Energy Conservation Program: Energy Conservation Standards for Miscellaneous Refrigeration Products, 19382-19447 [2023-05363]

Download as PDF 19382 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules DEPARTMENT OF ENERGY 10 CFR Part 430 [EERE–2020–BT–STD–0039] RIN 1904–AF00 Energy Conservation Program: Energy Conservation Standards for Miscellaneous Refrigeration Products Office of Energy Efficiency and Renewable Energy, Department of Energy. ACTION: Notice of proposed rulemaking; announcement of public meeting. AGENCY: The Energy Policy and Conservation Act, as amended (‘‘EPCA’’), prescribes energy conservation standards for various consumer products and certain commercial and industrial equipment, including miscellaneous refrigeration products. 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 result in significant energy savings. In this notice of proposed rulemaking (‘‘NOPR’’), DOE proposes amended energy conservation standards for miscellaneous refrigeration products, and also announces a public meeting to receive comment on these proposed standards and associated analyses and results. SUMMARY: ddrumheller on DSK120RN23PROD with PROPOSALS2 DATES: Comments: DOE will accept comments, data, and information regarding this NOPR no later than May 30, 2023. Meeting: DOE will hold a public meeting via webinar on Tuesday, May 2, 2023, from 1:00 p.m. to 4:00 p.m. See section IV, ‘‘Public Participation,’’ for webinar registration information, participant instructions and information about the capabilities available to webinar participants. Comments regarding the likely competitive impact of the proposed standard should be sent to the Department of Justice contact listed in the ADDRESSES section on or before May 1, 2023. ADDRESSES: Interested persons are encouraged to submit comments using the Federal Rulemaking Portal at www.regulations.gov, under by docket number EERE–2020–BT–STD–0039. Follow the instructions for submitting comments. Alternatively, interested persons may submit comments, identified by docket number EERE– 2020–BT–STD–0039, by any of the following methods: VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 Email: MRP2020STD0039@ ee.doe.gov. Include the docket number EERE–2020–BT–STD–0039 in the subject line of the message. Postal Mail: Appliance and Equipment Standards Program, U.S. Department of Energy, Building Technologies Office, Mailstop EE–5B, 1000 Independence Avenue SW, Washington, DC 20585–0121. Telephone: (202) 287–1445. If possible, please submit all items on a compact disc (‘‘CD’’), in which case it is not necessary to include printed copies. Hand Delivery/Courier: Appliance and Equipment Standards Program, U.S. Department of Energy, Building Technologies Office, 950 L’Enfant Plaza SW, 6th Floor, Washington, DC 20024. Telephone: (202) 287–1445. If possible, please submit all items on a CD, in which case it is not necessary to include printed copies. No telefacsimiles (‘‘faxes’’) will be accepted. For detailed instructions on submitting comments and additional information on this process, see section VII of this document. Docket: The docket for this activity, which includes Federal Register notices, 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. The docket web page can be found at www.regulations.gov/docket/EERE2020-BT-STD-0039. The docket web page contains instructions on how to access all documents, including public comments, in the docket. See section VII of this document for information on how to submit comments through www.regulations.gov. EPCA requires the Attorney General to provide DOE a written determination of whether the proposed standard is likely to lessen competition. The U.S. Department of Justice Antitrust Division invites input from market participants and other interested persons with views on the likely competitive impact of the proposed standard. Interested persons may contact the Division at energy.standards@usdoj.gov on or before the date specified in the DATES section. Please indicate in the ‘‘Subject’’ line of your email the title and Docket Number of this proposed rule. FOR FURTHER INFORMATION CONTACT: Mr. Lucas Adin, U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, Building PO 00000 Frm 00002 Fmt 4701 Sfmt 4702 Technologies Office, EE–5B, 1000 Independence Avenue SW, Washington, DC 20585–0121. Email: ApplianceStandardsQuestions@ ee.doe.gov. Mr. Matthew Schneider, U.S. Department of Energy, Office of the General Counsel, GC–33, 1000 Independence Avenue SW, Washington, DC 20585–0121. Telephone: (240) 597– 6265. Email: matthew.schneider@ hq.doe.gov. For further information on how to submit a comment, review other public comments and the docket, or participate in the public meeting, contact the Appliance and Equipment Standards Program staff at (202) 287–1445 or by email: ApplianceStandardsQuestions@ ee.doe.gov. SUPPLEMENTARY INFORMATION: Table of Contents I. Synopsis of the Proposed 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 Miscellaneous Refrigeration Products 3. Test Procedure 4. Off Mode and Standby Mode C. Deviation From Appendix A III. General Discussion A. Product Classes and Scope of Coverage B. Definitions C. Test Procedure D. Technological Feasibility 1. General 2. Maximum Technologically Feasible Levels E. Energy Savings 1. Determination of Savings 2. Significance of Savings F. Economic Justification 1. Specific Criteria a. Economic Impact on Manufacturers and Consumers b. Savings in Operating Costs Compared To Increase in Price (LCC and PBP) c. Energy Savings d. Lessening of Utility 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. Product Classes With Automatic Icemakers b. Addition of a Built-In Combination Cooler-Refrigerator-Freezer With BottomMounted Freezer and Automatic Icemaker Product Class 2. Technology Options B. Screening Analysis E:\FR\FM\31MRP2.SGM 31MRP2 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules 1. Screened-Out Technologies 2. Technology Options C. Engineering Analysis 1. Efficiency Analysis a. Built-In Classes b. Baseline Efficiency/Energy Use c. Higher Efficiency Levels d. VIP and VSC Analysis 2. Cost Analysis 3. Cost-Efficiency Results 4. Manufacturer Selling Price 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. Energy Efficiency Distribution in the NoNew-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 and Key Inputs a. Manufacturer Production Costs b. Shipments Projections c. Product and Capital Conversion Costs d. Manufacturer Markup Scenarios 3. Manufacturer Interviews a. Supply Chain Constraints b. Built-in Product Classes 4. Discussion of MIA Comments K. Emissions Analysis 1. Air Quality Regulations Incorporated in DOE’s Analysis L. Monetizing Emissions Impacts 1. Monetization of Greenhouse Gas Emissions a. Social Cost of Carbon b. Social Cost of Methane and Nitrous Oxide 2. Monetization of Other Emissions Impacts 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. Direct Impacts on 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 Economic Impacts C. Conclusion 1. Benefits and Burdens of TSLs Considered for MREF Standards 2. Annualized Benefits and Costs of the Proposed Standards D. Reporting, Certification, and Sampling Plan VI. Procedural Issues and Regulatory Review A. Review Under Executive Orders 12866 and 13563 B. Review Under the Regulatory Flexibility Act 1. Description of Reasons Why Action Is Being Considered 2. Objectives of, and Legal Basis for, Rule 3. Description on Estimated Number of Small Entities Regulated 4. Description and Estimate of Compliance Requirements Including Differences in Cost, if Any, for Different Groups of Small Entities 5. Duplication, Overlap, and Conflict With Other Rules and Regulations 6. Significant Alternatives to the Rule C. Review Under the Paperwork Reduction Act D. Review Under the National Environmental Policy Act 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. Information Quality VII. Public Participation A. Attendance at the Public Meeting Webinar B. Procedure for Submitting Prepared General Statements for Distribution 19383 C. Conduct of the Public Meeting D. Submission of Comments E. Issues on Which DOE Seeks Comment VIII. Approval of the Office of the Secretary I. Synopsis of the Proposed Rule The Energy Policy and Conservation Act, Public Law 94–163, as amended (‘‘EPCA’’),1 authorizes DOE to regulate the energy efficiency of a number of consumer products and certain industrial equipment. (42 U.S.C. 6291– 6317) Title III, Part B 2 of EPCA, established the Energy Conservation Program for Consumer Products Other Than Automobiles. (42 U.S.C. 6291– 6309) These products include miscellaneous refrigeration products (‘‘MREFs’’), the subject of this rulemaking. 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 a 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 (proceeding to a final rule, as appropriate). (42 U.S.C. 6295(m)) In accordance with these and other statutory provisions discussed in this document, DOE proposes amended energy conservation standards for miscellaneous refrigeration products. The proposed standards, which are expressed in kWh/yr, are shown in Table I.1. These proposed standards, if adopted, would apply to all miscellaneous refrigeration products listed in Table I.1 manufactured in, or imported into, the United States starting on the date 5 years after the publication of the final rule for this rulemaking. ddrumheller on DSK120RN23PROD with PROPOSALS2 TABLE I.1—PROPOSED ENERGY CONSERVATION STANDARDS FOR MISCELLANEOUS REFRIGERATION PRODUCTS Equations for maximum energy use (kWh/yr) Product class 1. Freestanding compact coolers (‘‘FCC’’) ..................................................................................................................... 2. Freestanding coolers (‘‘FC’’) ...................................................................................................................................... 3. Built-in compact coolers (‘‘BICC’’) .............................................................................................................................. 1 All references to EPCA in this document refer to the statute as amended through the Energy Act of 2020, Public Law. 116–260 (Dec. 27, 2020), VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 which reflect the last statutory amendments that impact Parts A and A–1 of EPCA. PO 00000 Frm 00003 Fmt 4701 Sfmt 4702 5.52AV + 109.1 5.52AV + 109.1 5.52AV + 109.1 2 For editorial reasons, upon codification in the U.S. Code, Part B was redesignated Part A. E:\FR\FM\31MRP2.SGM 31MRP2 19384 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules TABLE I.1—PROPOSED ENERGY CONSERVATION STANDARDS FOR MISCELLANEOUS REFRIGERATION PRODUCTS— Continued Equations for maximum energy use (kWh/yr) Product class 4. Built-in coolers (‘‘BIC’’) ............................................................................................................................................... C–3A. Cooler with all-refrigerator—automatic defrost .................................................................................................... C–3A–BI. Built-in cooler with all-refrigerator—automatic defrost ................................................................................... C–5–BI. Built-in cooler with refrigerator-freezer—automatic defrost with bottom-mounted freezer .............................. C–9. Cooler with upright freezer with automatic defrost without an automatic icemaker ............................................. C–9–BI. Built-in cooler with upright freezer with automatic defrost without an automatic icemaker ............................. C–13A. Compact cooler with all-refrigerator—automatic defrost ................................................................................... C–13A–BI. Built-in compact cooler with all-refrigerator—automatic defrost .................................................................. 6.30AV 4.11AV 4.67AV 5.47AV 5.58AV 6.38AV 4.74AV 5.22AV + + + + + + + + 124.6 117.4 133.0 196.2 + 28I 147.7 + 28I 168.8 + 28I 155.0 170.5 AV = Total adjusted volume, expressed in ft3, as determined in appendix A to subpart B of 10 CFR part 430. I = 1 for a product with an automatic icemaker and = 0 for a product without an automatic icemaker. A. Benefits and Costs to Consumers Table I.2 presents DOE’s evaluation of the economic impacts of the proposed standards on consumers of MREFs, as measured by the average life-cycle cost (‘‘LCC’’) savings and the simple payback period (‘‘PBP’’).3 The average LCC savings are positive for all product classes, and the PBP is less than the average lifetime of MREFs, which varies by product class (see section IV.F.6 of this document). TABLE I.2—IMPACTS OF PROPOSED ENERGY CONSERVATION STANDARDS ON CONSUMERS OF MISCELLANEOUS REFRIGERATION PRODUCTS Product class Average LCC savings [2021$] FCC ...................................................................................................................................................... FC ......................................................................................................................................................... BICC ..................................................................................................................................................... BIC ........................................................................................................................................................ C–13A ................................................................................................................................................... C–13A–BI ............................................................................................................................................. C–3A ..................................................................................................................................................... C–3A–BI ............................................................................................................................................... 12.6 ......................... 28.0 ......................... 2.9 ........................... 57.3 ......................... 12.0 ......................... 15.3 ......................... 31.5 ......................... 36.7 ......................... Simple payback period (years) 6.8 8.0 7.9 4.0 6.9 6.7 1.7 1.6 Note: See Table I.1 for definition of the product class acronyms. ddrumheller on DSK120RN23PROD with PROPOSALS2 DOE’s analysis of the impacts of the proposed 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 starting with the publication year (2023) of the NOPR and extending over a 30-year period following the expected compliance date of the standards (2023 to 2058). Using a real discount rate of 7.7 percent, DOE estimates that the INPV for manufacturers of MREFs, in the case without amended standards is $742.0 million.4 Under the proposed standards, the change in INPV is estimated to range from ¥12.1 percent to ¥8.4 percent, which is approximately ¥$89.8 million to ¥$62.7 million. In order to bring 3 The average LCC savings refer to consumers that are affected by a standard and are measured relative to the efficiency distribution in the no-newstandards case, which depicts the market in the compliance year in the absence of new or amended standards (see section IV.F.8 of this document). The simple PBP, which is designed to compare specific VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 products into compliance with amended standards, it is estimated that the industry would incur total conversion costs of $126.9 million. DOE’s analysis of the impacts of the proposed standards on manufacturers is described in section IV.J of this document. The analytic results of the manufacturer impact analysis (‘‘MIA’’) are presented in section V.B.2 of this document. C. National Benefits and Costs DOE’s analyses indicate that the proposed energy conservation standards for MREFs would save a significant amount of energy. Relative to the case without amended standards, the lifetime energy savings for MREFs purchased in the 30-year period that begins in the anticipated year of compliance with the amended standards (2029–2058) amount efficiency levels, is measured relative to the baseline product (see section IV.C of this document). 4 Unless otherwise noted, all monetary values in this document are expressed in 2021 dollars. 5 The quantity refers to full-fuel-cycle (‘‘FFC’’) energy savings. FFC energy savings includes the PO 00000 Frm 00004 Fmt 4701 Sfmt 4702 to 0.31 quadrillion British thermal units (‘‘Btu’’), or quads.5 This represents a savings of 19.6 percent relative to the energy use of these products in the case without amended standards (refer ed to as the ‘‘no-new-standards case’’). The cumulative net present value (‘‘NPV’’) of total consumer benefits of the proposed standards for MREFs ranges from $0.14 billion (at a 7-percent discount rate) to $0.69 billion (at a 3percent discount rate). This NPV expresses the estimated total value of future operating cost savings minus the estimated increased product costs for miscellaneous refrigeration products purchased in 2029–2058. In addition, the proposed standards for MREFs are projected to yield significant environmental benefits. DOE estimates that the proposed standards would result in cumulative emission 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.1 of this document. E:\FR\FM\31MRP2.SGM 31MRP2 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules ddrumheller on DSK120RN23PROD with PROPOSALS2 reductions (over the same period as for energy savings) of 10.4 million metric tons (‘‘Mt’’) 6 of carbon dioxide (‘‘CO2’’), 4.8 thousand tons of sulfur dioxide (‘‘SO2’’), 15.9 thousand tons of nitrogen oxides (‘‘NOX’’), 70.3 thousand tons of methane (‘‘CH4’’), 0.11 thousand tons of nitrous oxide (‘‘N2O’’), and 0.03 tons of mercury (‘‘Hg’’).7 DOE used interim SC– GHG values developed by an Interagency Working Group on the Social Cost of Greenhouse Gases (IWG) for the CO2 projections. DOE estimates the value of climate benefits from a reduction in greenhouse gases (GHG) using four different estimates of the social cost of CO2 (‘‘SC– CO2’’), the social cost of methane (‘‘SC– CH4’’), and the social cost of nitrous oxide (‘‘SC–N2O’’). Together these represent the social cost of GHG (SC– GHG).8 DOE used interim SC–GHG values developed by an Interagency Working Group on the Social Cost of Greenhouse Gases (IWG).9 The derivation of these values is discussed in section IV.L of this document. For presentational purposes, the monetized climate benefits associated with the average SC–GHG at a 3-percent discount rate are estimated to be $0.5 billion. DOE does not have a single central SC– GHG point estimate and it emphasizes the importance and value of considering 6 A metric ton is equivalent to 1.1 short tons. Results for emissions other than CO2 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 2022 (‘‘AEO 2022’’). AEO 2022 represents current Federal and state legislation and final implementation of regulations as of the time of its preparation. See section IV.K of this document for further discussion of AEO 2022 assumptions that effect air pollutant emissions. 8 On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22–30087) granted the Federal government’s emergency motion for stay pending appeal of the February 11, 2022, preliminary injunction issued in Louisiana v. Biden, No. 21–cv– 1074–JDC–KK (W.D. La.). As a result of the Fifth Circuit’s order, the preliminary injunction is no longer in effect, pending resolution of the Federal government’s appeal of that injunction or a further court order. Among other things, the preliminary injunction enjoined the defendants in that case from ‘‘adopting, employing, treating as binding, or relying upon’’ the interim estimates of the social cost of greenhouse gases—which were issued by the Interagency Working Group on the Social Cost of Greenhouse Gases on February 26, 2021—to monetize the benefits of reducing greenhouse gas emissions. As reflected in this rule, DOE has reverted to its approach prior to the injunction and presents monetized GHG abatement benefits where appropriate and permissible under law. 9 See Interagency Working Group on Social Cost of Greenhouse Gases, Technical Support Document: Social Cost of Carbon, Methane, and Nitrous Oxide. Interim Estimates Under Executive Order 13990, Washington, DC, February 2021 (‘‘February 2021 SC–GHG TSD’’). www.whitehouse.gov/wp-content/ uploads/2021/02/TechnicalSupportDocument_ SocialCostofCarbonMethaneNitrousOxide.pdf (Last accessed September 22, 2022). VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 the benefits calculated using all four SC–GHG estimates. DOE estimated the monetary health benefits of SO2 and NOX emissions reductions, also discussed in section IV.L of this document. DOE estimated the present value of the monetized health benefits would be $0.3 billion using a 7-percent discount rate, and $0.8 billion using a 3-percent discount rate.10 DOE is currently only monetizing (for SO2 and NOX) PM2.5 precursor health benefits and (for NOX) ozone precursor health benefits, but will continue to assess the ability to monetize other effects such as health benefits from reductions in direct PM2.5 emissions. Table I.3 summarizes the economic benefits and costs expected to result from the proposed standards for miscellaneous refrigeration products. There are other important unquantified effects, including certain unquantified climate benefits, unquantified public health benefits from the reduction of toxic air pollutants, direct PM2.5 and other emissions, unquantified energy security benefits, and distributional effects, among others. TABLE I.3—SUMMARY OF MONETIZED BENEFITS AND COSTS OF PROPOSED ENERGY CONSERVATION STANDARDS FOR MISCELLANEOUS REFRIGERATION PRODUCTS (TSL 4) [Billion 2021$] 3% discount rate Consumer Operating Cost Savings ............................. Climate Benefits * ................. Health Benefits ** .................. Total Monetized Benefits † ... Consumer Incremental Product Costs ‡ ......................... Monetized Net Benefits ........ 2.0 0.5 0.8 3.3 1.3 2.0 7% discount rate Consumer Operating Cost Savings ............................. Climate Benefits * (3% discount rate) ......................... Health Benefits ** .................. Total Monetized Benefits † ... Consumer Incremental Product Costs ........................... Monetized Net Benefits ........ 0.8 0.5 0.3 1.6 0.7 0.9 Note: This table presents the costs and benefits associated with product name shipped in 2029–2058. These results include benefits to consumers which accrue after 2058 from the products shipped in 2029–2058. 