
    For retailers, DOE developed separate markups for baseline products 
(baseline markups) and for the incremental cost of more efficient 
products (incremental markups). Incremental markups are coefficients 
that relate the change in the MSP of higher-efficiency models to the 
change in the retailer sales price. DOE relied on economic data from 
the U.S. Census Bureau to estimate average baseline and incremental 
markups.\24\
---------------------------------------------------------------------------

    \24\ U.S. Census, 2012 Annual Retail Trade Survey (ARTS), 
Electronics and Appliance Stores sectors.
---------------------------------------------------------------------------

    Aprilaire urged that the analysis be expanded for whole-home 
dehumidifiers to include the additional costs of shipping larger and 
heavier products and additional installation costs for larger units. 
(Aprilaire, No. 34 at p. 5)
    As in the preliminary and NOPR analyses, DOE used two different 
distribution channels for portable dehumidifiers and whole-home 
dehumidifiers. For the final rule analysis, DOE amended the 
distribution channel of the high-capacity portable dehumidifier product 
class, PC3. A share of the PC3 market uses the same distribution 
channel as PC1 and PC2: Units move from manufacturer to retailer to 
consumer. For the other share of the PC3 market, the distribution 
channel reflects its larger size and uses the whole-home dehumidifier 
distribution channel. To represent additional steps in the purchase of 
a larger unit, the whole-home dehumidifier distribution channel 
reflects two additional markups to include wholesalers and contractors 
used in the purchase of the larger dehumidifiers, including the third 
portable dehumidifier product class and whole-home dehumidifiers. As a 
result, DOE concluded that the wholesaler and contractor markups for 
the larger units include additional costs of shipping and installation.
    AHAM made the following comments regarding the use of incremental 
markups for appliance retailers to estimate future prices of efficient 
products: (1) The incremental markup approach relies on an assumption 
of perfect competition, which is an outdated model of the economy; (2) 
Relatively constant percent gross margins observed in aggregated 
appliance retail industry data imply the use of fixed-percent markups 
over time; (3) Interview responses from appliance retailers are 
consistent with the use of fixed-percent markups. (AHAM, No. 39 at p. 
7)
    DOE responds to these points as follows:
    (1) DOE's incremental markup approach is based on the widely 
accepted economic view that prices closely reflect marginal costs in 
competitive markets and in markets with some degree of 
concentration.\25\ In the absence of data to support a different 
assumption, DOE retains its assumption for this rulemaking.
---------------------------------------------------------------------------

    \25\ Pindyck, R. and Rubinfeld, D. Microeconomics. 8th Edition. 
Prentice Hall, 2012.
---------------------------------------------------------------------------

    (2) In examining the relatively constant appliance retail percent 
margin trend and its underlying prices, DOE found that the average 
inflation-adjusted prices of appliances are relatively fixed during 
this period as well. This set of historical data has no bearing on firm 
markup behavior under product price increases, such as DOE projects 
would occur when higher-efficiency products are introduced. If prices 
are relatively constant, the incremental markup approach will arrive at 
the same price prediction as applying fixed-percent margin; hence, the 
historically constant percent margins do not necessarily imply a 
constant percent margin in the future, especially in the case of 
increased input prices. DOE evaluated time series margin and price data 
from three industries that experienced rapidly changing input prices--
the LCD television retail market,\26\ the U.S. oil and gasoline 
market,\27\ and the U.S. housing market.\28\ The results indicate that 
dollar margins vary across different markets to reflect changes in 
input price, but the percent margins do not remain fixed over time in 
any of these industries. Appendix 6B in the TSD describes DOE's 
findings.
---------------------------------------------------------------------------

    \26\ LCD television data from DisplaySearch, a market research 
company affiliated with NPD Group.
    \27\ U.S. Energy Information Agency, Oil price: Spot price in 
Cushing, Oklahoma for 42 gallon barrel of oil; Retail gas price: 
U.S. average retail price of gasoline, all grades and formulations.
    \28\ Standard and Poors, Case-Shiller home price index, CPI-
adjusted; REAL Trends, http://www.realtrends.com.
---------------------------------------------------------------------------

    (3) Regarding the interviews with appliance retailers, it is 
difficult for DOE to evaluate the characterization of the responses 
without knowing what questions were posed to the retailers. DOE's 
analysis necessarily considers a simplified version of appliance 
retailing: Namely, a situation in which nothing changes except for 
those changes in appliance offerings that

[[Page 38357]]

occur in response to new standards. DOE implicitly asks: Assuming the 
product cost increases while the other costs remain constant (no change 
in labor, material and operating costs), are retailers still able to 
keep the same markup over time as before? DOE recognizes that retailers 
are likely to seek to maintain the same markup on appliances if the 
price they pay goes up as a result of appliance standards, but DOE 
concludes that, over time, adjustment is likely to occur due to 
competitive pressures. Other retailers may find that they can gain 
sales by reducing the markup and maintaining the same per-unit 
operating profit. The incremental markup approach embodies the same 
perspective as the ``preservation of per-unit operating profit markup 
scenario'' used in the MIA (see section IV.J of this document).
    DOE concludes that there is not sufficient evidence to support the 
application of fixed percent markups to the cost increment on efficient 
equipment. Firms generally cannot maintain fixed percent margins in the 
long run under changing cost conditions. Thus, DOE continues to apply 
the incremental markup approach to estimate the price increase for more 
efficient products.
    Chapter 6 of the final rule TSD provides details on DOE's 
development of markups for dehumidifiers.

E. Energy Use Analysis

    DOE's energy use analysis estimated the range of energy use of 
dehumidifiers in the field, i.e., as they are actually used by 
consumers. The energy use analysis provided the basis for other 
analyses DOE performed, particularly assessments of the energy savings 
and the savings in consumer operating costs that could result from 
adoption of amended standards.
    A dehumidifier uses energy when the compressor is operating to 
remove moisture from the air. When the compressor is not operating, the 
dehumidifier may use energy by operating the fan to circulate air 
through the unit to sample the ambient relative humidity and to defrost 
the evaporator coils. When neither the fan nor the compressor is 
operating, energy is used in standby mode or off mode to supply power 
for functions such as keeping a user panel lit.\29\
---------------------------------------------------------------------------

    \29\ The energy use operating mode names used in this standards 
final rule to characterize energy use and subsequent analyses, 
reflect dehumidifier use in the field and are not the same as the 
test procedure operating mode names.
---------------------------------------------------------------------------

    DOE determined the annual energy consumption of dehumidifiers by 
multiplying the capacity (liters per day) by the hours of operation in 
dehumidification mode, dividing that quantity by the product 
efficiency, and adding the energy use for the fan mode and the standby 
and off mode.
    The efficiency and capacity values were measured using a 
temperature of 73[emsp14][deg]F for whole-home dehumidifiers, 
65[emsp14][deg]F for portable dehumidifiers, and a humidity set point 
of 60 percent, as stipulated in the test procedure for dehumidifiers in 
appendix X1.
    To estimate hours of operation in each mode, DOE used two recent 
field studies that measured daily hours of use in each operating mode 
for both portable and whole-home dehumidifiers.\30\ DOE paired these 
data with estimates of the number of months that dehumidifiers are used 
in a representative sample of U.S. households. DOE used data from the 
EIA's 2009 Residential Energy Consumption Survey (RECS 2009), which was 
the most recent such survey available at the time of DOE's 
analysis.\31\ RECS is a national sample survey of housing units that 
collects statistical information on the consumption of and expenditures 
for energy in housing units along with data on energy-related 
characteristics of the housing units and occupants. RECS 2009 
questioned each household on two aspects of dehumidifier use: (1) 
Ownership and (2) number of months of dehumidifier use. DOE estimated 
that consumers leave the dehumidifier to cycle on and off for the 
entire month or months of the dehumidification season.
---------------------------------------------------------------------------

    \30\ Willem, H., et al., Using Field-Metered Data to Quantify 
Annual Energy Use of Residential Portable Unit Dehumidifiers, 
Lawrence Berkeley National Laboratory (Nov. 2013); Burke, T., et 
al., Whole-Home Dehumidifiers Energy Use: A Field-Monitoring Study, 
Lawrence Berkeley National Laboratory (Dec. 2015).
    \31\ U.S. Department of Energy: Energy Information 
Administration, Residential Energy Consumption Survey: 2009 RECS 
Survey Data (2013) (Available at: http://www.eia.gov/consumption/residential/data/2009/).
---------------------------------------------------------------------------

    DOE estimated the energy use for off-cycle mode and the standby and 
off mode using the hours of operation described above, along with data 
on average power in off-cycle and standby modes from the field studies.
    Therma-Stor believes that there are many factors which influence 
dehumidifier operation and that there is no correlation between 
dehumidifier capacity and the amount of water vapor which must be 
removed. Therma-Stor stated that a dehumidifier will be run as long as 
required to reduce humidity until it reaches the consumer's setting. 
(Therma-Stor, No. 38 at pp. 1-2)
    Based on available data, DOE has accounted for the factors 
influencing dehumidifier operation in its analysis. The engineering 
analysis provided data on capacities and efficiencies, field metered 
data in available literature showed ranges of time percentages spent in 
different modes of operation, and the RECS household sample showed 
variation in months of dehumidifier use as reported by consumers. DOE 
assumed that consumers use readily available guides when deciding the 
size of dehumidifier they need to purchase given the amount of humidity 
they experience.
    Chapter 7 of the final rule TSD provides details on DOE's energy 
use analysis for dehumidifiers.

F. Life-Cycle Cost and Payback Period Analysis

    In determining whether an energy conservation standard is 
economically justified, DOE considers the economic impact of potential 
standards on consumers. The effect of new or amended energy 
conservation standards on individual consumers usually involves a 
reduction in operating cost and an increase in purchase cost. DOE used 
the following two metrics to measure consumer impacts:
     LCC (life-cycle cost) is the total consumer cost of an 
appliance or product, generally over the life of the appliance or 
product. The LCC calculation includes total installed cost (equipment 
manufacturer selling price, distribution chain markups, sales tax, and 
installation costs), operating costs (energy, repair, and maintenance 
costs), equipment lifetime, and discount rate. Future operating costs 
are discounted to the time of purchase and summed over the lifetime of 
the appliance or product.
     PBP (payback period) measures the amount of time it takes 
consumers to recover the estimated higher purchase price of a more 
energy-efficient product through reduced operating costs. Inputs to the 
payback period calculation include the installed cost to the consumer 
and first-year operating costs.
    For any given efficiency level, DOE measures the change in LCC 
relative to the LCC in the no-new-standards case, which reflects the 
market in the absence of new or amended energy conservation standards, 
and includes baseline products as well as products with higher 
efficiency. In contrast, the PBP for a given efficiency level is 
measured relative to the baseline product only.
    For each product class efficiency level, DOE calculated the LCC and 
PBP for a nationally representative set of housing units. As stated 
previously, DOE developed household samples with RECS 2009 data. For 
each sample household, DOE determined the energy

[[Page 38358]]

consumption for the dehumidifier and the appropriate electricity price. 
By developing a representative sample of households, the analysis 
captured the variability in energy consumption and energy prices 
associated with the use of dehumidifiers.
    The LCC and PBP analyses are designed to support DOE's 
consideration of the economic impact of potential standards on 
consumers of the products subject to the standard, as required by EPCA. 
(42 U.S.C. 6295(o)(2)(B)(i)(I)) The use of RECS 2009 to develop a 
consumer sample and to provide data for estimation of product energy 
use allows DOE to characterize the range of conditions in which covered 
appliances are operated. As a result, DOE is able to estimate how the 
energy savings would vary among households for each considered 
efficiency level.
    Inputs to the calculation of total installed cost include the cost 
of the product--which includes MPCs, manufacturer markups, retailer and 
distributor markups, and sales taxes--and installation costs. Inputs to 
the calculation of operating expenses include annual energy 
consumption, energy prices and price projections, repair and 
maintenance costs, product lifetimes, and discount rates. DOE created 
distributions of values for product lifetime, discount rates, and sales 
taxes, with probabilities attached to each value, to account for their 
uncertainty and variability.
    The computer model DOE uses to calculate the LCC and PBP, which 
incorporates Crystal Ball\TM\ (a commercially available software 
program), relies on a Monte Carlo simulation to incorporate uncertainty 
and variability into the analysis. The Monte Carlo simulations randomly 
sample input values from the probability distributions and dehumidifier 
user samples. The model calculated the LCC and PBP for products at each 
efficiency level for 10,000 housing units per simulation run.
    DOE calculated the LCC and PBP for all customers as if each were to 
purchase a new product in the expected year of compliance with amended 
standards. The amended standards apply to dehumidifiers manufactured 3 
years after the date on which the amended standards for dehumidifiers 
are published. Therefore, for purposes of its analysis, DOE used 2019 
as the first year of compliance with these amended standards.
    Table IV.18 summarizes the approach and data DOE used to derive 
inputs to the LCC and PBP calculations. The subsections that follow 
provide further discussion. Details of the spreadsheet model, and of 
all the inputs to the LCC and PBP analyses, are contained in chapter 8 
of the final rule TSD and its appendices.

 Table IV.18--Summary of Inputs and Methods for the LCC and PBP Analysis
                                    *
------------------------------------------------------------------------
            Inputs                           Source/Method
------------------------------------------------------------------------
Product Cost.................  Derived by multiplying MPCs by
                                manufacturer and retailer markups and
                                sales tax, as appropriate. Used
                                historical data to derive a price
                                scaling index to forecast product costs.
Installation Costs...........  For portable dehumidifiers, DOE assumed
                                no installation costs with the baseline
                                unit and no cost with efficiency level.
                                For whole-home dehumidifiers, baseline
                                installation cost were determined with
                                data from RS Means Residential Cost
                                Data. DOE assumed incremental
                                installation costs with efficiency
                                level.
Annual Energy Use............  The total annual energy use derived from
                                power demand of each mode multiplied by
                                the hours per year. Average number of
                                hours based on field data.
                               Variability: Based on the 2009 RECS.
Energy Prices................  Average and Marginal Electricity: Based
                                on EEI 2014.
                               Variability: Regional energy prices
                                determined for 27 regions.
Energy Price Trends..........  Based on AEO 2015 price forecasts.
Repair and Maintenance Costs.  Assumed no change with efficiency level.
Product Lifetime.............  Appliance Magazine (2005), ACEEE (2001),
                                Northeast Energy Star Lighting and
                                Appliance.
Discount Rates...............  Approach involves identifying all
                                possible debt or asset classes that
                                might be used to purchase the considered
                                appliances, or might be affected
                                indirectly. Primary data source was the
                                Federal Reserve Board's Survey of
                                Consumer Finances** for 1995, 1998,
                                2001, 2004, 2007, 2010, and 2013.
Compliance Date..............  2019.
------------------------------------------------------------------------
* References for the data sources mentioned in this table are provided
  in the sections following the table or in chapter 8 of the final rule
  TSD.
** Survey of Consumer Finances.

1. Product Cost
    To calculate consumer product costs, DOE multiplied the MPCs 
developed in the engineering analysis by the markups described in this 
preamble (along with sales taxes). DOE used different markups for 
baseline products and higher-efficiency products, because DOE applies 
an incremental markup to the increase in MSP associated with higher-
efficiency products.
2. Installation Cost
    Installation cost includes labor, overhead, and any miscellaneous 
materials and parts needed to install the product. DOE used data from 
the 2015 R.S. Means Residential Cost Data book to estimate the baseline 
installation cost for whole-home dehumidifiers. DOE assumed that 
installation costs would not be impacted with increased efficiency 
levels in the NOPR analysis.
    Aprilaire commented that large whole-home units will require 
additional installation work. (Aprilaire, No. 34 at p. 2) For this 
final rule, DOE reviewed the R.S. Means Residential Data, and estimated 
incremental installation costs for each efficiency level based on 
additional labor costs for larger sizes of HVAC ventilation work. See 
chapter 8 of the final rule TSD for further information on the 
derivation of the installation costs for whole-home dehumidifiers.
3. Annual Energy Consumption
    For each sampled household, DOE determined the energy consumption 
for a dehumidifier at different efficiency levels using the approach 
described in section IV.E of this document.
4. Energy Prices
    DOE derived marginal residential electricity and natural gas prices 
for 27 geographic areas.\32\ Marginal prices are

[[Page 38359]]

appropriate for determining energy cost savings associated with 
possible changes to efficiency standards.
---------------------------------------------------------------------------

    \32\ DOE characterized the geographic distribution into 27 
geographic areas to be consistent with the 27 states and group of 
states reported in RECS 2009.
---------------------------------------------------------------------------

    For electricity, DOE derived marginal and average prices which vary 
by season, region, and baseline electricity consumption level. DOE 
estimated these prices using data published with the Edison Electric 
Institute (EEI), Typical Bill and Average Rates reports for summer and 
winter 2014.\33\ For the residential sector each report provides, for 
most of the major investor-owned utilities (IOUs) in the country, the 
total bill assuming household consumption levels of 500, 750, and 1,000 
kWh for the billing period. DOE defined the average price as the ratio 
of the total bill to the total electricity consumption. DOE also used 
the EEI data to define a marginal price as the ratio of the change in 
the bill to the change in energy consumption.
---------------------------------------------------------------------------

    \33\ Edison Electric Institute. Typical Bills and Average Rates 
Report. Winter 2014 published April 2014, Summer 2014 published 
October 2014. Available at: http://www.eei.org/resourcesandmedia/products/Pages/Products.aspx.
---------------------------------------------------------------------------

    For the residential sector, DOE defined the average price as the 
ratio of the total bill to the total electricity consumption. DOE also 
used the EEI data to define a marginal price as the ratio of the change 
in the bill to the change in energy consumption. DOE first calculated 
weighted-average values for each geographic area for each type of 
price. Each EEI utility in an area was assigned a weight based on the 
number of consumers it serves. Consumer counts were taken from the most 
recent EIA Form 861 data (2012).\34\
---------------------------------------------------------------------------

    \34\ U. S. Department of Energy, Energy Information 
Administration. Form EIA-861 Annual Electric Power Industry 
Database. http://www.eia.doe.gov/cneaf/electricity/page/eia861.html.
---------------------------------------------------------------------------

    DOE assigned seasonal average prices to all households in the LCC 
sample based on its location and its baseline monthly electricity 
consumption for an average summer or winter month. For sampled 
households who were assigned a product efficiency greater than or equal 
to the considered level for a standard, DOE then assigned marginal 
price to each household based on its location and the decremented 
electricity consumption. In the LCC sample, households could be 
assigned to one of 27 geographic areas.
    To estimate future trends in electricity and natural gas prices, 
DOE used price forecasts in AEO 2015. To arrive at prices in future 
years, DOE multiplied the average and marginal prices described above 
by the forecast of annual average changes in national-average 
residential electricity and natural gas prices. Because the AEO 2015 
forecasts prices only to 2040, DOE used the average rate of change 
during 2025-2040 to estimate the price trends beyond 2040.
5. Maintenance and Repair Costs
    Repair costs are associated with repairing or replacing product 
components that have failed in an appliance; maintenance costs are 
associated with maintaining the operation of the product. Typically, 
small incremental increases in product efficiency produce no, or only 
minor, changes in repair and maintenance costs.
    During the 2013 preliminary analysis phase of the rulemaking, DOE 
requested information as to whether maintenance and repair costs are a 
function of efficiency level and product class. Manufacturers responded 
that these costs would not increase with efficiency. As a result, DOE 
assumed that repair and maintenance costs do not scale with the 
efficiency of dehumidifiers.
6. Product Lifetime
    For portable dehumidifiers, DOE used lifetime estimates from the 
Appliance Magazine (2005),\35\ an appliance lifetime report (Kubo, et 
al., 2001),\36\ and Northeast Energy Star Lighting and Appliance.\37\ 
DOE assumed whole-home dehumidifiers have the same life span as 
residential room air conditioners and applied the lifetime parameters 
derived for room air conditioners in the 2011 rulemaking to whole-home 
dehumidifiers.\38\ The analysis yielded an estimate of mean lifetime of 
approximately 11 years for portable dehumidifiers and approximately 19 
years for whole-home dehumidifiers. DOE also used the data to develop a 
survival function that was incorporated as a probability distribution 
in the LCC analysis. See chapter 8, section 8.2.2.8 of the final rule 
TSD for further details on the method and sources DOE used to develop 
product lifetimes.
---------------------------------------------------------------------------

    \35\ The Life Expectancy/Replacement Picture. Appliance 
Magazine, September, 2005. Vol. 62, No. 9.
    \36\ Kubo, T., S. Nadel, and H. Sachs. Opportunities for New 
Appliance and Equipment Efficiency Standards: Energy and Economic 
Savings Beyond Current Standards Programs, September, 2001. 
Washington, DC: American Council for an Energy Efficient Economy 
(ACEEE). Report Number A016. <http://aceee.org/research-report/a016>.
    \37\ Northeast Energy Star Lighting and Appliance. 
Dehumidifiers. Accessed June 26, 2006. <http://www.myenergystar.com/Dehumidifiers.aspx>
    \38\ DOE-Energy Efficiency and Renewable Energy, Energy 
Conservation Program for Consumer Products, Technical Support 
Document: Energy Efficiency Program for Consumer Products and 
Commercial and Industrial Equipment, Residential Clothes Dryers and 
Room Air Conditioners (2011) (Available at: http://www.regulations.gov/#!documentDetail;D=EERE-2007-BT-STD-0010-0053).
---------------------------------------------------------------------------

    AHAM commented that DOE should use 10 years as the lifetime for 
portable dehumidifiers. (AHAM, No. 39 at p. 5) DOE used publically data 
and information including the three studies cited above to conclude 
that 11 years is the average lifetime for portable dehumidifiers.
7. Discount Rates
    In the calculation of LCC, DOE applies discount rates appropriate 
to households to estimate the present value of future operating costs. 
DOE estimated a distribution of residential discount rates for 
dehumidifiers based on consumer financing costs and opportunity cost of 
funds related to appliance energy cost savings and maintenance costs.
    To establish residential discount rates for the LCC analysis, DOE 
identified all relevant household debt or asset classes in order to 
approximate a consumer's opportunity cost of funds related to appliance 
energy cost savings and maintenance costs. DOE then estimated the 
average percentage shares of the various types of debt and equity by 
household income group using data from the Federal Reserve Board's 
Survey of Consumer Finances (SCF) for 1995, 1998, 2001, 2004, 2007, 
2010, and 2013.\39\ Using the SCF and other sources, DOE then developed 
a distribution of rates for each type of debt and asset by income group 
to represent the rates that may apply in the year in which amended 
standards would take effect. DOE assigned each sample household a 
specific discount rate drawn from one of the distributions. The average 
rate across all types of household debt and equity and income groups, 
weighted by the shares of each class, is 4.4 percent. See chapter 8, 
section 8.2.3 of the final rule TSD for further details on the 
development of consumer discount rates.
---------------------------------------------------------------------------

    \39\ Note that two older versions of the SCF are also available 
(1989 and 1992). These surveys were not used in this analysis 
because they do not provide all of the necessary types of data 
(e.g., credit card interest rates). DOE determines that the 15-year 
span covered by the six surveys included is sufficiently 
representative of recent debt and equity shares and interest rates.
---------------------------------------------------------------------------

8. Efficiency Distribution in the No-New-Standards Case
    To accurately estimate the share of consumers that would be 
affected by a standard at a particular efficiency level, DOE's LCC 
analysis considered the projected distribution of product efficiencies 
in the no-new-standards case (i.e., the case without new energy

[[Page 38360]]

efficiency standards). DOE refers to this distribution of product 
efficiencies as a no-new-standards case efficiency distribution.
    To estimate the efficiency distribution of dehumidifiers for 2019, 
DOE analyzed its Compliance Certification Database for dehumidifiers. 
To project the efficiency trend between 2019 and 2048, DOE used a 0.25 
percent annual increase in shipment-weighted efficiency, as discussed 
in section IV.H. See chapter 8 of the final rule TSD for further 
information on the derivation of the efficiency distributions.
9. Payback Period Analysis
    The PBP is the amount of time it takes the consumer to recover the 
additional installed cost of more efficient products, compared to 
baseline products, through energy cost savings. PBPs are expressed in 
years. PBPs that exceed the life of the product mean that the increased 
total installed cost is not recovered in reduced operating expenses.
    The inputs to the PBP calculation for each efficiency level are the 
change in total installed cost of the product and the change in the 
first-year annual operating expenditures relative to the baseline. The 
PBP calculation uses the same inputs as the LCC analysis, except that 
discount rates are not needed.
    As noted above, EPCA, as amended, establishes a rebuttable 
presumption that a standard is economically justified if the Secretary 
finds that the additional cost to the consumer of purchasing a product 
complying with an energy conservation standard level will be less than 
three times the value of the first year's energy savings resulting from 
the standard, as calculated under the applicable test procedure. (42 
U.S.C. 6295(o)(2)(B)(iii)) For each considered efficiency level, DOE 
determined the value of the first year's energy savings by multiplying 
the energy savings by the average energy price forecast for the year in 
which compliance with the amended standard would be required. The 
results of the rebuttable presumption PBP analysis are summarized in 
section V.B.1.c of this document.

G. Shipments Analysis

    DOE uses forecasts of annual product shipments to calculate the 
national impacts of potential amended energy conservation standards on 
energy use, NPV, and future manufacturer cash flows.\40\ The shipments 
model takes an accounting approach, tracking market shares of each 
product class and the vintage of units in the stock. Stock accounting 
uses product shipments as inputs to estimate the age distribution of 
in-service product stocks for all years. The age distribution of in-
service product stocks is a key input to calculations of both the NES 
and NPV, because operating costs for any year depend on the age 
distribution of the stock.
---------------------------------------------------------------------------

    \40\ DOE uses data on manufacturer shipments as a proxy for 
national sales, as aggregate data on sales are lacking. In general 
one would expect a close correspondence between shipments and sales.
---------------------------------------------------------------------------

    To determine shipments to the replacement market, DOE estimated a 
stock of dehumidifiers by vintage by integrating historical shipments 
starting from 1972 for portable dehumidifiers and from 2004 for whole-
home dehumidifiers. Over time, some units are retired and removed from 
the stock, triggering the shipment of a replacement unit. Depending on 
the vintage, a certain percentage of each type of unit will fail and 
need to be replaced. DOE based the retirement function on a probability 
distribution for the product lifetime that was developed in the LCC 
analysis. The shipments model assumes that no units are retired below a 
minimum product lifetime and that all units are retired before 
exceeding a maximum product lifetime.
    To calibrate the estimated shipments with the historical data, DOE 
introduced into the model a market segment identified as existing 
households without dehumidifiers, also referred to as first-time 
owners. Based on the calibration, DOE estimated that 0.35 percent of 
existing households without a dehumidifier would annually purchase this 
product over the analysis period, 2019-2048.
    For the final rule analysis, DOE applied price and efficiency 
elasticity parameters to estimate the effect of new standards on 
dehumidifier shipments. DOE estimated the price and efficiency 
elasticity parameters from a regression analysis that incorporated 
shipments, purchase price, and efficiency data specific to several 
residential appliances during 1989-2009. Based on evidence that the 
price elasticity of demand is significantly different over the short 
run and long run for other consumer goods (i.e., automobiles), DOE 
assumed that these elasticities decline over time. DOE estimated 
shipments in each standards case using the price and efficiency 
elasticity along with the change in the product price and operating 
costs between a standards case and the no-new-standards case. For 
details on the shipments analysis, see chapter 9 of the final rule TSD.