10 DOE estimates the economic value of these emissions reductions resulting from the considered TSLs for the purpose of complying with the requirements of Executive Order 12866. PO 00000 Frm 00005 Fmt 4701 Sfmt 4702 19385 * Climate benefits are calculated using four different estimates of the social cost of carbon (SC–CO2), methane (SC–CH4), and nitrous oxide (SC–N2O) (model average at 2.5 percent, 3 percent, and 5 percent discount rates; 95th percentile at 3 percent discount rate) (see section IV.L of this document). Together these represent the global SC–GHG. For presentational purposes of this table, the climate benefits associated with the average SC–GHG at a 3 percent discount rate are shown, but the Department does not have a single central SC–GHG point estimate. On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22– 30087) granted the Federal government’s emergency motion for stay pending appeal of the February 11, 2022, preliminary injunction issued in Louisiana v. Biden, No. 21–cv– 1074–JDC–KK (W.D. La.). As a result of the Fifth Circuit’s order, the preliminary injunction is no longer in effect, pending resolution of the Federal government’s appeal of that injunction or a further court order. Among other things, the preliminary injunction enjoined the defendants in that case from ‘‘adopting, employing, treating as binding, or relying upon’’ the interim estimates of the social cost of greenhouse gases—which were issued by the Interagency Working Group on the Social Cost of Greenhouse Gases on February 26, 2021—to monetize the benefits of reducing greenhouse gas emissions. As reflected in this rule, DOE has reverted to its approach prior to the injunction and presents monetized GHG abatement benefits, where appropriate and permissible under law. ** Health benefits are calculated using benefit-per-ton values for NOX and SO2. DOE is currently only monetizing (for SO2 and NOX) PM2.5 precursor health benefits and (for NOX) ozone precursor health benefits, but will continue to assess the ability to monetize other effects such as health benefits from reductions in direct PM2.5 emissions. See section IV.L of this document for more details. † Total and net benefits include those consumer, climate, and health benefits that can be quantified and monetized. For presentation purposes, total and net benefits for both the 3percent and 7-percent cases are presented using the average SC–GHG with 3-percent discount rate, but the Department does not have a single central SC–GHG point estimate. DOE emphasizes the importance and value of considering the benefits calculated using all four SC–GHG estimates. The benefits and costs of the proposed standards can also be expressed in terms of annualized values. The monetary values for the total annualized net benefits are (1) the reduced consumer operating costs, minus (2) the increase in product purchase prices and installation costs, plus (3) the value of climate and health benefits of emission reductions, all annualized.11 The national operating savings are domestic private U.S. consumer monetary savings that occur as a result 11 To convert the time-series of costs and benefits into annualized values, DOE calculated a present value in 2022, 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., 2030), and then discounted the present value from each year to 2022. 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\31MRP2.SGM 31MRP2 19386 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules of purchasing the covered products and are measured for the lifetime of miscellaneous refrigeration products shipped in 2029–2058. The benefits associated with reduced emissions achieved as a result of the proposed standards are also calculated based on the lifetime of miscellaneous refrigeration products shipped in 2029– 2058. Total benefits for both the 3percent and 7-percent cases are presented using the average GHG social costs with 3-percent discount rate. Estimates of SC–GHG values are presented for all four discount rates in section IV.L of this document. Table I.4 presents the total estimated monetized benefits and costs associated with the proposed standard, expressed in terms of annualized values. The results under the primary estimate are as follows. Using a 7-percent discount rate for consumer benefits and costs and health benefits from reduced NOx and SO2 emissions, and the 3-percent discount rate case for climate benefits from reduced GHG emissions, the estimated cost of the standards proposed in this rule is $81.2 million per year in increased equipment costs, while the estimated annual benefits are $97.6 million in reduced equipment operating costs, $28.9 million in monetized climate benefits, and $35.4 million in monetized health benefits. In this case, the monetized net benefit would amount to $80.6 million per year. Using a 3-percent discount rate for all benefits and costs, the estimated cost of the proposed standards is $81.0 million per year in increased equipment costs, while the estimated annual benefits are $123.1 million in reduced operating costs, $28.9 million in monetized climate benefits, and $49.5 million in monetized health benefits. In this case, the monetized net benefit would amount to $120.4 million per year. TABLE I.4—ANNUALIZED MONETIZED BENEFITS AND COSTS OF PROPOSED ENERGY CONSERVATION STANDARDS FOR MISCELLANEOUS REFRIGERATION PRODUCTS (TSL 4) [Million 2021$/year] Primary estimate Low-netbenefits estimate High-netbenefits estimate 3% discount rate Consumer Operating Cost Savings ............................................................................................. Climate Benefits * ......................................................................................................................... Health Benefits ** ......................................................................................................................... Total Monetized Benefits † .......................................................................................................... Consumer Incremental Product Costs † ...................................................................................... Monetized Net Benefits ............................................................................................................... 123.1 28.9 49.5 201.4 81.0 120.4 116.3 28.1 48.2 192.6 82.3 110.3 131.2 29.6 50.8 211.6 79.4 132.2 97.6 28.9 35.4 161.9 81.2 80.6 92.7 28.1 34.6 155.4 82.4 72.9 103.3 29.6 36.2 169.2 79.8 89.4 7% discount rate ddrumheller on DSK120RN23PROD with PROPOSALS2 Consumer Operating Cost Savings ............................................................................................. Climate Benefits * (3% discount rate) .......................................................................................... Health Benefits ** ......................................................................................................................... Total Monetized Benefits † .......................................................................................................... Consumer Incremental Product Costs ........................................................................................ Monetized Net Benefits ............................................................................................................... Note: This table presents the costs and benefits associated with miscellaneous refrigeration products shipped in 2029–2058. These results include benefits to consumers which accrue after 2058 from the products shipped in 2029–2058. The Primary, Low-Net-Benefits, and High Net Benefits Estimates utilize projections of energy prices from the AEO 2022 Reference case, Low Economic Growth case, and High Economic Growth case, respectively. In addition, incremental equipment costs reflect a medium decline rate in the Primary Estimate, a low decline rate in the Low-Net-Benefits Estimate, and a high decline rate in the High Net Benefits Estimate. The methods used to derive projected price trends are explained in section IV.H.3 of this document. Note that the Benefits and Costs may not sum to the Net Benefits due to rounding. * Climate benefits are calculated using four different estimates of the global SC–GHG (see section IV.L of this NOPR). For presentational purposes of this table, the climate benefits associated with the average SC–GHG at a 3 percent discount rate are shown, but the Department does not have a single central SC–GHG point estimate, and it emphasizes the importance and value of considering the benefits calculated using all four SC–GHG estimates. On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22–30087) granted the Federal government’s emergency motion for stay pending appeal of the February 11, 2022, preliminary injunction issued in Louisiana v. Biden, No. 21–cv–1074–JDC–KK (W.D. La.). As a result of the Fifth Circuit’s order, the preliminary injunction is no longer in effect, pending resolution of the Federal government’s appeal of that injunction or a further court order. Among other things, the preliminary injunction enjoined the defendants in that case from ‘‘adopting, employing, treating as binding, or relying upon’’ the interim estimates of the social cost of greenhouse gases—which were issued by the Interagency Working Group on the Social Cost of Greenhouse Gases on February 26, 2021—to monetize the benefits of reducing greenhouse gas emissions. As reflected in this rule, DOE has reverted to its approach prior to the injunction and presents monetized GHG abatement benefits where appropriate and permissible under law. ** Health benefits are calculated using benefit-per-ton values for NOX and SO2. DOE is currently only monetizing (for SO2 and NOX) PM2.5 precursor health benefits and (for NOX) ozone precursor health benefits, but will continue to assess the ability to monetize other effects such as health benefits from reductions in direct PM2.5 emissions. The health benefits are presented at real discount rates of 3 and 7 percent. See section IV.L of this document for more details. † Total benefits for both the 3-percent and 7-percent cases are presented using the average SC–GHG with 3-percent discount rate, but the Department does not have a single central SC–GHG point estimate. DOE’s analysis of the national impacts of the proposed standards is described in sections IV.H, IV.K and IV.L of this document. VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 D. Conclusion DOE has tentatively concluded that the proposed standards represent the maximum improvement in energy efficiency that is technologically feasible and economically justified, and PO 00000 Frm 00006 Fmt 4701 Sfmt 4702 would result in the significant conservation of energy. Specifically, with regards to technological feasibility products achieving these standard levels are already commercially available for all product classes covered by this proposal. As for economic justification, E:\FR\FM\31MRP2.SGM 31MRP2 ddrumheller on DSK120RN23PROD with PROPOSALS2 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules DOE’s analysis shows that the benefits of the proposed standard exceed, to a great extent, the burdens of the proposed standards. Using a 7-percent discount rate for consumer benefits and costs and NOX and SO2 reduction benefits, and a 3percent discount rate case for GHG social costs, the estimated cost of the proposed standards for miscellaneous refrigeration products is $81.2 million per year in increased product costs, while the estimated annual benefits are $97.6 million in reduced product operating costs, $28.9 million in monetized climate benefits and $35.4 million in monetized health benefits. The net monetized benefit amounts to $80.6 million per year. The significance of energy savings offered by a new or amended energy conservation standard cannot be determined without knowledge of the specific circumstances surrounding a given rulemaking.12 For example, some covered products and equipment have substantial energy consumption occur during periods of peak energy demand. The impacts of these products on the energy infrastructure can be more pronounced than products with relatively constant demand. Accordingly, DOE evaluates the significance of energy savings on a caseby-case basis. As previously mentioned, the proposed standards are projected to result in estimated national energy savings of 0.31 quad (FFC), the equivalent of the electricity use of 3.4 million homes in one year. In addition, they are projected to reduce GHG emissions. The NPV of consumer benefit for these projected energy savings is $0.14 billion using a discount rate of 7 percent, and $0.69 billion using a discount rate of 3 percent. The cumulative emissions reductions associated with these energy savings are 10.4 Mt of CO2, 4.8 thousand tons of SO2, 15.9 thousand tons of NOX, 0.03 tons of Hg, 70.3 thousand tons of CH4, and 0.11 thousand tons of N2O. The estimated monetary value of the climate benefits from reduced GHG emissions (associated with the average SC–GHG at a 3-percent discount rate) is $0.5 billion. The estimated monetary value of the health benefits from reduced SO2 and NOX emissions is $0.3 billion using a 7percent discount rate and $0.8 billion using a 3-percent discount rate. As such, DOE has initially determined the energy savings from the proposed standard 12 Procedures, Interpretations, and Policies for Consideration in New or Revised Energy Conservation Standards and Test Procedures for Consumer Products and Commercial/Industrial Equipment, 86 FR 70892, 70901 (Dec. 13, 2021). VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 levels are ‘‘significant’’ within the meaning of 42 U.S.C. 6295(o)(3)(B). A more detailed discussion of the basis for this tentative conclusion is contained in the remainder of this document and the accompanying technical support document (‘‘TSD’’). DOE also considered more stringent energy efficiency levels as potential standards and is still considering them in this rulemaking. However, DOE has tentatively concluded that the potential burdens of the more stringent energy efficiency levels would outweigh the projected benefits. Based on consideration of the public comments DOE receives in response to this document and related information collected and analyzed during the course of this rulemaking effort, DOE may adopt energy efficiency levels presented in this document that are either higher or lower than the proposed standards, or some combination of level(s) that incorporate the proposed standards in part. II. Introduction The following section briefly discusses the statutory authority underlying this proposed rule, as well as some of the relevant historical background related to the establishment of standards for miscellaneous refrigeration products. A. Authority EPCA authorizes DOE to regulate the energy efficiency of a number of consumer products and certain industrial equipment. Title III, Part B of EPCA established the Energy Conservation Program for Consumer Products Other Than Automobiles which, in addition to identifying particular consumer products and commercial equipment as covered under the statute, permits the Secretary of Energy to classify additional types of consumer products as covered products. (42 U.S.C. 6292(a)(20)) DOE added MREFs as covered products through a final determination of coverage published in the Federal Register on July 18, 2016 (the ‘‘July 2016 Final Coverage Determination’’). 81 FR 46768. MREFs are consumer refrigeration products other than refrigerators, refrigerator-freezers, or freezers, which include coolers and combination cooler refrigeration products. 10 CFR 430.2. MREFs include refrigeration products such as coolers (e.g., wine chillers and other specialty products) and combination cooler refrigeration products (e.g., wine chillers and other specialty compartments combined with a refrigerator, refrigerator-freezers, or freezers). EPCA further provides that, PO 00000 Frm 00007 Fmt 4701 Sfmt 4702 19387 not later than 6 years after the 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 NOPR including new proposed energy conservation standards (proceeding to a final rule, as appropriate). (42 U.S.C. 6295(m)(1)) Not later than three years after issuance of a final determination not to amend standards, DOE must publish either a notice of determination that standards for the product do not need to be amended, or a NOPR including new proposed energy conservation standards (proceeding to a final rule, as appropriate). (42 U.S.C. 6295(m)(3)(B)) The energy conservation program under EPCA consists essentially of four parts: (1) testing, (2) labeling, (3) the establishment of Federal energy conservation standards, and (4) certification and enforcement procedures. Relevant provisions of EPCA specifically include definitions (42 U.S.C. 6291), test procedures (42 U.S.C. 6293), labeling provisions (42 U.S.C. 6294), energy conservation standards (42 U.S.C. 6295), and the authority to require information and reports from manufacturers (42 U.S.C. 6296). Federal energy efficiency requirements for covered products established under EPCA generally supersede State laws and 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 EPCA. (See 42 U.S.C. 6297(d)) 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) and 42 U.S.C. 6295(r)) 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 42 U.S.C. 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 miscellaneous refrigeration products appears at 10 CFR part 430, subpart B, appendix A, E:\FR\FM\31MRP2.SGM 31MRP2 ddrumheller on DSK120RN23PROD with PROPOSALS2 19388 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules Uniform Test Method for Measuring the Energy Consumption of Refrigerators, Refrigerator-Freezers, and Miscellaneous Refrigeration Products (‘‘appendix A’’). DOE must follow specific statutory criteria for prescribing new or amended standards for covered products, including refrigerators, refrigeratorfreezers, and freezers. Any new or amended standard for a covered product must be designed to achieve the maximum improvement in energy efficiency that the Secretary of Energy (‘‘Secretary’’) determines is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A) and 6295(o)(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 refrigerators, refrigeratorfreezers, and freezers, 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 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 considers relevant. VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 (42 U.S.C. 6295(o)(2)(B)(i)(I)–(VII)) Further, EPCA 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 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, EPCA 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 product 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 the 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)) Finally, pursuant to the amendments contained in the Energy Independence and Security Act of 2007 (‘‘EISA 2007’’), Public Law 110–140, any final rule for new or amended energy conservation standards promulgated after July 1, 2010, is required to address standby PO 00000 Frm 00008 Fmt 4701 Sfmt 4702 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 current test procedures for miscellaneous refrigeration products address standby mode and off mode energy use. In this rulemaking, DOE intends to incorporate such energy use into any amended energy conservation standards that it may adopt. B. Background 1. Current Standards DOE added MREFs as covered products through a final determination of coverage published in the Federal Register on July 18, 2016 (the ‘‘July 2016 Final Coverage Determination’’). 81 FR 46768. In that determination, DOE noted that MREFs, on average, consume more than 150 kilowatt hours per year (‘‘kWh/yr’’) and that the aggregate annual national energy use of these products exceeds 4.2 terawatt hours (‘‘TWh’’). 81 FR 46768, 46775. In addition to establishing coverage, the July 2016 Final Coverage Determination established definitions for ‘‘miscellaneous refrigeration products,’’ ‘‘coolers,’’ and ‘‘combination cooler refrigeration products’’ in 10 CFR 430.2. 81 FR 46768, 46791–46792. On October 28, 2016, DOE published a direct final rule (the ‘‘October 2016 Direct Final Rule’’) in which it adopted energy conservation standards for MREFs consistent with the recommendations from a negotiated rulemaking working group established under the Appliance Standards and Rulemaking Federal Advisory Committee. 81 FR 75194. Concurrent with the October 2016 Direct Final Rule, DOE published a NOPR in which it proposed and requested comments on the standards set forth in the direct final rule. 81 FR 74950. On May 26, 2017, DOE published a notice in the Federal Register in which it determined that the comments received in response to the October 2016 Direct Final Rule did not provide a reasonable basis for withdrawing the rule and, therefore, confirmed the adoption of the energy conservation standards established in that direct final rule. 82 FR 24214. These current standards for MREFs are set forth in DOE’s regulations at 10 CFR 430.32(aa)(1)–(2) and are repeated E:\FR\FM\31MRP2.SGM 31MRP2 19389 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules solely for reference in Table II.1 to aid the reader. TABLE II.1—FEDERAL ENERGY CONSERVATION STANDARDS FOR MREFS Equations for maximum energy use (kWh/yr) Product class 1. Freestanding compact coolers (‘‘FCC’’) ..................................................................................................................... 2. Freestanding coolers (‘‘FC’’) ...................................................................................................................................... 3. Built-in compact coolers (‘‘BICC’’) .............................................................................................................................. 4. Built-in coolers (‘‘BIC’’) ............................................................................................................................................... C–3A. Cooler with all-refrigerator—automatic defrost .................................................................................................... C–3A–BI. Built-in cooler with all-refrigerator—automatic defrost ................................................................................... C–9. Cooler with upright freezer with automatic defrost without an automatic icemaker ............................................. C–9–BI. Built-in cooler with upright freezer with automatic defrost without an automatic icemaker ............................. C–9I. Cooler with upright freezer with automatic defrost with an automatic icemaker ................................................. C–9I–BI. Built-in cooler with upright freezer with automatic defrost with an automatic icemaker ................................. C–13A. Compact cooler with all-refrigerator—automatic defrost ................................................................................... C–13A–BI. Built-in compact cooler with all-refrigerator—automatic defrost .................................................................. 7.88AV 7.88AV 7.88AV 7.88AV 4.57AV 5.19AV 5.58AV 6.38AV 5.58AV 6.38AV 5.93AV 6.52AV + + + + + + + + + + + + 155.8 155.8 155.8 155.8 130.4 147.8 147.7 168.8 231.7 252.8 193.7 213.1 AV = Total adjusted volume, expressed in ft3, as determined in appendix A to subpart B of 10 CFR part 430. 2. History of Standards Rulemaking for Miscellaneous Refrigeration Products On December 8, 2020, DOE published a notice that it was initiating an early assessment review to determine whether any new or amended standards would satisfy the relevant requirements of EPCA for a new or amended energy conservation standard for MREFs and a request for information (‘‘RFI’’). 85 FR 78964 (‘‘December 2020 Early Assessment Review RFI’’). Comments received following the publication of the December 2020 Early Assessment Review RFI helped DOE identify and resolve issues related to the subsequent preliminary analysis.13 DOE published a notice of public meeting and availability of the preliminary technical support document (‘‘TSD’’) on January 21, 2022 (‘‘January 2022 Preliminary Analysis’’). 87 FR 3229. DOE subsequently held a public meeting on March 7, 2022, to discuss and receive comments on the January 2022 Preliminary Analysis. The January 2022 Preliminary Analysis that presented the methodology and results of the preliminary analysis is available at: www.regulations.gov/document/ EERE-2020-BT-STD-0039-0009. DOE received five docket comments in response to the January 2022 Preliminary Analysis from the interested parties listed in Table II.1. TABLE II.1—JANUARY 2022 PRELIMINARY ANALYSIS WRITTEN COMMENTS Organization(s) Reference in this NOPR Association of Home Appliance Manufacturers ................ Appliance Standards Awareness Project ......................... California Investor-Owned Utilities .................................... Northwest Energy Efficiency Alliance ............................... Sub Zero Group, Inc ......................................................... AHAM ........................................................ ASAP ........................................................ CA IOUs .................................................... NEEA ........................................................ Sub Zero ................................................... Trade Organization. Efficiency Organization. Utility Supplier. Efficiency Organization. Manufacturer. EPCA sets forth generally applicable criteria and procedures for DOE’s adoption and amendment of test procedures. (42 U.S.C. 6293) Manufacturers of covered products must use these test procedures to certify to DOE that their product complies with energy conservation standards and to quantify the efficiency of their product. On October 12, 2021, DOE published in the Federal Register a final rule amending the test procedures for MREFs and other consumer refrigeration products at appendix A and appendix B of 10 CFR part 430 (the ‘‘October 2021 TP Final Rule’’). 86 FR 56790 (October 12, 2021). The October 2021 TP Final Rule incorporates by reference the most recent industry test procedure, AHAM Standard HRF–1, ‘‘Energy and Internal Volume of Consumer Refrigeration Products’’ (‘‘AHAM HRF–1–2019’’). However, DOE did not require the change in icemaker energy use included in the 2019 revision of HRF–1. 86 FR 56793. While DOE had proposed to implement this change in the proposed test procedure rulemaking (84 FR 70842, 70848–70850 (December 23, 2019)), DOE indicated in the October 2021 TP Final Rule that it would not require the calculations until the compliance dates of any amended energy conservation standards for these products, which incorporated the amended automatic icemaker energy consumption. 86 FR 56793. DOE determined that the test procedure amendments are not expected to impact the measured energy use of consumer refrigeration products, including MREFs, as compared to the test procedure in place at the time of the October 2021 Test Procedure Final Rule. 86 FR 56790. 13 Comments are available at www.regulations.gov/docket/EERE-2020-BT-STD0039/comments. 14 The parenthetical reference provides a reference for information located in the docket of DOE’s rulemaking to develop energy conservation standards for miscellaneous refrigeration products. (Docket No. EERE–2020–BT–STD–0039, which is maintained at https://www.regulations.gov/ document/EERE-2020-BT-STD-0039). The references are arranged as follows: (commenter name, comment docket ID number, page of that document). A parenthetical reference at the end of a comment quotation or paraphrase provides the location of the item in the public record.14 3. Test Procedure ddrumheller on DSK120RN23PROD with PROPOSALS2 Organization type VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 PO 00000 Frm 00009 Fmt 4701 Sfmt 4702 E:\FR\FM\31MRP2.SGM 31MRP2 19390 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules The analysis presented in this NOPR is based on the test procedure as finalized in the October 2021 TP Final Rule, except for the calculation of the change in energy use attributed to icemaker energy use, which aligns with the icemaker energy use in HRF–1– 2019. The value of the revised icemaker energy use and the plans to implement this change coincident with the date of future energy conservation standards were discussed at length in the October 2021 TP Final Rule. (See 86 FR 56822, October 12, 2021) Hence, this change is proposed in this document. ddrumheller on DSK120RN23PROD with PROPOSALS2 4. Off Mode and Standby Mode Pursuant to the amendments contained in the Energy Independence and Security Act of 2007 (‘‘EISA 2007’’), Public Law 110–140, any final rule for new or amended energy conservation standards promulgated after July 1, 2010, is required to 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 test procedures for refrigeration products measure the energy use of these products during extended time periods that include periods when the compressor and other key components are cycled off. All of the energy these products use during the ‘‘off cycles’’ is already included in the measurements. 79 FR 22320, 22345. The approach of testing with connected functions on but not connected to a network account for energy consumption of such functions as part of active mode testing, and as a result, this method provides consumers with representative estimates of energy consumption. C. Deviation From Appendix A In accordance with section 3(a) of 10 CFR part 430, subpart C, appendix A (‘‘appendix A’’), DOE notes that it is deviating from the provision in appendix A regarding the pre-NOPR stages for an energy conservation standards rulemaking. Section 6(a)(2) of appendix A states that if the Department determines it is appropriate to proceed with a rulemaking, the preliminary stages of a rulemaking to issue or amend an energy conservation standard that DOE will undertake will be a framework document and preliminary analysis, or an advance notice of proposed VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 rulemaking. For the reasons that follow, DOE finds it appropriate to deviate from this step-in appendix A and to instead publish this NOPR without issuing a framework document. A framework document is intended to introduce and summarize the various analyses DOE conducts during the rulemaking process and requests initial feedback from interested parties. As discussed in the preceding section, prior to this NOPR, DOE issued an early assessment request for information in which DOE identified and sought comment on the analyses conducted in support of the most recent energy conservation standards rulemaking, for which, DOE provided a 75-day comment period. 85 FR 78964, 78965–78966 (Dec. 8, 2020) (the ‘‘December 2020 Early Assessment Review RFI’’) DOE then issued the January 2022 Preliminary Analysis, seeking further general comments from stakeholders regarding the analyses conducted to support the upcoming standards rulemaking, for which, DOE provided a 60-day comment period for the January 2022 Preliminary Analysis. 87 FR 3229 (Jan. 21, 2022) As DOE is intending to rely on substantively the same analytical methods as in the most recent rulemaking, publication of a framework document would be largely redundant with the published early assessment RFI and preliminary analysis. As such, DOE is not publishing a framework document. Section 6(f)(2) of appendix A provides that the length of the public comment period for the NOPR will be at least 75 days. For this NOPR, DOE finds it appropriate to provide a 60-day comment period. As previously discussed, DOE provided a 60-day comment period on January 2022 Preliminary Analysis. 87 FR 3229. DOE subsequently held a public meeting on March 7, 2022, to discuss and received comments on the January 2022 Preliminary Analysis. Consequently, DOE has determined it is appropriate to provide a 60-day comment period on the NOPR, which the Department believes will provide interested parties with a meaningful opportunity to comment on the proposed rule. III. General Discussion DOE developed this proposal after considering oral and written comments, data, and information from interested parties that represent a variety of interests. The following discussion addresses issues raised by these commenters. PO 00000 Frm 00010 Fmt 4701 Sfmt 4702 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)) To simplify the structure for presentation of maximum allowable energy use equations, DOE is proposing, for class pairs for which one class includes an icemaker and the other does not, to represent the icemaker energy use adder in a single energy use equation rather than in two separate equations. The product class discussion in section IV below explores this issue further. In addition, DOE is proposing standard levels for a new class covering built-in combination cooler-refrigeratorfreezers with a bottom-mounted freezer, both with and without an automatic icemaker, (‘‘combination cooler 5–BI’’). This is also discussion in greater detail in section IV of this document. B. Definitions In 10 CFR 430.2, DOE has established definitions for a variety of refrigeration products, including refrigerators, refrigerator-freezers, freezers, and coolers and combination cooler refrigeration products defined as MREFs. DOE recognizes that there are some products that may, based on their physical and operational characteristics, meet more than one of the definitions in § 430.2. This includes certain combination cooler refrigeration products, such as cooler-refrigerators, cooler-refrigerator-freezers, or coolerfreezers. When standards for miscellaneous refrigeration products were established, they were not established for all potential combination products. Rather, standards were established for combination products that were on the market at the time of the final rule. 81 FR 75194, 75210, 75215–75216 (October 28, 2016). In doing so, DOE anticipated that manufacturers would eventually introduce combination products for which standards were not originally established under § 430.32(aa). In these cases, a particular product could also meet the definition of a refrigerator, refrigerator-freezer, or freezer. To specifically delineate between those products and MREF products currently E:\FR\FM\31MRP2.SGM 31MRP2 ddrumheller on DSK120RN23PROD with PROPOSALS2 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules subject to an energy conservation standard in § 430.32(aa), the definitions of refrigerator, refrigerator-freezer, or freezer in § 430.2 contain a provision that excludes any miscellaneous refrigeration product that must comply with an applicable miscellaneous refrigeration product energy conservation standard. Consequently, MREF products not exempted by that provision may still be defined as a refrigerator, refrigerator-freezer, or freezer. In this NOPR, DOE is clarifying that a product that combines a cooler with a refrigerator, refrigerator-freezer, or freezer that otherwise meets the definition of one of those product types in § 430.2 and is not excluded from the definition through coverage by a standard in 10 CFR 430.32(aa) as a miscellaneous refrigeration product, must be tested and certified as a refrigerator, refrigerator-freezer, or freezer according to the applicable test procedure in appendix A or appendix B (with additional instruction addressing the cooler compartment of a coolerfreezer, as applicable—these additional instructions are discussed in section III.C of this document), be certified according to the certification requirements in 10 CFR 429.14, and meet the energy conservation standard for the applicable product class of refrigerator, refrigerator-freezer, or freezer. DOE concludes that the current regulations require this approach for such products and is proposing the changes to the regulatory language simply as clarification. To ensure this clarification is properly applied, DOE identified potential clarifying amendments to the refrigerator and freezer definitions in § 430.2 that would lead to the appropriate determination of coverage for combination refrigeration products that do not have a prescribed MREF energy conservation standard. In particular, in this NOPR DOE proposes to amend the refrigerator and freezer definitions to clarify that the definitions do apply to products that have a cooler compartment included in addition to the fresh food compartment (for a refrigerator) or freezer compartment (for a freezer). DOE notes that this coverage status is already clear in the refrigeratorfreezer definition, which explicitly allows for additional compartments other than the fresh food and freezer compartments, which are defined based on operating temperature, by including allowing the product to have compartments that may operate outside these defined parameters. DOE’s proposal would make similar VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 clarifications for the refrigerator and freezer definitions. DOE requests comment on its proposal to amend the refrigerator and freezer definitions in § 430.2 to clarify that products that would otherwise be considered a refrigerator or a freezer that also include a cooler compartment would be considered a refrigerator or a freezer, unless a miscellaneous refrigeration product energy conservation standard in § 430.32(aa) is applicable for the product. C. Test Procedure EPCA sets forth generally applicable criteria and procedures for DOE’s adoption and amendment of test procedures. (42 U.S.C. 6293) Manufacturers of covered products must use these test procedures to certify to DOE that their product complies with energy conservation standards and to quantify the efficiency of their product. DOE’s current energy conservation standards for miscellaneous refrigeration products are expressed in terms of Annual Energy Use, expressed in kWh/year. (See 10 CFR 430.32(a).) As previously discussed, DOE planned to delay adopting for consumer refrigeration products the revised icemaker energy use adder of 28 kWh/ yr that is in AHAM HRF–1–2019— which is the industry test standard— until the compliance date of a possible amended standard. As discussed in the October 2021 TP final rule, DOE determined it would not require testing with the amended icemaker energy use adder until the compliance dates of the next amended energy conservation standards for refrigeration products. 86 FR 56815. Therefore, as discussed previously, this NOPR proposes product classes that implement the 28 kWh/year icemaker adder, consistent with the icemaker energy use in HRF–1–2019, and also proposes to adopt the updated icemaker adder for MREF, to be used on or after the compliance date of revised standards. As previously discussed, DOE is proposing clarifying amendments to product definitions indicating that products that include a cooler compartment in addition to a fresh food or freezer compartment but do not have an MREF energy conservation standard, would still meet the refrigerator or freezer definitions, as applicable. Additionally, DOE is proposing clarifying amendments to appendix A and appendix B, as it relates to testing combination cooler-freezers as well as testing combination refrigeration products that do not have a prescribed MREF energy conservation standards. PO 00000 Frm 00011 Fmt 4701 Sfmt 4702 19391 Specifically, DOE is proposing to add sub-sections to appendix A and appendix B to clarify the calculation of average per-cycle energy consumption for combination cooler-freezers and freezers with a cooler compartment, by referring to section 5.9.3 of HRF–1 2019 and stating specific ‘‘k’’ values to be used in equations presented therein. DOE also proposes to amend appendix B section 5.2 to refer to section 5.2 of appendix A when testing freezers with cooler compartments, because the appendix A requirements are more appropriate for products with more than one compartment. Lastly, DOE proposes to amend appendix B by adding a clarification to section 5.3 to specify the value of variable ‘‘K’’ when referencing section 5.8.2 of HRF–1–2019. ASAP stated in response to the January 2022 Preliminary Analysis that they understand that produce growers with a source of refrigeration likely meet the definition of a cooler but, due to unique components present in a produce grower that maintain an environment with temperature and humidity controls that are conducive to growing plants, produce growers cannot be tested in the same manner as coolers whose primary function is to chill beverage products. NEEA commented on a need for implementing different test procedures for produce growers, citing technology differences between produce growers and other miscellaneous refrigeration products. NEEA stated that test procedures for produce growers should include energy use measurements for cabinet temperature and humidity control systems, water distribution systems, and carbon dioxide injection systems. ASAP and NEEA encouraged DOE to establish test procedures for these products. (ASAP, No. 19, p. 3; NEEA, No. 21, pp. 3–4) DOE is aware of the produce grower market and appreciates input on this topic. At this point, only GE Appliances, a Haier Company (‘‘GEA’’) has submitted a petition for waiver from test procedures covering MREFs. GEA initially also requested an interim waiver. In an initial denial of the petition for interim waiver, DOE tentatively concluded that the GEA model meets the definition of a cooler, because the product consists of a cabinet used with one or more doors, and maintains compartment temperatures no lower than 39 degrees Fahrenheit, as determined when tested in a 90-degree Fahrenheit ambient temperature. 86 FR 35766, 35768 (July 7, 2021). In addition to this, DOE tentatively determined that the requested alternate test procedure E:\FR\FM\31MRP2.SGM 31MRP2 ddrumheller on DSK120RN23PROD with PROPOSALS2 19392 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules would not result in measured energy use of the basic model that is representative of actual energy used during representative average use. Id. In November 2021, GEA submitted a revised petition for waiver and interim waiver for its grower product that proposed a revised alternative test method designed to address the concerns that DOE expressed in its denial of the GEA’s original petition. Having considered the merits of GEA’s revised approach, and receiving no comments in opposition, DOE approved use of the revised alternate test procedure for rating GEA’s product through the publication of a notification of decision and order on October 17, 2022 (87 FR 62835), reiterating that while the In-Home Grower basic model meets the cooler definition, it is not subject to the cooler energy conservation standards because of its unique characteristics, as discussed in the November 2021 Notification of Petition for Waiver. (87 FR 62835, 62838) In consideration of the other produce growers mentioned in ASAP’s comment—the Viking Under-counter Micro Green & Herb Cabinet—GCV12, the Seedo Automated Home Grow Device, and the Bloom In-Home Grow System—DOE has not received waiver petitions for these products but will consider investigating these products, including whether they may be subject to testing requirements based on meeting the definition of an MREF product, as GEA’s product does. NEEA advocated for the implementation of a test procedure to calculate the energy impact of interior lighting in all miscellaneous refrigeration products. NEEA claims that the use of lighting differs largely depending on manufacturer and personal usage, and with the proliferation of glass doors for coolers, interior lighting plays a large role in energy calculations. (NEEA, No. 21, pp. 4–5) AHAM states the vast majority of the miscellaneous refrigeration product designs on the market no longer use incandescent lighting and have shifted to light-emitting diode (‘‘LED’’) technology, meaning efficiency gains from lighting are limited, and efforts to further regulate lighting options in miscellaneous refrigeration products will place undue burden on manufacturers. (AHAM, No. 18, p. 7) The test procedure does not include measurement of energy use with lighting turned on. DOE last finalized its test procedure for consumer refrigeration products including MREFs on October 12, 2021. 86 FR 56790. As VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 part of the rulemaking to establish this test procedure, DOE published a request for information (‘‘RFI’’) (82 FR 29780) on June 30, 2017, and a NOPR (84 FR 70842) on December 23, 2019. No comments in response to the RFI or NOPR suggested that lighting energy use should be included as part of the test procedure. In the final rule initially establishing the test procedures for MREF on July 18, 2016, DOE indicated that it set the requirement to test these products with light switches in the off position based on field surveys indicating that 90 percent of consumers kept light switches off in coolers. 81 FR 46768, 46782. This requirement was also consistent with the recommendations of the Working Group that negotiated MREF test procedures and energy conservation standards under the auspices of the Appliance Standards and Rulemaking Federal Advisory Committee (‘‘ASRAC’’). Id. When DOE next considers revisions to the test procedure for MREF, DOE may request information regarding trends affecting lighting energy use in these products, and, based on information obtained, may consider at that time, whether the test procedure should be revised to include lighting energy. D. Technological Feasibility 1. General In each energy conservation standards rulemaking, DOE conducts a screening analysis based on information gathered on all current technology options and prototype designs that could improve the efficiency of the products or equipment that are the subject of the rulemaking. As the first step in such an analysis, DOE develops a list of technology options for consideration in consultation with manufacturers, design engineers, and other interested parties. DOE then determines which of those means for improving efficiency are technologically feasible. DOE considers technologies incorporated in commercially available products or in working prototypes to be technologically feasible. Sections 6(b)(3)(i) and 7(b)(1) of CFR the Process Rule. 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; (3) adverse impacts on health or safety, and (4) unique-pathway proprietary technologies. Sections 6(b)(3)(ii)–(v) and 7(b)(2)–(5) of the PO 00000 Frm 00012 Fmt 4701 Sfmt 4702 Process Rule. Section IV.B of this document discusses the results of the screening analysis for miscellaneous refrigeration products, 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 NOPR technical support document (‘‘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 miscellaneous refrigeration products, 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.1.c of this proposed rule and in chapter 5 of the NOPR TSD. E. Energy Savings 1. Determination of Savings For each trial standard level (‘‘TSL’’), DOE projected energy savings from application of the TSL to miscellaneous refrigeration products purchased in the 30-year period that begins in the year of compliance with the proposed standards (2029–2058).15 The savings are measured over the entire lifetime of miscellaneous refrigeration products purchased in the previous 30-year 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 national impact analysis (‘‘NIA’’) spreadsheet model to estimate national energy savings (‘‘NES’’) from potential amended or new standards for miscellaneous refrigeration products. 15 Each TSL is composed of specific efficiency levels for each product class. The TSLs considered for this NOPR are described in section V.A of this document. DOE conducted a sensitivity analysis that considers impacts for products shipped in a 9year period. E:\FR\FM\31MRP2.SGM 31MRP2 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules The NIA spreadsheet model (described in section IV.H of this document) calculates energy savings in terms of site energy, which is the energy directly consumed by products at the locations where they are used. For electricity, DOE reports NES in terms of primary energy savings, which is the savings in the energy that is used to generate and transmit the site electricity. DOE also calculates NES in terms of 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 energy conservation standards.16 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. ddrumheller on DSK120RN23PROD with PROPOSALS2 2. Significance of Savings To adopt any new or amended 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)) The significance of energy savings offered by a new or amended energy conservation standard cannot be determined without knowledge of the specific circumstances surrounding a given rulemaking.17 For example, some covered products and equipment have most of their energy consumption occur during periods of peak energy demand. The impacts of these products on the energy infrastructure can be more pronounced than products with relatively constant demand. Accordingly, DOE evaluates the significance of energy savings on a caseby-case basis, taking into account the significance of cumulative FFC national energy savings, the cumulative FFC emissions reductions, health benefits, and the need to confront the global climate crisis, among other factors. DOE has initially determined the energy savings from the proposed standard levels are ‘‘significant’’ within the meaning of 42 U.S.C. 6295(o)(3)(B). 16 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). 17 The numeric threshold for determining the significance of energy savings established in a final rule published on February 14, 2020 (85 FR 8626, 8670), was subsequently eliminated in a final rule published on December 13, 2021 (86 FR 70892). VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 F. Economic Justification 1. Specific Criteria As noted previously, 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 of this document. 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 manufacturing 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 consumer costs and benefits expected to result from particular standards. DOE also evaluates the impacts of potential standards on identifiable subgroups18 of consumers that may be affected disproportionately by a 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 18 For this NOPR, DOE analyzed the impacts of the considered standard levels on senior-only households. PO 00000 Frm 00013 Fmt 4701 Sfmt 4702 19393 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 products 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 expense (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. For its LCC and PBP analysis, DOE assumes that consumers will purchase the covered products in the first year of compliance with new or 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 new or amended standards. DOE’s LCC and PBP analysis is discussed in further detail in section IV.F of this document. 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 III.E, DOE uses the NIA spreadsheet model to project NES. 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 E:\FR\FM\31MRP2.SGM 31MRP2 19394 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules 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 proposed in this document would not reduce the utility or performance of the products under consideration in this rulemaking. ddrumheller on DSK120RN23PROD with PROPOSALS2 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 proposed 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 proposed 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 will transmit a copy of this proposed rule to the Attorney General with a request that the Department of Justice (‘‘DOJ’’) provide its determination on this issue. DOE will publish and respond to the Attorney General’s determination in the final rule. DOE invites comment from the public regarding the competitive impacts that are likely to result from this proposed rule. In addition, stakeholders may also provide comments separately to DOJ regarding these potential impacts. See the ADDRESSES section for information to send comments to DOJ. f. Need for National Energy Conservation DOE also considers the need for national energy and water 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 proposed 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. DOE maintains that environmental and public health benefits associated with the more efficient use of energy are important to take into account when considering the need for national energy conservation. The proposed standards VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 are likely to result in environmental and health benefits in the form of reduced emissions of air pollutants and greenhouse gases (‘‘GHGs’’) 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; the estimated emissions impacts are reported in section I.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 In determining whether an energy conservation standard is economically justified, DOE may consider any other factors that the Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)) To the extent DOE identifies any relevant information regarding economic justification that does not fit into the other categories described previously, 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 effects that proposed 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.9 of this proposed rule. IV. Methodology and Discussion of Related Comments This section addresses the analyses DOE has performed for this rulemaking PO 00000 Frm 00014 Fmt 4701 Sfmt 4702 with regard to miscellaneous refrigeration products. Separate paragraphs address each component of DOE’s analyses. DOE used several analytical tools to estimate the impact of the standards proposed 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 projections 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 website for this rulemaking: www.regulations.gov/ docket/EERE-2020-BT-STD-0039. Additionally, DOE used output from the latest version of the Energy Information Administration’s (‘‘EIA’s’’) Annual Energy Outlook (‘‘AEO’’), a widely known energy projection for the United States, for the emissions and utility impact analyses. DOE received some comments in response to the January 2022 Preliminary Analysis that, rather than addressing specific aspects of the analysis, are general statements regarding the appropriateness of amending energy conservation standards and/or the efficiency levels that might be appropriate. AHAM stated they support DOE in its efforts to ensure a national marketplace through the Appliance Standards Program. AHAM also stated that amended standards for MREFs may not be justified under EPCA given the relatively low number of shipments in the MREF product category and the limited opportunity for energy savings that result from that fact. AHAM therefore stated, especially given DOE’s large backlog of rulemakings (many of which involve products with larger energy savings opportunities), DOE should prioritize other rulemakings. (AHAM, No. 18, p. 1) While miscellaneous refrigeration products have a smaller number of shipments when compared to refrigerators, refrigerator-freezers, and freezers, (‘‘RFs’’), that is not a factor DOE considers in determining when to proceed with reviewing a standard. DOE is mandated by 42 U.S.C. 6295(m)(1) to reconsider energy standards no later than 6 years after issuance of any final rule establishing or amending standards. E:\FR\FM\31MRP2.SGM 31MRP2 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules 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 miscellaneous refrigeration products. The key findings of DOE’s market assessment are summarized in the following sections. See chapter 3 of the NOPR TSD for further discussion of the market and technology assessment. 1. Scope of Coverage and Product Classes In the January 2022 Preliminary Analysis, DOE identified one potential product class modification for miscellaneous refrigeration products. DOE did receive a comment in response to the January 2022 Preliminary Analysis regarding the product class structure, which is addressed. ddrumheller on DSK120RN23PROD with PROPOSALS2 a. Product Classes With Automatic Icemakers DOE has identified an opportunity to simplify and consolidate the presentation of maximum allowable energy use for products within product classes that may or may not have an automatic icemaker. To represent the annual energy consumed by automatic icemakers in MREFs, DOE’s test procedures specify a constant energy-use adder of 84 kWh/ year (by use of a 0.23 kWh/day adder; see section 5.3(a)(i) of 10 CFR part 430, subpart B, appendix A and section 5.3.(a) of appendix B). With this constant adder, the standard levels for product classes with an automatic icemaker are equal to the standards of their counterparts without an icemaker plus the 84 kWh/year. Consistent with prior discussions in the test procedure rulemaking, this NOPR proposes to amend this equation such that representations made on or after the compliance date of any potential new energy conservation standards, the adder to be used shall change from 84 VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 kWh/yr to 28 kWh/yr. DOE determined as part of the October 2021 TP Final Rule that the revised adder would more accurately reflect energy use during a representative average use cycle. 86 FR 56811. However, DOE indicated that it would not require this change in the test procedure until the date of potential future energy conservation standard amendments. Id. at 86 FR 56793. Thus, this change is being proposed in this document, with an implementation date to coincide with the compliance date of the standards proposed in this document. DOE has concluded that because the standards for the product classes with and without automatic icemakers are effectively the same, except for the constant adder, there is an opportunity to express the maximum allowable energy use for both icemaking and nonicemaking classes with the same equation, thus consolidating the presentation of classes and simplifying the energy conservation standards. The equation would, for those classes that may or may not have an icemaker, include a term equal to the icemaking energy use adder multiplied by a factor that is defined to equal 1 for products with icemakers and to equal zero for products without icemakers. This approach would consolidate the product class structure with a single product class descriptor and maximum energy use equation, while continuing to reflect that products with and without icemakers may have different maximum energy use values. DOE requests comments on its proposal to consolidate the presentation of maximum allowable energy use for products of classes that may or may not have an automatic icemaker. b. Addition of a Built-In Combination Cooler-Refrigerator-Freezer With Bottom-Mounted Freezer and Automatic Icemaker Product Class Sub Zero stated they are planning to introduce a built-in combination coolerrefrigerator-freezer with bottommounted freezer and automatic icemaker. Sub Zero noted, although this configuration is an MREF covered product, it was not on the market in 2016 so a standard level was not set; using the same methodology used to set levels for the eight combination cooler types for which a standard was prescribed, the allowable maximum energy use would be 6.08AV + 302 kWh/yr. Sub Zero stated it is their understanding that they will need to request exception relief from DOE to certify this new product and requested that a future standard level for this product class be set in the upcoming PO 00000 Frm 00015 Fmt 4701 Sfmt 4702 19395 MREF rulemaking. (Sub Zero, No. 17, pp. 2–3) DOE is proposing energy use levels for the built-in combination coolerrefrigerator-freezer with a bottommounted freezer, with and without an automatic icemaker (‘‘combination cooler 5–BI’’), as requested by Sub Zero.19 DOE agrees with Sub Zero that the baseline energy use for the class with an automatic icemaker would be using the methodology established in the MREF negotiations for setting energy use standards for new classes of combination products, if calculated on the basis of the 84 kWh/yr icemaker energy use of the current test procedure. When considering the revised 28 kWh/ yr icemaker, to be implemented at the compliance date of any amended energy conservation standards, the baseline energy use equation for the product class would be 6.08AV + 246 kWh/yr. Since there are no products on the market that could serve as the basis for analysis to support setting a future standard, DOE is using combination cooler class 3A as a proxy for setting of a future energy conservation standard for the new combination cooler 5–BI class. DOE requests comment on its proposal to establish energy conservation standards for combination cooler 5–BI using the analysis for combination class 3A as proxy for setting the standard level, based on a baseline efficiency equal to 6.08AV + 218 +28*I kWh/yr, where I is equal to 0 if the model has no automatic icemaker and equal to 1 if it does. 2. Technology Options In the preliminary market analysis and technology assessment, DOE identified 37 technology options that would be expected to improve the efficiency of miscellaneous refrigeration products, as measured by the DOE test procedure: Table IV.1—Technology Options Identified in the Preliminary Analysis Insulation 1. Improved resistivity of insulation (insulation type) 2. Increased insulation thickness 3. Vacuum-insulated panels 4. Gas-filled insulation panels Gaskets and Anti-Sweat Heat 5. Improved gaskets 6. Double door gaskets 19 Although Sub Zero requested a new class only for models with an automatic icemaker, DOE is extending the proposal to also include products without an automatic icemaker, consistent with the consolidation of the icemaker energy use into the energy use equation in the presentation of energy use standards. E:\FR\FM\31MRP2.SGM 31MRP2 ddrumheller on DSK120RN23PROD with PROPOSALS2 19396 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules 7. Anti-sweat heat Doors 8. Low-E coatings 9. Inert gas fill 10. Vacuum-insulated glass 11. Additional panes 12. Frame design 13. Solid door Compressor 14. Improved compressor efficiency 15. Variable-speed compressors 16. Linear compressors Evaporator 17. Increased surface area 18. Forced-convection evaporator 19. Tube and fin enhancements (including microchannel designs) 20. Multiple evaporators Condenser 21. Increased surface area 22. Tube and fin enhancements (including microchannel designs 23. Forced-convection condenser Defrost System 24. Off-cycle defrost 25. Reduced energy for active defrost 26. Adaptive defrost 27. Condenser hot gas defrost Control System 28. Electronic temperature control 29. Air-distribution control Other Technologies 30. Fan and fan motor improvements 31. Improved expansion valve 32. Fluid control or solenoid off-cycle valve 33. Alternative refrigerants 34. Improved refrigerant piping 35. Component location 36. Alternative refrigeration systems Commenters provided feedback on some of these technology options. These comments are summarized below, along with DOE’s responses. AHAM stated several of the evaluated technology options are impractical or provide limited to no benefit given current manufacturing and design processes past EL 1. However, AHAM did not provide sufficient detail that would enable DOE to revise the listed technology options and subsequent analysis. (AHAM, No. 18, p. 7) AHAM also cited issues with DOE’s use of LED lighting in its analysis, DOE’s over-reliance on vacuuminsulated panels (‘‘VIPs’’) in its analysis, and an insufficient supply of variablespeed compressors (‘‘VSCs’’). Specifically, AHAM states that the widespread use of LED lighting in the market currently means the possible efficiency gains from lighting will be limited. When considering VIPs, AHAM argues that DOE overused VIPs in its analysis in a manner that is not consistent with their current use on the market or overall effectiveness. Finally, VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 AHAM points to the use of VSCs in the higher ELs as risky due to a potential shortfall of supply from manufacturers if they are included in a standards rulemaking as a primary design option for energy efficiency. (AHAM, No. 18, p. 7) DOE is aware of the widespread use of LED lighting in the market currently. Therefore, lighting technologies were not considered as a technology option in the preliminary analysis. Likewise, they were also not considered in the NOPR analysis. When considering the impact of VIPs, DOE took into consideration relevant rulemaking analyses for refrigerator, refrigerator-freezer, and freezer classes as a basis for VIP effectiveness as well as manufacturer feedback. With this information, VIP implementation in the NOPR analysis was more limited than in the preliminary analysis. For this analysis VIPs were only implemented partially in the max-tech levels of every directly analyzed class. The impact of VSCs on the miscellaneous refrigeration product analyses was primarily based on their ability to provide a higher level of efficiency when compared to their single-speed counterparts. As a result of this compressor efficiency increase, they are prevalent in the higher ELs of the efficiency analyses. DOE acknowledges that more stringent standards would likely necessitate adoption of more efficient technologies, such as variablespeed compressors. However, DOE expects that standards, if adopted, would provide sufficient certainty for manufacturers and suppliers to establish additional capacity in the supply chain, if needed. B. Screening Analysis DOE uses the following five 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 PO 00000 Frm 00016 Fmt 4701 Sfmt 4702 that a technology would have a significant adverse impact on the utility of the product for 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. (5) Unique-Pathway Proprietary Technologies. If a design option utilizes proprietary technology that represents a unique pathway to achieving a given efficiency level, that technology will not be considered further due to the potential for monopolistic concerns. 10 CFR part 430, subpart C, appendix A, sections 6(b)(3) and 7(b). In summary, if DOE determines that a technology, or a combination of technologies, fails to meet one or more of the listed five criteria, it will be excluded from further consideration in the engineering analysis. The reasons for eliminating any technology are discussed in the following sections. 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 In the January 2022 Preliminary Analysis, DOE screened out the following technologies on the basis of technological feasibility, practicability to manufacture, install, and service, adverse impacts on utility or availability, adverse impacts on health or safety, and use of unique-pathway proprietary technologies. Table IV.2—Technologies Screened Out in the Preliminary Analysis Solid doors Ultra-low-E (reflective) glass doors Vacuum-insulated glass Improved gaskets and double gaskets Linear compressors Fluid control or solenoid off-cycle valves Evaporator tube and fin enhancements Condenser tube and fin enhancements (except microchannel condensers) Condenser hot gas defrost Improved refrigerant piping E:\FR\FM\31MRP2.SGM 31MRP2 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules Component location Alternative refrigeration systems Improved VIPs ddrumheller on DSK120RN23PROD with PROPOSALS2 2. Technology Options Through a review of each technology, DOE concluded in the preliminary analysis that all of the other identified technologies listed in section IV.A.2 of this document met all five screening criteria to be examined further as design options in DOE’s NOPR analysis. In summary, DOE did not screen out the following technology options: Table IV.2—Technologies Remaining in the Preliminary Analysis Insulation 1. Improved resistivity of insulation (insulation type) 2. Increased insulation thickness 3. Gas-filled insulation panels 4. Vacuum-insulated panels Gasket and Anti-Sweat Heat 5. Anti-sweat heat Doors 6. Low-E coatings 7. Inert gas fill 8. Additional panes 9. Frame design Compressor 10. Improved compressor efficiency 11. Variable-speed compressors Evaporator 12. Forced-convection evaporator 13. Increased surface area 14. Multiple evaporators Condenser 15. Increased surface area 16. Microchannel designs 17. Forced-convection condenser Defrost System 18. Reduced energy for automatic defrost 19. Adaptive defrost 20. Off-cycle defrost Control System 21. Electronic Temperature control 22. Air-distribution control Other Technologies 23. Fan and fan motor improvements 24. Improved expansion valve 25. Alternative Refrigerants DOE has initially determined that these technology options are technologically feasible because they are being used or have previously been used in commercially available products or working prototypes. DOE also finds that all of the remaining technology 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, uniquepathway proprietary technologies). For additional details, see chapter 4 of the NOPR TSD. DOE received comments regarding the screened-out technologies; relevant comments are addressed. VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 AHAM agreed with DOE’s decision to screen out solid doors as a technology option for the reason that ELs requiring solid doors will result in a significant loss in consumer utility. AHAM also agreed with DOE’s decision to screen out Ultra-Low-E Glass Doors for similar reason, in that this technology also prevents the consumer from being able to see clearly into the cabinet. AHAM stated, should DOE include a door technology option in its final analysis for a possible amended standard, that analysis should provide careful justification to ensure that consumer utility and consumer costs are not unduly impacted. (AHAM, No. 18, p. 8) The CA IOUs urged DOE to reconsider several technologies that they claimed were screened out of the analysis or improperly categorized. These technologies include ultra-low E glass doors, Inert Gas-Filled Glass, vacuum insulated glass, microchannel heat exchangers, and variable speed compressors. In considering ultra-low E glass doors, the CA IOUs request the DOE define an acceptable emissivity that does not significantly hinder visibility while providing energy savings. For inert gas-filled glass, the CA IOUs claim that triple-pane Argon-filled glass with low-e coating is widely available throughout the market and should be considered at lower ELs. Considering vacuum insulated glass, the CA IOUs point to several manufacturers offering the glass for refrigeration applications. Finally, the CA IOUs urged DOE to make more consideration into the implementation of microchannel heat exchangers and VSCs, claiming that their energy benefits were not fully considered in the preliminary analysis. (CA IOUs, No. 20, pp. 4–6) DOE screened out ultra-low E glass panels due to loss in consumer utility associated with reduced visibility. DOE considers ultra-low E glass panels to be those with at least three glass layers and more than one low E coating. A large portion of the MREF market utilizes transparent glass doors as an option to allow the consumer to see inside the cooler compartment. Despite its ability to improve efficiency, ultra-low E glass reduces visibility into the cooler cabinet. In interviews, manufacturers specifically indicated that they avoid use of glass panels with more than one low E layer due to visibility concerns. DOE did include in its analysis tripleglazed panels with argon fill and one low E layer, consistent with panels that have been observed in available cooler products. DOE likewise did not consider vacuum insulated glass as it impacts PO 00000 Frm 00017 Fmt 4701 Sfmt 4702 19397 practicability of manufacture, repair, and installation. While it remains available as a technology option for use in refrigeration equipment (e.g., walk-in cooler doors), DOE is not currently aware of vacuum-insulated glass currently in use for any MREFs. Also, because MREFs are typically much smaller than commercial refrigeration equipment, vacuum-insulated glass may not yet be available for all MREF sizes. While the CA IOUs claim that five commercial refrigeration manufacturers already have integrated microchannel condenser coils in their equipment outside the MREF product category, DOE has not observed microchannel condensers in any of the products in the teardown analysis for MREFs. DOE notes that microchannel condensers may allow for refrigerant charge reductions and improved heat transfer but known drawbacks to these designs include irregular refrigerant distribution and greater pressure drops on the refrigerant side and air side. Therefore, microchannel condensers may not provide efficiency improvements. Hence, DOE screened out microchannel condensers as a technology option. Variable speed compressors were included in the NOPR analysis and are implemented in higher-level ELs throughout the analyzed product classes. Published EER levels for VSCs are generally much higher than published EERs for single-speed compressors in the capacity range suitable for compact products, but DOE has not found many MREF products that use VSCs, nor many related compact refrigerators that use VSCs, and thus has little evidence on which to base confident predictions of large efficiency improvements. DOE received a range of estimates of the improvement potential associated with this technology from manufacturers during interviews. DOE believes that its MREF NOPR engineering analysis is representative of performance improvement potential using variable-speed compressors. The door technology options that remain for increasing the efficiency of miscellaneous refrigeration products include low-e coatings, inert gas fills, additional panes, and frame design changes. Of these options, gas fills, additional panes, and low-e coating were the options implemented in the final EL analyses, with max-tech doors including triple-pane glass, argon gas fill, and a low-e layer on the outermost glass. These options were implemented based on their current use in the market. DOE seeks further comment on any of the technologies screened out in this NOPR analysis as they were determined to not meet the screening criteria (i.e., E:\FR\FM\31MRP2.SGM 31MRP2 19398 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules practicable to manufacture, install, and service and do not result in adverse impacts on consumer utility, product availability, health, safety, or use of unique-pathway proprietary technologies). DOE also seeks comment on those technologies retained for further consideration in the engineering analysis, based on the determination that they are technologically feasible and also meet the other screening criteria. ddrumheller on DSK120RN23PROD with PROPOSALS2 C. Engineering Analysis The purpose of the engineering analysis is to establish the relationship between the efficiency and cost of miscellaneous refrigeration products. There are two elements to consider in the engineering analysis; the selection of efficiency levels to analyze (i.e., the ‘‘efficiency analysis’’) and the determination of product cost at each efficiency level (i.e., the ‘‘cost analysis’’). In determining the performance of higher-efficiency products, DOE considers technologies and design option combinations not eliminated by the screening analysis. For each product class, DOE estimates the baseline cost, as well as the incremental cost for the product at efficiency levels above the baseline. The output of the engineering analysis is a set of cost-efficiency ‘‘curves’’ that are used in downstream analyses (i.e., the LCC and PBP analyses and the NIA). 