H. National Impact Analysis

    The NIA assesses the national energy savings (NES) and the national 
net present value (NPV) from a national perspective of total consumer 
costs and savings that would be expected to result from new or amended 
standards at specific efficiency levels.\41\ (``Consumer'' in this 
context refers to consumers of the product being regulated.) DOE 
calculates the NES and NPV based on projections of annual product 
shipments, along with the annual energy consumption and total installed 
cost data from the energy use and LCC analyses.\42\ For the present 
analysis, DOE forecasted the energy savings, operating cost savings, 
product costs, and NPV of consumer benefits over the lifetime of 
dehumidifiers sold from 2019 through 2048.
---------------------------------------------------------------------------

    \41\ The NIA accounts for impacts in the 50 states and U.S. 
territories.
    \42\ For the NIA, DOE adjusts the installed cost data from the 
LCC analysis to exclude sales tax, which is a transfer.
---------------------------------------------------------------------------

    DOE evaluates the impacts of new and amended standards by comparing 
a case without such standards with standards-case projections. The no-
new-standards case characterizes energy use and consumer costs for each 
product class in the absence of new or amended energy conservation 
standards. For this projection, DOE considers historical trends in 
efficiency and various forces that are likely to affect the mix of 
efficiencies over time. DOE compares the no-new-standards case with 
projections characterizing the market for each product class if DOE 
adopted new or amended standards at specific energy efficiency levels 
(i.e., the TSLs or standards cases) for that class. For the standards 
cases, DOE considers how a given standard would likely affect the 
market shares of products with efficiencies greater than the standard.

[[Page 38361]]

    DOE uses a spreadsheet model to calculate the energy savings and 
the national consumer costs and savings from each TSL. Interested 
parties can review DOE's analyses by changing various input quantities 
within the spreadsheet. The NIA spreadsheet model uses typical values 
(as opposed to probability distributions) as inputs.
    Table IV.19 summarizes the inputs and methods DOE used for the NIA 
analysis for the final rule. Discussion of these inputs and methods 
follows the table. See chapter 10 of the final rule TSD for further 
details.

   Table IV.19--Summary of Inputs and Methods for the National Impact
                                Analysis
------------------------------------------------------------------------
              Inputs                               Method
------------------------------------------------------------------------
Shipments.........................  Annual shipments from shipments
                                     model.
Compliance Date of Standard.......  2019.
Efficiency Trends.................  No-New-Standards case: Shipment-
                                     Weighted Integrated Energy Factor
                                     (SWIEF) determined in 2019 for each
                                     of the considered products classes.
                                     Annual growth rate of 0.25 percent
                                     assumed for determining SWIEF
                                     between 2019 and 2048.
                                    Standard cases: Roll-up and shift
                                     scenario for 2019.
Annual Energy Consumption per Unit  Annual weighted-average values are a
                                     function of energy use at each TSL.
Total Installed Cost per Unit.....  Annual weighted-average values are a
                                     function of cost at each TSL.
                                    Incorporates forecast of future
                                     product prices based on historical
                                     data.
Annual Energy Cost per Unit.......  Annual weighted-average values as a
                                     function of the annual energy
                                     consumption per unit and energy
                                     prices.
Repair and Maintenance Cost per     Annual values do not change with
 Unit.                               efficiency level.
Energy Prices.....................  AEO 2015 forecasts (to 2040) and
                                     extrapolation through 2048.
Energy Site-to-Primary and FFC      A time-series conversion factor
 Conversion.                         derived from AEO 2015.
Discount Rate.....................  Three and seven percent real.
Present Year......................  Future costs and savings are
                                     discounted to 2015.
------------------------------------------------------------------------

1. Product Efficiency Trends
    A key component of the NIA is the trend in energy efficiency 
projected for the no-new-standards case and each of the standards 
cases. Section IV.8 of this document describes how DOE developed an 
energy efficiency distribution for the no-new-standards case (which 
yields a shipment-weighted average efficiency) for each of the 
considered product classes for the first year of the forecast period. 
To project the trend in efficiency for dehumidifiers over the entire 
shipments projection period, DOE employed shipments-weighted integrated 
energy factors (SWIEF) as a starting point for 2014 and assumed a 0.25 
percent annual increase in shipment-weighted efficiency between 2014 
and 2048. The approach is further described in chapter 10 of the final 
rule TSD.
    For the standards cases, DOE used a ``roll-up'' scenario to 
establish the shipment-weighted efficiency for the year that standards 
are assumed to become effective (2019). In this scenario, the market of 
products in the no-new-standards case that do not meet the standard 
under consideration would ``roll up'' to meet the new standard level, 
and the market share of products above the standard would remain 
unchanged. For its projected efficiencies of TSLs, in addition to a 
``roll-up'' scenario, DOE developed a shift scenario. In the shift 
scenario DOE developed growth trends for each trial standard level that 
maintained the same per-unit average total installed cost difference 
for the year 2019 between the no-new-standards case and each standards 
case over the entire projection period (2019-2048).
2. National Energy Savings
    In 2011, in response to the recommendations of a committee on 
``Point-of-Use and Full-Fuel-Cycle Measurement Approaches to Energy 
Efficiency Standards'' appointed by the National Academy of Sciences, 
DOE announced its intention to use FFC measures of energy use and 
greenhouse gas and other emissions in the national impact analyses and 
emissions analyses included in future energy conservation standards 
rulemakings. 76 FR 51281 (Aug. 18, 2011). After evaluating the 
approaches discussed in the August 18, 2011 notice, DOE published a 
statement of amended policy in which DOE explained its determination 
that EIA's National Energy Modeling System (NEMS) is the most 
appropriate tool for its FFC analysis and its intention to use NEMS for 
that purpose. 77 FR 49701 (August 17, 2012). NEMS is a public domain, 
multi-sector, partial equilibrium model of the U.S. energy sector \43\ 
that EIA uses to prepare its Annual Energy Outlook. The approach used 
for deriving FFC measures of energy use and emissions is described in 
appendix 10C of the final rule TSD.
---------------------------------------------------------------------------

    \43\ For more information on NEMS, refer to The National Energy 
Modeling System: An Overview, DOE/EIA-0581 (98) (Feb.1998) 
(Available at: http://www.eia.gov/oiaf/aeo/overview/).
---------------------------------------------------------------------------

    Aprilaire commented that DOE should separately show energy savings 
of whole-home dehumidifiers and portable dehumidifiers and stated that 
DOE has not shown that whole-home dehumidifier regulation will meet the 
requirement of ``substantial'' energy savings nor has DOE shown it 
meets the term used in the public meeting as ``non-trivial.'' 
(Aprilaire, No. 38 at p. 5) DOE shows energy savings for each product 
class in the National Impact Analysis. However when analyzing whether 
standards meet the EPCA requirement of ``significant'' energy savings, 
DOE considers the product type as a whole.
3. Net Present Value Analysis
    The inputs for determining the NPV of the total costs and benefits 
experienced by consumers are: (1) Total annual installed cost; (2) 
total annual savings in operating costs; and (3) a discount factor to 
calculate the present value of costs and savings. DOE calculates net 
savings each year as the difference between the no-new-standards case 
and each standards case in terms of total savings in operating costs 
versus total increases in installed costs. DOE calculates operating 
cost savings over the lifetime of each product shipped during the 
forecast period.
    As discussed in section IV.F.1 of this document, DOE developed 
dehumidifier

[[Page 38362]]

price trends based on historical Producer Price Index (PPI) data. 
Within the portable and whole-home product groups, DOE applied the same 
trends to forecast prices for each product class at each considered 
efficiency level. By 2048, which is the end date of the forecast 
period, the average dehumidifier price is forecasted to drop 37 percent 
relative to 2013. DOE's projection of product prices for dehumidifiers 
is described in further detail in appendix 10C of the final rule TSD.
    To evaluate the effect of uncertainty regarding price trends, DOE 
examined the effect of various product price forecasts on the consumer 
NPV for the considered TSLs for dehumidifiers. In addition to the 
default price trend, DOE considered separate product price sensitivity 
cases for portable dehumidifiers and whole-home dehumidifiers. For 
portable dehumidifiers, DOE considered a case for a low price decline 
based on estimating an experience curve using PPI data for ``small 
electric household appliances'' from 1990 to 2009. A case for high 
price decline was based on the price forecast of the ``furniture and 
appliances'' series from AEO 2015. For whole-home dehumidifiers, a case 
for a low price decline was based on an exponential fit to the PPI from 
1978 to 2014 for ``air-conditioning, refrigeration, and forced air 
heating equipment.'' The high price decline was based on the price 
forecast of the ``furniture and appliances'' series from AEO 2015. The 
approach used to forecast the price trends and the results of the 
sensitivity cases are described in appendix 10C of the final rule TSD.
    The operating cost savings are energy cost savings, which are 
calculated using the estimated energy savings in each year and the 
projected price of the appropriate form of energy. To estimate energy 
prices in future years, DOE multiplied the average and marginal energy 
prices by the forecast of annual national-average residential energy 
price changes in the reference case from AEO 2015, which has an end 
year of 2040. To estimate price trends after 2040, DOE used the average 
annual rate of change in prices from 2020 to 2040. As part of the NIA, 
DOE also analyzed scenarios that used inputs from the AEO 2015 Low 
Economic Growth and High Economic Growth cases. Those cases have higher 
and lower energy price trends compared to the Reference case. NIA 
results based on these cases are presented in appendix 10C of the final 
rule TSD.
    In calculating the NPV, DOE multiplies the net savings in future 
years by a discount factor to determine their present value. For this 
final rule, DOE estimated the NPV of consumer benefits using both a 3-
percent and a 7-percent real discount rate. DOE uses these discount 
rates in accordance with guidance provided by the Office of Management 
and Budget (OMB) to Federal agencies on the development of regulatory 
analysis.\44\ The discount rates for the determination of NPV are in 
contrast to the discount rates used in the LCC analysis, which are 
designed to reflect a consumer's perspective. The 7-percent real value 
is an estimate of the average before-tax rate of return to private 
capital in the U.S. economy. The 3-percent real value represents the 
``social rate of time preference,'' which is the rate at which society 
discounts future consumption flows to their present value.
---------------------------------------------------------------------------

    \44\ United States Office of Management and Budget, ``Circular 
A-4: Regulatory Analysis,'' Section E (Sept. 17, 2003) (Available 
at: www.whitehouse.gov/omb/memoranda/m03-21.html.http://www.whitehouse.gov/omb/circulars_a004_a-4/).
---------------------------------------------------------------------------

I. Consumer Subgroup Analysis

    In analyzing the potential impact of new or amended standards on 
consumers, DOE evaluates the impact on identifiable subgroups of 
consumers that may be disproportionately affected by a national 
standard. DOE evaluates impacts on particular subgroups of consumers by 
analyzing the LCC impacts and PBP for those particular consumers from 
alternative standard levels. For this final rule, DOE analyzed the 
impacts of the considered standard levels on low-income households and 
senior-only households. Chapter 11 in the final rule TSD describes the 
consumer subgroup analysis.

J. Manufacturer Impact Analysis

1. Overview
    DOE performed an MIA to estimate the financial impacts of amended 
energy conservation standards on manufacturers of dehumidifiers and to 
estimate the potential impacts of such standards on employment and 
manufacturing capacity. The MIA has both quantitative and qualitative 
aspects and includes analyses of forecasted industry cash flows, the 
INPV, investments in research and development (R&D) and manufacturing 
capital, and domestic manufacturing employment. Additionally, the MIA 
seeks to determine how amended energy conservation standards might 
affect manufacturing employment, capacity, and competition, as well as 
how standards contribute to overall regulatory burden. Finally, the MIA 
serves to identify any disproportionate impacts on manufacturer 
subgroups, including small business manufacturers.
    The quantitative part of the MIA primarily relies on the Government 
Regulatory Impact Model (GRIM), an industry cash flow model with inputs 
specific to this rulemaking. The key GRIM inputs include data on the 
industry cost structure, unit production costs, product shipments, 
manufacturer markups, and investments in R&D and manufacturing capital 
required to produce compliant products. The key GRIM outputs are the 
INPV, which is the sum of industry annual cash flows over the analysis 
period, discounted using the industry-weighted average cost of capital, 
and the impact to domestic manufacturing employment. The model uses 
standard accounting principles to estimate the impacts of more-
stringent energy conservation standards on a given industry by 
comparing changes in INPV and domestic manufacturing employment between 
a no-new-standards case and the various TSLs. To capture the 
uncertainty relating to manufacturer pricing strategy following amended 
standards, the GRIM estimates a range of possible impacts under 
different markup scenarios.
    The qualitative part of the MIA addresses manufacturer 
characteristics and market trends. Specifically, the MIA considers such 
factors as manufacturing capacity, competition within the industry, the 
cumulative impact of other DOE and non-DOE regulations, and impacts on 
manufacturer subgroups. The complete MIA is outlined in chapter 12 of 
the final rule TSD.
    DOE conducted the MIA for this rulemaking in three phases. In Phase 
1 of the MIA, DOE conducted detailed interviews with manufacturers and 
prepared a profile of the dehumidifier manufacturing industry. During 
manufacturer interviews, DOE discussed engineering, manufacturing, and 
financial topics in order to identify concerns and to inform and 
validate assumptions used in the GRIM. See appendix 5A and 5B of the 
final rule TSD for a copy of the interview guides. See section IV.J.4 
for a description of the key issues raised by manufacturers during the 
interviews.
    Based on these manufacturer interviews, the market and technology 
assessment, and publicly available information, DOE derived financial 
inputs for the GRIM (e.g., revenues; materials, labor, overhead, and 
depreciation expenses; selling, general, and administrative expenses 
(SG&A); and R&D expenses). The public sources

[[Page 38363]]

of information DOE used in developing its characterization of the 
dehumidifier manufacturing industry, include company filings of form 
SEC 10-K filings,\45\ corporate annual reports, the U.S. Census 
Bureau's Economic Census,\46\ and Hoover's reports.\47\
---------------------------------------------------------------------------

    \45\ U.S. Securities and Exchange Commission, Annual 10-K 
Reports (Various Years) (Available at: http://www.sec.gov/edgar/searchedgar/companysearch.html).
    \46\ U.S. Census Bureau, Annual Survey of Manufacturers: General 
Statistics: Statistics for Industry Groups and Industries (2011) 
(Available at: http://factfinder2.census.gov/faces/nav/jsf/pages/searchresults.xhtml?refresh=t).
    \47\ Hoovers Inc. Company Profiles. Various Companies. 
www.hoovers.com.
---------------------------------------------------------------------------

    In Phase 2 of the MIA, DOE prepared an industry cash-flow analysis 
to quantify the potential impacts of amended energy conservation 
standards. The GRIM uses several factors to determine a series of 
annual cash flows starting with the announcement of the standard and 
extending over a 30-year period following the compliance date of the 
standard. These factors include annual expected revenues, costs of 
sales, SG&A and R&D expenses, taxes, and capital expenditures (derived 
during Phase 1). In general, energy conservation standards can affect 
manufacturer cash flow in three distinct ways: (1) Create a need for 
increased investment; (2) raise production costs per unit; and (3) 
alter revenue due to higher per-unit prices and changes in sales 
volumes.
    In Phase 3 of the MIA, DOE evaluated subgroups of manufacturers 
that may be disproportionately impacted by amended standards or that 
may not be accurately represented by the average cost assumptions used 
to develop the industry cash flow analysis. Such manufacturer subgroups 
always include small business manufacturers, but may also include low-
volume manufacturers (LVMs), niche players, and/or manufacturers 
exhibiting a cost structure that largely differs from the industry 
average. DOE identified one dehumidifier manufacturer subgroup for 
which average cost assumptions may not hold: Small businesses.
    To identify small businesses for this analysis, DOE applied the 
size standards published by the Small Business Administration (SBA) to 
determine whether a company is considered a small business. See 13 CFR 
part 121. To be categorized as a small business manufacturer of 
dehumidifiers under North American Industry Classification System 
(NAICS) codes 333415 (``Air-Conditioning and Warm Air Heating Equipment 
and Commercial and Industrial Refrigeration Equipment Manufacturing'') 
or 335210 (``Small Electrical Appliance Manufacturing''), a 
dehumidifier manufacturer and its affiliates may employ a maximum of 
1,250 employees or 1,500 employees, respectively. These thresholds 
include all employees in a business' parent company and any other 
subsidiaries. Using these classifications in conjunction with a search 
of industry databases and the SBA member directory, DOE identified five 
manufacturers of dehumidifiers that qualify as small businesses, all of 
which are manufacturers of whole-home dehumidifiers and high-capacity 
portable dehumidifiers.
    The dehumidifier manufacturer subgroup analysis is discussed in 
greater detail in chapter 12 of the final rule TSD and in section 
V.B.2.d of this document.
    In Phase 3, DOE also analyzed impacts of amended energy 
conservation standards for dehumidifiers on manufacturing capacity, 
direct employment, and cumulative regulatory burdens. Section V.B.2 
discusses the findings of these analyses.
2. Government Regulatory Impact Model (GRIM)
    DOE uses the GRIM to quantify the changes in industry cash flows 
resulting from amended energy conservation standards. The GRIM uses 
manufacturer costs, markups, shipments, and industry financial 
information to arrive at a series of no-new-standards-case annual cash 
flows absent new or amended standards, beginning with the present year, 
2016, and continuing through 2048. The GRIM then models changes in 
costs, investments, shipments, and manufacturer margins that may result 
from new or amended energy conservation standards and compares these 
results against those in the no-new-standards-case forecast of annual 
cash flows. The primary quantitative output of the GRIM is the INPV, 
which DOE calculates by summing the stream of annual discounted cash 
flows over the full analysis period. For manufacturers of 
dehumidifiers, DOE used a real discount rate of 8.43 percent, the 
weighted-average cost of capital derived from industry financials and 
modified based on feedback received during confidential interviews with 
manufacturers.
    The GRIM calculates cash flows using standard accounting principles 
and compares changes in INPV between the no-new-standards case and the 
various TSLs. The difference in INPV between the no-new-standards case 
and a standards case represents the financial impact of the amended 
standard on manufacturers at that particular TSL. As discussed 
previously, DOE collected the necessary information to develop key GRIM 
inputs from a number of sources, including publicly available data and 
interviews with manufacturers (described in section IV.J.4 of this 
document). The GRIM results are shown in section V.B.2.a of this 
document. Additional details about the GRIM can be found in chapter 12 
of the final rule TSD.
a. Government Regulatory Impact Model Key Inputs
Manufacturer Production Costs
    Manufacturing a higher efficiency product is typically more 
expensive than manufacturing a baseline product due to the use of more 
complex and typically more costly components. The changes in the MPCs 
of the analyzed products can affect the revenues, gross margins, and 
cash flow of the industry, making product cost data key GRIM inputs for 
DOE's analysis. For each efficiency level for each product class, DOE 
used the MPCs developed in the engineering analysis, as described in 
section IV.C.2 of this document and further detailed in chapter 5 of 
the final rule TSD. Additionally, DOE used information from its 
teardown analysis, described in section IV.C of this final rule, to 
disaggregate the MPCs into material and labor costs. These cost 
breakdowns and equipment markups were validated with manufacturers 
during interviews.
No-New-Standards-Case Shipments Forecast
    The GRIM estimates manufacturer revenues based on total unit 
shipment forecasts and the distribution of shipments by efficiency 
level. Changes in sales volumes and efficiency mix over time can 
significantly affect manufacturer finances. For this analysis, the GRIM 
used the NIA's annual shipment forecasts derived from the shipments 
analysis from 2016 (the base year) to 2048 (the end of the analysis 
period). See chapter 9 of the final rule TSD for additional details on 
the shipments analysis.
Standards-Case Shipments Forecast
    For each standards case, the GRIM assumes a small, constant 
percentage shift in shipments to higher efficiency levels, reflecting 
the idea that some efficiency improvements will occur independent of 
amended standards. The GRIM also assumes all remaining shipments of 
products below the projected minimum standard levels would roll up 
(i.e., be added) to the standard efficiency levels in response to

[[Page 38364]]

an increase in energy conservation standards. The GRIM also assumes 
that demand for higher-efficiency products (that are above the 
minimally compliant level) is a function of price, and is independent 
of the standard level.
Product and Capital Conversion Costs
    Amended energy conservation standards may cause manufacturers to 
incur conversion costs to bring their production facilities and product 
designs into compliance with the new standards. For the purpose of the 
MIA, DOE classified these conversion costs into two major groups: (1) 
Product conversion costs and (2) capital conversion costs. Product 
conversion costs are investments in research, development, testing, and 
marketing, focused on making product designs comply with the new energy 
conservation standard. Capital conversion expenditures are investments 
in property, plant, and equipment to adapt or change existing 
production facilities so that new product designs can be fabricated and 
assembled.
Stranded Assets
    If new or amended energy conservation standards require investment 
in new manufacturing capital, there also exists the possibility that 
they will render existing manufacturing capital obsolete. If the 
obsolete manufacturing capital is not fully depreciated at the time new 
or amended standards go into effect, these assets would be stranded and 
the manufacturer would have to write-down the residual value that had 
not yet been depreciated.
    DOE used multiple sources of data to evaluate the level of product 
and capital conversion costs and stranded assets manufacturers would 
likely face to comply with amended dehumidifier energy conservation 
standards. DOE used manufacturer interviews to gather data on the level 
of investment anticipated at each proposed efficiency level and 
validated these assumptions using estimates of capital requirements 
derived from the product teardown analysis and engineering model 
described in section IV.C of this final rule. These estimates were then 
aggregated and scaled to derive total industry estimates of product and 
capital conversion costs and to protect confidential information.
    In general, DOE assumes that all conversion-related investments 
occur between the year the final rule is published and the year by 
which manufacturers must comply with the new or amended standards. The 
investment figures used in the GRIM can be found in section V.B.2 of 
this document. For additional information on the estimated product 
conversion and capital conversion costs, see chapter 12 of the final 
rule TSD.
b. Government Regulatory Impact Model Scenarios
No-New-Standards-Case Markup
    As discussed in section IV.D of this final rule, MSPs include 
direct manufacturing production costs (i.e., labor, material, overhead, 
and depreciation estimated in DOE's MPCs) and all non-production costs 
(i.e., SG&A, R&D, and interest), along with profit. To calculate the 
MSPs in the GRIM, DOE applied manufacturer markups to the MPCs 
estimated in the engineering analysis. Based on publicly available 
financial information for manufacturers of dehumidifiers and comments 
from manufacturer interviews, DOE assumed the industry average no-new-
standards-case markup on production costs to be 1.45. This markup takes 
into account the two-tiered sourcing structure of the majority of the 
portable dehumidifier segment, detailed below, in addition to the 
traditional one-tiered structure of the domestically-produced whole-
home (and similarly constructed high-capacity portable) dehumidifier 
segment.
    Lower-capacity portable dehumidifiers (product classes 1 and 2) and 
some high-capacity dehumidifiers (product class 3) are manufactured 
under contract by an overseas original equipment manufacturer (OEM). 
The engineering analysis, as detailed in chapter 5 of the final rule 
TSD, estimates the cost of manufacturing at the OEM. This production 
cost is marked up once by the OEM to the company contracting its 
manufacturer and again by the contracting company who imports the 
product and sells it to retailers. For imported portable dehumidifiers, 
the industry average baseline markup breaks down as follows:

             Table IV.20--Industry-Average Baseline Markups
------------------------------------------------------------------------
 
------------------------------------------------------------------------
OEM to Contracting Company Markup.............................      1.20
Contracting Company to First Customer Markup..................      1.21
Overall OEM to First Customer Markup..........................      1.45
------------------------------------------------------------------------

Markup Scenarios
    Modifying the aforementioned no-new-standards-case markups in the 
standards case yields different sets of impacts on manufacturers. For 
the MIA, DOE modeled two standards-case markup scenarios to represent 
the uncertainty regarding the potential impacts on prices and 
profitability for manufacturers following the implementation of amended 
energy conservation standards: (1) A preservation of gross margin \48\ 
(percentage) scenario; and (2) a preservation of per-unit operating 
profits scenario. These scenarios lead to different markups values 
that, when applied to the MPCs, result in varying revenue and cash flow 
impacts.
---------------------------------------------------------------------------

    \48\ ``Gross margin'' is defined as revenues minus cost of goods 
sold. On a unit basis, gross margin is selling price minus 
manufacturer production cost. In the GRIMs, markups determine the 
gross margin because various markups are applied to the manufacturer 
production costs to reach manufacturer selling price.
---------------------------------------------------------------------------

    The preservation of gross margin as a percentage of revenues markup 
scenario assumes that the baseline markup of 1.45 is maintained for all 
products in the standards case. Typically, this scenario represents the 
upper bound of industry profitability as manufacturers are able to 
fully pass through additional costs due to standards to their customers 
under this scenario.
    The preservation of per-unit operating profits markup scenario is 
similar to the preservation of gross margin as a percentage of revenues 
markup scenario with the exception that in the standards case, 
minimally compliant products lose a fraction of the baseline markup. 
Typically, this scenario represents the lower bound profitability and a 
more substantial impact on the industry as manufacturers accept a lower 
margin in an attempt to offer price competitive entry level products 
while maintaining the same level of absolute operating profits, on a 
per-unit basis, that they saw prior to amended standards. Under this 
scenario, gross margin as a percentage decreases in the standards case.
3. Discussion of Comments
    Manufacturers and trade organizations provided several comments on 
the potential impact of amended energy conservation standards on 
manufacturers. These comments are outlined below. DOE considered these 
comments when updating the analysis for this final rule.
    AHAM cautioned that DOE not overlook the considerable capital and 
product conversion expenditures that manufacturers must face in 
redesigning significant component systems to meet TSL 3 with the new 
test procedure, appendix X1. AHAM commented that DOE should revise its 
analysis based on