1. Efficiency Analysis DOE typically uses one of two approaches to develop energy efficiency levels for the engineering analysis: (1) relying on observed efficiency levels in the market (i.e., the efficiency-level approach), or (2) determining the incremental efficiency improvements associated with incorporating specific design options to a baseline model (i.e., the design-option approach). Using the efficiency-level approach, the efficiency levels established for the analysis are determined based on the market distribution of existing products (in other words, based on the range of efficiencies and efficiency level ‘‘clusters’’ that already exist on the market). Using the design option approach, the efficiency levels established for the analysis are determined through detailed engineering calculations and/or computer simulations of the efficiency improvements from implementing specific design options that have been identified in the technology assessment. DOE may also rely on a combination of these two approaches. For example, the efficiency-level approach (based on actual products on the market) may be VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 extended using the design option approach to ‘‘gap fill’’ levels (to bridge large gaps between other identified efficiency levels) and/or to extrapolate to the max-tech level (particularly in cases where the max-tech level exceeds the maximum efficiency level currently available on the market). For the January 2022 Preliminary Analysis, DOE used the physical teardown approach supplemented with a catalog teardown approach for coolers. Several products from the cooler class (compact and standard size) and one product from the combination cooler class C–13A were used in physical teardowns. The physical teardown combination cooler was used to determine manufacturer production costs (‘‘MPCs’’) for one analyzed product class (C–13A), but that analysis primarily relied on the engineering conducted for the October 15, 2021, preliminary analysis for consumer refrigerators, refrigerator-freezers, and freezers (86 FR 57378) as the basis for other MPCs and incremental costs. For this NOPR analysis, DOE chose to analyze classes C–3A and C–9 in addition to the original C–13A. Due to the lack of physical teardown products for these classes, the analysis relied heavily on adjusted analyses from the consumer refrigerators, refrigeratorfreezers, and freezers (‘‘RF’’) classes 3 and 9. RF product class 3 represents refrigerator-freezers with automatic defrost with top-mounted freezers without an automatic icemaker while RF product class 9 represents upright freezers with automatic defrost without an automatic icemaker. Product class 3 was chosen as a proxy to C–3A due to its similar configuration, and its analysis was able to be adapted relatively easily. Likewise, C–9’s analysis used RF product class 9’s analysis due to similarities in configuration.20 A survey approach was taken to determine sizing and pricing for representative models, and relevant design options from C–13A were used in the additional analyses. DOE also considered input provided during manufacturer interviews to improve upon design option energy savings and representative ELs. General comments regarding the efficiency analysis are addressed below. AHAM noted DOE builds its incremental MPC based on a set path of technology options, but there is no standard ordering of technology choice within a single company, let alone 20 As described in section IV.C.1.c of this document, DOE conducted engineering analysis for class C–9, but did not conduct further analysis due to the limited potential for efficiency increase. PO 00000 Frm 00018 Fmt 4701 Sfmt 4702 across the total industry. AHAM stated DOE should recognize there is limited new technology that would allow for significant per-unit reduction in energy consumption, particularly true of technology options that DOE evaluated to reach efficiency levels beyond EL 1. (AHAM, No. 18, pp. 6–7) In response, DOE notes that the ordering of technologies is not intended to be aligned with the ordering that would be considered by a single company, nor is it intended to represent the ordering that the total industry would adopt. Instead, it is intended to provide reasonable representation, both of design options used by specific reverse-engineered products, and of an ordering that would prioritize the most cost-effective options, with gradual reductions in cost-effectiveness as the EL increases. Also, the certified data shows that existing products on the market demonstrate significant per-unit reduction in energy consumption. For example, among DOE’s tested and reverse-engineered compact coolers was a 3.4 cuft cooler certified with energy use 45% less than the standard, and a 5.1 cuft cooler certified with energy use 49% less than the standard. These levels were EL3 for the preliminary analysis and beyond EL4 for the NOPR analysis, certainly beyond EL1. DOE test results confirmed that their energy use was consistent with the certifications. CA IOUs stated that in its review of products currently available on the market, it was revealed that the incremental design options may not be the most appropriate (as presented by DOE in Table 5.5.1 of the preliminary TSD) as products on the market contain a combination of technologies DOE has attributed to different ELs. For example, smaller units within the compact category utilize efficiency features affecting the thermal envelope (argon and/or triple-pane glass), whereas larger units can utilize condenser, evaporator, and compressor efficiency features. (CA IOUs, No. 20, pp. 1–2) When analyzing the models pointed to by CA IOUs, DOE was unable to confirm the efficiency level for one of the provided MREF models, due to the fact it was not listed on the Compliance Certification Database (‘‘CCD’’) as of August 2022. The compact model referred to above was located on the CCD system and rated at around 13% lower energy use than baseline; however, the model did not match the CCD rated AV, therefore, the efficiency information may not be up to date. Information regarding the design options used by each model was also limited, with relevant engineering design options absent from promotional E:\FR\FM\31MRP2.SGM 31MRP2 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules ddrumheller on DSK120RN23PROD with PROPOSALS2 material, user manuals, and specification sheets. Considering the issues related to gathering information on the specific models referenced in the comment, DOE is unable to point to specific reasoning behind the design options implemented in each model. DOE does note, however, that it considers design options in a manner as described previously: with design options used by specific reverseengineered products, and of an ordering that prioritizes the most cost-effective options for initial EL steps and gradual reduction in cost-effectiveness as the EL increases. DOE requests any further input from commenters regarding the approach for design option selection and implementation for a given model, beyond the information DOE has already considered. a. Built-In Classes In this NOPR analysis, DOE chose to continue using freestanding MREF classes as proxies for built-in classes. DOE’s analysis of the current market for miscellaneous refrigeration products showed built-in and freestanding products occupying the same range of efficiencies, and DOE did not identify any unique characteristic that would inhibit efficiency improvements for built-in products relative to freestanding products based on a review on the market. As a result, DOE chose to apply its freestanding products analyses to built-in classes. Several comments were received following the preliminary analysis (which used the same approach) and are addressed below. According to AHAM, and echoed by Sub Zero and NEEA, freestanding product classes are not a good proxy for built-in product classes, and DOE should evaluate them separately. AHAM stated that DOE’s assumption that the products can employ similar technology options in order to achieve higher efficiency levels is fundamentally flawed as built-in designs face difference constraints than freestanding designs. NEEA and Sub Zero both specifically mentioned insulation thickness increases and airflow as a major difference between built-in and freestanding products. (AHAM, No. 18, p. 9; Sub Zero, No. 17, p. 2; NEEA, No. 21, pp. 2–3) Based on the comments provided, DOE revisited its review of the range of efficiency levels attainable by built-in and freestanding coolers. DOE noted that many products certified as freestanding have installation instructions that provide requirements for both freestanding and built-in installation and are advertised for both VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 installations. DOE found that for such products, the majority of high-efficiency models are advertised as capable of both freestanding and built-in installations. For coolers between 2 and 6 cubic feet, DOE found that all of the most efficient products reviewed (roughly 37% better than baseline or more) were capable of both configurations, whereas some of the products that were less efficient in that adjusted volume range were advertised as freestanding only. This suggests that built-in products are not inhibited in their ability to achieve high efficiencies. For larger coolers between 14 and 16 cubic feet in adjusted volume, DOE found products up to 15% greater than the baseline level that were configurable in both, based on manufacturer instructions. There were a few large cooler products that reached the highest available efficiency reviewed, up to roughly 30% better than baseline, that are advertised as only capable of a freestanding configuration. DOE also reviewed the depth of the various models considered to determine if models advertised for built-in installation have any clear dimensional limitation that might make achieving high efficiency levels more difficult. DOE was unable to determine a clear correlation between depth and energy use, for any of the models or capacity ranges considered, nor between depth and instructions or advertising for builtin installation. In fact, DOE found that the most efficient freestanding-only model in the large cubic volume range had the smallest depth of all the other models reviewed, suggesting that dimensional restriction on depth was not a key factor relative to the overall unit efficiency. DOE also observed that the highest efficiency levels for coolers of the builtin class and efficiency levels for freestanding coolers having installation instructions or advertising for both freestanding and built-in installation were at or close to the maximum technology efficiency levels analyzed by DOE. DOE has not been provided evidence that manufacturers are using design options in built-ins other than those that have passed screening for this analysis. There are also no manufacturer comments that suggest other design options have been used to achieve maxtech efficiency levels in built-in products. Hence, DOE concludes builtins are using the same set of design options as analyzed at max-tech for freestanding classes. Consequently, DOE did not conduct separate analysis for built-in classes. While DOE chose, in this NOPR analysis, to continue using freestanding classes as proxies for built-in classes, PO 00000 Frm 00019 Fmt 4701 Sfmt 4702 19399 DOE requests additional information regarding the constraints for built-in designs relative to freestanding designs, and the associated specific efficiency and cost impacts. b. Baseline Efficiency/Energy Use For each product/equipment class, DOE generally selects a baseline model as a reference point for each class, and measures changes resulting from potential energy conservation standards against the baseline. The baseline model in each product/equipment class represents the characteristics of a product/equipment typical of that class (e.g., capacity, physical size). Generally, a baseline model is one that just meets current energy conservation standards, or, if no standards are in place, the baseline is typically the most common or least efficient unit on the market. For the January 2022 Preliminary Analysis, DOE chose baseline efficiency levels represented by the current Federal energy conservation standards, expressed as maximum annual energy consumption as a function of the product’s adjusted volume. The baseline levels differ for coolers and combination coolers to account for design differences; all coolers share the same baseline level, i.e., the baseline is the same function of adjusted volume for both freestanding and built-in models, for both compact and standard-size models. For this NOPR, DOE kept the cooler baselines the same as the preliminary analysis; the combination cooler baseline has also been kept the same. From these baselines DOE conducted direct analyses for three different AV coolers, and two combination coolers (C–13A, and C–3A). In conducting these analyses, eight teardown units were used in construction of cost curves, and had their characteristics determined in large part by testing and reverseengineering. Further information on the design characteristics of specific analyzed baseline models is summarized in the NOPR TSD. c. Higher Efficiency Levels For the NOPR analysis, DOE analyzed up to five incremental efficiency levels beyond the baseline for each of the analyzed product classes. The efficiency levels start at EL1, 10% more efficient than the current energy conservation standard. For the compact coolers NOPR analysis, DOE extended the efficiency levels in steps of 10% of the current energy conservation standard up to EL 4; for full-size coolers, EL 4 is analyzed at 35%. For combination coolers (excluding C–9) efficiency levels above EL 1 are in steps of 5% up to EL 4. E:\FR\FM\31MRP2.SGM 31MRP2 19400 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules Finally, EL 5 represents maximum technology (‘‘max-tech’’), using design option analysis to extend the analysis beyond EL 4 using all applicable design options, including max efficiency variable-speed compressors, and maximum practical use of VIPs. For coolers, the current Energy Star specifications correspond to EL 1 for freestanding full-size coolers (10%), EL 2 for freestanding compact coolers (20%), and EL 3 for both classes of builtin coolers (30%). DOE conducted analysis for product class C–9 starting with analysis for a class 9 upright freezer with comparable total refrigerated volume. In its analysis, DOE concluded that application of all of the design options being considered at max-tech would be required for the product to be compliant with the current energy conservation standards. Currently, the CCD includes only one product that is certified as C–9—an LG product certified with energy use 17% below the standard. DOE did not purchase, test, and reverse-engineer this product, in-part because of the limited product offering and expected insignificant potential for energy savings for the class. Thus, DOE is relying primarily on its analysis of the RF product class 9 freezer, to suggest that opportunities for energy savings are likely limited and likely not costeffective, even if improved efficiency is technically feasible. DOE has not analyzed efficiency levels beyond baseline for this product class in this NOPR, but has taken into consideration all design options applied at max-tech in its analysis. DOE received comments regarding intermediate efficiency levels as shown below. The CA IOUs expressed concern that the cost analysis performed in the preliminary TSD is overly conservative; the marked drop in calculated benefits between the lower ELs does not accurately reflect the more nuanced state of the market. As such, they suggested DOE implement an intermediate EL, between EL 1 and EL 2, for the Cooler-FC and Cooler-F product classes. They also suggested an intermediate EL between EL 2 and EL 3 for product class C–13A. NEEA voiced similar concerns to CA IOUs and also suggested similar intermediate EL levels for coolers and C–13A. ASAP also urged DOE to consider an intermediate EL for compact coolers between ELs 1 and 2. (CA IOUs, No. 20, pp. 1–2; NEEA, No. 21, pp. 5–6; ASAP, No. 19, pp. 2–3) In response, DOE notes that the efficiency levels considered in the NOPR analysis differ significantly from those considered in the January 2022 Preliminary Analysis.21 While all of the specific gap fill levels suggested by stakeholders may not have been included, DOE believes that, the levels suggested in this NOPR more accurately reflect the full efficiency range of the market. The proposed EL steps have been chosen to represent the full range of efficiency and reflect the products on the market for each product class. ASAP noted, in the preliminary TSD for consumer refrigerators and freezers, DOE estimated a 9-percent improvement in compressor efficiency associated with converting from a single-speed compressor to a VSC with similar rated energy efficiency ratio (‘‘EER’’) values, and ASAP stated they expect there to be similar savings for compact coolers. ASAP further noted, however, in the preliminary analysis for the 5.1 cubic foot compact cooler representative unit, DOE appears to show energy savings of only about 2 percent when going from the most efficient single-speed compressor at EL 3 to a VSC and a triple-pane glass pack at EL 4. ASAP therefore stated concern that DOE may be underestimating the energy savings associated with the design options incorporated at EL 4 and urged DOE to ensure that its analysis is appropriately capturing the savings from the incorporation of a VSC. (ASAP, No. 19, p. 2) When constructing a direct analysis of the 5.1 cubic foot compact cooler DOE considered numerous design options when moving from EL 3 to EL 4. The effect of the triple-pane glass and switch to VSC alone do not contribute to the ultimate percentage difference between El 3 and EL 4. DOE has continued to work with manufacturers in order to accurately create ELs for both coolers and combination coolers that are based on real-world information and energy consumption. The efficiency levels analyzed for this NOPR beyond the baseline are shown in Table IV.3. TABLE IV.3—INCREMENTAL EFFICIENCY LEVELS FOR ANALYZED PRODUCTS (% ENERGY USE LESS THAN BASELINE) Coolers Product class (AV, cu.ft.) EL EL EL EL EL FCC (3.1) (%) 1 ...................................................................................... 2 * .................................................................................... 3 ...................................................................................... 4 ...................................................................................... 5 ...................................................................................... Combination coolers FCC (5.1) (%) 10 20 30 40 59 FC (15.3) (%) 10 20 30 40 50 C–13A (5) (%) 10 20 30 35 38 10 16 20 25 28 C–3A (21) (%) 10 15 20 24 30 * ENERGY STAR % level varies based on specific teardown units analyzed. DOE received comments on the implementation of VIPs in its analyses, and the comments are addressed below. AHAM stated DOE does not account for the limitations of VIPs and that DOE’s modeling does not apply VIPs as they would likely be used in actual products and, as a result, overestimates their use and impact in its analysis. AHAM stated DOE should note the following when evaluating the effectiveness of VIPs: covering all sides of an MREF casing in VIPs is not reasonable or a good design practice, there are costs associated with VIPs beyond the price of the panels themselves, a failed VIP in the field cannot be repaired and it will require a total product replacement, and VIPs are 21 The January 2022 Preliminary Analysis TSD presenting the preliminary analysis is available at: www.regulations.gov/document/EERE-2020-BTSTD-0039-0009. ddrumheller on DSK120RN23PROD with PROPOSALS2 d. VIP and VSC Analysis VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 PO 00000 Frm 00020 Fmt 4701 Sfmt 4702 not effective for smaller products because of ‘‘edge effects.’’ AHAM stated DOE should further discuss these issues with manufacturers during manufacturer interviews and evaluate more products in order to get a better understanding of the complexities and costs associated with VIPs and update its analysis accordingly. (AHAM, No. 18, pp. 7–8) E:\FR\FM\31MRP2.SGM 31MRP2 ddrumheller on DSK120RN23PROD with PROPOSALS2 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules In communicating with manufacturers DOE received similar comments relating to decreased effectiveness of VIPs on miscellaneous refrigeration products. For the NOPR analysis DOE aimed to adjust the usage of VIPs in order to provide more accuracy in associated energy savings. More focus was put on increasing efficiency in glass panels, gas fills, and thickness changes when moving up in efficiency levels. Only partial VIP coverage was included in max-tech levels for the NOPR analysis. ASAP expressed concern that DOE is underestimating the potential savings from upgrading from a single-speed compressor to a VSC by not accounting for the higher EER values of VSCs. ASAP noted that, in the preliminary TSD, DOE states compressors typically present in MREFs have capacities of 300 to 400 Btu per hour, but at a capacity of 300 BTU per hour, for example, even the least efficient VSC has a higher EER than the most efficient single-speed compressor. ASAP further noted that the EER of the most efficient VSC at 300 BTU per hour appears to be about 30 percent higher than the most efficient single-speed compressor. ASAP therefore urged DOE to ensure that its analysis is capturing the improved fullload efficiency of VSCs relative to single-speed compressors. (ASAP, No. 19, p. 1) In the preliminary analysis, as laid out in figure 5.5.1 in the preliminary TSD, DOE analyzed the capacity and efficiency ratings of numerous VSCs through publicly available compressor performance data. 79 FR 71705. This figure does show that VSCs account for a higher EER when compared to singlespeed compressors as capacity (Btu/h) is decreased. However, relating back ASAP’s claim relating to 300 Btu/h capacity compressors, manufacturer feedback indicates that these EER efficiency increases are not generally realized when implementing this technology. Manufacturers have reported a wide range of overall efficiency increases associated with use of variable-speed compressors. In in the NOPR analysis DOE considered manufacturer feedback regarding experience with implementing VSC’s in order to avoid overestimating efficiency increases. The analysis primarily considers energy savings associated with increased heat exchanger effectiveness associated with lower compressor speed operation and reduced fan speeds, assuming that fans would be operated at reduced speed when operating at low compressor speed. VSCs are generally implemented at higher EL levels throughout the VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 analysis, consistent with their projected cost effectiveness. DOE seeks comment on the range of VSC nominal efficiencies and the relative overall efficiency gains offered by VSCs when operating at reduced compressor speeds along with reduced fan speeds in MREF products. 2. Cost Analysis The cost analysis portion of the engineering analysis is conducted using one or a combination of cost approaches. The selection of cost approach depends on a suite of factors, including the availability and reliability of public information, characteristics of the regulated product, the availability and timeliness of purchasing the product on the market. The cost approaches are summarized as follows: b Physical teardowns: Under this approach, DOE physically dismantles a commercially available product, component-by-component, to develop a detailed bill of materials for the product. b Catalog teardowns: In lieu of physically deconstructing a product, DOE identifies each component using parts diagrams (available from manufacturer websites or appliance repair websites, for example) to develop the bill of materials for the product. b Price surveys: If neither a physical nor catalog teardown is feasible (for example, for tightly integrated products such as fluorescent lamps, which are infeasible to disassemble and for which parts diagrams are unavailable) or costprohibitive and otherwise impractical (e.g., large commercial boilers), DOE conducts price surveys using publicly available pricing data published on major online retailer websites and/or by soliciting prices from distributors and other commercial channels. In the present case, DOE conducted the analysis using primarily physical teardowns. Physical teardowns were used to provide a baseline of technology options and their pricing for a specific product class at a specific EL level. Then with technology option information, DOE estimated the cost of various design options including compressors, VIPs, and insulation, by extrapolating the costs from price surveys of relevant refrigerators, refrigerator-freezers, and freezers. AHAM stated VSC supply is not sufficient to accommodate a standard that requires their use for all MREF products, indicating that this will drive up costs, and further noting that DOE’s analysis does not account for these increased costs. AHAM also stated MREFs are enclosed systems and the use of VSCs entails significant redesign costs for those that do not currently PO 00000 Frm 00021 Fmt 4701 Sfmt 4702 19401 employ VSCs, which DOE’s analysis also must account for. (AHAM, No. 18, p. 8) DOE has considered the comments regarding VSC availability and cost of VSC implementation. For this NOPR analysis, DOE estimated the cost of implementing VSCs based on the costs of relevant variable-speed compressors available on the market for other refrigeration products. Regarding component availability, DOE acknowledges that more stringent standards would likely necessitate adoption of more efficient technologies, such as variable-speed compressors. However, DOE expects that standards, if adopted, would provide sufficient time and regulatory certainty for manufacturers and suppliers to establish additional capacity in the supply chain, if needed. Should this NOPR proceed to a final rule, compliance with any amended standards would not be required until 5-years after a final rule is published. DOE expects that this 5year compliance period provides adequate time for OEMs to sign supply contracts with their compressor suppliers ahead of anticipated demand. DOE seeks comment on whether manufacturers expect manufacturing capacity constraints would limit product availability to consumers in the timeframe of the amended standard compliance date. 3. Cost-Efficiency Results The results of the engineering analysis are presented as cost-efficiency data for each of the efficiency levels for each of the product classes that were analyzed, as well as those extrapolated from a product class with similar cooling capacity and features. DOE developed estimates of MPCs for each unit in the teardown sample, and also performed additional modeling for each of the teardown samples, to develop a comprehensive set of MPCs at each efficiency level. The resulting weighted average incremental MPCs (i.e., the additional costs manufacturers would likely incur by producing miscellaneous refrigeration products at each efficiency level compared to the baseline) are provided in Tables 5.5.5 and 5.5.6 in chapter 5 of the NOPR TSD. See chapter 5 of the NOPR TSD for additional detail on the engineering analysis. DOE seeks comment on the method for estimating manufacturing production costs and on the resulting cost-efficiency curves. See section VII.E of this document for a list of issues on which DOE seeks comment. E:\FR\FM\31MRP2.SGM 31MRP2 19402 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules TABLE IV.1—INCREMENTAL DESIGN OPTIONS * BY EFFICIENCY LEVEL AND PRODUCT CLASS Product class (AV ***) EL1 EL2 EL3 EL4 EL Percent ................... 10% ............................. 20% ............................. 30% ............................. 40% ............................. 59%. Design Options Added Tube and Fin Evaporator; Argon Filled Glass. Static Condenser; ........ Higher-EER Compressor; Tube and Fin Condenser. Partial VIP; Triple Pane Glass **; Tube and Fin Bond Evaporator. EL Percent ................... 10% ............................. 20% ............................. 30% ............................. Variable-Speed Compressor; Roll Bond Evaporator; Manual Defrost; Increased Insulation Thickness. 40% ............................. Design Options Added Argon Filled Glass; Higher-EER Compressor. Higher-EER Compressor. Higher-EER Compressor; Hot Wall Condenser. FC (15.3) EL Percent ................... Design Options Added 10% ............................. Higher-EER Compressor; Hot Wall + Tube and Fin Condenser. 20% ............................. Higher-EER Compressor. C–13A (5). EL Percent ................... 10% ............................. 16% ............................. 30% ............................. Variable-Speed Compressor; Variable Defrost; 3x Tube and Fin Evaporator; Increased Insulation Thickness. 20% ............................. Design Options Added Higher-EER Compressor. 10% ............................. Higher-EER Compressor. 15% ............................. Variable-Speed Compressor. 20% ............................. Higher-EER Compressor. Variable-Speed Compressor; Variable (off-cycle) Defrost. Triple Pane Glass**; Timed (off-cycle) Defrost; Higher-EER Variable Speed Compressor. FCC (3.1). FCC (5.1). C–3A (20.6). EL Percent ................... Design Options Added EL5 50%. Higher-EER Compressor; Tube and Fin Evaporator; HotWall + Tube and Fin Condenser; Increased Insulation Thickness. 35% ............................. Triple Pane Glass ** .... 38%. Partial VIP. 25% ............................. 28%. Triple Pane Glass ** .... Partial VIP. Variable-Speed Compressor; Partial VIP; Triple Pane Glass **. 24%. Partial VIP; Variable (off-cycle) Defrost. * Design options are cumulative between efficiency levels (except for component replacements). ** Triple-pane glass pack consists of soft-coated low-E glass and argon gas fill (with a reduced gap size to maintain door thickness). *** AV represented in ft3. TABLE IV.2—COST-EFFICIENCY CURVES FOR MISCELLANEOUS REFRIGERATION PRODUCTS Product Class (AV *) FCC (3.1) ........ FCC (5.1) ........ FC (15.3) ......... C–13A (5) ........ C–3A (20.6) ..... C–9 (20) ** ....... EL0 EL Percent ........................................................................... MPC ..................................................................................... Incremental MPC ................................................................. EL Percent ........................................................................... MPC ..................................................................................... Incremental MPC ................................................................. EL Percent ........................................................................... MPC ..................................................................................... Incremental MPC ................................................................. EL Percent ........................................................................... MPC ..................................................................................... Incremental MPC ................................................................. EL Percent ........................................................................... MPC ..................................................................................... Incremental MPC ................................................................. EL Percent ........................................................................... MPC ..................................................................................... Incremental MPC ................................................................. 0% $273.66 $0.00 0% $307.76 $0.00 0% $648.22 $0.00 0% $533.25 $0.00 0% $601.00 $0.00 0% $514.16 $0 EL1 EL2 EL3 EL4 EL5 10% $289.88 $16.21 10% $310.89 $3.13 10% $661.71 $13.49 10% $535.25 $2.00 10% $604.17 $3.17 .................... .................... .................... 20% $299.61 $25.94 20% $313.29 $5.53 20% $665.13 $16.91 15% $537.01 $3.76 16% $639.47 $38.47 .................... .................... .................... 30% $309.88 $36.22 30% $327.72 $19.96 30% $709.87 $61.65 20% $565.74 $32.48 20% $733.13 $132.13 .................... .................... .................... 40% $343.55 $69.88 40% $354.18 $46.42 35% $832.95 $184.72 25% $589.63 $56.37 24% $790.03 $189.03 .................... .................... .................... 59% $392.74 $119.08 50% $439.26 $131.50 38% $845.25 $197.02 28% $627.33 $94.07 .................... .................... .................... .................... .................... .................... ddrumheller on DSK120RN23PROD with PROPOSALS2 * Adjusted volumes provided in ft3. ** Only considered at baseline. 4. Manufacturer Selling Price To account for manufacturers’ nonproduction costs and profit margin, DOE applies a multiplier (the manufacturer markup) to the MPC. The resulting manufacturer selling price (‘‘MSP’’) is the price at which the manufacturer distributes a unit into commerce. DOE developed an average manufacturer VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 markup by examining the annual Securities and Exchange Commission (‘‘SEC’’) 10–K reports 22 filed by publicly-traded manufacturers primarily engaged in appliance manufacturing and whose combined product range 22 U.S. Securities and Exchange Commission, Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system. Available at www.sec.gov/edgar/ search/ (last accessed September 22, 2022). PO 00000 Frm 00022 Fmt 4701 Sfmt 4702 includes miscellaneous refrigeration products. See chapter 12 of the NOPR TSD for additional detail on the manufacturer markup. D. Markups Analysis The markups analysis develops appropriate markups (e.g., retailer markups and distributor markups) in the distribution chain and sales taxes to E:\FR\FM\31MRP2.SGM 31MRP2 19403 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules ddrumheller on DSK120RN23PROD with PROPOSALS2 convert the MSP estimates derived in the engineering analysis to consumer prices, which are then used in the LCC and PBP analysis. At each step in the distribution channel, companies markup equipment prices to cover business costs and profit margin. For MREFs, DOE identified two distribution channels: (1) manufacturers to retailers to consumers, and (2) manufactures to wholesalers to dealers/ retailers to consumers. The parties involved in the distribution channel are retailers, wholesalers and dealers. DOE developed baseline and incremental markups for each actor in the distribution channel. Baseline markups are applied to the price of products with baseline efficiency, while incremental markups are applied to the difference in price between baseline and higher-efficiency models (the incremental cost increase). The incremental markup is typically less than the baseline markup and is designed to maintain similar per-unit operating profit before and after new or amended standards. DOE relied on economic data from the U.S. Census Bureau to estimate average baseline and incremental markups. Specifically, DOE used the 2017 Annual Retail Trade Survey for the ‘‘electronics and appliance stores’’ sector to develop retailer markups, and the 2017 Annual Wholesale Trade Survey for the ‘‘household appliances, and electrical and electronic goods merchant wholesalers’’ sector to estimate wholesaler markups. DOE recognized that the overall markup in the wholesaler channel should be higher than the direct retailer channel. Considering that most of the wholesalers and dealers/retailers hold special contract in the wholesaler channel, DOE assumed that the dealer/ retailer markups are half of the values of the retailer makeups in the direct retailer channel. DOE requests comment on the assumption used in developing the dealer/retailer markups and welcomes any feedback on the overall markup in the wholesaler channel. Chapter 6 of the NOPR TSD provides details on DOE’s development of markups for MREFs. E. Energy Use Analysis The purpose of the energy use analysis is to determine the annual energy consumption of MREFs at different efficiencies in representative U.S. households, and to assess the energy savings potential of increased MREF efficiency. The energy use analysis estimates the range of energy use of MREFs in the field (i.e., as they VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 are actually used by consumers). The energy use analysis provides 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 or new standards. DOE determined a range of annual energy use of MREFs as a function of unit volume. DOE developed distributions of adjusted volume of product classes (Table IV.3) with more than one representative unit base on the capacity distributions reported in the TraQline® wine chiller data spanning from 2020 Q1 to 2022 Q1.23 24 DOE also developed a sample of households that use MREFs based on the TraQline wine chiller data (see section IV.G for details). For each volume and considered efficiency level, DOE derived the energy consumption as measured by the DOE test procedure at 10 CFR part 430, subpart B, appendix A, with the exception that DOE used in its analysis the reduced icemaker energy use contribution that would take effect on the compliance date of new standards. DOE requests comment on its methodology to develop market share distributions by adjusted volume in the compliance year for each product class with two representative volumes, as well as data to further inform these distributions in subsequent rounds of this rulemaking. TABLE IV.3—DISTRIBUTION OF ADJUSTED INTERIOR VOLUMES BY PRODUCT CLASS Adjusted volume (ft3) Percentage FCC 3.1 .......... 5.1 .......... 83.4 16.6 BICC 3.1 .......... 5.1 .......... 81.3 18.7 FC and BIC 15.3 ........ 100.0 23 TraQline is a market research company that specialized in tracking consumer purchasing behavior across a wide range of products using quarterly online surveys. 24 DOE acknowledges that the pandemics which span the sample period may contribute to the medium- to long-term consumer behavior changes. DOE will continue monitor the consumer behavior trend and may make alternative estimation in the next rulemaking phase. PO 00000 Frm 00023 Fmt 4701 Sfmt 4702 TABLE IV.3—DISTRIBUTION OF ADJUSTED INTERIOR VOLUMES BY PRODUCT CLASS—Continued Adjusted volume (ft3) Percentage C–3A 21 ........... 100.0 C–9 20 ........... 100.0 C–13A 5 ............. 100.0 Chapter 7 of the NOPR TSD provides details on DOE’s energy use analysis for MREFs. F. Life-Cycle Cost and Payback Period Analysis DOE conducted the LCC and PBP analyses to evaluate the economic impacts on individual consumers of potential energy conservation standards for MREFs. 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: • The LCC is the total consumer expense of an appliance or product over the life of that product, consisting of total installed cost (manufacturer selling price, distribution chain markups, sales tax, and installation costs) plus operating costs (expenses for energy use, maintenance, and repair). To compute the operating costs, DOE discounts future operating costs to the time of purchase and sums them over the lifetime of the product. • 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 at higher efficiency levels by the change in annual operating cost for the year that amended or new standards are assumed to take effect. For any given efficiency level, DOE measures the change in LCC relative to the LCC in the no-new-standards case, which reflects the estimated efficiency distribution of MREFs in the absence of new or amended energy conservation standards. In contrast, the PBP for a given efficiency level is measured relative to the baseline product. NEEA encouraged DOE to calculate and consider the return on investment E:\FR\FM\31MRP2.SGM 31MRP2 19404 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules (ROI) for each efficiency level as an additional metric of cost-effectiveness, which would only require the use of simple payback and device lifetime. (NEEA, No. 21, pp. 6–7). DOE acknowledges that ROI is a metric that can be useful in evaluating investments in energy efficiency. However, the measures that DOE has historically used to evaluate the economic impacts of standards on consumers—LCC savings and PBP—are more closely related to the language in EPCA that 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)) Therefore, DOE finds it reasonable to continue to use those measures. For each considered efficiency level in each product class, DOE calculated the LCC and PBP for a nationally representative set of housing units. As stated previously, DOE developed household samples based on TraQline wine chiller survey data. The survey panel is weighted against the U.S. Census based on their demographic characteristic to make the sample representative of the U.S. population. The wine chiller survey asked respondents about the product features of the wine chillers they recently purchased, as well as the purchasing channel of the products. To account for the more recent MREF consumers, DOE used the latest two years of survey data (2020 Q1 to 2022 Q1) to construct the household sample used in this NOPR.25 For each sample household, DOE determined the energy consumption for the MREF(s) and the appropriate energy price. By developing a representative sample of households, the analysis captured the variability in energy consumption and energy prices associated with the use of MREFs. 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 (if applicable), 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 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 MREF user samples. The model calculated the LCC and PBP for products at each efficiency level for 10,000 housing units per simulation run. The analytical results include a distribution of 10,000 data points showing the range of LCC savings for a given efficiency level relative to the no-new-standards case efficiency distribution. In performing an iteration of the Monte Carlo simulation for a given consumer, product efficiency is chosen based on its probability. If the chosen product efficiency is greater than or equal to the efficiency of the standard level under consideration, the LCC and PBP calculation reveals that a consumer is not impacted by the standard level. By accounting for consumers who already purchase more-efficient products, DOE avoids overstating the potential benefits from increasing product efficiency. DOE calculated the LCC and PBP for all consumers of MREFs as if each were to purchase a new product in the expected year of required compliance with new or amended standards. New and amended standards would apply to MREFs manufactured 5 years after the date on which any new or amended standard is published. (42 U.S.C. 6295(l)(2)) At this time, DOE estimates publication of a final rule in 2024. Therefore, for purposes of its analysis, DOE used 2029 as the first year of compliance with any amended standards for MREFs. Table IV.4 summarizes the approach and data DOE used to derive inputs to the LCC and PBP calculations. The paragraphs 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 NOPR TSD and its appendices. TABLE IV.4—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 project product costs. Assumed no change with efficiency level. Not considered in the analysis. Derived from engineering inputs (See chapter 5 of the NOPR TSD). Variability: Based on the product class and rep unit volume, where applicable. Electricity: Based on 2021 average and marginal electricity price data from the Edison Electric Institute. Variability: Electricity prices vary by region. Based on AEO 2022 price projections. Assumed no change with efficiency level. Not considered in the analysis. Average: 12.6 years. 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. 