[[Page 38365]]

additional data from AHAM and manufacturer interviews, which may show 
that TSL 3 is no longer justified. (AHAM, No. 39 at p. 6) Additionally, 
AHAM commented that DOE should consider marketing costs necessary to 
explain to the public the change in capacities of units. (AHAM, No. 39 
at p. 3)
    DOE recognizes that the revised test procedure resulted in changes 
in capacity and efficiency. 80 FR 45802 (July 31, 2015). To ensure that 
the conversion cost estimates provided by manufacturers were reflective 
of the conversion costs dehumidifier manufacturers will face as a 
result of amended energy conservation standards, DOE conducted another 
round of manufacturer interviews following the June 2015 NOPR 
publication. DOE solicited information on all conversion costs during 
these interviews and was particularly interested in understanding the 
product conversion costs necessary for marketing, training, consumer 
education, and labeling that would help buyers of these products 
understand the new ranges of capacity and efficiency. (See the final 
rule TSD appendix 12A for the list of topics included in post-NOPR 
manufacturer interviews.) Based on feedback from these interviews, DOE 
has revised its conversion cost estimates, where applicable, for this 
final rule. See section V.B.2 of this final rule and chapter 12 of the 
final rule TSD for details on the revised industry conversion costs.
    Aprilaire and Therma-Stor provided comments describing the 
potential impacts on the high-capacity portable dehumidifier and whole-
home dehumidifier market segments. Aprilaire commented that it does not 
support DOE regulating the whole-home dehumidifier industry at this 
time, as it believes the small American-based businesses would face 
high, disproportionate impacts. (Aprilaire, No. 34 at p. 1) 
Additionally, Aprilaire commented that any decrease in market size and 
jobs for whole-home dehumidifiers would have a disproportionate effect 
on employment in the United States, and the job market specifically in 
Wisconsin. (Aprilaire, No. 34 at p. 5) Therma-Stor, also a small 
manufacturer located in Wisconsin, commented that if the June 2015 NOPR 
proposal goes into effect unchanged, it could put them and other 
domestic manufacturers out of business. Therma-Stor stated that it 
expects to reduce its employment headcount by one-half under the June 
2015 NOPR proposal, which it stated was biased against manufacturers of 
high-capacity portable dehumidifiers and whole-home dehumidifiers. 
(Therma-Stor, No. 38 at p. 3)
    DOE acknowledges that amended energy conservation standards for 
dehumidifiers could disproportionately impact small domestic 
manufacturers. As mentioned above, as a result of these and other 
comments submitted in response to the June 2015 NOPR, DOE solicited 
additional information from small and large dehumidifier manufacturers 
on the expected financial burdens related to compliance with the 
standard levels considered in the NOPR. Based on new feedback, for this 
final rule, DOE has updated the MIA, including its analysis of small 
business impacts and discussions of potential impacts on domestic 
production employment and manufacturing capacity. DOE based its 
selection of efficiency levels in this final rule on its updated 
analysis. See section V.B.2 of this final rule for DOE's updated 
analysis of INPV impacts, and direct employment and manufacturing 
capacity impacts. See section VII.B of this final rule for a discussion 
of disproportionate impacts on small domestic dehumidifier 
manufacturers.
    Regarding the baseline and incremental efficiency levels analyzed 
in the June 2015 NOPR, Therma-Stor commented that DOE's determination 
that low-capacity portable dehumidifiers cannot be designed with 
efficiency enhancements to establish a minimum efficiency level two to 
three times less than high capacity portable dehumidifiers and whole-
home dehumidifiers leads to an unfair and anti-competitive bias in 
favor of the manufacturers and importers of low-capacity portable 
dehumidifiers. (Therma-Stor, No. 38 at p. 2) Aprilaire commented that 
the whole-home dehumidifier industry has been analyzed at only two 
efficiency levels and asked why DOE did not analyze other efficiency 
levels, which may have less of an impact on the small businesses and 
the whole-home dehumidifier industry. (Aprilaire, Public Meeting 
Transcript, No. 35 at p. 83)
    As described in section IV.C.1 of this final rule, DOE analyzed a 
representative sample of products in each product class to determine an 
appropriate baseline efficiency level and subsequent improved 
efficiency levels. For high-capacity portable dehumidifiers (50.01 
pints/day or greater), DOE has updated the analysis and included an 
additional efficiency level for this product class to reflect products 
currently available on the market. Based on product testing and 
teardowns, DOE included only one gap fill efficiency level for whole-
home dehumidifiers with a case volume less than 8.0 cubic feet and two 
gap fill efficiency levels for whole-home dehumidifiers with case 
volumes greater than 8.0 cubic feet. Based on the new feedback from 
interested parties, DOE has updated the MIA in this final rule, 
including its analysis of small, domestic business impacts, and its 
analysis of potential impacts on domestic production employment and 
manufacturing capacity. This updated analysis has directly impacted the 
selection of standard efficiency levels in this final rule. See section 
V.B.2 of this final rule for DOE's updated analysis of INPV impacts, 
and direct employment and manufacturing capacity impacts.
4. Manufacturer Interviews
    As a result of public comments received from interested parties 
following the publication of the June 2015 NOPR and DOE's amended test 
procedure,\49\ DOE conducted additional confidential interviews with 
manufacturers. During interviews, DOE asked manufacturers to describe 
their recommendations relating to updates to the June 2015 NOPR 
analyses, particularly those that would be affected by the new 
dehumidifier test procedure. Specifically, DOE solicited feedback on 
product classes, efficiency levels, and industry conversion costs. 
Technical data obtained during these interviews informed updates to the 
engineering analysis for this final rule, where applicable. See 
sections IV.A.1 and IV.C.1 of this document for information about the 
changes to product classes and efficiency levels for this final rule.
---------------------------------------------------------------------------

    \49\ Section IV.C.1.a describes the updated engineering analysis 
based on the test procedure in appendix X1.
---------------------------------------------------------------------------

    The following sections describe the issues identified by 
manufacturers relating to DOE's June 2015 NOPR analyses. These concerns 
are also presented in chapter 12 of the final rule TSD.
Unavailability of Products
    Most manufacturers interviewed expressed concern that the proposed 
dehumidifier standards were too aggressive and could result in the 
unavailability of products of certain capacities. In particular, 
manufacturers stated that the efficiency levels proposed in the June 
2015 NOPR for high-capacity portable dehumidifiers and whole-home 
dehumidifiers are too stringent relative to those for lower-capacity 
dehumidifiers. Manufacturers stated that this would reduce the

[[Page 38366]]

competitiveness of high-capacity portable dehumidifiers and whole-home 
dehumidifiers, making them uneconomical to produce. Relatedly, other 
manufacturers noted that they would not enter the high-capacity 
portable dehumidifier market in the future because the high standard 
efficiency levels for these products would make it difficult to meet 
their price targets. Public comments relating to the impact of this 
rulemaking on the availability of certain product types are discussed 
in sections IV.J.3 and V.C of this final rule.
Impacts on Small Business
    Similarly, manufacturers expressed concerns that small business 
manufacturers currently producing high-capacity portable dehumidifiers 
and whole-home dehumidifiers may have to exit the market if the 
standards proposed in the June 2015 NOPR become final. This would 
negatively impact domestic manufacturing employment and capacity in the 
dehumidifier market.
    In addition to the prohibitive capital costs associated with 
compliance with the standard levels proposed in the June 2015 NOPR, 
small manufacturers of whole-home dehumidifiers cited the re-education 
of distributors as a source of substantial financial burden resulting 
from the new test procedure and amended standards for whole-home 
products. Public comments relating to small business impacts are 
addressed in section IV.J.3 of this final rule.
Consumer Confusion
    Finally, manufacturers expressed concerns regarding the potential 
confusion faced by consumers as a result of new product capacity 
ratings under the appendix X1 test procedure. Manufacturers believe 
this confusion will be particularly detrimental in the short-term, when 
consumers will have a selection of both newly rated products and the 
existing inventory of products rated using the appendix X test 
procedure. One manufacturer commented that it would like DOE to develop 
a standardized label for dehumidifiers to help educate consumers on the 
new ratings. Public comments relating to consumer confusion and 
labeling are discussed in section IV.J.3 of this final rule. 
Additionally, as stated in section II.A of this final rule, the FTC is 
primarily responsible for the labeling of consumer products.

K. Emissions Analysis

    The emissions analysis consists of two components. The first 
component estimates the effect of potential energy conservation 
standards on power sector and site (where applicable) combustion 
emissions of CO2, NOX, SO2, and Hg. 
The second component estimates the impacts of potential standards on 
emissions of two additional greenhouse gases, CH4 and 
N2O, as well as the reductions to emissions of all species 
due to ``upstream'' activities in the fuel production chain. These 
upstream activities comprise extraction, processing, and transporting 
fuels to the site of combustion. The associated emissions are referred 
to as upstream emissions.
    The analysis of power sector emissions uses marginal emissions 
factors that were derived from data in AEO 2015, as described in 
section IV.M. The methodology is described in chapter 13 and 15 of the 
final rule TSD.
    Combustion emissions of CH4 and N2O are 
estimated using emissions intensity factors published by the EPA, GHG 
Emissions Factors Hub.\50\ The FFC upstream emissions are estimated 
based on the methodology described in chapter 15 of the final rule TSD. 
The upstream emissions include both emissions from fuel combustion 
during extraction, processing, and transportation of fuel, and 
``fugitive'' emissions (direct leakage to the atmosphere) of 
CH4 and CO2.
---------------------------------------------------------------------------

    \50\ Available at: http://www2.epa.gov/climateleadership/center-corporate-climate-leadership-ghg-emission-factors-hub.
---------------------------------------------------------------------------

    The emissions intensity factors are expressed in terms of physical 
units per MWh or MMBtu of site energy savings. Total emissions 
reductions are estimated using the energy savings calculated in the 
national impact analysis.
    For CH4 and N2O, DOE calculated emissions 
reduction in tons and also in terms of units of carbon dioxide 
equivalent (CO2eq). Gases are converted to CO2eq 
by multiplying each ton of gas by the gas' global warming potential 
(GWP) over a 100-year time horizon. Based on the Fifth Assessment 
Report of the Intergovernmental Panel on Climate Change,\51\ DOE used 
GWP values of 28 for CH4 and 265 for N2O.
---------------------------------------------------------------------------

    \51\ IPCC, 2013: Climate Change 2013: The Physical Science 
Basis. Contribution of Working Group I to the Fifth Assessment 
Report of the Intergovernmental Panel on Climate Change [Stocker, 
T.F., D. Qin, G.-K. Plattner, M. Tignor, S.K. Allen, J. Boschung, A. 
Nauels, Y. Xia, V. Bex and P.M. Midgley (eds.)]. Cambridge 
University Press, Cambridge, United Kingdom and New York, NY, USA. 
Chapter 8.
---------------------------------------------------------------------------

    The AEO incorporates the projected impacts of existing air quality 
regulations on emissions. AEO 2015 generally represents current 
legislation and environmental regulations, including recent government 
actions, for which implementing regulations were available as of 
October 31, 2014. DOE's estimation of impacts accounts for the presence 
of the emissions control programs discussed in the following 
paragraphs.
    SO2 emissions from affected electric generating units 
(EGUs) are subject to nationwide and regional emissions cap-and-trade 
programs. Title IV of the Clean Air Act sets an annual emissions cap on 
SO2 for affected EGUs in the 48 contiguous States and the 
District of Columbia (DC). (42 U.S.C. 7651 et seq.) SO2 
emissions from 28 eastern States and DC were also limited under the 
Clean Air Interstate Rule (CAIR). 70 FR 25162 (May 12, 2005). CAIR 
created an allowance-based trading program that operates along with the 
Title IV program. In 2008, CAIR was remanded to EPA by the U.S. Court 
of Appeals for the District of Columbia Circuit, but it remained in 
effect.\52\ In 2011, EPA issued a replacement for CAIR, the Cross-State 
Air Pollution Rule (CSAPR). 76 FR 48208 (August 8, 2011). On August 21, 
2012, the DC Circuit issued a decision to vacate CSAPR,\53\ and the 
court ordered EPA to continue administering CAIR. On April 29, 2014, 
the U.S. Supreme Court reversed the judgment of the DC Circuit and 
remanded the case for further proceedings consistent with the Supreme 
Court's opinion.\54\ On October 23, 2014, the DC Circuit lifted the 
stay of CSAPR.\55\ Pursuant to this action, CSAPR went into effect (and 
CAIR ceased to be in effect) as of January 1, 2015.
---------------------------------------------------------------------------

    \52\ See North Carolina v. EPA, 550 F.3d 1176 (D.C. Cir. 2008); 
North Carolina v. EPA, 531 F.3d 896 (D.C. Cir. 2008).
    \53\ See EME Homer City Generation, LP v. EPA, 696 F.3d 7, 38 
(D.C. Cir. 2012), cert. granted, 81 U.S.L.W. 3567, 81 U.S.L.W. 3696, 
81 U.S.L.W. 3702 (U.S. June 24, 2013) (No. 12-1182).
    \54\ See EPA v. EME Homer City Generation, 134 S.Ct. 1584, 1610 
(U.S. 2014). The Supreme Court held in part that EPA's methodology 
for quantifying emissions that must be eliminated in certain States 
due to their impacts in other downwind States was based on a 
permissible, workable, and equitable interpretation of the Clean Air 
Act provision that provides statutory authority for CSAPR.
    \55\ See Georgia v. EPA, Order (D.C. Cir. filed October 23, 
2014) (No. 11-1302).
---------------------------------------------------------------------------

    EIA was not able to incorporate CSAPR into AEO 2015, so it assumes 
implementation of CAIR. Although DOE's analysis used emissions factors 
that assume that CAIR, not CSAPR, is the regulation in force, the 
difference between CAIR and CSAPR is not significant for the purpose of 
DOE's analysis of emissions impacts from energy conservation standards.
    The attainment of emissions caps is typically flexible among EGUs 
and is

[[Page 38367]]

enforced through the use of emissions allowances and tradable permits. 
Under existing EPA regulations, any excess SO2 emissions 
allowances resulting from the lower electricity demand caused by the 
adoption of an efficiency standard could be used to permit offsetting 
increases in SO2 emissions by any regulated EGU. In past 
rulemakings, DOE recognized that there was uncertainty about the 
effects of efficiency standards on SO2 emissions covered by 
the existing cap-and-trade system, but it concluded that negligible 
reductions in power sector SO2 emissions would occur as a 
result of standards.
    Beginning in 2016, however, SO2 emissions will fall as a 
result of the Mercury and Air Toxics Standards (MATS) for power plants. 
77 FR 9304 (Feb. 16, 2012). In the MATS rule, EPA established a 
standard for hydrogen chloride as a surrogate for acid gas hazardous 
air pollutants (HAP), and also established a standard for 
SO2 (a non-HAP acid gas) as an alternative equivalent 
surrogate standard for acid gas HAP. The same controls are used to 
reduce HAP and non-HAP acid gas; thus, SO2 emissions will be 
reduced as a result of the control technologies installed on coal-fired 
power plants to comply with the MATS requirements for acid gas. AEO 
2015 assumes that, in order to continue operating, coal plants must 
have either flue gas desulfurization or dry sorbent injection systems 
installed by 2016. Both technologies, which are used to reduce acid gas 
emissions, also reduce SO2 emissions. Under the MATS, 
emissions will be far below the cap established by CAIR, so it is 
unlikely that excess SO2 emissions allowances resulting from 
the lower electricity demand would be needed or used to permit 
offsetting increases in SO2 emissions by any regulated 
EGU.\56\ Therefore, DOE believes that energy conservation standards 
will generally reduce SO2 emissions in 2016 and beyond.
---------------------------------------------------------------------------

    \56\ DOE notes that the Supreme Court remanded EPA's 2012 rule 
regarding national emission standards for hazardous air pollutants 
from certain electric utility steam generating units. See Michigan 
v. EPA (Case No. 14-46, 2015). DOE has tentatively determined that 
the remand of the MATS rule does not change the assumptions 
regarding the impact of energy efficiency standards on 
SO2 emissions. Further, while the remand of the MATS rule 
may have an impact on the overall amount of mercury emitted by power 
plants, it does not change the impact of the energy efficiency 
standards on mercury emissions. DOE will continue to monitor 
developments related to this case and respond to them as 
appropriate.
---------------------------------------------------------------------------

    CAIR established a cap on NOX emissions in 28 eastern 
States and the District of Columbia.\57\ Energy conservation standards 
are expected to have little effect on NOX emissions in those 
States covered by CAIR because excess NOX emissions 
allowances resulting from the lower electricity demand could be used to 
permit offsetting increases in NOX emissions from other 
facilities. However, standards would be expected to reduce 
NOX emissions in the States not affected by the caps, so DOE 
estimated NOX emissions reductions from the standards 
considered in this final rule for these States.
---------------------------------------------------------------------------

    \57\ CSAPR also applies to NOX and it supersedes the 
regulation of NOX under CAIR. As stated previously, the 
current analysis assumes that CAIR, not CSAPR, is the regulation in 
force. The difference between CAIR and CSAPR with regard to DOE's 
analysis of NOX emissions is slight.
---------------------------------------------------------------------------

    The MATS limit mercury emissions from power plants, but they do not 
include emissions caps and, as such, DOE's energy conservation 
standards would likely reduce Hg emissions. DOE estimated mercury 
emissions reduction using emissions factors based on AEO 2015, which 
incorporates the MATS.

L. Monetizing Carbon Dioxide and Other Emissions Impacts

    As part of the development of this rule, DOE considered the 
estimated monetary benefits from the reduced emissions of 
CO2 and NOX that are expected to result from each 
of the TSLs considered. In order to make this calculation analogous to 
the calculation of the NPV of consumer benefit, DOE considered the 
reduced emissions expected to result over the lifetime of products 
shipped in the forecast period for each TSL. This section summarizes 
the basis for the monetary values used for CO2 and 
NOX emissions and presents the values considered in this 
final rule.
    For this final rule, DOE relied on a set of values for the social 
cost of carbon (SCC) that was developed by a Federal interagency 
process. The basis for these values is summarized in the next section, 
and a more detailed description of the methodologies used is provided 
as an appendix to chapter 14 of the final rule TSD.
1. Social Cost of Carbon
    The SCC is an estimate of the monetized damages associated with an 
incremental increase in carbon emissions in a given year. It is 
intended to include (but is not limited to) climate-change-related 
changes in net agricultural productivity, human health, property 
damages from increased flood risk, and the value of ecosystem services. 
Estimates of the SCC are provided in dollars per metric ton of 
CO2. A domestic SCC value is meant to reflect the value of 
damages in the United States resulting from a unit change in 
CO2 emissions, while a global SCC value is meant to reflect 
the value of damages worldwide.
    Under section 1(b)(6) of Executive Order 12866, ``Regulatory 
Planning and Review,'' 58 FR 51735 (Oct. 4, 1993), agencies must, to 
the extent permitted by law, ``assess both the costs and the benefits 
of the intended regulation and, recognizing that some costs and 
benefits are difficult to quantify, propose or adopt a regulation only 
upon a reasoned determination that the benefits of the intended 
regulation justify its costs.'' The purpose of the SCC estimates 
presented here is to allow agencies to incorporate the monetized social 
benefits of reducing CO2 emissions into cost-benefit 
analyses of regulatory actions. The estimates are presented with an 
acknowledgement of the many uncertainties involved and with a clear 
understanding that they should be updated over time to reflect 
increasing knowledge of the science and economics of climate impacts.
    As part of the interagency process that developed these SCC 
estimates, technical experts from numerous agencies met on a regular 
basis to consider public comments, explore the technical literature in 
relevant fields, and discuss key model inputs and assumptions. The main 
objective of this process was to develop a range of SCC values using a 
defensible set of input assumptions grounded in the existing scientific 
and economic literatures. In this way, key uncertainties and model 
differences transparently and consistently inform the range of SCC 
estimates used in the rulemaking process.
a. Monetizing Carbon Dioxide Emissions
    When attempting to assess the incremental economic impacts of 
CO2 emissions, the analyst faces a number of challenges. A 
report from the National Research Council \58\ points out that any 
assessment will suffer from uncertainty, speculation, and lack of 
information about: (1) Future emissions of GHGs; (2) the effects of 
past and future emissions on the climate system; (3) the impact of 
changes in climate on the physical and biological environment; and (4) 
the translation of these environmental impacts into economic damages. 
As a result, any effort to quantify and

[[Page 38368]]

monetize the harms associated with climate change will raise questions 
of science, economics, and ethics and should be viewed as provisional.
---------------------------------------------------------------------------

    \58\ National Research Council, Hidden Costs of Energy: Unpriced 
Consequences of Energy Production and Use, National Academies Press: 
Washington, DC (2009).
---------------------------------------------------------------------------

    Despite the limits of both quantification and monetization, SCC 
estimates can be useful in estimating the social benefits of reducing 
CO2 emissions. The agency can estimate the benefits from 
reduced (or costs from increased) emissions in any future year by 
multiplying the change in emissions in that year by the SCC values 
appropriate for that year. The NPV of the benefits can then be 
calculated by multiplying each of these future benefits by an 
appropriate discount factor and summing across all affected years.
    It is important to emphasize that the interagency process is 
committed to updating these estimates as the science and economic 
understanding of climate change and its impacts on society improves 
over time. In the meantime, the interagency group will continue to 
explore the issues raised by this analysis and consider public comments 
as part of the ongoing interagency process.
b. Development of Social Cost of Carbon Values
    In 2009, an interagency process was initiated to offer a 
preliminary assessment of how best to quantify the benefits from 
reducing carbon dioxide emissions. To ensure consistency in how 
benefits are evaluated across Federal agencies, the Administration 
sought to develop a transparent and defensible method, specifically 
designed for the rulemaking process, to quantify avoided climate change 
damages from reduced CO2 emissions. The interagency group 
did not undertake any original analysis. Instead, it combined SCC 
estimates from the existing literature to use as interim values until a 
more comprehensive analysis could be conducted. The outcome of the 
preliminary assessment by the interagency group was a set of five 
interim values: Global SCC estimates for 2007 (in 2006$) of $55, $33, 
$19, $10, and $5 per metric ton of CO2. These interim values 
represented the first sustained interagency effort within the U.S. 
government to develop an SCC for use in regulatory analysis. The 
results of this preliminary effort were presented in several proposed 
and final rules.
c. Current Approach and Key Assumptions
    After the release of the interim values, the interagency group 
reconvened on a regular basis to generate improved SCC estimates. 
Specially, the group considered public comments and further explored 
the technical literature in relevant fields. The interagency group 
relied on three integrated assessment models commonly used to estimate 
the SCC: The FUND, DICE, and PAGE models. These models are frequently 
cited in the peer-reviewed literature and were used in the last 
assessment of the Intergovernmental Panel on Climate Change (IPCC). 
Each model was given equal weight in the SCC values that were 
developed.
    Each model takes a slightly different approach to model how changes 
in emissions result in changes in economic damages. A key objective of 
the interagency process was to enable a consistent exploration of the 
three models, while respecting the different approaches to quantifying 
damages taken by the key modelers in the field. An extensive review of 
the literature was conducted to select three sets of input parameters 
for these models: Climate sensitivity, socio-economic and emissions 
trajectories, and discount rates. A probability distribution for 
climate sensitivity was specified as an input into all three models. In 
addition, the interagency group used a range of scenarios for the 
socio-economic parameters and a range of values for the discount rate. 
All other model features were left unchanged, relying on the model 
developers' best estimates and judgments.
    In 2010, the interagency group selected four sets of SCC values for 
use in regulatory analyses. Three sets of values are based on the 
average SCC from the three integrated assessment models, at discount 
rates of 2.5, 3, and 5 percent. The fourth set, which represents the 
95th percentile SCC estimate across all three models at a 3-percent 
discount rate, was included to represent higher-than-expected impacts 
from climate change further out in the tails of the SCC distribution. 
The values grow in real terms over time. Additionally, the interagency 
group determined that a range of values from 7 percent to 23 percent 
should be used to adjust the global SCC to calculate domestic 
effects,\59\ although preference is given to consideration of the 
global benefits of reducing CO2 emissions. Table IV.21 
presents the values in the 2010 interagency group report,\60\ which is 
reproduced in appendix 14A of the final rule TSD.
---------------------------------------------------------------------------

    \59\ It is recognized that this calculation for domestic values 
is approximate, provisional, and highly speculative. There is no a 
priori reason why domestic benefits should be a constant fraction of 
net global damages over time.
    \60\ Social Cost of Carbon for Regulatory Impact Analysis Under 
Executive Order 12866. Interagency Working Group on Social Cost of 
Carbon, United States Government (February 2010) (Available at: 
www.whitehouse.gov/sites/default/files/omb/inforeg/for-agencies/Social-Cost-of-Carbon-for-RIA.pdf).

                     Table IV.21--Annual SCC Values From 2010 Interagency Report, 2010-2050
                                           [2007$ per metric ton CO2]
----------------------------------------------------------------------------------------------------------------
                                                                           Discount rate
                                                 ---------------------------------------------------------------
                                                        5%              3%             2.5%             3%
                      Year                       ---------------------------------------------------------------
                                                                                                       95th
                                                      Average         Average         Average       percentile
----------------------------------------------------------------------------------------------------------------
2010............................................             4.7            21.4            35.1            64.9
2015............................................             5.7            23.8            38.4            72.8
2020............................................             6.8            26.3            41.7            80.7
2025............................................             8.2            29.6            45.9            90.4
2030............................................             9.7            32.8            50.0           100.0
2035............................................            11.2            36.0            54.2           109.7
2040............................................            12.7            39.2            58.4           119.3
2045............................................            14.2            42.1            61.7           127.8
2050............................................            15.7            44.9            65.0           136.2
----------------------------------------------------------------------------------------------------------------


[[Page 38369]]

    The SCC values used for this document were generated using the most 
recent versions of the three integrated assessment models that have 
been published in the peer-reviewed literature, as described in the 
2013 update from the interagency working group (revised July 2015).\61\ 
Table IV.22 shows the updated sets of SCC estimates from the latest 
interagency update in 5-year increments from 2010 to 2050. The full set 
of annual SCC estimates between 2010 and 2050 is reported in appendix 
14B of the final rule TSD. The central value that emerges is the 
average SCC across models at the 3-percent discount rate. However, for 
purposes of capturing the uncertainties involved in regulatory impact 
analysis, the interagency group emphasizes the importance of including 
all four sets of SCC values.
---------------------------------------------------------------------------

    \61\ Technical Update of the Social Cost of Carbon for 
Regulatory Impact Analysis Under Executive Order 12866, Interagency 
Working Group on Social Cost of Carbon, United States Government 
(May 2013; revised July 2015) (Available at: http://www.whitehouse.gov/sites/default/files/omb/inforeg/scc-tsd-final-july-2015.pdf).