2029. Installation Costs ...................................................................... Annual Energy Use .................................................................. Energy Prices ........................................................................... ddrumheller on DSK120RN23PROD with PROPOSALS2 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 NOPR TSD. 25 DOE acknowledges that the pandemics which span the sample period may contribute to the VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 medium- to long-term consumer behavior changes. DOE will continue monitor the consumer behavior PO 00000 Frm 00024 Fmt 4701 Sfmt 4702 trend and may make alternative estimation in the next rulemaking phase. E:\FR\FM\31MRP2.SGM 31MRP2 ddrumheller on DSK120RN23PROD with PROPOSALS2 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules 1. Product Cost To calculate consumer product costs, DOE multiplied the MSPs developed in the engineering analysis by the markups described previously (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. Economic literature and historical data suggest that the real costs of many products may trend downward over time according to ‘‘learning’’ or ‘‘experience’’ curves. Experience curve analysis implicitly includes factors such as efficiencies in labor, capital investment, automation, materials prices, distribution, and economies of scale at an industry-wide level.26 In the experience curve method, the real cost of production is related to the cumulative production or ‘‘experience’’ with a manufactured product. DOE used historical Producer Price Index (PPI) data for ‘‘household refrigerator and home freezer manufacturing’’ from the Labor Department’s Bureau of Labor Statistics’ (‘‘BLS’’) spanning the time period between 1989 and 2021 as a proxy of the production cost for MREFs.27 This is the most relevant price index for MREFs as the main technology options are similar to full-size refrigerators and several refrigerator manufacturers also produce MREFs. An inflation-adjusted price index was calculated by dividing the PPI series by the gross domestic product index from Bureau of Economic Analysis for the same years. The cumulative production of MREFs were assembled from the estimated annual shipments using the stock accounting approach between 2016 and 2021, and a flat shipment trend was assumed prior to 1951. The estimated learning rate (defined as the fractional reduction in price expected from each doubling of cumulative production) is 15.5 ± 1.7 percent. DOE included variable-speed compressors as a technology option for higher efficiency levels. To develop future prices specific for that technology, DOE applied a different price trend to the controls portion of the variable-speed compressor, which represents part of the price increment when moving from an efficiency level 26 Taylor, M. and Fujita, K.S. Accounting for Technological Change in Regulatory Impact Analyses: The Learning Curve Technique. LBNL– 6195E. Lawrence Berkeley National Laboratory, Berkeley, CA. April 2013. https://escholarship.org/ uc/item/3c8709p4#page-1. 27 Household refrigerator and home freezer manufacturing PPI series ID: PCU3352203352202; www.bls.gov/ppi/. VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 achieved with the highest efficiency single-speed compressor to an efficiency level with variable-speed compressor. DOE used PPI data on ‘‘semiconductors and related device manufacturing’’ between 1967 and 2021 to estimate the historic price trend of electronic components in the control.28 The regression, performed as an exponential trend line fit, results in an R-square of 0.99, with an annual price decline rate of 6.3 percent. See chapter 8 of the TSD for further details on this topic. AHAM noted that any declining costs are due to value engineering and/or productivity improvements, and agreed with DOE’s decision not to use a price learning curve in the preliminary analysis. AHAM also stated that MREFs are not identical to refrigerators and freezers, and therefore DOE should not apply the learning curve from the refrigerators, refrigerator-freezers, and freezers rulemaking analysis. (AHAM, No. 18, p. 6) On the other hand, NEEA, ASAP and the CA IOUs, encouraged DOE to incorporate a price learning curve. ASAP and the CA IOUs expressed concern that assuming constant prices will result in overestimating the cost to achieve higher efficiency levels in the assumed compliance year and beyond and suggested the use of price data from consumer refrigerators to inform the development of an appropriate learning rate for MREFs, as many of the same design options are used for MREFs. (NEEA, No. 21, pp. 4–5, ASAP, No. 19 at p. 3, CA IOUs, No. 20, pp. 2–4). As discussed earlier, in this NOPR DOE developed a price learning based on the historical refrigerator and freezer PPI and the cumulative production estimated specifically for MREFs, assuming that the refrigerator and freezer PPI is representative of MREFs. Given that similar design options are considered for units in higher efficiency levels as for consumer refrigerators, DOE also considered a separate price learning for the controls portion of the variable-speed compressor in MREFs at higher efficiency levels. DOE is requesting comment on this approach. 2. Installation Cost Installation cost includes labor, overhead, and any miscellaneous materials and parts needed to install the product. DOE is not aware of any data that suggest the cost of installation changes as a function of efficiency for MREFs. DOE therefore assumed that installation costs are the same regardless 28 Semiconductors and related device manufacturing PPI series ID: PCU334413334413; www.bls.gov/ppi/. PO 00000 Frm 00025 Fmt 4701 Sfmt 4702 19405 of EL and do not impact the LCC or PBP. As a result, DOE did not include installation costs in the LCC and PBP analysis. 3. Annual Energy Consumption DOE determined the energy consumption for MREFs at different efficiency levels using the approach described previously in section IV.E of this document. 4. Energy Prices Because marginal electricity price more accurately captures the incremental savings associated with a change in energy use from higher efficiency, it provides a better representation of incremental change in consumer costs than average electricity prices. Therefore, DOE applied average electricity prices for the energy use of the product purchased in the no-newstandards case, and marginal electricity prices for the incremental change in energy use associated with the other efficiency levels considered. DOE derived electricity prices in 2021 using data from EEI Typical Bills and Average Rates reports. Based upon comprehensive, industry-wide surveys, this semi-annual report presents typical monthly electric bills and average kilowatt-hour costs to the customer as charged by investor-owned utilities. For the residential sector, DOE calculated electricity prices using the methodology described in Coughlin and Beraki (2018).29 To estimate energy prices in future years, DOE multiplied the 2021 energy prices by the projection of annual average price changes from the Reference case in AEO 2022, which has an end year of 2050.30 To estimate price trends after 2050, DOE used the 2050 electricity prices, held constant. 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 compared to baseline efficiency 29 Coughlin, K. and B. Beraki.2018. Residential Electricity Prices: A Review of Data Sources and Estimation Methods. Lawrence Berkeley National Lab. Berkeley, CA. Report No. LBNL–2001169. https://ees.lbl.gov/publications/residentialelectricity-prices-review (Last accessed September 22, 2022). 30 EIA. Annual Energy Outlook 2022 with Projections to 2050. Washington, DC. Available at www.eia.gov/forecasts/aeo/ (last accessed September 22, 2022). E:\FR\FM\31MRP2.SGM 31MRP2 19406 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules products. DOE is not aware of any data that suggest the cost of repair or maintenance for MREFs changes as a function of efficiency. DOE therefore assumed that these costs are the same regardless of EL and do not impact the LCC or PBP. As a result, DOE did not include maintenance and repair costs in the LCC and PBP analysis. 6. Product Lifetime For MREFs, DOE used lifetime estimates from products that operate using the same refrigeration technology: covered refrigerators and refrigeratorfreezers. DOE assumed a maximum lifetime of 40 years for all product classes and an average lifetime of 10.3 years for compact coolers and 17.3 years for full-size coolers. DOE also assumed that the probability function for the annual survival of MREFs would take the form of a Weibull distribution. See chapter 8 of the NOPR TSD for a more detailed discussion. DOE requests comment and data on the assumptions and methodology used to calculate MREF survival probabilities. 7. Discount Rates In the calculation of LCC, DOE applies discount rates appropriate to households to estimate the present value of future operating cost savings. DOE estimated a distribution of residential discount rates for MREFs based on consumer financing costs and the opportunity cost of consumer funds. DOE applies weighted average discount rates calculated from consumer debt and asset data, rather than marginal or implicit discount rates.31 The LCC analysis estimates net present value over the lifetime of the product, so the appropriate discount rate will reflect the general opportunity cost of household funds, taking this time scale into account. Given the long-time horizon modeled in the LCC analysis, the application of a marginal interest rate associated with an initial source of funds is inaccurate. Regardless of the method of purchase, consumers are expected to continue to rebalance their debt and asset holdings over the LCC analysis period, based on the restrictions consumers face in their debt payment requirements and the relative size of the interest rates available on debts and assets. DOE estimates the aggregate impact of this rebalancing using the historical distribution of debts and assets. 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. It 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, 2013, 2016, and 2019.32 Using the SCF and other sources, DOE 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 type, is 4.1 percent. See chapter 8 of the NOPR TSD for further details on the development of consumer discount rates. 8. Energy Efficiency Distribution in the No-New-Standards Case To accurately estimate the share of consumers that would be affected by a potential energy conservation standard at a particular efficiency level, DOE’s LCC analysis considered the projected distribution (market shares) of product efficiencies under the no-new-standards case (i.e., the case without amended or new energy conservation standards). In the January 2022 Preliminary Analysis, DOE estimated the energy efficiency distribution of MREFs for 2029 using model counts from DOE’s CCD. DOE assumed that the distribution of models was equivalent to the distribution of products sold. AHAM commented that the distribution DOE obtained through this approach did not reflect the shipment breakdown by efficiency seen in the market and submitted shipment data by product class and efficiency level collected from its members to illustrate the discrepancy between the CCD data and the AHAM efficiency distributions. (AHAM, No. 18, p. 2–5) DOE appreciates AHAM’s data submission and, for this NOPR, DOE is using the efficiency distribution by product class as provided by AHAM. DOE understands that this approach inherently assumes that the rest of the MREF market has a similar distribution of efficiencies. However, due to lack of efficiency data from non-AHAM members, DOE is not able to verify whether this assumption is incorrect. For this analysis, DOE also assumed that the current distribution of product efficiencies would remain constant in 2029, and during the analysis period, in the no-new-standards case. The estimated market shares for the no-new-standards case for MREFs are shown in Table IV.5 of this document. See chapter 8 of the NOPR TSD for further information on the derivation of the efficiency distributions. TABLE IV.5—EFFICIENCY DISTRIBUTIONS FOR THE NO-NEW-STANDARDS CASE IN THE COMPLIANCE YEAR Product class Cooler-FC .......................... Cooler-BIC ......................... ddrumheller on DSK120RN23PROD with PROPOSALS2 2029 Market share (%) Total adjusted volume (cu. ft.) Cooler-F ............................ Cooler-BI ........................... C–13A ............................... C–3A ................................. EL 0 3.1 5.1 3.1 5.1 15.3 15.3 5 21 EL 1 EL 2 EL 3 EL 4 EL 5 Total * 79 18 3 0 0 0 100 18 6 1 1 0 74 100 42 72 99 100 58 8 1 0 0 20 0 0 0 0 0 0 0 0 0 0 0 0 0 ........................ 100 100 100 100 * The total may not sum to 100% due to rounding. 31 The implicit discount rate is inferred from a consumer purchase decision between two otherwise identical goods with different first cost and operating cost. It is the interest rate that equates the increment of first cost to the difference in net present value of lifetime operating cost, incorporating the influence of several factors: VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 transaction costs; risk premiums and response to uncertainty; time preferences; interest rates at which a consumer is able to borrow or lend. The implicit discount rate is not appropriate for the LCC analysis because it reflects a range of factors that influence consumer purchase decisions, rather than PO 00000 Frm 00026 Fmt 4701 Sfmt 4702 the opportunity cost of the funds that are used in purchases. 32 U.S. Board of Governors of the Federal Reserve System. Survey of Consumer Finances. 1995, 1998, 2001, 2004, 2007, 2010, 2013, 2016, and 2019. (Last accessed September 22, 2022.) https://www.federal reserve.gov/econresdata/scf/scfindex.htm. E:\FR\FM\31MRP2.SGM 31MRP2 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules DOE requests comment and data on its efficiency distribution assumptions and projection into future years. Specifically, DOE is requesting comment and data on the efficiency distribution of non-AHAM members, to more accurately derive the efficiency distribution for the whole MREF market. ddrumheller on DSK120RN23PROD with PROPOSALS2 9. Payback Period Analysis The payback period is the amount of time it takes the consumer to recover the additional installed cost of moreefficient products, compared to baseline products, through energy cost savings. Payback periods are expressed in years. Payback periods 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 previously, EPCA 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 calculating the energy savings in accordance with the applicable DOE test procedure, and multiplying those savings by the average energy price projection for the year in which compliance with the amended standards would be required. G. Shipments Analysis DOE uses projections of annual product shipments to calculate the national impacts of potential amended or new energy conservation standards on energy use, NPV, and future manufacturer cash flows.33 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 33 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. VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 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. DOE defined two broad MREF product categories (coolers, and combination cooler refrigeration products) and developed models to estimate shipments for each category. DOE used various data and assumptions to develop the shipments for each product class considered in this rulemaking. Given the limited available data sources on historical shipments of coolers, DOE assumed a penetration rate of 13.3 percent in the U.S. households based on online surveys 34 to estimate the annual shipments starting from 2016, the start year of AEO 2022 housing projection data. 35 36 DOE multiplied the estimated penetration by the total number of households from the AEO 2022, and then determined the number of new shipments by dividing the total stock by the mean product lifetime. DOE projected the annual shipments by incorporating the lifetime distributions by product class and assuming that the growth of new sales is consistent with the housing projections from AEO 2022. To estimate shipments prior to 2016, DOE assumed a flat historical shipment trend at the 2016 level. With even more limited available data sources on historical shipments of combination cooler refrigeration products, DOE estimated total shipments of combination cooler refrigeration products in 2014 to be 36,000 units, based on feedback from manufacturers from the October 2016 Direct Final Rule. DOE assumed sales 34 DOE also reviewed the recent release of the EIA 2020 Residential Energy Consumption Survey (RECS 2020), which identified wine chillers in representative U.S. households. DOE found that the penetration rate of wine chillers in RECS 2020 is significantly lower compared to that estimated by DOE for MREFs based on previous market surveys. Due to the uncertainty on the breakdown of MREFs between wine chillers and other miscellaneous refrigeration applications in the U.S. market, DOE continued to use the 13.3 percent penetration rate for MREFs in this NOPR. However, DOE also modeled an alternative shipments scenario based on the lower penetration rate of MREFs in American homes derived from the RECS 2020 data. For more details on this alternative scenario and the resulting NES and NPV results, see chapter 9 and appendix 10C of the NOPR TSD, respectively. As part of its request for comment below, DOE requests input on its shipments modeling. 35 Greenblatt, J.B., S.J. Young, H.-C. Yang, T. Long, B. Beraki, S.K. Price, S. Pratt, H. Willem, L.B. Desroches, and S.M. Donovan. U.S. Residential Miscellaneous Refrigeration Products: Results from Amazon Mechanical Turk Surveys. 2014. Lawrence Berkeley National Laboratory: Berkeley, CA. Report No. LBNL–6537E. 36 Donovan, S.M., S.J. Young, and J.B. Greenblatt. Ice-Making in the U.S.: Results from an Amazon Mechanical Turk Survey. Lawrence Berkeley National Laboratory. Report No. LBNL–183899. PO 00000 Frm 00027 Fmt 4701 Sfmt 4702 19407 would increase in line with the increase in the number of households in AEO 2022. Finally, DOE incorporated the 2021 shipment data provided by AHAM to re-calibrate total shipments for each product class considered in this rulemaking. AHAM commented that the methodology DOE used to develop shipments in the preliminary analysis was based on findings of a Lawrence Berkeley National Laboratory (‘‘LBNL’’) study taken place nine years ago and that DOE should improve its data collection effort and consider other data sources. AHAM conducted another data collection among its members for 2021 shipments by product class in response to DOE’s comment regarding AHAM shipments from the RFI (AHAM, No. 18 at p. 2–5). A separate confidential shipment data submission disaggregated by product class and capacity was provided by AHAM along with its comment. AHAM stated that the data they provided for 2021 shipments by product class and efficiency varies substantially from the data and assumptions in DOE’s aforementioned shipments analysis (AHAM, No. 18 at p. 2). Furthermore, AHAM asserted that the bulk of the market lies at lower efficiency levels, its membership represents a majority of the market, and shipments are significantly lower than what DOE is projecting. Finally, AHAM noted that DOE should further investigate other data sources to collect accurate information from nonAHAM members (including NPD,37 TraQline data, and manufacturer interviews) rather than relying on calculations whose assumptions may not be accurate. Sub Zero echoed AHAM’s comments and suggested DOE rethink its approach using manufacturer-provided data (Sub Zero, No. 17 at p. 2). DOE appreciates the shipments data submitted by AHAM, which were disaggregated by product class and efficiency. As discussed earlier in this NOPR, DOE used the efficiency distributions by product class to match those submitted by AHAM. DOE also assumed that the market share of each product class (in relation to the total MREF shipments) matched the market shares provided by AHAM. To estimate total MREF shipments, DOE utilized the AHAM shipments data and AHAMmember information and reviewed the TraQline data from 2020 Q1 to 2022 Q1 to estimate non-AHAM-member 37 https://www.npd.com/. E:\FR\FM\31MRP2.SGM 31MRP2 19408 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules shipments.38 Based on this approach, DOE’s estimate of the MREF shipments for the whole market was consistent with the total number of shipments estimated using DOE’s approach discussed earlier and used in the January 2022 Preliminary Analysis. Hence, DOE continued using the same approach to develop the total MREF shipments, but incorporated the product class breakdown provided by AHAM to re-distribute the total shipments by product class. DOE is requesting comment on this approach and welcomes comment and data related to the total MREF shipments, MREF shipments by product class, and the non-AHAM-member shipments. H. National Impact Analysis The NIA assesses the NES and the 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.39 (‘‘Consumer’’ in this context refers to consumers of the product being regulated.) DOE calculates the NES and NPV for the potential standard levels considered 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. For the present analysis, DOE projected the energy savings, operating cost savings, product costs, and NPV of consumer benefits over the lifetime of MREFs sold from 2029 through 2058. DOE evaluates the impacts of new or 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. DOE uses a model coded in the Python programming language to calculate the energy savings and the national consumer costs and savings from each TSL and presents the results in the form of a spreadsheet. 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.6 summarizes the inputs and methods DOE used for the NIA analysis for the NOPR. Discussion of these inputs and methods follows the table. See chapter 10 of the NOPR TSD for further details. TABLE IV.6—SUMMARY OF INPUTS AND METHODS FOR THE NATIONAL IMPACT ANALYSIS Inputs Method Shipments ................................................................................................. Compliance Date of Standard .................................................................. Efficiency Trends ...................................................................................... Annual Energy Consumption per Unit ...................................................... Annual shipments from shipments model. 2029. No trend assumed. Calculated for each efficiency level based on inputs from energy use analysis. Prices for the year of compliance are calculated in the LCC analysis. Prices in subsequent years are calculated incorporating price learning based on historical data. Calculated for each efficiency level using the energy use per unit, and electricity prices and trends. Annual values do not change with efficiency level. AEO 2022 projections to 2050 and fixed at 2050 prices thereafter. A time-series conversion factor based on AEO 2022. 3 percent and 7 percent. 2022. Total Installed Cost per Unit ..................................................................... Annual Energy Cost per Unit ................................................................... Repair and Maintenance Cost per Unit .................................................... Energy Price Trends ................................................................................. Energy Site-to-Primary and FFC Conversion .......................................... Discount Rate ........................................................................................... Present Year ............................................................................................. ddrumheller on DSK120RN23PROD with PROPOSALS2 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.F.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 year of anticipated compliance with an amended standard. 