           Table IV.22--Annual SCC Values From 2013 Interagency Update (Revised July 2015), 2010-2050
                                           [2007$ per metric ton CO2]
----------------------------------------------------------------------------------------------------------------
                                                                           Discount Rate
                                                 ---------------------------------------------------------------
                                                        5%              3%             2.5%             3%
                      Year                       ---------------------------------------------------------------
                                                                                                       95th
                                                      Average         Average         Average       percentile
----------------------------------------------------------------------------------------------------------------
2010............................................              10              31              50              86
2015............................................              11              36              56             105
2020............................................              12              42              62             123
2025............................................              14              46              68             138
2030............................................              16              50              73             152
2035............................................              18              55              78             168
2040............................................              21              60              84             183
2045............................................              23              64              89             197
2050............................................              26              69              95             212
----------------------------------------------------------------------------------------------------------------

    It is important to recognize that a number of key uncertainties 
remain, and that current SCC estimates should be treated as provisional 
and revisable because they will evolve with improved scientific and 
economic understanding. The interagency group also recognizes that the 
existing models are imperfect and incomplete. The National Research 
Council report mentioned previously points out that there is tension 
between the goal of producing quantified estimates of the economic 
damages from an incremental ton of carbon and the limits of existing 
efforts to model these effects. There are a number of analytical 
challenges that are being addressed by the research community, 
including research programs housed in many of the Federal agencies 
participating in the interagency process to estimate the SCC. The 
interagency group intends to periodically review and reconsider those 
estimates to reflect increasing knowledge of the science and economics 
of climate impacts, as well as improvements in modeling.\62\
---------------------------------------------------------------------------

    \62\ In November 2013, OMB announced a new opportunity for 
public comment on the interagency technical support document 
underlying the revised SCC estimates. 78 FR 70586. In July 2015 OMB 
published a detailed summary and formal response to the many 
comments that were received. https://www.whitehouse.gov/blog/2015/07/02/estimating-benefits-carbon-dioxide-emissions-reductions. It 
also stated its intention to seek independent expert advice on 
opportunities to improve the estimates, including many of the 
approaches suggested by commenters.
---------------------------------------------------------------------------

    In summary, in considering the potential global benefits resulting 
from reduced CO2 emissions, DOE used the values from the 
2013 interagency report (revised July 2015), adjusted to 2014$ using 
the implicit price deflator for gross domestic product (GDP) from the 
Bureau of Economic Analysis. For each of the four sets of SCC cases 
specified, the values for emissions in 2015 were $12.2, $40.0, $62.3, 
and $117 per metric ton avoided (values expressed in 2014$). DOE 
derived values after 2050 based on the trend in 2010-2050 in each of 
the four cases.
    DOE multiplied the CO2 emissions reduction estimated for 
each year by the SCC value for that year in each of the four cases. To 
calculate a present value of the stream of monetary values, DOE 
discounted the values in each of the four cases using the specific 
discount rate that had been used to obtain the SCC values in each case.
2. Social Cost of Other Air Pollutants
    As noted previously, DOE has estimated how the considered energy 
conservation standards would decrease power sector NOX 
emissions in those 22 States not affected by the CAIR.
    DOE estimated the monetized value of NOX emissions 
reductions using benefit per ton estimates from the Regulatory Impact 
Analysis for the Clean Power Plan Final Rule, published in August 2015 
by EPA's Office of Air Quality Planning and Standards.\63\ The report 
includes high and low values for NOX (as PM2.5) 
for 2020, 2025, and 2030 discounted at 3 percent and 7 percent; \64\ 
these values are presented in chapter 14 of the final rule TSD. DOE 
assigned values for 2021-2024 and 2026-2029 using, respectively, the 
values for 2020 and 2025. DOE assigned values after 2030 using the 
value for 2030. DOE developed values specific to the end-use category 
for dehumidifiers using a method described in appendix 14C.
---------------------------------------------------------------------------

    \63\ Available at: http://www.epa.gov/cleanpowerplan/clean-power-plan-final-rule-regulatory-impact-analysis. See Tables 4A-3, 
4A-4, and 4A-5 in the report.
    \64\ For the monetized NOX benefits associated with 
PM2.5, the related benefits (derived from benefit-per-ton 
values) are primarily based on an estimate of premature mortality 
derived from the ACS study (Krewski et al., 2009), which is the 
lower of the two EPA central tendencies. Using the lower value is 
more conservative when making the policy decision concerning whether 
a particular standard level is economically justified. If the 
benefit-per-ton estimates were based on the Six Cities study 
(Lepuele et al., 2012), the values would be nearly two-and-a-half 
times larger. (See chapter 14 of the final rule TSD for further 
description of the studies mentioned in this preamble.)
---------------------------------------------------------------------------

    DOE multiplied the emissions reduction (tons) in each year by the 
associated $/ton values, and then discounted each series using discount 
rates of 3-percent and 7-percent as appropriate. DOE will continue to 
evaluate the monetization of avoided NOX emissions and will 
make any appropriate updates in energy conservation standards 
rulemakings.
    DOE is evaluating appropriate monetization of avoided 
SO2 and Hg emissions in energy conservation standards 
rulemakings. DOE has not

[[Page 38370]]

included monetization of those emissions in the current analysis.
    AHAM commented that monetization of avoided CO2 
emissions should include a more comprehensive analysis to understand 
the total environmental impact. It stated that any CO2 
analysis should include CO2 emissions that are caused 
indirectly, as well as directly, from a standards change, such as 
increased carbon emissions required to manufacture a given standard 
level, the increased transportation and related emissions required for 
a given standard level, and reduced carbon emissions from peak load 
reductions. (AHAM, No. 39 at p. 7)
    In response, DOE notes that EPCA directs DOE to consider the total 
projected amount of energy, or as applicable, water, savings likely to 
result directly from the imposition of the standard when determining 
whether a standard is economically justified. (42 U.S.C. 
6295(o)(2)(B)(i)(III)) DOE interprets this to include energy used in 
the generation, transmission, and distribution of fuels used by 
appliances or equipment. In addition, DOE is using the FFC measure, 
which includes the energy consumed in extracting, processing, and 
transporting primary fuels. DOE's current accounting of primary energy 
savings and the FFC measure are directly linked to the energy used by 
appliances or equipment. DOE believes that energy used in manufacturing 
or transporting appliances or equipment falls outside the boundaries of 
``directly'' as intended by EPCA. Thus, DOE did not consider such 
energy use and air emissions in the NIA or in the emissions analysis. 
DOE's analysis does account for impacts on CO2 emissions 
from electricity load reduction.
    The U.S. Chamber of Commerce objected to the continued use of the 
SCC in the cost-benefit analysis performed. AHAM stated that DOE should 
wait for comments on the 2013 interagency report to be resolved before 
it relies on the 2013 estimates, and, until that time DOE should rely 
on the 2010 estimates as it has done in rulemakings prior to May 2013. 
(U.S. Chamber of Commerce, No. 37 at p. 4; AHAM, No. 39 at p. 7)
    The 2013 report provides an update of the SCC estimates based 
solely on the latest peer-reviewed version of the models, replacing 
model versions that were developed up to ten years ago in a rapidly 
evolving field. It does not revisit other assumptions with regard to 
the discount rate, reference case socioeconomic and emission scenarios, 
or equilibrium climate sensitivity. Improvements in the way damages are 
modeled are confined to those that have been incorporated into the 
latest versions of the models by the developers themselves in the peer-
reviewed literature. Given the above, using the 2010 estimates would be 
inconsistent with DOE's objective of using the best available 
information in its analyses. As noted previously, OMB published a 
detailed summary and formal response to the many comments that were 
received on the 2013 interagency report.

M. Utility Impact Analysis

    The utility impact analysis estimates several effects on the 
electric power generation industry that would result from the adoption 
of new or amended energy conservation standards. The utility impact 
analysis estimates the changes in installed electrical capacity and 
generation that would result for each TSL. The analysis is based on 
published output from the NEMS associated with AEO 2015. NEMS produces 
the AEO Reference case, as well as a number of side cases that estimate 
the economy-wide impacts of changes to energy supply and demand. DOE 
uses published side cases to estimate the marginal impacts of reduced 
energy demand on the utility sector. These marginal factors are 
estimated based on the changes to electricity sector generation, 
installed capacity, fuel consumption and emissions in the AEO Reference 
case and various side cases. Details of the methodology are provided in 
the appendices to chapters 13 and 15 of the final rule TSD.
    The output of this analysis is a set of time-dependent coefficients 
that capture the change in electricity generation, primary fuel 
consumption, installed capacity and power sector emissions due to a 
unit reduction in demand for a given end use. These coefficients are 
multiplied by the stream of electricity savings calculated in the NIA 
to provide estimates of selected utility impacts of new or amended 
energy conservation standards.

N. Employment Impact Analysis

    DOE considers employment impacts in the domestic economy as one 
factor in selecting a standard. Employment impacts from new or amended 
energy conservation standards include both direct and indirect impacts. 
Direct employment impacts are any changes in the number of employees of 
manufacturers of the products subject to standards, their suppliers, 
and related service firms. The MIA addresses those impacts. Indirect 
employment impacts are changes in national employment that occur due to 
the shift in expenditures and capital investment caused by the purchase 
and operation of more-efficient appliances. Indirect employment impacts 
from standards consist of the net jobs created or eliminated in the 
national economy, other than in the manufacturing sector being 
regulated, caused by: (1) Reduced spending by end users on energy; (2) 
reduced spending on new energy supply by the utility industry; (3) 
increased consumer spending on new products to which the new standards 
apply; and (4) the effects of those three factors throughout the 
economy.
    One method for assessing the possible effects on the demand for 
labor of such shifts in economic activity is to compare sector 
employment statistics developed by the Labor Department's Bureau of 
Labor Statistics (BLS).\65\ BLS regularly publishes its estimates of 
the number of jobs per million dollars of economic activity in 
different sectors of the economy, as well as the jobs created elsewhere 
in the economy by this same economic activity. Data from BLS indicate 
that expenditures in the utility sector generally create fewer jobs 
(both directly and indirectly) than expenditures in other sectors of 
the economy.\66\ There are many reasons for these differences, 
including wage differences and the fact that the utility sector is more 
capital-intensive and less labor-intensive than other sectors. Energy 
conservation standards have the effect of reducing consumer utility 
bills. Because reduced consumer expenditures for energy likely lead to 
increased expenditures in other sectors of the economy, the general 
effect of efficiency standards is to shift economic activity from a 
less labor-intensive sector (i.e., the utility sector) to more labor-
intensive sectors (e.g., the retail and service sectors). Thus, the BLS 
data suggest that net national employment may increase due to shifts in 
economic activity resulting from energy conservation standards.
---------------------------------------------------------------------------

    \65\ Data on industry employment, hours, labor compensation, 
value of production, and the implicit price deflator for output for 
these industries are available upon request by calling the Division 
of Industry Productivity Studies (202-691-5618) or by sending a 
request by email to dipsweb@bls.gov.
    \66\ See Bureau of Economic Analysis, Regional Multipliers: A 
User Handbook for the Regional Input-Output Modeling System (RIMS 
II), U.S. Department of Commerce (1992).
---------------------------------------------------------------------------

    DOE estimated indirect national employment impacts for the standard 
levels considered in this final rule using an input/output model of the 
U.S. economy called Impact of Sector Energy Technologies version 3.1.1 
(ImSET).\67\

[[Page 38371]]

ImSET is a special-purpose version of the ``U.S. Benchmark National 
Input-Output'' (I-O) model, which was designed to estimate the national 
employment and income effects of energy-saving technologies. The ImSET 
software includes a computer-based I-O model having structural 
coefficients that characterize economic flows among 187 sectors most 
relevant to industrial, commercial, and residential building energy 
use.
---------------------------------------------------------------------------

    \67\ J.M. Roop, M.J. Scott, and R.W. Schultz, ImSET 3.1: Impact 
of Sector Energy Technologies, PNNL-18412, Pacific Northwest 
National Laboratory (2009) (Available at: www.pnl.gov/main/publications/external/technical_reports/PNNL-18412.pdf.)
---------------------------------------------------------------------------

    DOE notes that ImSET is not a general equilibrium forecasting 
model, and understands the uncertainties involved in projecting 
employment impacts, especially changes in the later years of the 
analysis. Because ImSET does not incorporate price changes, the 
employment effects predicted by ImSET may over-estimate actual job 
impacts over the long run for this rule. Therefore, DOE generated 
results for near-term timeframes, where these uncertainties are 
reduced. For more details on the employment impact analysis, see 
chapter 16 of the final rule TSD.

V. Analytical Results and Conclusions

    The following section addresses the results from DOE's analyses 
with respect to the considered energy conservation standards for 
dehumidifiers. It addresses the TSLs examined by DOE, the projected 
impacts of each of these levels if adopted as energy conservation 
standards for dehumidifiers, and the standards levels that DOE is 
adopting in this final rule. Additional details regarding DOE's 
analyses are contained in the final rule TSD supporting this document.

A. Trial Standard Levels

    DOE analyzed the benefits and burdens of four TSLs for 
dehumidifiers. These TSLs were developed by combining specific 
efficiency levels for each of the five product classes analyzed by DOE. 
DOE presents the results for the TSLs in this document, while the 
results for all efficiency levels that DOE analyzed are in the final 
rule TSD. Table V.1 presents the TSLs and the corresponding efficiency 
levels for dehumidifiers. TSL 4 represents the max-tech energy 
efficiency for all product classes. TSL 3 consists of the efficiency 
levels below the max-tech level for all product classes. The efficiency 
level for TSL 2 for product classes 1, 2, and 3 is one below the max-
tech level, the same level as TSL3. The efficiency level for TSL 2 for 
product classes 4 and 5 is the baseline. TSL 1 consists of Efficiency 
Level 2 for product classes 1, 2, and 3 and the baseline for product 
classes 4 and 5.

                                                   Table V.1--Trial Standard Levels for Dehumidifiers
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                     PC1                   PC2                   PC3                   PC4                   PC5
                                           -------------------------------------------------------------------------------------------------------------
                                              <=25.00 pints/day    25.01-50.00 pints/     >=50.01 pints/day        <=8.0 ft\3\           >8.0 ft\3\
                    TSL                    ----------------------          day         -----------------------------------------------------------------
                                                                 ----------------------
                                                EL     AEU (kWh/             AEU (kWh/      EL     AEU (kWh/      EL     AEU (kWh/      EL     AEU (kWh/
                                                          yr)         EL        yr)                   yr)                   yr)                   yr)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                    0        505          0        808          0        867          0        809          0        967
1.........................................          2        460          2        688          2        778          0        809          0        967
2.........................................          3        422          3        603          3        665          0        809          0        967
3.........................................          3        422          3        603          3        665          1        681          2        660
4.........................................          4        351          4        534          4        509          2        565          3        519
--------------------------------------------------------------------------------------------------------------------------------------------------------

B. Economic Justification and Energy Savings

1. Economic Impacts on Individual Consumers
    DOE analyzed the economic impacts on dehumidifier consumers by 
looking at the effects potential amended standards at each TSL would 
have on the LCC and PBP. DOE also examined the impacts of potential 
standards on consumer subgroups. These analyses are discussed below.
a. Life-Cycle Cost and Payback Period
    In general, higher-efficiency products affect consumers in two 
ways: (1) Purchase price increases, and (2) annual operating costs 
decrease. Inputs used for calculating the LCC and PBP include total 
installed costs (i.e., product price plus installation costs), and 
operating costs (i.e., annual energy use, energy prices, energy price 
trends, repair costs, and maintenance costs). The LCC calculation also 
uses product lifetime and a discount rate. Chapter 8 of the final rule 
TSD provides detailed information on the LCC and PBP analyses.
    Table V.2 through Table V.3 show the LCC and PBP results for the 
TSL efficiency levels considered for each product class. In the first 
of each pair of tables, the simple payback is measured relative to the 
baseline product. In the second table, the impacts are measured 
relative to the efficiency distribution in the no-new-standards case in 
the compliance year (see section IV.F.8 of this document). Because some 
consumers purchase products with higher efficiency in the no-new-
standards case, the average savings are less than the difference 
between the average LCC of Efficiency Level 0 (baseline) and the 
average LCC at each TSL. The savings refer only to consumers who are 
affected by a standard at a given TSL. Those who already purchase a 
product with efficiency at or above a given TSL are not affected. 
Consumers for whom the LCC increases at a given TSL experience a net 
cost.

[[Page 38372]]



                                     Table V.2--Average LCC and PBP Results by Efficiency Level for Dehumidifier PC1
                                                                   [<=25.00 pints/day]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2014$)
                                                         ---------------------------------------------------------------- Simple payback      Average
                   TSL                          EL                         First year's      Lifetime                         (years)        lifetime
                                                          Installed cost  operating cost  operating cost        LCC                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       0             208              78             736             944  ..............              11
1.......................................               2             210              71             674             884             0.4              11
2, 3....................................               3             214              66             622             836             0.5              11
4.......................................               4             238              56             525             763             1.3              11
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the
  baseline (EL 0) product.


            Table V.3--Average LCC Savings Relative to the No-New-Standards Case for Dehumidifier PC1
                                               [<=25.00 pints/day]
----------------------------------------------------------------------------------------------------------------
                                                                                    Life-cycle cost savings
                                                                             -----------------------------------
                                                                                                   Percent of
                             TSL                                    EL           Average LCC     consumers that
                                                                                  savings *      experience net
                                                                                   (2014$)          cost (%)
----------------------------------------------------------------------------------------------------------------
1...........................................................               2                60                 0
2, 3........................................................               3               107               0.1
4...........................................................               4               110              11.5
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.


                                     Table V.4--Average LCC and PBP Results by Efficiency Level for Dehumidifier PC2
                                                                 [25.01-50.00 pints/day]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2014$)
                                                         ----------------------------------------------------------------   Simple PBP        Average
                   TSL                          EL                         First year's      Lifetime                         (years)        lifetime
                                                          Installed cost  operating cost  operating cost        LCC                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       0             252             124           1,173           1,425  ..............              11
1.......................................               2             255             107           1,010           1,265             0.2              11
2, 3....................................               3             264              95             895           1,158             0.4              11
4.......................................               4             286              85             800           1,086             0.9              11
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the
  baseline product.


      Table V.5--Average LCC Savings Relative to the Base-Case Efficiency Distribution for Dehumidifier PC2
                                             [25.01-50.00 pints/day]
----------------------------------------------------------------------------------------------------------------
                                                                                    Life-cycle cost savings
                                                                             -----------------------------------
                                                                                                   Percent of
                             TSL                                    EL           Average LCC     consumers that
                                                                                  savings *      experience net
                                                                                   (2014$)          cost (%)
----------------------------------------------------------------------------------------------------------------
1...........................................................               2               157                 0
2,3.........................................................               3               119               0.7
4...........................................................               4               191               5.1
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.


[[Page 38373]]


                                     Table V.6--Average LCC and PBP Results by Efficiency Level for Dehumidifier PC3
                                                                   [>50.00 pints/day]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2014$)
                                                         ----------------------------------------------------------------   Simple PBP        Average
                   TSL                          EL                         First year's      Lifetime                         (years)        lifetime
                                                          Installed cost  operating cost  operating cost        LCC                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       0           1,302             134           1,269           2,571  ..............              11
1.......................................               2           1,407             121           1,147           2,554             8.2              11
2,3.....................................               3           1,433             105             994           2,427             4.5              11
4.......................................               4           1,673              83             782           2,455             7.2              11
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the
  baseline product.


      Table V.7--Average LCC Savings Relative to the Base-Case Efficiency Distribution for Dehumidifier PC3
                                               [>50.00 pints/day]
----------------------------------------------------------------------------------------------------------------
                                                                                    Life-cycle cost savings
                                                                             -----------------------------------
                                                                                                   Percent of
                             TSL                                    EL           Average LCC     consumers that
                                                                                  savings *      experience net
                                                                                   (2014$)          cost (%)
----------------------------------------------------------------------------------------------------------------
1...........................................................               2                17              44.9
2,3.........................................................               3               142              28.7
4...........................................................               4                96              54.3
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.


                                     Table V.8--Average LCC and PBP Results by Efficiency Level for Dehumidifier PC4
                                                                      [<=8.0 ft\3\]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2014$)
                                                         ----------------------------------------------------------------   Simple PBP        Average
                   TSL                          EL                         First year's      Lifetime                         (years)        lifetime
                                                          Installed cost  operating cost  operating cost        LCC                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
1,2.....................................               0           1,733             129           1,893           3,626  ..............              19
3.......................................               1           1,769             110           1,613           3,382             1.9              19
4.......................................               2           1,977              93           1,361           3,339             6.8              19
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the
  baseline product.


      Table V.9--Average LCC Savings Relative to the Base-Case Efficiency Distribution for Dehumidifier PC4
                                                  [<=8.0 ft\3\]
----------------------------------------------------------------------------------------------------------------
                                                                                    Life-cycle cost savings
                                                                             -----------------------------------
                                                                                                   Percent of
                             TSL                                    EL           Average LCC     consumers that
                                                                                  savings *      experience net
                                                                                   (2014$)          cost (%)
----------------------------------------------------------------------------------------------------------------
1,2.........................................................               0  ................  ................
3...........................................................               1               242               9.9
4...........................................................               2               242              42.6
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.


                                    Table V.10--Average LCC and PBP Results by Efficiency Level for Dehumidifier PC5
                                                                      [>8.0 ft\3\]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2014$)
                                                         ----------------------------------------------------------------   Simple PBP        Average
                   TSL                          EL                         First year's      Lifetime                         (years)        lifetime
                                                          Installed cost  operating cost  operating cost        LCC                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
1,2.....................................               0           2,233             153           2,250           4,483  ..............              19

[[Page 38374]]

 
3.......................................               2           2,325             108           1,581           3,906             2.0              19
4.......................................               3           2,617              87           1,273           3,890             5.8              19
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the
  baseline product.


     Table V.11--Average LCC Savings Relative to the Base-Case Efficiency Distribution for Dehumidifier PC5
                                                  [>8.0 ft\3\]
----------------------------------------------------------------------------------------------------------------
                                                                                    Life-cycle cost savings
                                                                             -----------------------------------
                                                                                                   Percent of
                             TSL                                    EL           Average LCC     consumers that
                                                                                  savings *      experience net
                                                                                   (2014$)          cost (%)
----------------------------------------------------------------------------------------------------------------
1,2.........................................................               1  ................  ................
3...........................................................               2               479              10.8
4...........................................................               3               386              43.4
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.

b. Consumer Subgroup Analysis
    As described in section IV.I of this document, DOE estimated the 
impact of the considered TSLs on low-income households and senior-only 
households. Table V.12 through Table V.16 compare the average LCC 
savings at each efficiency level for the two consumer subgroups, along 
with the average LCC savings for the entire sample. In most cases, the 
average LCC savings and PBP for low-income households and senior-only 
households at the considered efficiency levels are not substantially 
different from the average for all households. Chapter 11 of the final 
rule TSD presents the complete LCC and PBP results for the two 
subgroups.

                    Table V.12--Dehumidifier PC1 (<=25.00 Pints/Day): Comparison of Impacts for Consumer Subgroups and All Households
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Average life-cycle cost savings (2014$)              Simple payback period (years)
                                                         -----------------------------------------------------------------------------------------------
                           TSL                              Low-income      Senior-only                     Low-income      Senior-only
                                                            households      households    All households    households      households    All households
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.......................................................              55              48              60             0.4             0.5             0.4
2,3.....................................................              99              86             107             0.6             0.7             0.5
4.......................................................             101              85             110             1.4             1.6             1.3
--------------------------------------------------------------------------------------------------------------------------------------------------------


                  Table V.13--Dehumidifier PC2 (25.01-50.00 Pints/Day): Comparison of Impacts for Consumer Subgroups and All Households
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Average life-cycle cost savings (2014$)              Simple payback period (years)
                                                         -----------------------------------------------------------------------------------------------
                           TSL                              Low-income      Senior-only                     Low-income      Senior-only
                                                            households      households    All households    households      households    All households
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.......................................................             149             127             157             0.2             0.2             0.2
2,3.....................................................             112              97             119             0.4             0.5             0.4
4.......................................................             178             151             191             0.9             1.1             0.9
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 38375]]


                    Table V.14--Dehumidifier PC3 (>50.00 Pints/Day): Comparison of Impacts for Consumer Subgroups and All Households
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Average life-cycle cost savings (2014$)              Simple payback period (years)
                                                         -----------------------------------------------------------------------------------------------
                           TSL                              Low-income      Senior-only                     Low-income      Senior-only
                                                            households      households    All households    households      households    All households
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.......................................................               9             (6)              17             8.6             9.9             8.2
2,3.....................................................             126              95             142             4.7             5.5             4.5
4.......................................................              69              17              96             7.5             8.7             7.2
--------------------------------------------------------------------------------------------------------------------------------------------------------


                       Table V.15--Dehumidifier PC4 (<=8.0 ft\3\): Comparison of Impacts for Consumer Subgroups and All Households
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Average life-cycle cost savings (2014$)              Simple payback period (years)
                                                         -----------------------------------------------------------------------------------------------
                           TSL                              Low-income      Senior-only                     Low-income      Senior-only
                                                            households      households    All households    households      households    All households
--------------------------------------------------------------------------------------------------------------------------------------------------------
1,2.....................................................  ..............  ..............  ..............  ..............  ..............  ..............
3.......................................................             135             251             242             2.7             1.8             1.9
4.......................................................              64             259             242             9.6             6.5             6.8
--------------------------------------------------------------------------------------------------------------------------------------------------------


                       Table V.16--Dehumidifier PC5 (>8.0 ft\3\): Comparison of Impacts for Consumer Subgroups and All Households
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Average life-cycle cost savings (2014$)              Simple payback period (years)
                                                         -----------------------------------------------------------------------------------------------
                           TSL                              Low-income      Senior-only                     Low-income      Senior-only
                                                            households      households    All households    households      households    All households
--------------------------------------------------------------------------------------------------------------------------------------------------------
1,2.....................................................  ..............  ..............  ..............  ..............  ..............  ..............
3.......................................................             261             496             479             2.9             2.0             2.0
4.......................................................             105             409             386             8.3             5.6             5.8
--------------------------------------------------------------------------------------------------------------------------------------------------------

c. Rebuttable Presumption Payback
    As discussed in this preamble, EPCA provides a rebuttable 
presumption that an energy conservation standard is economically 
justified if the increased purchase cost for a product that meets the 
standard is less than three times the value of the first-year energy 
savings resulting from the standard. In calculating a rebuttable 
presumption PBP for the considered standard levels, DOE used discrete 
values and, as required by EPCA, based the energy use calculation on 
the DOE test procedure for dehumidifiers in appendix X1. In contrast, 
the PBPs presented in section V.B.1.a were calculated using 
distributions for input values, with energy use based on field studies 
and RECS data.
    Table V.17 presents the rebuttable-presumption PBPs for the 
considered TSLs.\68\ While DOE examined the rebuttable-presumption 
criterion, it further considered whether the standard levels considered 
for the NOPR are economically justified through a more detailed 
analysis of the economic impacts of those levels pursuant to 42 U.S.C. 
6295(o)(2)(B)(i). The results of that analysis serve as the basis for 
DOE to evaluate the economic justification for a potential standard 
level (thereby supporting or rebutting the results of any preliminary 
determination of economic justification).
---------------------------------------------------------------------------

    \68\ The PBPs in Table V.17 differ from those shown in Tables 
V.2, V.4, V.6, V.8 and V.10 because the rebuttable PBPs are 
calculated with energy use based on the DOE test procedure, whereas 
the PBPs in the earlier tables are calculated with energy use based 
on field studies and RECS data.

                          Table V.17--Dehumidifiers: Rebuttable Payback Period (Years)
----------------------------------------------------------------------------------------------------------------
                                                                       Trial standard level
                  Product class                  ---------------------------------------------------------------
                                                         1               2               3               4
----------------------------------------------------------------------------------------------------------------
PC1 (<=25.00 pints/day).........................             0.5             0.6             0.6             1.6
PC2 (25.00-50.00 pints/day).....................             0.2             0.5             0.5             1.0
PC3 (>=50.01 pints/day).........................             8.7             4.8             4.8             7.7
PC4 (<=8.0 ft\3\)...............................  ..............  ..............             2.2             7.8
PC5 (>8.0 ft\3\)................................  ..............  ..............             2.3             6.7
----------------------------------------------------------------------------------------------------------------


[[Page 38376]]

2. Economic Impacts on Manufacturers
    DOE performed an MIA to estimate the impact of amended energy 
conservation standards on manufacturers of dehumidifiers. The section 
below describes the expected impacts on manufacturers at each TSL. 
Chapter 12 of the final rule TSD explains the analysis in further 
detail.
a. Industry Cash Flow Analysis Results
    The following tables illustrate the estimated financial impacts 
(represented by changes in INPV) of amended energy conservation 
standards on manufacturers of dehumidifiers, as well as the conversion 
costs that DOE estimates manufacturers would incur for each product 
class at each TSL. To evaluate the range of cash-flow impacts on the 
dehumidifier manufacturing industry, DOE used two different markup 
scenarios to model the range of anticipated market responses to amended 
energy conservation standards.
    To assess the lower (less severe) end of the range of potential 
impacts, DOE modeled a preservation of gross margin percentage markup 
scenario, in which a flat markup of 1.45 (i.e., the baseline 
manufacturer markup) is applied across all efficiency levels. In this 
scenario, DOE assumed that a manufacturer's absolute dollar markup 
would increase as production costs increase in the amended energy 
conservation standards case. Manufacturers have indicated that it is 
optimistic to assume that they would be able to maintain the same gross 
margin markup as their production costs increase in response to a new 
or amended energy conservation standard, particularly at higher TSLs.
    To assess the higher (more severe) end of the range of potential 
impacts, DOE modeled the preservation of per-unit operating profit 
markup scenario, which assumes that manufacturers would not be able to 
preserve the same overall gross margin, but instead would cut their 
markup for minimally compliant products to maintain a cost competitive 
product offering while maintaining the same overall level of operating 
profit in absolute dollars as in the no-new-standards case. The two 
tables below show the range of potential INPV impacts for manufacturers 
of dehumidifiers. Table V.18 reflects the lower bound of impacts 
(higher profitability) and Table V.19 represents the upper bound of 
impacts (lower profitability).
    Each scenario results in a unique set of cash flows and 
corresponding industry values at each TSL. In the following discussion, 
the INPV results refer to the sum of discounted cash flows through 
2048, the difference in INPV between the no-new-standards case and each 
standards case, and the total industry conversion costs required for 
each standards case.

             Table V.18--Manufacturer Impact Analysis Under the Preservation of Gross Margin Percentage Markup Scenario for Analysis Period
                                                                       [2016-2048]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                               Trial standard level
                                                      Units                   No-new-    ---------------------------------------------------------------
                                                                          standards case         1               2               3               4
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV...................................  2014$ Millions.................           179.5           176.5           145.5           140.7           126.9
Change in INPV.........................  2014$ Millions.................  ..............           (3.0)          (34.0)          (38.7)          (52.6)
                                         (%)............................  ..............          (1.7%)         (18.9%)         (21.6%)         (29.3%)
Free Cash Flow (2018)..................  2014$ Millions.................            15.0            13.2           (4.2)           (6.7)          (19.7)
Change in Free Cash Flow (2018)........  (%)............................  ..............         (12.4%)        (128.3%)        (144.9%)        (231.4%)
Product Conversion Costs...............  2014$ Millions.................  ..............             3.0            29.9            35.4            55.2
Capital Conversion Costs...............  2014$ Millions.................  ..............             2.1            22.6            24.5            39.1
                                                                         -------------------------------------------------------------------------------
    Total Conversion Costs.............  2014$ Millions.................  ..............             5.1            52.5            59.8            94.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values.


            Table V.19--Manufacturer Impact Analysis Under the Preservation of Per-Unit Operating Profit Markup Scenario for Analysis Period
                                                                       [2016-2048]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                               Trial standard level
                                                      Units                   No-new-    ---------------------------------------------------------------
                                                                          standards case         1               2               3               4
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV...................................  2014$ Millions.................           179.5           175.8           142.0           137.1           106.8
Change in INPV.........................  2014$ Millions.................  ..............           (3.6)          (37.5)          (42.4)          (72.7)
                                         (%)............................  ..............          (2.0%)         (20.9%)         (23.6%)         (40.5%)
Free Cash Flow (2018)..................  2014$ Millions.................            15.0            13.2           (4.2)           (6.7)          (19.7)
Decrease in Free Cash Flow (2018)......  (%)............................  ..............         (12.4%)        (128.3%)        (144.9%)        (231.4%)
Product Conversion Costs...............  2014$ Millions.................  ..............             3.0            29.9            35.4            55.2
Capital Conversion Costs...............  2014$ Millions.................  ..............             2.1            22.6            24.5            39.1
                                                                         -------------------------------------------------------------------------------
    Total Conversion Costs.............  2014$ Millions.................  ..............             5.1            52.5            59.8            94.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values.

    Beyond impacts on INPV, DOE includes a comparison of free cash flow 
between the no-new-standards case and the standards case at each TSL in 
the year before amended standards take effect to provide perspective on 
the short-run cash flow impacts in the discussion of the results below.
    At TSL 1, DOE estimates the impact on INPV for manufacturers of 
dehumidifiers to range from -$3.6 million to -$3.0 million, or a change 
in INPV of -2.0 percent to -1.7 percent under the preservation of per-
unit operating profit markup scenario and

[[Page 38377]]

preservation of gross margin percentage markup scenario, respectively. 
At this TSL, industry free cash flow is estimated to decrease by 
approximately 12.4 percent to $13.2 million, compared to the no-new-
standards-case value of $15.0 million in 2018, the year before the 
projected compliance date.
    At TSL 1, the industry as a whole is expected to incur $3.0 million 
in product conversion costs attributed to upfront research, 
development, testing, and certification, as well as $2.1 million in 
investments in property, plant and equipment (PP&E) necessary to 
manufacture redesigned platforms. Industry conversion cost burden at 
TSL 1 would be felt by manufacturers of both lower-capacity and high-
capacity portable dehumidifiers, although 83 percent of conversion 
costs relate to higher-capacity portable dehumidifier platform 
redesigns. At TSL 1, approximately 1 percent of portable platforms will 
require complete platform redesigns to reach the improved efficiency, 
which involve moving to a new case size to accommodate larger heat 
exchangers. These changes require upfront capital investments for new 
tooling to manufacturing production lines, among other changes. 
Additionally, it is assumed that manufacturers of high-capacity 
portable dehumidifiers, the majority of which are small business 
manufacturers, will have to outsource testing of their products to 
third-party testing facilities, contributing to greater product 
conversion costs. In contrast, the large manufacturers of portable 
dehumidifiers are assumed to have in-house testing capabilities, which 
significantly reduce the cost of testing. DOE confirmed these 
assumptions regarding testing burdens during manufacturer interviews.
    At TSL 2, DOE estimates the impact on INPV for dehumidifier 
manufacturers to range from -$37.5 million to -$34.0 million, or a 
change in INPV of -20.9 percent to -18.9 percent under the preservation 
of per-unit operating profit markup scenario and the preservation of 
gross margin percentage markup scenario, respectively. At this TSL, 
industry free cash flow is estimated to decrease by approximately 128.3 
percent to -$4.2 million, compared to the no-new-standards-case free 
cash flow of $15.0 million in 2018, the year before the projected 
compliance date.
    At TSL 2, the industry as a whole is expected to incur $29.9 
million in product conversion costs associated with upfront research, 
development, testing, and certification, as well as $22.6 million in 
investments in PP&E to manufacture products requiring platform 
redesigns. At TSL 2, the industry conversion cost burden will be felt 
by manufacturers of both low-capacity and high-capacity portable 
dehumidifiers, as approximately 50 percent of portable dehumidifier 
platforms will require complete platform redesigns. Platform redesigns 
at TSL 2 will include moving to a new case size to accommodate larger 
heat exchangers, and will necessitate upfront capital investments for 
new tooling. Because lower-capacity portable units represent 
approximately 98.5 percent of the market, conversion costs associated 
with this segment have a significant impact on total industry 
conversion costs for TSL 2.
    At TSL 3, DOE estimates the impact on INPV for dehumidifier 
manufacturers to range from -$42.4 million to -$38.7 million, or a 
change in INPV of -23.6 percent to -21.6 percent under the preservation 
of per-unit operating profit markup scenario and the preservation of 
gross margin percentage markup scenario, respectively. At this TSL, 
industry free cash flow is estimated to decrease by approximately 144.9 
percent to -$6.7 million, compared to the no-new-standards-case free 
cash flow of $15.0 million in 2018, the year before the projected 
compliance date.
    At TSL 3, the industry as a whole is expected to spend $35.4 
million in product conversion costs associated with upfront research, 
development, testing, and certification, as well as $24.5 million in 
investments in PP&E to manufacture redesigned platforms. While 
conversion costs remain constant for manufacturers of portable 
dehumidifiers between TSLs 2 and 3, the conversion costs for 
manufacturers of whole-home dehumidifiers increase substantially at TSL 
3, as nearly 80 percent of these products will require total platform 
redesigns. As with the portable dehumidifier market segment, platform 
redesigns for whole-home units will consist of moving products to a new 
case size to accommodate larger heat exchangers, and in turn will 
require capital investments in new tooling for larger cases. This 
upfront investment is in addition to higher R&D and testing 
expenditures. Despite increased conversion costs associated with the 
whole-home segment, because lower-capacity portable units represent 
approximately 98.5 percent of the market, conversion costs associated 
with this segment have a significant impact on total industry 
conversion costs for TSL 3.
    At TSL 4, DOE estimates the impact on INPV for manufacturers of 
dehumidifiers to range from -$72.7 million to -$52.6 million, or a 
change in INPV of -40.5 percent to -29.3 percent the preservation of 
per-unit operating profit markup scenario and the preservation of gross 
margin percentage markup scenario, respectively. At this TSL, industry 
free cash flow is estimated to decrease by approximately 231.4 percent 
to -$19.7 million, compared to the no-new-standards-case free cash flow 
of $15.0 million in 2018, the year before the projected compliance 
date.
    At TSL 4, the industry as a whole is expected to spend $55.2 
million in product conversion costs associated with upfront research, 
development, testing, and certification, as well as $40.5 million in 
investments in PP&E for platform redesigns. At TSL 4, approximately 63 
percent of dehumidifier platforms will require complete redesigns in 
the form of larger chassis. Again, since lower-capacity portable units 
represent approximately 98.5 percent of the market, conversion costs 
associated with this segment have a significant impact on total 
industry conversion costs for TSL 4.
b. Impacts on Direct Employment
    DOE used the GRIM to estimate the domestic labor expenditures and 
number of domestic production workers in the no-new-standards case and 
at each TSL from 2016 to 2048. DOE used statistical data from the U.S. 
Census Bureau's 2013 Annual Survey of Manufactures, the results of the 
engineering analysis, and interviews with manufacturers to determine 
the inputs necessary to calculate industry-wide labor expenditures and 
domestic employment levels at each TSL. Labor expenditures for the 
manufacture of a product are a function of the labor intensity of the 
product, the sales volume, and an assumption that wages in real terms 
remain constant. The total labor expenditures in each year are 
calculated by multiplying the MPCs by the labor percentage of MPCs. DOE 
estimates that all whole-home dehumidifiers and 50 percent of high-
capacity portable dehumidifiers are produced domestically. This 
represents approximately 1 percent of dehumidifiers sold in the United 
States.
    The total labor expenditures in the GRIM were then converted to 
domestic production employment levels by dividing production labor 
expenditures by the annual payment per production worker (production 
worker hours times the labor rate found in the U.S. Census Bureau's 
2013 Annual Survey of Manufactures). The production worker estimates in 
this section only cover workers up to the line-supervisor level who are 
directly involved in fabricating

[[Page 38378]]

and assembling a product within an original equipment manufacturer 
(OEM) facility. Workers performing services that are closely associated 
with production operations, such as materials handling tasks using 
forklifts, are also included as production labor. DOE's estimates only 
account for production workers who manufacture the specific products 
covered by this rulemaking.
    Because production employment expenditures are assumed to be a 
fixed percentage of cost of goods sold and the MPCs typically increase 
with more efficient products, labor tracks the increased prices in the 
GRIM. As efficiency of dehumidifiers increase, so does the complexity 
of the products, generally requiring more labor to produce. Based on 
industry feedback, DOE believes that manufacturers that use domestic 
production currently will continue to produce the same scope of covered 
products in domestic production facilities. DOE does not expect 
production to shift to lower labor cost countries. However, in public 
comments submitted in response to the NOPR and in manufacturer 
interviews, stakeholders provided feedback indicating that amended 
energy conservation standards could have a negative impact on domestic 
production employment, depending on the standard level.
    Using the GRIM, DOE estimates that in the absence of amended energy 
conservation standards, there would be 88 domestic production workers 
in the dehumidifier industry. As noted previously, DOE estimates that 1 
percent of dehumidifier units sold in the United States are 
manufactured domestically. Table V.20 shows the range of the impacts of 
potential amended energy conservation standards on U.S. production 
workers of dehumidifiers. A complete description of the assumptions 
used to generate these upper and lower bounds can be found in chapter 
12 of the final rule TSD.

                        Table V.20--Change in Total Number of Domestic Production Employees in 2019 in the Dehumidifier Industry
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                  No-new- standards case
                                             *                     TSL 1                   TSL 2                   TSL 3                   TSL 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Change in Total Number of         ......................  0 to 1................  0 to 1................  (44) to 2.............  (88) to 11
 Domestic Production Workers in
 2019.**
--------------------------------------------------------------------------------------------------------------------------------------------------------
* No-new-standards case estimates 88 domestic production workers in the dehumidifier industry in 2019.
** Parentheses indicate negative values.

    The upper end of the range estimates the maximum increase in the 
number of production workers in the dehumidifier industry after 
implementation of an emended energy conservation standard. It assumes 
that manufacturers would continue to produce the same scope of covered 
products within the United States and would require some additional 
labor to produce more efficient products.
    The lower end of the range represents the maximum decrease in total 
number of U.S. production workers that could result from an amended 
energy conservation standard and is based on direct feedback from 
interested parties. Feedback from manufacturers during interviews 
indicated that some domestic small businesses in the dehumidifier 
industry (specifically in the high-capacity portable dehumidifier and 
whole-home dehumidifier segments) may be forced to reduce employment, 
shift production abroad, or exit the dehumidifier market as a result of 
amended energy conservation standards. This lower bound of direct 
employment impacts reflects the worst-case scenario of impacts.
    This conclusion is independent of any conclusions regarding 
indirect employment impacts in the broader U.S. economy, which are 
documented in Chapter 16 of the TSD.
c. Impacts on Manufacturing Capacity
    As noted previously, the majority of dehumidifiers sold in the 
United States are not produced domestically. However, in response to 
standard levels analyzed in the June 2015 NOPR, domestic manufacturers 
of high-capacity portable dehumidifiers and whole-home dehumidifiers 
commented that production of these products could shift to lower-cost 
countries or halt altogether as a result of amended energy conservation 
standards, depending on the level selected. This could lead to a 
permanently lower production capacity within the dehumidifier industry.
d. Impacts on Subgroups of Manufacturers
    Small manufacturers, niche equipment manufacturers, and 
manufacturers exhibiting a cost structure substantially different from 
the industry average could be affected disproportionately. Using 
average cost assumptions to develop an industry cash-flow estimate is 
inadequate to assess differential impacts among manufacturer subgroups.
    For dehumidifier equipment, DOE identified and evaluated the impact 
of amended energy conservation standards on one subgroup: Small 
manufacturers. The SBA defines a ``small business'' as having 1,250 
employees or less for NAICS 333415 (``Air-Conditioning and Warm Air 
Heating Equipment and Commercial and Industrial Refrigeration Equipment 
Manufacturing'') or 1,500 employees or less for NAICS 335210 (``Small 
Electrical Appliance Manufacturing''). Based on this definition, DOE 
identified five manufacturers in the dehumidifier equipment industry 
that are small businesses.
    For a discussion of the impacts on the small manufacturer subgroup, 
see the Regulatory Flexibility Analysis in section VII.B of this final 
rule and chapter 12 of the final rule TSD.
e. Cumulative Regulatory Burden
    One aspect of assessing manufacturer burden involves looking at the 
cumulative impact of multiple DOE standards and the regulatory actions 
of other Federal agencies and States that affect the manufacturers of a 
covered product or equipment. DOE believes that a standard level is not 
economically justified if it contributes to an unacceptable cumulative 
regulatory burden. While any one regulation may not impose a 
significant burden on manufacturers, the combined effects of several 
existing or impending regulations may have serious consequences for 
some manufacturers, groups of manufacturers, or an entire industry. 
Multiple regulations affecting the same manufacturer can strain profits 
and lead companies to abandon product lines or markets with lower 
expected

[[Page 38379]]

future returns than competing products. In addition to DOE's energy 
conservation regulations for dehumidifiers, several other existing and 
pending regulations apply to these products and other equipment 
produced by the same manufacturers. DOE looks at these regulations that 
could affect dehumidifier manufacturers that will take effect 
approximately 3 years before or after the 2019 compliance date of 
amended energy conservation standards for dehumidifiers. Additionally, 
DOE will evaluate its approach to assessing cumulative regulatory 
burden for use in future rulemakings to ensure that it is effectively 
capturing the overlapping impacts of its regulations. In particular, 
DOE will assess whether looking at rules where any portion of the 
compliance period potentially overlaps with the compliance period for 
the subject rulemaking would yield a more accurate reflection of 
cumulative regulatory burden. For example, DOE recognizes that if it 
were to undertake a rulemaking to amend the standards for room air 
conditioners pursuant to the 6-year look back requirement under 42 
U.S.C. 6295(m), any future room air conditioner rule could have a 
cumulative impact on manufacturers of dehumidifiers during the 
compliance period for these dehumidifiers standards.
    The compliance years and expected industry conversion costs of 
energy conservation standards that may also impact dehumidifier 
manufacturers are indicated in Table V.21. For each rule, the table 
also contains the number of affected dehumidifier original equipment 
manufacturers (OEMs). DOE excludes companies that import and relabel 
dehumidifiers from this count, as DOE's analysis indicates that OEMs 
bear the majority of the economic burden for a given rule. Only 50 
percent of the companies selling dehumidifiers in the United States are 
OEMs (12 of 24). None of the OEMs identified in this table are domestic 
in terms of ownership or manufacturing site.

               Table V.21--Other Federal Energy Conservation Standards Affecting Dehumidifier OEMs
----------------------------------------------------------------------------------------------------------------
                                                                 Estimated total                     Number of
                                  Number of      Estimated INPV      industry       Compliance       affected
       DOE Regulation          manufacturers *    *** (No new       conversion         date        dehumidifier
                                                standards case)       costs                            OEMs
----------------------------------------------------------------------------------------------------------------
Microwave Ovens, 78 FR 36316                12  1,386.5 Million  43.1 Million               2016               1
 (June 17, 2013).                                (2011$).         (2011$).
Residential Clothes Washers,                16  2,586.0 Million  418.5 Million              2018               2
 77 FR 32308 (May 31, 2012).                     (2010$).         (2010$).
Ceiling Fans, 81 FR 1688,                   31  1,308.7 Million  9.4 Million             ** 2019               1
 (January 13, 2016).                             (2014$).         (2014$).
Furnace Fans, 79 FR 38129                   37  349.6 Million    40.6 Million               2019               2
 (July 3, 2014).                                 (2013$).         (2013$).
Portable Air Conditioners                   29  725.5 Million    302.8 Million           ** 2021               4
 Pre-publication NOPR issued                     (2014$).         (2014$).
 on April 27, 2016.
----------------------------------------------------------------------------------------------------------------
* The number of manufacturers listed in the final rule for the energy conservation standard that is contributing
  to cumulative regulatory burden.
** The dates listed are an approximation. The exact dates are pending final DOE action.
*** The industry net present value (INPV) is the sum of the discounted cash flows to the industry from the base
  year through the end of the analysis period of the rulemaking (typically 30 years).

    In addition to other Federal energy conservation standards, 
manufacturers cited third-party certification programs (e.g., UL safety 
standards certification for dehumidifiers) as a source of cumulative 
regulatory burden for dehumidifier manufacturers. For more details, see 
chapter 12 of the final rule TSD.
3. National Impact Analysis
a. Significance of Energy Savings
    To estimate the energy savings attributable to potential standards 
for dehumidifiers, DOE compared the energy consumption of those 
products under the base case to their anticipated energy consumption 
under each TSL. Table V.22 presents DOE's projections of the national 
energy savings for each TSL considered for dehumidifiers shipped in the 
2019-2048 period. The savings were calculated using the approach 
described in section IV.H.1 of this document.

                          Table V.22--Dehumidifiers: Cumulative National Energy Savings
                                            [Shipments in 2019-2048]
----------------------------------------------------------------------------------------------------------------
                                                                       Trial standard level
                     Savings                     ---------------------------------------------------------------
                                                         1               2               3               4
----------------------------------------------------------------------------------------------------------------
Primary Energy Savings (quads)..................            0.07            0.29            0.30            0.79
FFC Energy Savings (quads)......................            0.07            0.30            0.31            0.82
----------------------------------------------------------------------------------------------------------------

    OMB Circular A-4 \69\ requires agencies to present analytical 
results, including separate schedules of the monetized benefits and 
costs that show the type and timing of benefits and costs. Circular A-4 
also directs agencies to consider the variability of key elements 
underlying the estimates of benefits and costs. For this rulemaking, 
DOE undertook a sensitivity analysis using 9, rather than 30, years of 
product shipments. The choice of a 9-year period is a proxy for the 
timeline in EPCA for the review of certain energy conservation 
standards and potential revision of, and compliance with, such revised 
standards.\70\ The review

[[Page 38380]]

timeframe established in EPCA is generally not synchronized with the 
product lifetime, product manufacturing cycles, or other factors 
specific to dehumidifiers. Thus, such results are presented for 
informational purposes only and are not indicative of any change in 
DOE's analytical methodology. The NES sensitivity analysis results 
based on a 9-year analytical period are presented in Table V.23. The 
impacts are counted over the lifetime of dehumidifiers purchased in 
2019-2027.
---------------------------------------------------------------------------

    \69\ U.S. Office of Management and Budget, ``Circular A-4: 
Regulatory Analysis'' (Sept. 17, 2003) (Available at: http://www.whitehouse.gov/omb/circulars_a004_a-4/).
    \70\ Under 42 U.S.C. 6295(m)(1), no later than 6 years after DOE 
issues a final rule establishing or amending an energy conservation 
standard, DOE must publish a notice of determination that standards 
for the product do not need to be amended or a NOPR that includes 
new proposed standards. The 9-year analytical period includes this 
6-year period and an additional 3 years to issue the final rule and 
allow time for industry compliance.

         Table V.23--Dehumidifiers: Cumulative National Energy Savings for Products Shipped in 2019-2027
----------------------------------------------------------------------------------------------------------------
                                                                       Trial standard level
                     Savings                     ---------------------------------------------------------------
                                                         1               2               3               4
----------------------------------------------------------------------------------------------------------------
Primary Energy Savings (quads)..................            0.02            0.09            0.10            0.23
FFC Energy Savings (quads)......................            0.02            0.10            0.10            0.25
----------------------------------------------------------------------------------------------------------------

b. Net Present Value of Consumer Costs and Benefits
    DOE estimated the cumulative NPV of the total costs and savings for 
consumers that would result from the standard levels considered for 
dehumidifiers. In accordance with the OMB's guidelines on regulatory 
analysis,\71\ DOE calculated NPV using both a 7-percent and a 3-percent 
real discount rate.
---------------------------------------------------------------------------

    \71\ U.S. Office of Management and Budget, ``Circular A-4: 
Regulatory Analysis,'' Section E, (September 17, 2003) (Available 
at: http://www.whitehouse.gov/omb/circulars_a004_a-4/).
---------------------------------------------------------------------------

    Table V.24 shows the consumer NPV results for each TSL DOE 
considered for dehumidifiers. The impacts are counted over the lifetime 
of products purchased in 2019-2048.

 Table V.24--Dehumidifiers: Cumulative Net Present Value of Consumer Benefits for Products Shipped in 2019-2048
----------------------------------------------------------------------------------------------------------------
                                                               Trial standard level (Billion 2014$)
                  Discount rate                  ---------------------------------------------------------------
                                                         1               2               3               4
----------------------------------------------------------------------------------------------------------------
3 percent.......................................            0.61            2.71            2.77            6.74
7 percent.......................................            0.28            1.28            1.30            3.04
----------------------------------------------------------------------------------------------------------------

    The NPV results based on the aforementioned 9-year analytical 
period are presented in Table V.25. The impacts are counted over the 
lifetime of products purchased in 2019-2027. As mentioned previously, 
such results are presented for informational purposes only and are not 
indicative of any change in DOE's analytical methodology or decision 
criteria.

 Table V.25--Dehumidifiers: Cumulative Net Present Value of Consumer Benefits for Products Shipped in 2019-2027
----------------------------------------------------------------------------------------------------------------
                                                               Trial standard level (Billion 2014$)
                  Discount rate                  ---------------------------------------------------------------
                                                         1               2               3               4
----------------------------------------------------------------------------------------------------------------
3 percent.......................................            0.22            1.05            1.07            2.41
7 percent.......................................            0.14            0.65            0.66            1.47
----------------------------------------------------------------------------------------------------------------

    The above results reflect the use of a default trend to estimate 
the change in price for dehumidifiers over the analysis period (see 
section IV.F.1 of this document). DOE also conducted a sensitivity 
analysis that considered one scenario with a lower rate of price 
decline than the reference case and one scenario with a higher rate of 
price decline than the reference case. The results of these alternative 
cases are presented in appendix 10C of the final rule TSD. In the high 
price decline case, the NPV of consumer benefits is higher than in the 
default case. In the low price decline case, the NPV of consumer 
benefits is lower than in the default case.
c. Indirect Impacts on Employment
    DOE expects energy conservation standards for dehumidifiers to 
reduce energy bills for consumers of those products, with the resulting 
net savings being redirected to other forms of economic activity. These 
expected shifts in spending and economic activity could affect the 
demand for labor. As described in section IV.N of this document, DOE 
used an input/output model of the U.S. economy to estimate indirect 
employment impacts of the TSLs that DOE considered in this rulemaking. 
DOE understands that there are uncertainties involved in projecting 
employment impacts, especially changes in the later years of the 
analysis. Therefore, DOE generated results for near-term timeframes 
(2019-2048), where these uncertainties are reduced.

[[Page 38381]]

    The results suggest that the adopted standards are likely to have a 
negligible impact on the net demand for labor in the economy. The net 
change in jobs is so small that it would be imperceptible in national 
labor statistics and might be offset by other, unanticipated effects on 
employment. Chapter 16 of the final rule TSD presents detailed results 
regarding anticipated indirect employment impacts.
4. Impact on Utility or Performance of Products
    Based on testing conducted in support of this rule, discussed in 
section IV.C of this document, DOE has concluded that the standards 
adopted in this final rule would not reduce the utility or performance 
of the dehumidifiers under consideration in this rulemaking. 
Manufacturers of these products currently offer units that meet or 
exceed the adopted standards.
5. Impact of Any Lessening of Competition
    As discussed in section e, the Attorney General of the United 
States (Attorney General) determines the impact, if any, of any 
lessening of competition likely to result from a proposed standard and 
to transmit such determination in writing to the Secretary within 60 
days of the publication of a proposed rule, together with an analysis 
of the nature and extent of the impact. To assist the Attorney General 
in making such determination, DOE provided the Department of Justice 
(DOJ) with copies of the NOPR and the TSD for review. In its assessment 
letter responding to DOE, DOJ concluded that the proposed energy 
conservation standards for dehumidifiers are unlikely to have a 
significant adverse impact on competition. DOE is publishing the 
Attorney General's assessment at the end of this final rule.
6. Need of the Nation To Conserve Energy
    Enhanced energy efficiency, where economically justified, improves 
the nation's energy security, strengthens the economy, and reduces the 
environmental impacts (costs) of energy production. Reduced electricity 
demand due to energy conservation standards is also likely to reduce 
the cost of maintaining the reliability of the electricity system, 
particularly during peak-load periods. As a measure of this reduced 
demand, chapter 15 in the final rule TSD presents the estimated 
reduction in generating capacity, relative to the no-new-standards 
case, for the TSLs that DOE considered in this rulemaking.
    Energy conservation resulting from amended standards for 
dehumidifiers is expected to yield environmental benefits in the form 
of reduced emissions of air pollutants and greenhouse gases. Table V.26 
provides DOE's estimate of cumulative emissions reductions expected to 
result from the TSLs considered in this rulemaking. The table includes 
both power sector emissions and upstream emissions. The emissions were 
calculated using the multipliers discussed in section IV.K. DOE reports 
annual emissions reductions for each TSL in chapter 13 of the final 
rule TSD.

                Table V.26--Cumulative Emissions Reduction for Dehumidifiers Shipped in 2019-2048
----------------------------------------------------------------------------------------------------------------
                                                                       Trial standard level
                                                 ---------------------------------------------------------------
                                                         1               2               3               4
----------------------------------------------------------------------------------------------------------------
                                             Power Sector Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......................             4.0            17.7            18.1            47.5
SO2 (thousand tons).............................             2.4            10.8            11.1            29.0
NOX (thousand tons).............................             4.4            19.3            19.7            52.0
Hg (tons).......................................            0.01            0.04            0.04            0.11
CH4 (thousand tons).............................             0.4             1.5             1.6             4.1
N2O (thousand tons).............................            0.05            0.22            0.22            0.59
----------------------------------------------------------------------------------------------------------------
                                               Upstream Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......................             0.2             1.0             1.0             2.6
SO2 (thousand tons).............................             0.0             0.2             0.2             0.5
NOX (thousand tons).............................             3.2            13.8            14.1            37.4
Hg (tons).......................................             0.0             0.0             0.0             0.0
CH4 (thousand tons).............................            17.4            76.4            78.1           206.6
N2O (thousand tons).............................            0.00            0.01            0.01            0.02
----------------------------------------------------------------------------------------------------------------
                                               Total FFC Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......................             4.2            18.6            19.0            50.1
SO2 (thousand tons).............................             2.5            11.0            11.3            29.5
NOX (thousand tons).............................             7.5            33.1            33.9            89.4
Hg (tons).......................................            0.01            0.04            0.04            0.11
CH4 (thousand tons).............................            17.8            77.9            79.7           210.7
CH4 (thousand tons CO2eq) *.....................             498           2,182           2,231           5,900
N2O (thousand tons).............................            0.05            0.23            0.23            0.61
N2O (thousand tons CO2eq) *.....................            13.7            60.5            61.8           162.2
----------------------------------------------------------------------------------------------------------------
* CO2eq is the quantity of CO2 that would have the same global warming potential (GWP).

    As part of the analysis for this rule, DOE estimated monetary 
benefits likely to result from the reduced emissions of CO2 
and NOX that DOE estimated for each of the considered TSLs 
for dehumidifiers. As discussed in section IV.K of this document, for 
CO2, DOE used the most recent values for the SCC developed 
by an interagency process. The four sets of SCC values for 
CO2 emissions reductions in 2015 resulting from that process 
(expressed in 2014$) are represented by $12.2/metric ton (the average 
value from a distribution that uses a 5-percent discount rate), $40.0/

[[Page 38382]]

metric ton (the average value from a distribution that uses a 3-percent 
discount rate), $62.3/metric ton (the average value from a distribution 
that uses a 2.5-percent discount rate), and $117/metric ton (the 95th-
percentile value from a distribution that uses a 3-percent discount 
rate). The values for later years are higher due to increasing damages 
(public health, economic and environmental) as the projected magnitude 
of climate change increases.
    Table V.27 presents the global value of CO2 emissions 
reductions at each TSL. For each of the four cases, DOE calculated a 
present value of the stream of annual values using the same discount 
rate as was used in the studies upon which the dollar-per-ton values 
are based. DOE calculated domestic values as a range from 7 percent to 
23 percent of the global values; these results are presented in chapter 
14 of the final rule TSD.

   Table V.27--Estimates of Global Present Value of CO2 Emissions Reduction for Products Shipped in 2019-2048
----------------------------------------------------------------------------------------------------------------
                                                                    SCC case * (million 2014$)
                                                 ---------------------------------------------------------------
                       TSL                                                                          3% discount
                                                    5% discount     3% discount    2.5% discount    rate, 95th
                                                   rate, average   rate, average   rate, average    percentile
----------------------------------------------------------------------------------------------------------------
                                             Power Sector Emissions
----------------------------------------------------------------------------------------------------------------
1...............................................            29.2           131.0           207.2           398.6
2...............................................           129.7           580.0           916.2           1,763
3...............................................           132.6           592.9           936.6           1,802
4...............................................           343.9           1,547           2,447           4,705
----------------------------------------------------------------------------------------------------------------
                                               Upstream Emissions
----------------------------------------------------------------------------------------------------------------
1...............................................             1.6             7.1            11.3            21.7
2...............................................             7.0            31.4            49.7            95.6
3...............................................             7.1            32.1            50.8            97.7
4...............................................            18.5            84.2           133.4           256.3
----------------------------------------------------------------------------------------------------------------
                                               Total FFC Emissions
----------------------------------------------------------------------------------------------------------------
1...............................................            30.8           138.2           218.5           420.3
2...............................................           136.7           611.4           965.9           1,859
3...............................................           139.7           625.0           987.4           1,900
4...............................................           362.4           1,631           2,580           4,961
----------------------------------------------------------------------------------------------------------------
* For each of the four cases, the corresponding SCC value for emissions in 2015 is $12.2, $40.0, $62.3, and $117
  per metric ton (2014$). The values are for CO2 only (i.e., not CO2eq of other greenhouse gases).

    DOE is well aware that scientific and economic knowledge about the 
contribution of CO2 and other GHG emissions to changes in 
the future global climate and the potential resulting damages to the 
world economy continues to evolve rapidly. Thus, any value placed on 
reduced CO2 emissions in this rulemaking is subject to 
change. DOE, together with other Federal agencies, will continue to 
review various methodologies for estimating the monetary value of 
reductions in CO2 and other GHG emissions. This ongoing 
review will consider the comments on this subject that are part of the 
public record for this and other rulemakings, as well as other 
methodological assumptions and issues. However, consistent with DOE's 
legal obligations, and taking into account the uncertainty involved 
with this particular issue, DOE has included in this rule the most 
recent values and analyses resulting from the interagency review 
process.
    DOE also estimated the cumulative monetary value of the economic 
benefits associated with NOX emissions reductions 
anticipated to result from the considered TSLs for dehumidifiers. The 
dollar-per-ton values that DOE used are discussed in section IV.L of 
this document. Table V.28 presents the cumulative present value for 
NOX emissions for each TSL calculated using 7-percent and 3-
percent discount rates. This table presents values that use the low 
dollar-per-ton values, which reflect DOE's primary estimate. Results 
that reflect the range of NOX dollar-per-ton values are 
presented in Table V.29.

  Table V.28--Estimates of Present Value of NOX Emissions Reduction for
                  Dehumidifiers Shipped in 2019-2048 *
------------------------------------------------------------------------
                                                   Million 2014$
                                         -------------------------------
                   TSL                      3% discount     7% discount
                                               rate            rate
------------------------------------------------------------------------
                         Power Sector Emissions
------------------------------------------------------------------------
1.......................................             8.7             3.9
2.......................................            38.9            17.6
3.......................................            39.7            18.0
4.......................................           102.9            45.7
------------------------------------------------------------------------
                           Upstream Emissions
------------------------------------------------------------------------
1.......................................             6.2             2.7
2.......................................            27.7            12.2
3.......................................            28.3            12.5
4.......................................            73.6            31.8
------------------------------------------------------------------------
                           Total FFC Emissions
------------------------------------------------------------------------
1.......................................            15.0             6.6
2.......................................            66.6            29.8
3.......................................            68.0            30.4
4.......................................           176.5            77.4
------------------------------------------------------------------------
* Results are based on the low benefit-per-ton values.

7. Other Factors
    The Secretary of Energy, in determining whether a standard is 
economically justified, may consider

[[Page 38383]]

any other factors that the Secretary deems to be relevant. (42 U.S.C. 
6295(o)(2)(B)(i)(VII)) No other factors were considered in this 
analysis.
8. Summary of National Economic Impacts
    The NPV of the monetized benefits associated with emissions 
reductions can be viewed as a complement to the NPV of the consumer 
savings calculated for each TSL considered in this rulemaking. Table 
V.29 presents the NPV values that result from adding the estimates of 
the potential economic benefits resulting from reduced CO2 
and NOX emissions in each of four valuation scenarios to the 
NPV of consumer savings calculated for each TSL considered in this 
rulemaking, at both a 7-percent and 3-percent discount rate. The 
CO2 values used in the columns of each table correspond to 
the four sets of SCC values discussed above.

Table V.29--Net Present Value of Consumer Savings Combined With Present Value of Monetized Benefits From CO2 and
                                            NOX Emissions Reductions
----------------------------------------------------------------------------------------------------------------
                                             Consumer NPV at 3% discount rate added with: (Billion 2014$)
                                     ---------------------------------------------------------------------------
                 TSL                   SCC case  $12.2/   SCC case  $40.0/   SCC case  $62.3/   SCC case  $117/
                                       metric ton  and    metric ton  and    metric ton  and    metric ton  and
                                      3% low  NOX value  3% low  NOX value  3% low  NOX value  3% low  NOX value
----------------------------------------------------------------------------------------------------------------
1...................................                0.7                0.8                0.8                1.0
2...................................                2.9                3.4                3.7                4.6
3...................................                3.0                3.5                3.8                4.7
4...................................                7.3                8.5                9.5               11.9
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                             Consumer NPV at 7% discount rate added with: (billion 2014$)
                                     ---------------------------------------------------------------------------
                 TSL                   SCC Case $12.2/    SCC Case $40.0/    SCC Case $62.3/     SCC Case $117/
                                      metric ton and 7%  metric ton and 7%  metric ton and 7%  metric ton and 7%
                                        low NOX value      low NOX value      low NOX value      low NOX value
----------------------------------------------------------------------------------------------------------------
1...................................                0.3                0.4                0.5                0.7
2...................................                1.4                1.9                2.3                3.2
3...................................                1.5                2.0                2.3                3.2
4...................................                3.5                4.7                5.7                8.1
----------------------------------------------------------------------------------------------------------------
Note: The SCC case values represent the global SCC in 2015, in 2014$, for each case.

    In considering the above results, two issues are relevant. First, 
the national operating cost savings are domestic U.S. monetary savings 
that occur as a result of market transactions, while the value of 
CO2 reductions is based on a global value. Second, the 
assessments of operating cost savings and the SCC are performed with 
different methods that use different time frames for analysis. The 
national operating cost savings is measured for the lifetime of 
products shipped in 2019 to 2048. Because CO2 emissions have 
a very long residence time in the atmosphere,\72\ the SCC values in 
future years reflect future climate-related impacts that continue 
beyond 2100.
---------------------------------------------------------------------------

    \72\ The atmospheric lifetime of CO2 is estimated of 
the order of 30-95 years. Jacobson, MZ, ``Correction to `Control of 
fossil-fuel particulate black carbon and organic matter, possibly 
the most effective method of slowing global warming,' '' J. Geophys. 
Res. 110. pp. D14105 (2005).
---------------------------------------------------------------------------

C. Conclusion

    When considering standards, the new or amended energy conservation 
standards that DOE adopts for any type (or class) of covered product 
must be designed to achieve the maximum improvement in energy 
efficiency that the Secretary determines is technologically feasible 
and economically justified. (42 U.S.C. 6295(o)(2)(A)) In determining 
whether a standard is economically justified, the Secretary must 
determine whether the benefits of the standard exceed its burdens by, 
to the greatest extent practicable, considering the seven statutory 
factors discussed previously. (42 U.S.C. 6295(o)(2)(B)(i)). The new or 
amended standard must also result in significant conservation of 
energy. (42 U.S.C. 6295(o)(3)(B))
    In the June 2015 NOPR, DOE proposed energy conservation standards 
for dehumidifiers at TSL 3, as constructed for that analysis. The 
minimum IEFs corresponding to TSL 3 from the June 2015 NOPR are shown 
in Table V.30. 80 FR 31645, 31696 (June 3, 2015).

   Table V.30--NOPR Proposed Amended Energy Conservation Standards for
                              Dehumidifiers
------------------------------------------------------------------------
                                                              Minimum
                                                            integrated
   Portable dehumidifier product capacity (pints/day)      energy factor
                                                              (L/kWh)
------------------------------------------------------------------------
30.00 or less...........................................            1.30
30.01-45.00.............................................            1.60
45.01 or more...........................................            2.80
------------------------------------------------------------------------
Whole-home dehumidifier
product case volume
                              (cubic feet)
------------------------------------------------------------------------
8.0 or less.............................................            2.09
More than 8.0...........................................            3.52
------------------------------------------------------------------------

    Aprilaire encouraged DOE to analyze portable dehumidifiers and 
whole-home dehumidifiers as separate markets with separate regulations 
and test procedures and to suspend proposed regulations on the whole-
home dehumidifier market. Aprilaire suggested that in lieu of proposing 
whole-home dehumidifier standards, that DOE use the Build America 
program to better understand the market and applications. (Aprilaire, 
No. 34 at pp. 1, 3) Further, Aprilaire commented that because whole-
home

[[Page 38384]]

dehumidifiers are a subsystem of energy control in the home, regulating 
that market may have a detrimental effect on the overall goal of 
reducing energy use in the home. (Aprilaire, Public Meeting Transcript, 
No. 35 at pp. 94-95) In this final rule, DOE considered multiple TSLs 
representing both energy conservation standards at the baseline 
efficiency level and higher efficiency levels for whole-home 
dehumidifiers. Section V.C.1 of this document describes how DOE 
selected the energy conservation standards established in this final 
rule.
    Therma-Stor recommended a single minimum efficiency level be 
established for all portable dehumidifiers and a single minimum 
efficiency level be established for whole-home dehumidifiers based upon 
the test procedure in appendix X1. (Therma-Stor, No. 38 at pp. 2-3) As 
discussed in section IV.A.1 of this document, DOE separated both 
portable dehumidifiers and whole-home dehumidifiers into multiple 
product classes to ensure that consumer utility is maintained under any 
amended energy conservation standards. Section IV.C.1 of this final 
rule explains the efficiency levels DOE analyzed for each of the 
product classes. In that discussion, DOE explains how different IEF 
values define each efficiency level for the different product classes. 
In constructing TSLs for this final rule, DOE selected efficiency 
levels for each individual product class. Accordingly, DOE considered 
different minimum efficiency levels for the individual product classes 
in each TSL.
    Therma-Stor commented that only two of its seven whole-home 
dehumidifier models exceed the proposed minimum efficiency level from 
the June 2015 NOPR. Therma-Stor cautioned that the proposed regulation 
would reduce the number of efficient high-capacity portable 
dehumidifier and whole-home dehumidifier choices available to consumers 
who would instead purchase one, or multiple, inefficient low-capacity 
portable dehumidifiers. (Therma-Stor, No. 38 at pp. 2-3) In this final 
rule analysis, DOE updated its estimates of manufacturer impacts at the 
different analyzed efficiency levels. (See section IV.J of this 
document.) DOE considered these impacts for each TSL when determining 
appropriate standards for dehumidifiers. Section V.C.1 of this document 
details the benefits and burdens of each TSL considered in this final 
rule.
    Therma-Stor stated that the test procedure for whole-home 
dehumidifiers in appendix X1 specifies an external static pressure 
which increases the necessary fan power beyond that specified for 
portable dehumidifiers. Therefore, Therma-Stor expressed concern that, 
although there are no whole-home dehumidifiers currently in the market 
that are more efficient than a similar-capacity portable dehumidifier, 
the proposed efficiency level for ``large'' whole-home dehumidifiers is 
26 percent higher than the level proposed for high-capacity portable 
dehumidifiers. (Therma-Stor, No. 38 at pp. 2-3) Although whole-home 
dehumidifiers are tested with a ducted setup that imposes an external 
static pressure on the unit, which increases power consumption, the 
higher ambient test temperature increases overall dehumidification 
capacity compared to a portable dehumidifier. As a result, a whole-home 
dehumidifier would typically have a higher rated IEF than a portable 
dehumidifier with similar components.
    ASAP and the Joint Commenters supported the proposed levels for 
high-capacity portable dehumidifiers and whole-home dehumidifiers, 
while they urged DOE to consider adopting TSL 4 in the final rule for 
the two portable dehumidifier product classes with capacities less than 
or equal to 45 pints/day. (ASAP, Public Meeting Transcript, No. 35 at 
pp. 9-10; Joint Commenters, No. 40 at pp. 1-4) The Joint Commenters 
stated that multiple market and policy changes will likely increase the 
demand for high-efficiency compressors for room air conditioners, which 
would increase the availability of high-efficiency compressors for 
dehumidifiers. The Joint Commenters commented that impacts on 
manufacturers would be substantially reduced by maintaining the 
proposed TSL 3 for high-capacity portable dehumidifiers and whole-home 
dehumidifiers while adopting the proposed TSL 4 for portable 
dehumidifiers with capacities <=45 pints/day. They stated that adopting 
the proposed TSL 3 for high-capacity portable dehumidifiers and whole-
home dehumidifiers would limit impacts on small domestic manufacturers 
and eliminate DOE's concern regarding the availability of high-
efficiency compressors for high-capacity portable dehumidifiers and 
whole-home dehumidifiers. (Joint Commenters, No. 40 at pp. 1, 3-4)
    AHAM disagreed with adopting the proposed TSL 4 instead of the 
proposed TSL 3 for portable dehumidifiers less than 45 pints per day. 
AHAM noted that TSL 4 is the max-tech level for which no units are 
currently on the market, and stated that selecting TSL 4 may contribute 
to the potential unavailability of products at certain capacities 
across that product class. To meet TSL 4, AHAM suggested that 
manufacturers would have to incorporate the highest efficiency 
compressors, but few are available; therefore, several dehumidifier 
platforms could be unable to meet the max-tech IEF. (AHAM, No. 39 at p. 
6)
    DOE reviewed the comments submitted by ASAP, the Joint Commenters, 
and AHAM that directly addressed the proposed standards and TSLs 
analyzed in the June 2015 NOPR. In this final rule, DOE reassessed the 
benefits and burdens of the TSLs, including newly constructed TSLs for 
this final rule analysis, while considering all comments received, as 
detailed below.
    For this final rule, DOE considered the impacts of amended 
standards for dehumidifiers at each TSL, beginning with the maximum 
technologically feasible level, to determine whether that level was 
economically justified. Where the max-tech level was not justified, DOE 
then considered the next most efficient level and undertook the same 
evaluation until it reached the highest efficiency level that is both 
technologically feasible and economically justified and saves a 
significant amount of energy.
    To aid the reader as DOE discusses the benefits and/or burdens of 
each TSL, tables in this section present a summary of the results of 
DOE's quantitative analysis for each TSL. In addition to the 
quantitative results presented in the tables, DOE also considers other 
burdens and benefits that affect economic justification. These include 
the impacts on identifiable subgroups of consumers who may be 
disproportionately affected by a national standard and impacts on 
employment.
    DOE also notes that the economics literature provides a wide-
ranging discussion of how consumers trade off upfront costs and energy 
savings in the absence of government intervention. Much of this 
literature attempts to explain why consumers appear to undervalue 
energy efficiency improvements. There is evidence that consumers 
undervalue future energy savings as a result of: (1) A lack of 
information; (2) a lack of sufficient salience of the long-term or 
aggregate benefits; (3) a lack of sufficient savings to warrant 
delaying or altering purchases; (4) excessive focus on the short term, 
in the form of inconsistent weighting of future energy cost savings 
relative to available returns on other investments; (5) computational 
or other difficulties associated with the evaluation of relevant 
tradeoffs; and (6) a divergence in incentives (for example,

[[Page 38385]]

between renters and owners, or builders and purchasers). Having less 
than perfect foresight and a high degree of uncertainty about the 
future, consumers may trade off these types of investments at a higher 
than expected rate between current consumption and uncertain future 
energy cost savings.
    In DOE's current regulatory analysis, potential changes in the 
benefits and costs of a regulation due to changes in consumer purchase 
decisions are included in two ways. First, if consumers forego the 
purchase of a product in the standards case, this decreases sales for 
product manufacturers, and the impact on manufacturers attributed to 
lost revenue is included in the MIA. Second, DOE accounts for energy 
savings attributable only to products actually used by consumers in the 
standards case; if a regulatory option decreases the number of products 
purchased by consumers, this decreases the potential energy savings 
from an energy conservation standard. DOE provides estimates of 
shipments and changes in the volume of product purchases in chapter 9 
of the final rule TSD. However, DOE's current analysis does not 
explicitly control for heterogeneity in consumer preferences, 
preferences across subcategories of products or specific features, or 
consumer price sensitivity variation according to household income.\73\
---------------------------------------------------------------------------

    \73\ P.C. Reiss and M.W. White, Household Electricity Demand, 
Revisited, Review of Economic Studies (2005) 72, 853-883.
---------------------------------------------------------------------------

    While DOE is not prepared at present to provide a fuller 
quantifiable framework for estimating the benefits and costs of changes 
in consumer purchase decisions due to an energy conservation standard, 
DOE is committed to developing a framework that can support empirical 
quantitative tools for improved assessment of the consumer welfare 
impacts of appliance standards. DOE has posted a paper that discusses 
the issue of consumer welfare impacts of appliance energy conservation 
standards, and potential enhancements to the methodology by which these 
impacts are defined and estimated in the regulatory process.\74\ DOE 
welcomes comments on how to more fully assess the potential impact of 
energy conservation standards on consumer choice and how to quantify 
this impact in its regulatory analysis in future rulemakings.
---------------------------------------------------------------------------

    \74\ Alan Sanstad, Notes on the Economics of Household Energy 
Consumption and Technology Choice. Lawrence Berkeley National 
Laboratory (2010) (Available online at: http://www1.eere.energy.gov/buildings/appliance_standards/pdfs/consumer_ee_theory.pdf).
---------------------------------------------------------------------------

1. Benefits and Burdens of TSLs Considered for Dehumidifier Standards
    Table V.31 and Table V.32 summarize the quantitative impacts 
estimated for each TSL for dehumidifiers. The efficiency levels 
contained in each TSL are described in section V.A of this document.

                                            Table V.31--Dehumidifier Trial Standard Levels: National Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
            Category                         TSL 1                          TSL 2                         TSL 3                         TSL 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          Cumulative FFC Energy Savings (quads)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                 0.07.........................  0.30........................  0.31........................  0.82.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                        NPV of Customer Benefits (2014$ billion)
--------------------------------------------------------------------------------------------------------------------------------------------------------
3% discount rate...............  0.61.........................  2.71........................  2.77........................  6.74.
7% discount rate...............  0.28.........................  1.28........................  1.30........................  3.04.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                           Cumulative FFC Emissions Reduction
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)......  4.2..........................  18.6........................  19.0........................  50.1.
NOX (thousand tons)............  7.5..........................  33.1........................  33.9........................  89.4.
Hg (tons)......................  0.01.........................  0.04........................  0.04........................  0.11.
N2O (thousand tons)............  0.05.........................  0.23........................  0.23........................  0.61.
N2O (thousand tons CO2eq *)....  13.7.........................  60.5........................  61.8........................  162.2.
CH4 (thousand tons)............  17.8.........................  77.9........................  79.7........................  210.7.
CH4 (thousand tons CO2eq *)....  498..........................  2,182.......................  2,231.......................  5,900.
SO2 (thousand tons)............  2.5..........................  11.0........................  11.3........................  29.5.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Value of Emissions Reduction
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (2014$ million) **.........  31 to 420....................  137 to 1,859................  140 to 1,900................  362 to 4,961.
NOX--3% discount rate (2014$     15.0 to 34.2.................  66.6 to 151.8...............  68.0 to 155.1...............  176.5 to 402.3.
 million).
NOX--7% discount rate (2014$     6.6 to 14.9..................  29.8 to 67.1................  30.4 to 68.6................  77.4 to 174.6.
 million).
--------------------------------------------------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values.
* CO2eq is the quantity of CO2 that would have the same GWP.
** Range of the economic value of CO2 reductions is based on estimates of the global benefit of reduced CO2 emissions.


                                    Table V.32--Dehumidifier Trial Standard Levels: Manufacturer and Consumer Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
            Category                         TSL 1                          TSL 2                         TSL 3                         TSL 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  Manufacturer Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
Industry NPV (2014$ millions)    175.8 to 176.5...............  142.0 to 145.5..............  137.1 to 140.7..............  106.8 to 126.9.
 (No-New-Standards INPV =
 179.5).
Industry NPV (% change)........  (2.0%) to (1.7%).............  (20.9%) to (18.9%)..........  (23.6%) to (21.6%)..........  (40.5%) to (29.3%).
--------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 38386]]

 
                                                          Consumer Average LCC Savings (2014$)
--------------------------------------------------------------------------------------------------------------------------------------------------------
PC1 (<=25.00 pints/day)........  60...........................  107.........................  107.........................  110.
PC2 (25.01-50.00 pints/day)....  157..........................  119.........................  119.........................  191.
PC3 (>50.00 pints/day).........  17...........................  142.........................  142.........................  96.
PC4 (<=8.0 ft \3\).............  .............................  ............................  242.........................  242.
PC5 (>8.0 ft \3\)..............  .............................  ............................  479.........................  386.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Consumer Simple PBP (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
PC1 (<=25.00 pints/day)........  0.4..........................  0.5.........................  0.5.........................  1.3.
PC2 (25.01-50.00 pints/day)....  0.2..........................  0.4.........................  0.4.........................  0.9.
PC3 (>50.00 pints/day).........  8.2..........................  4.5.........................  4.5.........................  7.2.
PC4 (<=8.0 ft \3\).............  .............................  ............................  1.9.........................  6.8.
PC5 (>8.0 ft \3\)..............  .............................  ............................  2.0.........................  5.8.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                         % of Consumers That Experience Net Cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
PC1 (<=25.00 pints/day)........  0............................  0.1.........................  0.1.........................  11.5.
PC2 (25.01-50.00 pints/day)....  0............................  0.7.........................  0.7.........................  5.1.
PC3 (>50.00 pints/day).........  44.9.........................  28.7........................  28.7........................  54.3.
PC4 (<=8.0 ft \3\).............  .............................  ............................  9.9.........................  42.6.
PC5 (>8.0 ft \3\)..............  .............................  ............................  10.8........................  43.4.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values.

    DOE first considered TSL 4, which represents the max-tech 
efficiency levels. TSL 4 would save 0.82 quads of energy, an amount DOE 
considers significant. Under TSL 4, the NPV of consumer benefit would 
be $3.04 billion using a discount rate of 7 percent, and $6.74 billion 
using a discount rate of 3 percent.
    The cumulative emissions reductions at TSL 4 are 50.1 Mt of 
CO2, 89.4 thousand tons of NOX, 29.5 thousand 
tons of SO2, 0.11 ton of Hg, 0.61 thousand tons of 
N2O, and 210.7 thousand tons of CH4. The 
estimated monetary value of the CO2 emissions reductions at 
TSL 4 ranges from $362 million to $4,961 million.
    At TSL 4, the average LCC impact is a savings of $110 for PC1, $191 
for PC2, $96 for PC3, $242 for PC4, and $386 for PC5. The simple PBP is 
1.3 years for PC1, 0.9 years for PC2, 7.2 years for PC3, 6.8 years for 
PC4, and 5.8 years for PC5. The fraction of consumers experiencing a 
net LCC cost is 11.5 percent for PC1, 5.1 percent for PC2, 54.3 percent 
for PC3, 42.6 percent for PC4, and 43.4 percent for PC5.
    At TSL 4, the projected change in INPV ranges from a decrease of 
$72.7 million to a decrease of $52.6 million. If the high end of the 
range of impacts is reached, TSL 4 could result in a net loss of up to 
40.5 percent in INPV for manufacturers. Products that meet the 
efficiency standards specified by this TSL are estimated to represent 
less than 2 percent of current annual shipments. As such, manufacturers 
would have to redesign nearly all products by the expected 2019 
projected compliance date to meet demand. Redesigning all units to meet 
the current max-tech efficiency levels would require considerable 
capital and product conversion expenditures. At TSL 4, the capital 
conversion costs total as much as $39.1 million, 3.8 times the industry 
annual ordinary capital expenditure in 2018 (the year leading up to 
amended standards). DOE estimates that complete platform redesigns 
would cost the industry $55.2 million in product conversion costs. 
These conversion costs largely relate to the extensive research 
programs required to develop new products that meet the efficiency 
standards at TSL 4. These costs are equivalent to 10.9 times the 
industry annual budget for research and development. As such, the 
conversion costs associated with the changes in products and 
manufacturing facilities required at TSL 4 would require significant 
use of manufacturers' financial reserves (manufacturer capital pools), 
impacting other areas of business that compete for these resources and 
significantly reducing INPV. In addition, manufacturers could face a 
substantial impact on profitability at TSL 4. Because manufacturers are 
more likely to reduce their margins to maintain a price-competitive 
product at higher TSLs, especially in the lower-capacity portable 
dehumidifier segment, DOE expects that TSL 4 would yield impacts closer 
to the high end of the range of INPV impacts. If the high end of the 
range of impacts is reached, as DOE expects, TSL 4 could result in a 
net loss to manufacturers of 40.5 percent of INPV. Additionally, TSL 4 
could result in a net loss to whole-home dehumidifier manufacturers of 
174.7 percent of INPV, or cause some domestic manufacturers to exit the 
whole-home dehumidifier market altogether.
    Beyond the direct financial impact on manufacturers, TSL 4 may also 
contribute to the potential unavailability of products at certain 
capacities across the five product classes. To meet TSL 4, all products 
would be required to incorporate the highest efficiency compressors; 
however, manufacturers indicated that few such compressors are 
available in the range of compressor capacities suitable for 
dehumidifiers, and it is unlikely that substantially more would become 
available if standards at TSL 4 were adopted. In addition, the specific 
compressor capacities available at any given time are driven largely by 
the markets for other products with higher shipments (e.g., room air 
conditioners), and thus dehumidifier manufacturers may be constrained 
in their design choices. Because DOE assumed manufacturers would 
optimize all components at TSL 4, including the use of high-efficiency 
compressors as well as larger heat exchangers and permanent-magnet 
blower motors, DOE expects that those dehumidifier platforms for which 
a suitable high efficiency compressor is not available would be unable 
to meet the max-tech efficiency levels associated with TSL 4. While 
this would likely not eliminate entire product classes from the market,

[[Page 38387]]

it has the potential to eliminate dehumidifiers of certain capacities 
within a given product class. The potential for this impact on 
manufacturers of high-capacity portable dehumidifiers and whole-home 
dehumidifiers is exacerbated by this segment's low production volumes, 
which limits manufacturers' ability to influence the availability of 
higher efficiency components from their vendors.
    Therefore, the Secretary concludes that at TSL 4 for dehumidifiers, 
the benefits of energy savings, positive NPV of consumer benefits, 
emission reductions, and the estimated monetary value of the 
CO2 emissions reductions would be outweighed by the economic 
burden on some consumers, the potential impact on product availability, 
and the impacts on manufacturers, including significantly negative 
impacts on small domestic manufacturers of high-capacity portable and 
whole-home dehumidifiers. Consequently, the Secretary has concluded 
that TSL 4 is not economically justified.
    DOE then considered TSL 3, which would save an estimated 0.31 quads 
of energy, an amount DOE considers significant. Under TSL 3, the NPV of 
consumer benefit would be $1.30 billion using a discount rate of 7 
percent, and $2.77 billion using a discount rate of 3 percent.
    The cumulative emissions reductions at TSL 3 are 19.0 Mt of 
CO2, 33.9 thousand tons of NOX, 11.3 thousand 
tons of SO2, 0.04 tons of Hg, 0.23 thousand tons of 
N2O, and 79.7 thousand tons of CH4. The estimated 
monetary value of the CO2 emissions reductions at TSL 3 
ranges from $140 million to $1,900 million.
    At TSL 3, the average LCC impact is a savings of $107 for PC1, $119 
for PC2, $142 for PC3, $242 for PC4, and $479 for PC5. The simple PBP 
is 0.5 years for PC1, 0.4 and PC2, 4.5 years for PC3, 1.9 years for 
PC4, and 2.0 years for PC5. The fraction of consumers experiencing a 
net LCC cost is 0.1 percent for PC1, 0.7 percent for PC2, 28.7 percent 
for PC3, 9.9 percent for PC4, and 10.8 percent for PC5.
    At TSL 3, the projected change in INPV ranges from a decrease of 
$42.4 million to a decrease of $38.7 million. If the high end of the 
range of impacts is reached, TSL 3 could result in a net loss of up to 
23.6 percent in INPV for manufacturers, with high disproportionate 
impacts to small, domestic manufacturers of whole-home and high-
capacity portable dehumidifiers. The capital conversion costs required 
by whole-home dehumidifier manufacturers (which includes four small, 
domestic manufacturers and one larger foreign manufacturer) in order to 
comply with TSL 3 are estimated to be $1.8 million, 5.4 times the 
whole-home dehumidifier industry annual ordinary capital expenditure in 
2018 (the year leading up to amended standards). DOE estimates that 
complete platform redesigns would cost the industry $5.5 million in 
product conversion costs, equivalent to 32.7 times the whole-home 
dehumidifier industry annual budget for research and development. As a 
result, TSL 3 could result in a net loss to whole-home dehumidifier 
industry of 101.4 percent of INPV or cause some domestic manufacturers 
to exit the whole-home dehumidifier market altogether. Additionally, 
the manufacturers with the greatest share of the whole-home 
dehumidifier market are small and domestic and also produce high-
capacity portable dehumidifiers. Accordingly, these manufacturers will 
incur the added burden of compliance with EL 3 for their high-capacity 
portable dehumidifiers as well as with standards above the baseline for 
their whole-home dehumidifiers. In aggregate, as detailed in section 
VII.B of this document, at TSL 3, the typical small manufacturer may 
incur $2.3 million in capital and product conversion costs in order to 
maintain existing product lines for both portable and whole-home 
dehumidifiers. This equates to approximately 56.1 percent of the 
typical small manufacturer's annual revenue and 945.1 percent of its 
annual operating profit.
    Although some portable dehumidifiers may require higher efficiency 
compressors, the efficiency levels specified at TSL 3 offer 
manufacturers multiple design pathways to meet the standard. This in 
turn would allow manufacturers to maintain product offerings should a 
high efficiency compressor be unavailable at a given compressor 
capacity. In addition, a wide variety of units are already available 
that meet the efficiency levels for portable dehumidifiers specified at 
TSL 3.
    The Secretary concludes that at TSL 3 for dehumidifiers, the 
benefits of energy savings, positive NPV of consumer benefits, emission 
reductions, and the estimated monetary value of the CO2 
emissions reductions would be outweighed by the significantly negative 
impacts on small domestic manufacturers of high-capacity portable and 
whole-home dehumidifiers. Consequently, the Secretary has concluded 
that TSL 3 is not economically justified.
    DOE then considered TSL 2, which would save an estimated 0.30 quads 
of energy, an amount DOE considers significant. Under TSL 3, the NPV of 
consumer benefit would be $1.28 billion using a discount rate of 7 
percent, and $2.71 billion using a discount rate of 3 percent.
    The cumulative emissions reductions at TSL 2 are 18.6 Mt of 
CO2, 33.1 thousand tons of NOX, 11.0 thousand 
tons of SO2, 0.04 tons of Hg, 0.23 thousand tons of 
N2O, and 77.9 thousand tons of CH4. The estimated 
monetary value of the CO2 emissions reductions at TSL 3 
ranges from $137 million to $1,859 million.
    At TSL 2, the average LCC impact is a savings of $107 for PC1, $119 
for PC2, $142 for PC3, $0 for PC4, and $0 for PC5. The simple PBP is 
0.5 years for PC1, 0.4 and PC2, 4.5 years for PC3, and zero years for 
PC4 and PC5. The fraction of consumers experiencing a net LCC cost is 
0.1 percent for PC1, 0.7 percent for PC2, 28.7 percent for PC3, and 
zero percent for PC4 and PC5 because TSL 2 is set at the baseline 
efficiency level for PC4 and PC5.
    At TSL 2, the projected change in INPV ranges from a decrease of 
$37.5 million to a decrease of $34.0 million. If the high end of the 
range of impacts is reached, TSL 2 could result in a net loss of up to 
20.9 percent in INPV for manufacturers. In contrast to TSL 3 and TSL 4, 
TSL 2 would not result in disproportionate impacts to the whole-home 
dehumidifier industry because TSL 2 corresponds to the baseline 
efficiency level for the whole-home product classes. Products that meet 
the efficiency standards specified at this TSL level represent 39 
percent of shipments of all dehumidifiers in 2018 (the year leading up 
to amended standards). In order to bring the remaining products into 
compliance with TSL 2, the portable dehumidifier industry may incur 
capital and product conversion costs of $22.6 million and $29.9 
million, respectively. Although, at TSL 2, three out of the five small, 
domestic manufacturers will incur some costs associated with 
redesigning high-capacity portable products, only one of these five 
manufacturers limits its product offerings in the dehumidifier market 
to the high-capacity portable segment, with most of its products 
comprising commercial units that are not covered products under this 
rulemaking. The other two small, domestic manufacturers that produce 
high-capacity portable products also manufacture whole-home 
dehumidifiers, and thus their impacts at TSL 2 will be significantly 
lower than at TSL 3 and TSL 4. TSL 2 will result

[[Page 38388]]

in little to no adverse impacts for whole-home dehumidifier 
manufacturing, including the two small, domestic manufacturers that 
focus exclusively on these dehumidifiers. For these reasons, TSL 2 will 
minimize disproportionate impacts to small, domestic dehumidifier 
manufacturers relative to TSL 3 and TSL 4.
    Although some dehumidifiers may require higher efficiency 
compressors, the efficiency levels specified at TSL 2 offer 
manufacturers multiple design pathways to meet the standard. This 
allows manufacturers to maintain product offerings should a high 
efficiency compressor be unavailable at a given compressor capacity. In 
addition, units are already available that meet the efficiency levels 
specified at TSL 2.
    The Secretary concludes that at TSL 2 for dehumidifiers, the 
benefits of energy savings, positive NPV of consumer benefits, emission 
reductions, estimated monetary value of the CO2 emissions 
reductions, and positive average LCC savings would outweigh the 
negative impacts on some consumers and on manufacturers, including the 
conversion costs that could result in a reduction in INPV for 
manufacturers of portable dehumidifiers.
    After carefully considering the analysis and the benefits and 
burdens of TSL 2, the Secretary concludes that this TSL will offer the 
maximum improvement in energy efficiency that is technologically 
feasible and economically justified, and will result in significant 
conservation of energy without eliminating or making unavailable any 
product classes or portions of product classes. Therefore, DOE is 
establishing amended energy conservation standards for dehumidifiers at 
TSL 2, as indicated in Table V.33.

   Table V.33--Amended Energy Conservation Standards for Dehumidifiers
------------------------------------------------------------------------
                                                              Minimum
                                                            integrated
   Portable dehumidifier product capacity (pints/day)      energy factor
                                                              (L/kWh)
------------------------------------------------------------------------
25.00 or less...........................................            1.30
25.01-50.00.............................................            1.60
50.01 or more...........................................            2.80
------------------------------------------------------------------------
Whole-home dehumidifier                                   ..............
product case volume
(cubic feet)
------------------------------------------------------------------------
8.0 or less.............................................            1.77
More than 8.0...........................................            2.41
------------------------------------------------------------------------

2. Summary of Annualized Benefits and Costs of the Adopted Standards
    The benefits and costs of the proposed standards can also be 
expressed in terms of annualized values. The annualized net benefit is 
the sum of: (1) The annualized national economic value of the benefits 
from operating products that meet the proposed standards (consisting 
primarily of operating cost savings from using less energy, minus 
increases in product purchase costs, which is another way of 
representing consumer NPV), and (2) the monetary value of the benefits 
of CO2 and NOX emission reductions.\75\
---------------------------------------------------------------------------

    \75\ To convert the time-series of costs and benefits into 
annualized values, DOE calculated a present value in 2014, the year 
used for discounting the NPV of total consumer costs and savings. 
For the benefits, DOE calculated a present value associated with 
each year's shipments in the year in which the shipments occur 
(2020, 2030, etc.), and then discounted the present value from each 
year to 2014. The calculation uses discount rates of 3 and 7 percent 
for all costs and benefits except for the value of CO2 
reductions, for which DOE used case-specific discount rates, as 
shown in Table V.22. Using the present value, DOE then calculated 
the fixed annual payment over a 30-year period, starting in the 
compliance year that yields the same present value.
---------------------------------------------------------------------------

    Table V.34 shows the annualized values for dehumidifiers under TSL 
3, expressed in 2014$. The results under the primary estimate are as 
follows. Using a 7-percent discount rate for benefits and costs other 
than CO2 reductions, for which DOE used a 3-percent discount 
rate along with the SCC series corresponding to a value of $40.5/ton in 
2015 (in 2014$), the estimated cost of the proposed standards for 
dehumidifiers is $11 million per year in increased equipment costs, 
while the estimated annualized benefits are $136 million per year in 
reduced equipment operating costs, $34 million per year in 
CO2 reductions, and $2.9 million per year in reduced 
NOX emissions. In this case, the net benefit amounts to $163 
million per year.
    Using a 3-percent discount rate for all benefits and costs and the 
SCC series corresponding to a value of $40.5/ton in 2015 (in 2014$), 
the estimated cost of the proposed standards for dehumidifiers in 
today's rule is $10 million per year in increased equipment costs, 
while the benefits are $162 million per year in reduced operating 
costs, $34 million per year in CO2 reductions, and $3.7 
million per year in reduced NOX emissions. In this case, the 
net benefit amounts to $189 million per year.

                   Table V.34--Annualized Benefits and Costs of Proposed Amended Standards (TSL 3) for Dehumidifiers Sold in 2019-2048
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                      Million 2014$/year
                                                                     -----------------------------------------------------------------------------------
                                              Discount rate                                        Low net benefits estimate  High net benefits estimate
                                                                          Primary estimate *                   *                           *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings...  7%..............................  136.......................  131.......................  141.
                                    3%..............................  162.......................  154.......................  169.
CO2 Reduction at $12.2/t **.......  5%..............................  10........................  10........................  11.
CO2 Reduction at $40.0/t **.......  3%..............................  34........................  34........................  35.
CO2 Reduction at $62.3/t **.......  2.5%............................  50........................  49........................  51.
CO2 Reduction at $117/t **........  3%..............................  104.......................  102.......................  106.
NOX Reduction [dagger]............  7%..............................  2.9.......................  2.9.......................  6.7.
                                    3%..............................  3.7.......................  3.7.......................  8.6.
Total Benefits [dagger][dagger]...  7% plus CO2 range...............  150 to 243................  144 to 236................  159 to 254.
                                    7%..............................  173.......................  167.......................  183.

[[Page 38389]]

 
                                    3% plus CO2 range...............  176 to 269................  168 to 260................  188 to 284.
                                    3%..............................  200.......................  192.......................  213.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                          Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Incremental Product Costs  7%..............................  11........................  11........................  10.
                                    3%..............................  10........................  12........................  10.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Total Net Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total [dagger][dagger]............  7% plus CO2 range...............  139 to 232................  132 to 224................  148 to 244.
                                    7%..............................  163.......................  156.......................  173.
                                    3% plus CO2 range...............  165 to 259................  157 to 248................  178 to 274.
                                    3%..............................  189.......................  180.......................  203.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* This table presents the costs and benefits associated with dehumidifiers shipped in 2019-2048. These results include benefits to consumers which
  accrue after 2048 from the products purchased in 2019-2048. The costs account for the incremental variable and fixed costs incurred by manufacturers
  due to the standard, some of which may be incurred in preparation for the rule.
** The CO2 values represent global monetized values of the SCC, in 2014$, in 2015 under several scenarios of the updated SCC values. The first three
  cases use the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The fourth case represents the 95th
  percentile of the SCC distribution calculated using a 3% discount rate. The SCC time series incorporate an escalation factor.
[dagger] The $/ton values used for NOX are described in section 0. DOE estimated the monetized value of NOX emissions reductions using benefit per ton
  estimates from the Regulatory Impact Analysis for the Clean Power Plan Final Rule, published in August 2015 by EPA's Office of Air Quality Planning
  and Standards. (Available at: http://www.epa.gov/cleanpowerplan/clean-power-plan-final-rule-regulatory-impact-analysis.) See section IV.L.2 for
  further discussion. Note that the agency is primarily using a national benefit-per-ton estimate for NOX emitted from the Electricity Generating Unit
  sector based on an estimate of premature mortality derived from the ACS study (Krewski et al., 2009). If the benefit-per-ton estimates were based on
  the Six Cities study (Lepuele et al., 2011), the values would be nearly two-and-a-half times larger.
[dagger][dagger] Total Benefits for both the 3% and 7% cases are derived using the series corresponding to average SCC with 3-percent discount rate
  ($40.0/t case).

VI. Certification Reporting and Enforcement Requirements

    In the July 2015 Test Procedure Final Rule, DOE amended the 
sampling plan and certification reporting requirements for 
dehumidifiers in 10 CFR 429.36 to clarify how manufacturers must make 
representations of capacity, and for whole-home dehumidifiers, the case 
volume of a basic model. DOE also amended the certification reporting 
requirements to specify the product-specific information that must be 
reported for each basic model. 80 FR 45801, 45819 (July 31, 2015).
    In this final rule, DOE further amends section 10 CFR 429.36(a) to 
provide rounding instructions for the reported IEF and to require that 
products capable of operating as both a portable and whole-home 
dehumidifier be rated and certified under both configurations, and 
section 10 CFR 429.36(b)(2) to detail the specific reporting 
requirements when testing according to appendix X and appendix X1.
    In the July 2015 Test Procedure Final Rule, DOE amended the 
enforcement requirements for dehumidifiers in 10 CFR 429.134(f). Id. In 
this final rule, DOE amends the enforcement provisions to update the 
referenced efficiency metric to also include IEF.

VII. Procedural Issues and Regulatory Review

A. Review Under Executive Orders 12866 and 13563

    Section 1(b)(1) of Executive Order 12866, ``Regulatory Planning and 
Review,'' 58 FR 51735 (Oct. 4, 1993), requires each agency to identify 
the problem that it intends to address, including, where applicable, 
the failures of private markets or public institutions that warrant new 
agency action, as well as to assess the significance of that problem. 
The problems that the adopted standards for dehumidifiers are intended 
to address are as follows:
    (1) Insufficient information and the high costs of gathering and 
analyzing relevant information leads some consumers to miss 
opportunities to make cost-effective investments in energy efficiency.
    (2) In some cases the benefits of more efficient equipment are not 
realized due to misaligned incentives between purchasers and users. An 
example of such a case is when the equipment purchase decision is made 
by a building contractor or building owner who does not pay the energy 
costs.
    (3) There are external benefits resulting from improved energy 
efficiency of appliances that are not captured by the users of such 
equipment. These benefits include externalities related to public 
health, environmental protection and national energy security that are 
not reflected in energy prices, such as reduced emissions of air 
pollutants and greenhouse gases that impact human health and global 
warming. DOE attempts to qualify some of the external benefits through 
use of social cost of carbon values.
    The Administrator of the Office of Information and Regulatory 
Affairs (OIRA) in the OMB has determined that the proposed regulatory 
action is a significant regulatory action under section (3)(f) of 
Executive Order 12866. Accordingly, pursuant to section 6(a)(3)(B) of 
the Order, DOE has provided to OIRA: (i) The text of the draft 
regulatory action, together with a reasonably detailed description of 
the need for the regulatory action and an explanation of how the 
regulatory action will meet that need; and (ii) An assessment of the 
potential costs and benefits of the regulatory action, including an 
explanation of the manner in which the regulatory action is consistent 
with a statutory mandate. DOE has included these documents in the 
rulemaking record.

[[Page 38390]]

    In addition, the Administrator of OIRA has determined that the 
proposed regulatory action is an ``economically'' significant 
regulatory action under section (3)(f)(1) of Executive Order 12866. 
Accordingly, pursuant to section 6(a)(3)(C) of the Order, DOE has 
provided to OIRA an assessment, including the underlying analysis, of 
benefits and costs anticipated from the regulatory action, together 
with, to the extent feasible, a quantification of those costs; and an 
assessment, including the underlying analysis, of costs and benefits of 
potentially effective and reasonably feasible alternatives to the 
planned regulation, and an explanation why the planned regulatory 
action is preferable to the identified potential alternatives. These 
assessments can be found in the technical support document for this 
rulemaking.
    DOE has also reviewed this regulation pursuant to Executive Order 
13563, issued on January 18, 2011. (76 FR 3281, Jan. 21, 2011) 
Executive Order 13563 is supplemental to and explicitly reaffirms the 
principles, structures, and definitions governing regulatory review 
established in Executive Order 12866. To the extent permitted by law, 
agencies are required by Executive Order 13563 to: (1) Propose or adopt 
a regulation only upon a reasoned determination that its benefits 
justify its costs (recognizing that some benefits and costs are 
difficult to quantify); (2) tailor regulations to impose the least 
burden on society, consistent with obtaining regulatory objectives, 
taking into account, among other things, and to the extent practicable, 
the costs of cumulative regulations; (3) select, in choosing among 
alternative regulatory approaches, those approaches that maximize net 
benefits (including potential economic, environmental, public health 
and safety, and other advantages; distributive impacts; and equity); 
(4) to the extent feasible, specify performance objectives, rather than 
specifying the behavior or manner of compliance that regulated entities 
must adopt; and (5) identify and assess available alternatives to 
direct regulation, including providing economic incentives to encourage 
the desired behavior, such as user fees or marketable permits, or 
providing information upon which choices can be made by the public.
    DOE emphasizes as well that Executive Order 13563 requires agencies 
to use the best available techniques to quantify anticipated present 
and future benefits and costs as accurately as possible. In its 
guidance, OIRA has emphasized that such techniques may include 
identifying changing future compliance costs that might result from 
technological innovation or anticipated behavioral changes. For the 
reasons stated in the preamble, DOE believes that this final rule is 
consistent with these principles, including the requirement that, to 
the extent permitted by law, benefits justify costs and that net 
benefits are maximized.

B. Review Under the Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires 
preparation of a final regulatory flexibility analysis (FRFA) for any 
final rule where the agency was first required by law to publish a 
proposed rule for public comment. As required by Executive Order 13272, 
``Proper Consideration of Small Entities in Agency Rulemaking,'' 67 FR 
53461 (Aug. 16, 2002), DOE published procedures and policies on 
February 19, 2003, to ensure that the potential impacts of its rules on 
small entities are properly considered during the rulemaking process. 
68 FR 7990. DOE has made its procedures and policies available on the 
Office of the General Counsel's Web site (http://energy.gov/gc/office-general-counsel). DOE has prepared the following FRFA for the products 
that are the subject of this rulemaking.
1. Statement of the Need for, and Objectives of, the Rule
    The need for, and objectives of this final rule are stated 
elsewhere in the preamble and not repeated here.
2. Significant Issues Raised by Public Comment
    Significant issues raised by public comment in response to the 
initial regulatory flexibility analysis and the economic impacts of the 
rule are provided in section IV.J.3 and not repeated here. As discussed 
in section IV.J.3, based on those comments, DOE updated its analysis of 
manufacturer impacts, including small business impacts, for this final 
rule. The standard levels adopted in this final rule were selected 
based on updated engineering and economic analyses.
3. Response to Comments From the Small Business Administration's Chief 
Counsel for Advocacy
    The SBA's Chief Counsel for Advocacy did not submit comments on 
this rulemaking.
4. Description and Estimated Number of Small Entities Regulated
a. Methodology for Estimating the Number of Small Entities
    For the manufacturers of dehumidifiers, the SBA has set a size 
threshold, which defines those entities classified as ``small 
businesses'' for the purposes of the Regulatory Flexibility Act. DOE 
used the SBA's small business size standards to determine whether any 
small entities would be subject to the requirements of the rule. See 13 
CFR part 121. The size standards are listed by North American Industry 
Classification System (NAICS) code and industry description and are 
available at: www.sba.gov/sites/default/files/files/Size_Standards_Table.pdf. Manufacturing of whole-home dehumidifiers is 
classified under NAICS codes 333415: Air-Conditioning and Warm Air 
Heating Equipment and Commercial and Industrial Refrigeration Equipment 
Manufacturing, whereas manufacturing of portable dehumidifiers is 
classified under 335210: Small Electrical Appliance Manufacturing. The 
SBA sets a threshold of 1,250 employees or less and 1,500 employees or 
less for an entity to be considered as a small business in these 
industry categories, respectively.
    To estimate the number of companies that could be small business 
manufacturers of products covered by this rulemaking, DOE conducted a 
market survey using available public information to identify potential 
small manufacturers. DOE's research included searches of public 
databases (e.g., DOE's Compliance Certification Database,\76\ the SBA 
Database \77\), individual company Web sites, and market research tools 
(e.g., Hoovers Web site \78\) to create a list of companies that 
manufacture or sell products covered by this rulemaking. DOE also asked 
stakeholders and industry representatives if they were aware of any 
other small manufacturers during manufacturer interviews and at DOE 
public meetings. DOE reviewed publicly available data and contacted 
select companies on its list, as necessary, to determine whether they 
met the SBA's definition of a small business manufacturer of covered 
dehumidifiers. DOE screened out companies that do not manufacture 
products covered by this rulemaking, do not meet the

[[Page 38391]]

definition of a ``small business,'' or are foreign owned and operated.
---------------------------------------------------------------------------

    \76\ See http://www.regulations.doe.gov/certification-data/.
    \77\ See http://dsbs.sba.gov/dsbs/search/dsp_dsbs.cfm.
    \78\ See http://www.hoovers.com/.
---------------------------------------------------------------------------

    DOE initially identified 25 manufacturers of dehumidifier products 
sold in the United States. DOE then determined that of the 25 
companies, 20 were either large manufacturers, exclusively import 
products manufactured overseas, or are foreign owned and operated. DOE 
identified the remaining five manufacturers as domestic manufacturers 
that meet the SBA's definition of a ``small business'' and manufacture 
products covered by this rulemaking.
    The five domestic small business manufacturers of dehumidifiers 
identified account for a small fraction of total industry shipments. In 
2015, 98.5 percent of dehumidifiers sold in the United States were 
small portable units (belonging to product classes 1 and 2) and were 
made by large, diversified manufacturers. The remaining 1.5 percent of 
the market consists of high-capacity portable and whole-home 
dehumidifiers, which are primarily manufactured by small business 
manufacturers. It is estimated that small, domestic manufacturers 
account for 50 percent of high-capacity portable U.S. shipments and the 
overwhelming majority of whole-home dehumidifier U.S. shipments. The 
two small, domestic manufacturers that account for the greatest share 
of the combined high-capacity portable and whole-home market segments 
manufacture both high-capacity portable and whole-home products. Of the 
remaining small, domestic manufacturers, one produces only high-
capacity portable dehumidifiers and two produce only whole-home 
dehumidifiers.
b. Manufacturer Participation
    Before issuing this final rule, DOE attempted to contact all the 
small business manufacturers of dehumidifiers identified. Two of these 
small business manufacturers responded to DOE and consented to being 
interviewed as part of the manufacturing impact analysis. DOE also 
obtained information about small business impacts while interviewing 
large manufacturers.
c. Comparison of Large and Small Entities
    Several factors may contribute to a disproportionate burden on 
small business manufacturers from amended energy conservation standards 
for dehumidifiers relative to their larger counterparts. One way in 
which small manufacturers could be at a disadvantage is that they may 
be disproportionately affected by product and capital conversion costs. 
Product redesign, testing, and certification costs tend to be fixed per 
basic model and do not scale with sales volume. Both large and small 
business manufacturers must make investments in R&D to redesign their 
products, but small businesses lack the sales volumes to sufficiently 
recoup these upfront investments without substantially marking up their 
products. Similarly, upfront capital investments in new manufacturing 
capital for platform redesigns, as well as depreciated manufacturing 
capital, can be spread across a lower volume of shipments for small 
business manufacturers.
    In addition, because small business manufacturers typically have 
fewer engineers than large manufacturers, they must allocate a greater 
portion of their available human resources to meet an amended 
regulatory standard. Because engineers may need to spend more time 
redesigning and testing existing models as a result of the amended 
standard, they may have less time to develop new products.
    Furthermore, smaller manufacturers may lack the purchasing power of 
larger manufacturers. For example, because fan motor suppliers give 
volume discounts to manufacturers based on the number of motors they 
purchase, larger manufacturers may have a pricing advantage because 
they make higher volume purchases. This purchasing power difference 
between high-volume and low-volume orders applies to other dehumidifier 
components as well, including compressors and heat exchangers. DOE 
expects that certain larger manufacturers of lower-capacity portable 
dehumidifiers may even manufacture heat exchangers in-house. 
Additionally, because small business manufacturers produce higher-
capacity dehumidifiers, they typically require larger and/or custom-
made components (e.g., larger compressors and heat exchangers), 
compared to the lower-capacity portable dehumidifier manufacturers that 
account for the majority of the dehumidifier market. Because of the 
low-volume nature of the high-capacity portable dehumidifier and whole-
home dehumidifier market, certain technological improvements to 
components may be developed only for lower-capacity portable products, 
or with significant lag time for application in high-capacity portable 
dehumidifier and whole-home dehumidifier products.
    In terms of cumulative regulatory burden faced by small domestic 
dehumidifier manufacturers, the small manufacturers with the greatest 
dehumidifier market share are more specialized and concentrated in 
dehumidifier manufacturing and, thus, manufacture a smaller range of 
products than larger companies. The other products that some of the 
small manufacturers also produce include humidifiers, air purifiers and 
desiccant wheels. None of these are currently regulated by DOE.
    However, one small manufacturer (with low market share among small 
dehumidifier manufacturers) also produces residential furnaces. This 
small manufacturer produces only whole-home dehumidifiers and would not 
be burdened by the whole-home standard level established in this 
document.
    In terms of access to the capital required to cover the conversion 
costs associated with reaching the proposed standards, small business 
manufacturers would likely need to take on additional debt, whereas 
larger diversified manufacturers of small portable products would be 
better equipped to fund purchases with existing cash flow from 
operations. Additionally, since the recession of 2007 and 2008, small 
business lending has dropped substantially due to a combination of 
tightened lending standards, increasing collateral requirements and 
reduced focus on small business credit markets. Thus, small businesses 
generally have less access to capital than larger companies.
5. Description and Estimate of Compliance Requirements
    DOE derived industry conversion costs using a top-down approach 
described in section IV.J.2.a. Using product platform counts by product 
class and manufacturer, DOE estimated the distribution of industry 
conversion costs between small manufacturers and large manufacturers. 
Using its count of manufacturers, DOE calculated capital conversion 
costs (Table VII.1) and product conversion costs (Table VII.2) for an 
average small manufacturer versus an average large manufacturer. To 
provide context on the size of the conversion costs relative to the 
size of the businesses, DOE presents the conversion costs relative to 
annual revenue and annual operating profit at each TSL for the average 
small manufacturer (Table VII.3) and the average large manufacturer 
(Table VII.4). The current annual revenue and annual operating profit 
estimates are derived from the GRIM's industry revenue calculations and 
the market share breakdowns of small versus large manufacturers.

[[Page 38392]]



           Table VII.1--Comparison of Typical Small and Large Manufacturer's Capital Conversion Costs
----------------------------------------------------------------------------------------------------------------
                                                             Capital conversion costs   Capital conversion costs
                   Trial standard level                         for typical small          for typical large
                                                              manufacturer (2014 $M)     manufacturer (2014 $M)
----------------------------------------------------------------------------------------------------------------
TSL 1.....................................................                       $0.2                       $0.1
TSL 2.....................................................                        0.2                        1.3
TSL 3.....................................................                        0.6                        1.3
TSL 4.....................................................                        0.8                        2.1
----------------------------------------------------------------------------------------------------------------


           Table VII.2--Comparison of Typical Small and Large Manufacturer's Product Conversion Costs
----------------------------------------------------------------------------------------------------------------
                                                             Product conversion costs   Product conversion costs
                   Trial standard level                         for typical small          for typical large
                                                              manufacturer (2014 $M)     manufacturer (2014 $M)
----------------------------------------------------------------------------------------------------------------
TSL 1.....................................................                       $0.5                       $0.0
TSL 2.....................................................                        0.8                        1.5
TSL 3.....................................................                        1.7                        1.5
TSL 4.....................................................                        2.4                        2.5
----------------------------------------------------------------------------------------------------------------


                                        Table VII.3--Impacts of Conversion Costs on a Typical Small Manufacturer
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                            Conversion
                                                              Capital         Product                       Conversion      Conversion        costs/
                                                            conversion      conversion      Conversion     costs/ annual      costs/        conversion
                  Trial standard level                      costs (2014     costs (2014    costs/ annual     operating      conversion        period
                                                                $M)             $M)         revenue (%)     profit (%)    period revenue     operating
                                                                                                                               * (%)       profit * (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
TSL 1...................................................            $0.2            $0.5            15.3           258.1             5.1            86.0
TSL 2...................................................             0.2             0.8            24.9           419.1             8.3           139.7
TSL 3...................................................             0.6             1.9            56.1           945.1            18.7           315.0
TSL 4...................................................             0.8             2.5            78.0          1313.8            26.0           437.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Note: The conversion period, the time between the final rule publication year and the compliance year for this rulemaking, is 3 years. Annual
  Revenues, and Operating Profit figures are for 2015.


                                        Table VII.4--Impacts of Conversion Costs on a Typical Large Manufacturer
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                            Conversion
                                                              Capital         Product                       Conversion      Conversion        costs/
                                                            conversion      conversion      Conversion     costs/ annual      costs/        conversion
                  Trial standard level                      costs (2014     costs (2014    costs/ annual     operating      conversion        period
                                                                $M)             $M)         revenue (%)     profit (%)    period revenue     operating
                                                                                                                               * (%)       profit * (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
TSL 1...................................................            $0.1            $0.0             0.0             0.6             0.0             0.2
TSL 2...................................................             1.3             1.5             0.8            13.1             0.3             4.4
TSL 3...................................................             1.3             1.5             0.8            13.1             0.3             4.4
TSL 4...................................................             2.1             2.5             1.3            21.4             0.4             7.1
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Note: The conversion period, the time between the final rule publication year and the compliance year for this rulemaking, is 3 years. Annual
  Revenues, and Operating Profit figures are for 2015.

    At the established standard level (TSL 2), DOE estimates total 
conversion costs associated with amended energy conservation standards 
for an average small manufacturer to be $1.01 million, which is 
approximately 24.9 percent of annual revenue and 419.1 percent of 
annual operating profit. This suggests that an average small 
manufacturer would need to reinvest roughly 139.7 percent of its 
operating profit per year over the conversion period to comply with 
standards. At this TSL, the standard level for whole-home dehumidifiers 
is the baseline. Accordingly three of the five small, domestic 
manufacturers may incur costs associated only with the high-capacity 
portable segment of their business.
    The total conversion costs associated with new and amended energy 
conservation standards for an average large manufacturer is $2.79 
million, which is approximately 0.8 percent of annual revenue and 13.1 
percent of annual operating profit. This suggests that an average large 
manufacturer would need to reinvest roughly 4.4 percent of its 
operating profit per year over the 3-year conversion period.
6. Significant Alternatives to the Rule
    The discussion in the previous section analyzes impacts on small 
businesses that would result from the adopted standards, represented by 
TSL 2. In reviewing alternatives to the adopted standards, DOE examined 
an energy conservation standard set at both higher and lower efficiency 
levels.
    As discussed in section V. C., DOE's analysis shows that TSL 3 
achieves

[[Page 38393]]

approximately 3 percent higher energy savings than TSL 2. TSL 4 
achieves approximately 173 percent higher savings than TSL 2. However, 
as discussed in section V.C., DOE rejected these TSLs in part due to 
the negative INPV results and substantial small business impacts. The 
estimated conversion costs for small business manufacturers are 
significantly higher at TSL 3 and TSL 4 than at TSL 2. To comply with 
TSL 3, the average small manufacturer must make $2.27 million in 
conversion cost investments, which is $1.26 million more than at TSL 2. 
At TSL 3, the projected change in INPV also ranges from a decrease of 
$42.4 million to a decrease of $38.7 million. If the high end of the 
range of impacts is reached, TSL 3 could result in a net loss of up to 
23.6 percent in INPV for manufacturers, with high disproportionate 
impacts to whole-home dehumidifier manufacturers, the majority of which 
are small, domestic companies. The capital conversion costs required by 
whole-home dehumidifier manufacturers to comply with TSL 3 are 
estimated to be $1.8 million, 5.4 times the whole-home dehumidifier 
industry annual ordinary capital expenditure in 2018 (the year leading 
up to amended standards). DOE estimates that complete platform 
redesigns would cost the industry $5.5 million in product conversion 
costs, equivalent to 32.7 times the whole-home dehumidifier industry 
annual budget for research and development. As a result, TSL 3 could 
result in a net loss to whole-home dehumidifier manufacturers of 101.4 
percent of INPV (compared to no impacts at TSL 2) or cause some 
domestic manufacturers to exit the whole-home dehumidifier market 
altogether. To comply with TSL 4, the average small manufacturer must 
make $3.15 million in conversion cost investments, which is $2.15 
million more than at TSL 2. INPV losses and impacts to the industry, 
and particularly to small manufacturers, would be even more significant 
than at TSL 3. DOE's analysis also shows that while TSL 1 would reduce 
the impacts on small business manufacturers ($0.62 million conversion 
costs for the typical small manufacturers), it would come at the 
expense of a reduction in energy savings. TSL 1 achieves 77-percent 
lower energy savings compared to the energy savings at TSL 2.
    DOE has concluded that establishing standards at TSL 2 balances the 
benefits of the energy savings at TSL 2 with the potential burdens 
placed on dehumidifier manufacturers, including small business 
manufacturers. As required by EPCA, DOE adopts in this final rule the 
energy conservation standards that achieve the maximum improvement in 
energy efficiency that is technologically feasible and economically 
justified. Accordingly, DOE is not adopting one of the other TSLs 
considered in the analysis, or the other policy alternatives examined 
as part of the regulatory impacts analysis and included in chapter 17 
of the final rule TSD.
    Additional compliance flexibilities may be available through other 
means. For example, individual manufacturers may petition for a waiver 
of the applicable test procedure. (See 10 CFR 431.401) Further, EPCA 
provides that a manufacturer whose annual gross revenue from all of its 
operations does not exceed $8 million may apply for an exemption from 
all or part of an energy conservation standard for a period not longer 
than 24 months after the effective date of a final rule establishing 
the standard. Additionally, Section 504 of the Department of Energy 
Organization Act, 42 U.S.C. 7194, provides authority for the Secretary 
to adjust a rule issued under EPCA in order to prevent ``special 
hardship, inequity, or unfair distribution of burdens'' that may be 
imposed on that manufacturer as a result of such rule. Manufacturers 
should refer to 10 CFR part 430, subpart E, and part 1003 for 
additional details.

C. Review Under the Paperwork Reduction Act

    Manufacturers of dehumidifiers must certify to DOE that their 
products comply with any applicable energy conservation standards. In 
certifying compliance, manufacturers must test their products according 
to the DOE test procedures for dehumidifiers, including any amendments 
adopted for those test procedures. DOE has established regulations for 
the certification and recordkeeping requirements for all covered 
consumer products and commercial equipment, including dehumidifiers. 
See generally 10 CFR part 429. The collection-of-information 
requirement for the certification and recordkeeping is subject to 
review and approval by OMB under the Paperwork Reduction Act (PRA). 
This requirement has been approved by OMB under OMB control number 
1910-1400. Public reporting burden for the certification is estimated 
to average 30 hours per response, including the time for reviewing 
instructions, searching existing data sources, gathering and 
maintaining the data needed, and completing and reviewing the 
collection of information.
    Notwithstanding any other provision of the law, no person is 
required to respond to, nor shall any person be subject to a penalty 
for failure to comply with, a collection of information subject to the 
requirements of the PRA, unless that collection of information displays 
a currently valid OMB Control Number.

D. Review Under the National Environmental Policy Act of 1969

    Pursuant to the National Environmental Policy Act (NEPA) of 1969, 
DOE has determined that the rule fits within the category of actions 
included in Categorical Exclusion (CX) B5.1 and otherwise meets the 
requirements for application of a CX. See 10 CFR part 1021, App. B, 
B5.1(b); 1021.410(b) and App. B, B(1)-(5). The rule fits within this 
category of actions because it is a rulemaking that establishes energy 
conservation standards for consumer products or industrial equipment, 
and for which none of the exceptions identified in CX B5.1(b) apply. 
Therefore, DOE has made a CX determination for this rulemaking, and DOE 
does not need to prepare an Environmental Assessment or Environmental 
Impact Statement for this rule. DOE's CX determination for this rule is 
available at http://energy.gov/nepa/categorical-exclusion-cx-determinations-cx.

E. Review Under Executive Order 13132

    Executive Order 13132, ``Federalism.'' 64 FR 43255 (Aug. 10, 1999) 
imposes certain requirements on Federal agencies formulating and 
implementing policies or regulations that preempt State law or that 
have Federalism implications. The Executive Order requires agencies to 
examine the constitutional and statutory authority supporting any 
action that would limit the policymaking discretion of the States and 
to carefully assess the necessity for such actions. The Executive Order 
also requires agencies to have an accountable process to ensure 
meaningful and timely input by State and local officials in the 
development of regulatory policies that have Federalism implications. 
On March 14, 2000, DOE published a statement of policy describing the 
intergovernmental consultation process it will follow in the 
development of such regulations. 65 FR 13735. DOE has examined this 
rule and has determined that it would not have a substantial direct 
effect on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government. EPCA governs 
and

[[Page 38394]]

prescribes Federal preemption of State regulations as to energy 
conservation for the products that are the subject of this final rule. 
States can petition DOE for exemption from such preemption to the 
extent, and based on criteria, set forth in EPCA. (42 U.S.C. 6297) 
Therefore, no further action is required by Executive Order 13132.

F. Review Under Executive Order 12988

    With respect to the review of existing regulations and the 
promulgation of new regulations, section 3(a) of Executive Order 12988, 
``Civil Justice Reform,'' imposes on Federal agencies the general duty 
to adhere to the following requirements: (1) Eliminate drafting errors 
and ambiguity; (2) write regulations to minimize litigation; (3) 
provide a clear legal standard for affected conduct rather than a 
general standard; and (4) promote simplification and burden reduction. 
61 FR 4729 (Feb. 7, 1996). Regarding 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, to the extent permitted by law, this final rule meets the 
relevant standards of Executive Order 12988.

G. Review Under the Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) 
requires each Federal agency to assess the effects of Federal 
regulatory actions on State, local, and Tribal governments and the 
private sector. Public Law 104-4, sec. 201 (codified at 2 U.S.C. 1531). 
For a regulatory action likely to result in a rule that may cause the 
expenditure by State, local, and Tribal governments, in the aggregate, 
or by the private sector of $100 million or more in any one year 
(adjusted annually for inflation), section 202 of UMRA requires a 
Federal agency to publish a written statement that estimates the 
resulting costs, benefits, and other effects on the national economy. 
(2 U.S.C. 1532(a), (b)) The UMRA also requires a Federal agency to 
develop an effective process to permit timely input by elected officers 
of State, local, and Tribal governments on a ``significant 
intergovernmental mandate,'' and requires an agency plan for giving 
notice and opportunity for timely input to potentially affected small 
governments before establishing any requirements that might 
significantly or uniquely affect them. On March 18, 1997, DOE published 
a statement of policy on its process for intergovernmental consultation 
under UMRA. 62 FR 12820. DOE's policy statement is also available at 
http://energy.gov/sites/prod/files/gcprod/documents/umra_97.pdf.
    DOE has concluded that this final rule does not require 
expenditures of $100 million or more in any one year on the private 
sector. The final rule is likely to result in expenditures of $100 
million or more, but there is no requirement that mandates that result. 
Such expenditures may include: (1) Investment in research and 
development and in capital expenditures by dehumidifier manufacturers 
in the years between the final rule and the compliance date for the new 
standards, and (2) incremental additional expenditures by consumers to 
purchase higher-efficiency dehumidifiers, starting at the compliance 
date for the applicable standard.
    Section 202 of UMRA authorizes a Federal agency to respond to the 
content requirements of UMRA in any other statement or analysis that 
accompanies the final 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 document and chapter 17 of 
the TSD for this final rule respond to those requirements.
    Under section 205 of UMRA, the Department is obligated to identify 
and consider a reasonable number of regulatory alternatives before 
promulgating a rule for which a written statement under section 202 is 
required. (2 U.S.C. 1535(a)) DOE is required to select from those 
alternatives the most cost-effective and least burdensome alternative 
that achieves the objectives of the rule unless DOE publishes an 
explanation for doing otherwise, or the selection of such an 
alternative is inconsistent with law. In accordance with the statutory 
provisions discussed in this document, this final rule establishes 
amended energy conservation standards for dehumidifiers 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 chapter 17 of the TSD for this final rule.

H. Review Under the Treasury and General Government Appropriations Act, 
1999

    Section 654 of the Treasury and General Government Appropriations 
Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family 
Policymaking Assessment for any rule that may affect family well-being. 
This rule would not have any impact on the autonomy or integrity of the 
family as an institution. Accordingly, DOE has concluded that it is not 
necessary to prepare a Family Policymaking Assessment.

I. Review Under Executive Order 12630

    Pursuant to Executive Order 12630, ``Governmental Actions and 
Interference with Constitutionally Protected Property Rights'' 53 FR 
8859 (March 18, 1988), DOE has determined that this rule would not 
result in any takings that might require compensation under the Fifth 
Amendment to the U.S. Constitution.

J. Review Under the Treasury and General Government Appropriations Act, 
2001

    Section 515 of the Treasury and General Government Appropriations 
Act, 2001 (44 U.S.C. 3516, note) provides for Federal agencies to 
review most disseminations of information to the public under 
information quality guidelines established by each agency pursuant to 
general guidelines issued by OMB. OMB's guidelines were published at 67 
FR 8452 (Feb. 22, 2002), and DOE's guidelines were published at 67 FR 
62446 (Oct. 7, 2002). DOE has reviewed this final rule under the OMB 
and DOE guidelines and has concluded that it is consistent with 
applicable policies in those guidelines.

K. Review Under Executive Order 13211

    Executive Order 13211, ``Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use,'' 66 FR 28355 
(May 22, 2001), requires Federal agencies to prepare and submit to OIRA 
at OMB, a Statement of Energy Effects for any significant energy 
action. A ``significant

[[Page 38395]]

energy action'' is defined as any action by an agency that promulgates 
or is expected to lead to promulgation of a final rule, and that: (1) 
Is a significant regulatory action under Executive Order 12866, or any 
successor order; and (2) is likely to have a significant adverse effect 
on the supply, distribution, or use of energy, or (3) is designated by 
the Administrator of OIRA as a significant energy action. For any 
significant energy action, the agency must give a detailed statement of 
any adverse effects on energy supply, distribution, or use should the 
proposal be implemented, and of reasonable alternatives to the action 
and their expected benefits on energy supply, distribution, and use.
    DOE has concluded that this regulatory action, which sets forth 
amended energy conservation standards for dehumidifiers, is not a 
significant energy action because the standards are not likely to have 
a significant adverse effect on the supply, distribution, or use of 
energy, nor has it been designated as such by the Administrator at 
OIRA. Accordingly, DOE has not prepared a Statement of Energy Effects 
on this final rule.

L. Review Under the Information Quality Bulletin for Peer Review

    On December 16, 2004, OMB, in consultation with the Office of 
Science and Technology Policy (OSTP), issued its Final Information 
Quality Bulletin for Peer Review (the Bulletin). 70 FR 2664 (Jan. 14, 
2005). The Bulletin establishes that certain scientific information 
shall be peer reviewed by qualified specialists before it is 
disseminated by the Federal Government, including influential 
scientific information related to agency regulatory actions. The 
purpose of the bulletin is to enhance the quality and credibility of 
the Government's scientific information. Under the Bulletin, the energy 
conservation standards rulemaking analyses are ``influential scientific 
information,'' which the Bulletin defines as ``scientific information 
the agency reasonably can determine will have, or does have, a clear 
and substantial impact on important public policies or private sector 
decisions.'' Id at FR 2667.
    In response to OMB's Bulletin, DOE conducted formal in-progress 
peer reviews of the energy conservation standards development process 
and analyses and has prepared a Peer Review Report pertaining to the 
energy conservation standards rulemaking analyses. Generation of this 
report involved a rigorous, formal, and documented evaluation using 
objective criteria and qualified and independent reviewers to make a 
judgment as to the technical/scientific/business merit, the actual or 
anticipated results, and the productivity and management effectiveness 
of programs and/or projects. The ``Energy Conservation Standards 
Rulemaking Peer Review Report'' dated February 2007 has been 
disseminated and is available at the following Web site: 
www1.eere.energy.gov/buildings/appliance_standards/peer_review.html.

M. Congressional Notification

    As required by 5 U.S.C. 801, DOE will report to Congress on the 
promulgation of this rule prior to its effective date. The report will 
state that it has been determined that the rule is a ``major rule'' as 
defined by 5 U.S.C. 804(2).

VIII. Approval of the Office of the Secretary

    The Secretary of Energy has approved publication of this final 
rule.

List of Subjects

10 CFR Part 429

    Energy conservation, Household appliances, Imports.

10 CFR Part 430

    Administrative practice and procedure, Confidential business 
information, Energy conservation, Household appliances, Imports, 
Incorporation by reference, Intergovernmental relations, Small 
businesses.

    Issued in Washington, DC, on May 20, 2016.
David Friedman,
Principal Deputy Assistant Secretary, Energy Efficiency and Renewable 
Energy.

    For the reasons set forth in the preamble, DOE amends parts 429 and 
430 of chapter II of title 10 of the Code of Federal Regulations, as 
set forth below:

PART 429--CERTIFICATION, COMPLIANCE, AND ENFORCEMENT FOR CONSUMER 
PRODUCTS AND COMMERCIAL AND INDUSTRIAL EQUIPMENT

0
1. The authority citation for part 429 continues to read as follows:

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


0
2. Section 429.36 is amended by adding paragraphs (a)(5) and (6) and 
revising paragraph (b)(2) to read as follows:


Sec.  429.36  Dehumidifiers.

    (a) * * *
    (5) Round the value of energy factor or integrated energy factor 
for a basic model to two decimal places.
    (6) Dehumidifiers distributed in commerce by the manufacturer with 
the ability to operate as both a portable and whole-home dehumidifier 
by means of installation or removal of an optional ducting kit, must be 
rated and certified under both configurations.
    (b) * * *
    (2) Pursuant to Sec.  429.12(b)(13), a certification report must 
include the following public product-specific information:
    (i) For dehumidifiers tested in accordance with appendix X: The 
energy factor in liters per kilowatt hour (liters/kWh) and capacity in 
pints per day.
    (ii) For dehumidifiers tested in accordance with appendix X1: The 
integrated energy factor in liters per kilowatt hour (liters/kWh), 
capacity in pints per day, and for whole-home dehumidifiers, case 
volume in cubic feet.

0
3. Section 429.134 is amended by revising paragraph (f) to read as 
follows:


Sec.  429.134  Product-specific enforcement provisions.

* * * * *
    (f) Dehumidifiers--(1) Verification of capacity. The capacity will 
be measured pursuant to the test requirements of part 430 for each unit 
tested. The results of the measurement(s) will be averaged and compared 
to the value of capacity certified by the manufacturer for the basic 
model. The certified capacity will be considered valid only if the 
measurement is within five percent, or 1.00 pint per day, whichever is 
greater, of the certified capacity.
    (i) If the certified capacity is found to be valid, the certified 
capacity will be used as the basis for determining the minimum energy 
factor or integrated energy factor allowed for the basic model.
    (ii) If the certified capacity is found to be invalid, the average 
measured capacity of the units in the sample will be used as the basis 
for determining the minimum energy factor or integrated energy factor 
allowed for the basic model.
    (2) Verification of whole-home dehumidifier case volume. The case 
volume will be measured pursuant to the test requirements of part 430 
for each unit tested. The results of the measurement(s) will be 
averaged and compared to the value of case volume certified by the 
manufacturer for the basic model. The certified case volume will be 
considered valid only if the measurement is within two percent, or

[[Page 38396]]

0.2 cubic feet, whichever is greater, of the certified case volume.
    (i) If the certified case volume is found to be valid, the 
certified case volume will be used as the basis for determining the 
minimum integrated energy factor allowed for the basic model.
    (ii) If the certified case volume is found to be invalid, the 
average measured case volume of the units in the sample will be used as 
the basis for determining the minimum integrated energy factor allowed 
for the basic model.
* * * * *

PART 430--ENERGY CONSERVATION PROGRAM FOR CONSUMER PRODUCTS

0
4. The authority citation for part 430 continues to read as follows:

    Authority: 42 U.S.C. 6291-6309; 28 U.S.C. 2461 note.


0
5. Section 430.32 is amended by adding paragraph (v)(3) to read as 
follows:


Sec.  430.32  Energy and water conservation standards and their 
effective dates.

* * * * *
    (v) * * *
    (3) Dehumidifiers manufactured on or after June 13, 2019, shall 
have an integrated energy efficiency ratio that meets or exceeds the 
following values:

------------------------------------------------------------------------
                                                      Minimum integrated
                                                      energy efficiency
                                                     factor (liters/kWh)
------------------------------------------------------------------------
                 Portable dehumidifier Product Capacity
                               (pints/day)
------------------------------------------------------------------------
25.00 or less......................................                 1.30
25.01-50.00........................................                 1.60
50.01 or more......................................                 2.80
------------------------------------------------------------------------
               Whole-home dehumidifier product case volume
                              (cubic feet)
------------------------------------------------------------------------
8.0 or less........................................                 1.77
More than 8.0......................................                 2.41
------------------------------------------------------------------------

* * * * *
[FR Doc. 2016-12881 Filed 6-10-16; 8:45 am]
 BILLING CODE 6450-01-P