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 (2029). In this 38 DOE also collected and reviewed manufacturer interview data but was unable to collect a VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 scenario, the market shares 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. In the absence of data on trends in efficiency, DOE assumed no efficiency trend over the analysis period for both the no-new-standards and standards cases. For a given case, market shares by efficiency level were held fixed to their 2029 distribution. DOE requests comment on its assumption of no efficiency trend and seeks historical product efficiency data. 2. National Energy Savings The NES analysis involves a comparison of national energy consumption of the considered products between each potential standards case (TSL) and the case with no new or amended energy conservation standards. DOE calculated the national energy consumption by multiplying the number of units (stock) of each product (by vintage or age) by the unit energy consumption (also by vintage). DOE calculated annual NES based on the difference in national energy consumption for the no-new standards case and for each higher efficiency standard case. DOE estimated energy consumption and savings based on site representative sample that would allow it to estimate non-AHAM-member shipments data. 39 The NIA accounts for impacts in the 50 states and U.S. territories. PO 00000 Frm 00028 Fmt 4701 Sfmt 4702 E:\FR\FM\31MRP2.SGM 31MRP2 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules ddrumheller on DSK120RN23PROD with PROPOSALS2 energy and converted the electricity consumption and savings to primary energy (i.e., the energy consumed by power plants to generate site electricity) using annual conversion factors derived from AEO 2022. Cumulative energy savings are the sum of the NES for each year over the timeframe of the analysis. Use of higher-efficiency products is occasionally associated with a direct rebound effect, which refers to an increase in utilization of the product due to the increase in efficiency. DOE did not find any data on the rebound effect specific to MREFs that would indicate that consumers would alter their utilization of their product as a result of an increase in efficiency. MREFs are typically plugged in and operate continuously; therefore, DOE assumed a rebound rate of 0. 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 (Aug. 17, 2012). NEMS is a public domain, multi-sector, partial equilibrium model of the U.S. energy sector 40 that EIA uses to prepare its Annual Energy Outlook. The FFC factors incorporate losses in production and delivery in the case of natural gas (including fugitive emissions) and additional energy used to produce and deliver the various fuels used by power plants. The approach used for deriving FFC measures of energy use and emissions is described in appendix 10B of the NOPR TSD. 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 operating costs (energy costs and repair and maintenance costs), and (3) a 40 For more information on NEMS, refer to The National Energy Modeling System: An Overview 2018, DOE/EIA–0581(2018), April 2019. Available at www.eia.gov/outlooks/aeo/nems/documentation/ (last accessed September 22, 2022). VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 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 projection period. As discussed in section IV.F.1 of this document, DOE developed MREF price trends based on an experience curve calculated using historical PPI data. DOE applied the same trends to project prices for each product class at each considered efficiency level. By 2058, which is the end date of the projection period, the average price of single-speed compressor MREFs is projected to drop 14 percent and the average price of MREFs with a variable-speed compressor is projected to drop about 15 percent relative to 2029, the compliance year. DOE’s projection of product prices is described in appendix 10C of the NOPR TSD. To evaluate the effect of uncertainty regarding the price trend estimates, DOE investigated the impact of different product price projections on the consumer NPV for the considered TSLs for MREFs. In addition to the default price trend, DOE considered high and low- price- decline sensitivity cases. For the single-speed compressor MREFs and the non-variable- speed controls portion of MREFs, DOE estimated the high price decline and the low- price- decline scenarios based on household refrigerator and home freezer PPI data limited to the period between the period 1989–2008 and 2009–2021, respectively. For the variable-speed controls portion of MREFs, DOE estimated the high price decline and the low- price- decline scenarios based on an exponential trend line fit of the semiconductor PPI between the period 1994–2021 and 1967–1993, respectively. The derivation of these price trends and the results of these sensitivity cases are described in appendix 10C of the NOPR 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 regional energy prices by the projection of annual national-average residential energy price changes in the Reference case from AEO 2022, which has an end year of 2050. To estimate price trends after 2050, DOE used the average annual rate of change in prices from 2020 through 2050. As part of the NIA, DOE also analyzed scenarios that used inputs from variants PO 00000 Frm 00029 Fmt 4701 Sfmt 4702 19409 of the AEO 2022 Reference case that have lower and higher economic growth. Those cases have lower and higher energy price trends compared to the Reference case. NIA results based on these cases are presented in appendix 10C of the NOPR TSD. In calculating the NPV, DOE multiplies the net savings in future years by a discount factor to determine their present value. For this NOPR, 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.41 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 7percent 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 energy conservation standards on consumers, DOE evaluates the impact on identifiable subgroups of consumers that may be disproportionately affected by a new or amended national standard. The purpose of a subgroup analysis is to determine the extent of any such disproportional impacts. 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 NOPR, DOE analyzed the impacts of the considered standard levels on senior-only households. DOE did not consider low-income consumers in this NOPR because MREFs are not products generally used by this subgroup, as they typically cost more than comparable compact refrigerators, which are able to maintain lower temperatures compared to MREFs, and therefore serve a wider range of applications. The analysis used a subset of the TraQline consumer sample composed of households that meet the criteria for this subgroup. DOE used the LCC and PBP spreadsheet model to 41 United States Office of Management and Budget. Circular A–4: Regulatory Analysis. September 17, 2003. Section E. Available at https:// obamawhitehouse.archives.gov/omb/circulars_ a004_a-4/ (last accessed September 30, 2022). E:\FR\FM\31MRP2.SGM 31MRP2 19410 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules estimate the impacts of the considered efficiency levels on senior-only households. Chapter 11 in the NOPR TSD describes the consumer subgroup analysis. However, DOE acknowledges the potential limitations of this dataset to capture possible areas of the market, in particular smaller businesses (e.g. restaurants and bars), that are users of products such as wine chillers. DOE believes it is likely that a fraction of the purchasers of MREFs are likely small business owners who utilize such cooler products to keep beverages cool within restaurants. DOE requests comment on the subgroup analysis for MREF products, and specifically whether to any significant extent these products are in use by smaller or comparatively lowerincome, small businesses. DOE is also interested in understanding the number of potential small business purchasers of MREFs that would be impacted at DOE’s proposed TSL 4 and how such impacts may be different than those of the overall samples. ddrumheller on DSK120RN23PROD with PROPOSALS2 J. Manufacturer Impact Analysis 1. Overview DOE performed an MIA to estimate the financial impacts of amended energy conservation standards on manufacturers of MREFs and to estimate the potential impacts of such standards on direct employment and manufacturing capacity. The MIA has both quantitative and qualitative aspects and includes analyses of projected 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 VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 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 standards cases. To capture the uncertainty relating to manufacturer pricing strategies following amended standards, the GRIM estimates a range of possible impacts under different scenarios. The qualitative part of the MIA addresses manufacturer characteristics and market trends. Specifically, the MIA considers such factors as a potential standard’s impact on manufacturing capacity, competition within the industry, the cumulative impact of other DOE and non-DOE, Federal regulations, and impacts on manufacturer subgroups. The complete MIA is outlined in chapter 12 of the NOPR TSD. DOE conducted the MIA for this rulemaking in three phases. In Phase 1 of the MIA, DOE prepared a profile of the MREF manufacturing industry based on the market and technology assessment and publicly available information. This included a top-down analysis of MREF manufacturers that DOE used to derive preliminary financial inputs for the GRIM (e.g., revenues; materials, labor, overhead, and depreciation expenses; selling, general, and administrative expenses (‘‘SG&A’’); and R&D expenses). DOE also used public sources of information to further calibrate its initial characterization of the MREF manufacturing industry, including company filings of Form 10-Ks from the SEC,42 corporate annual reports, the U.S. Census Bureau’s Annual Survey of Manufactures (‘‘ASM’’),43 and reports from Dun & Bradstreet.44 In Phase 2 of the MIA, DOE prepared a framework 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 42 U.S. Securities and Exchange Commission, Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system. Available at www.sec.gov/edgar/ search/ (last accessed July 1, 2022). 43 U.S. Census Bureau, Annual Survey of Manufactures. ‘‘Summary Statistics for Industry Groups and Industries in the U.S (2020).’’ Available at: www.census.gov/data/tables/time-series/econ/ asm/2018–2020-asm.html (Last accessed July 15, 2022). 44 The Dun & Bradstreet Hoovers login is available at: app.dnbhoovers.com (Last accessed July 15, 2022). PO 00000 Frm 00030 Fmt 4701 Sfmt 4702 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. In general, energy conservation standards can affect manufacturer cash flow in three distinct ways: (1) creating a need for increased investment, (2) raising production costs per unit, and (3) altering revenue due to higher per-unit prices and changes in sales volumes. In addition, during Phase 2, DOE developed interview guides to distribute to manufacturers of MREFs in order to develop other key GRIM inputs, including product and capital conversion costs, and to gather additional information on the anticipated effects of energy conservation standards on revenues, direct employment, capital assets, industry competitiveness, and manufacturer subgroups. In Phase 3 of the MIA, DOE conducted structured, detailed interviews with representative manufacturers. During these interviews, DOE discussed engineering, manufacturing, procurement, and financial topics to validate assumptions used in the GRIM and to identify key issues or concerns. See section IV.J.3 of this document for a description of the key issues raised by manufacturers during the interviews. As part of Phase 3, DOE also 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 may include small business manufacturers, lowvolume manufacturers, niche players, and/or manufacturers exhibiting a cost structure that largely differs from the industry average. DOE identified one subgroup for a separate impact analysis: small business manufacturers. The small business subgroup is discussed in section VI.B, ‘‘Review under the Regulatory Flexibility Act’’ and in chapter 12 of the NOPR TSD. 2. Government Regulatory Impact Model and Key Inputs DOE uses the GRIM to quantify the changes in cash flow due to amended standards that result in a higher or lower industry value. The GRIM uses a standard, annual discounted cash flow analysis that incorporates manufacturer costs, manufacturer markups, shipments, and industry financial E:\FR\FM\31MRP2.SGM 31MRP2 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules information as inputs. The GRIM models changes in costs, distribution of shipments, investments, and manufacturer margins that could result from an amended energy conservation standard. The GRIM spreadsheet uses the inputs to arrive at a series of annual cash flows, beginning in 2023 (the NOPR publication year) and continuing to 2058. DOE calculated INPVs by summing the stream of annual discounted cash flows during this period. For manufacturers of MREFs, DOE used a real discount rate of 7.7 percent, which was derived from industry financials and then modified according to feedback received during manufacturer interviews. The GRIM calculates cash flows using standard accounting principles and compares changes in INPV between the no-new-standards case and each standards case. The difference in INPV between the no-new-standards case and a standards case represents the financial impact of the amended energy conservation standard on manufacturers. As discussed previously, DOE developed critical GRIM inputs using a number of sources, including publicly available data, results of the engineering analysis and shipments analysis, and information gathered from industry stakeholders during the course of manufacturer interviews. The GRIM results are presented in section I.B.2. Additional details about the GRIM, the discount rate, and other financial parameters can be found in chapter 12 of the NOPR TSD. c. Product and Capital Conversion Costs Amended energy conservation standards could cause manufacturers to incur conversion costs to bring their production facilities and equipment designs into compliance. DOE evaluated the level of conversion-related expenditures that would be needed to comply with each considered efficiency level in each product class. For 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, marketing, and other non-capitalized costs necessary to make product designs comply with amended energy conservation standards. Capital conversion costs are investments in property, plant, and equipment necessary to adapt or change existing production facilities such that new compliant product designs can be fabricated and assembled. b. Shipments Projections Product Conversion Costs DOE based its estimates of the product conversion costs necessary to meet the varying efficiency levels on information from manufacturer interviews, the design paths analyzed in the engineering analysis, the prior MREF rulemaking analysis, and market share and model count information. 81 FR 75194. Generally, manufacturers indicated a preference to meet amended standards with design options that were direct and relatively straight forward component swaps. However, at higher efficiency levels, manufacturers anticipated the need for platform redesigns. Efficiency levels that significantly altered cabinet construction would require very large investments to update designs. Manufacturers noted that increasing foam thickness would require complete redesign of the cabinet, liner, and shelving due to loss of interior volume. Additionally, extensive use of VIPs would require redesign of the cabinet to maximize the benefits of VIPs. The GRIM estimates manufacturer revenues based on total unit shipment projections and the distribution of those shipments by efficiency level. Changes in sales volumes and efficiency mix over time can significantly affect manufacturer finances. For this analysis, the GRIM uses the NIA’s annual shipment projections derived from the shipments analysis from 2023 (the NOPR publication year) to 2058 (the end year of the analysis period). See chapter Capital Conversion Costs DOE relied on information from manufacturer interviews and the engineering analysis to evaluate the level of capital conversion costs would likely incur at the considered standard levels. During interviews, manufacturers provided estimates and descriptions of the required tooling changes that would be necessary to upgrade product lines to meet the various efficiency levels. Based on these inputs, DOE modeled a. Manufacturer Production Costs Manufacturing more efficient equipment is typically more expensive than manufacturing baseline equipment due to the use of more complex components, which are typically more costly than baseline components. The changes in the MPCs of covered products can affect the revenues, gross margins, and cash flow of the industry. For a complete description of the MPCs, see chapter 5 of the NOPR TSD or section IV.C of this document. ddrumheller on DSK120RN23PROD with PROPOSALS2 9 of the NOPR TSD for additional details or section IV.G of this document. VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 PO 00000 Frm 00031 Fmt 4701 Sfmt 4702 19411 incremental capital conversion costs for efficiency levels that could be reached with individual components swaps. However, based on feedback, DOE modeled higher capital conversion costs when manufacturers would have to redesign their existing product platforms. DOE used information from manufacturer interviews to determine the cost of the manufacturing equipment and tooling necessary to implement complete redesigns. Increases in foam thickness require either reductions to interior volume or increases to exterior volume. Many MREFs are sized to fit standard widths, meaning any increase in foam thickness would likely result in the loss of interior volume. Additionally, many MREFs are sized to maximize storage of specific products (e.g., canned beverages or wine bottles) and small changes in wall thickness could dramatically decrease the unit storage capacity for those products. The reduction of interior volume has significant consequences for manufacturing. Redesigning the cabinet to increase the effectiveness of insulation likely requires manufacturers to update designs and tooling associated with the interior of the product. This could require investing in new tooling to accommodate changes to the liner, shelving, drawers, and doors. To minimize reductions to interior volume, manufacturers may choose to adopt VIP technology. Extensive incorporation of VIPs into designs require significant upfront capital due to differences in the handling, storing, and manufacturing of VIPs as compared to typical polyurethane foams. VIPs are relatively fragile and must be protected from punctures and rough handling. If VIPs have leaks of any size, the panel will eventually lose much of its thermal insulative properties and structural strength. If already installed within a cabinet wall, a punctured VIP may significantly reduce the structural strength of the MREF cabinet. As a result, VIPs require careful handling and installation. Manufacturers noted the need to allocate special warehouse space in order to ensure the VIPs are not jostled or roughly handled in the manufacturing environment. VIPs require significantly more warehouse space than polyurethane foams. The application of VIPs can be difficult and may require investment in hard-tooling or robotic systems to ensure the panels are positioned properly within the cabinet or door. Manufacturers noted that producing cabinets with VIPs are much more labor and time intensive than producing cabinets with typical polyurethane foams and the increase in E:\FR\FM\31MRP2.SGM 31MRP2 19412 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules labor can affect total production capacity. To develop industry conversion cost estimates, DOE estimated the number of product platforms in DOE’s CCD45 and California Energy Commission’s Modernized Appliance Efficiency Database System (‘‘MAEDbS’’) 46 and scaled up the product and capital conversion costs associated with the number of product platforms that would require updating at each efficiency level. DOE acknowledges that manufacturers may follow different design paths to reach the various efficiency levels analyzed. An individual manufacturer’s investments depend on a range of factors, including the company’s current product offerings and product platforms, existing production facilities and infrastructure, and make vs. buy decisions for products. DOE’s conversion cost methodology incorporated feedback from all manufacturers that took part in interviews and extrapolated industry values. While industry average values may not represent any single manufacturer, DOE’s modeling provides reasonable estimates of industry-level investments. In general, DOE assumes all conversion-related investments occur between the year of publication of the final rule and the year by which manufacturers must comply with the new standard. The conversion cost figures used in the GRIM can be found in section V.B.2 of this document. For additional information on the estimated capital and product conversion costs, see chapter 12 of the NOPR TSD. ddrumheller on DSK120RN23PROD with PROPOSALS2 d. Manufacturer Markup Scenarios MSPs include direct manufacturing production costs (i.e., labor, materials, and overhead 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 for each product class and efficiency level. Modifying these markups in the standards case yields different sets of impacts on manufacturers. For the MIA, DOE 45 U.S. Department of Energy’s Compliance Certification Database is available at: www.regulations.doe.gov/certification-data/ #q=Product_Group_s%3A* (Last accessed September 22, 2022). 46 California Energy Commission’s Modernized Appliance Efficiency Database System is available at: cacertappliances.energy.ca.gov/Pages/ ApplianceSearch.aspx (Last accessed September 22, 2022). DOE used this database to gather product information not provided in DOE’s CCD (e.g., manufacturer names). VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 modeled two standards case scenarios to represent uncertainty regarding the potential impacts on prices and profitability for manufacturers following the implementation of amended energy conservation standards: (1) a preservation of gross margin percentage scenario; and (2) a preservation of operating profit scenario. These scenarios lead to different manufacturer markup values that, when applied to the MPCs, result in varying revenue and cash flow impacts. Under the preservation of gross margin percentage scenario, DOE applied a single uniform ‘‘gross margin percentage’’ across all efficiency levels, which assumes that manufacturers would be able to maintain the same amount of profit as a percentage of revenues at all efficiency levels within a product class. As manufacturer production costs increase with efficiency, this scenario implies that the per-unit dollar profit will increase. DOE assumed a gross margin percentage of 20 percent for freestanding compact coolers and 28 percent for all other product classes.47 Manufacturers tend to believe it is optimistic to assume that they would be able to maintain the same gross margin percentage as their production costs increase, particularly for minimally efficient products. Therefore, this scenario represents a high bound of industry profitability under an amended energy conservation standard. In the preservation of operating profit scenario, as the cost of production goes up under a standards case, manufacturers are generally required to reduce their manufacturer markups to a level that maintains base-case operating profit. DOE implemented this scenario in the GRIM by lowering the manufacturer markups at each TSL to yield approximately the same earnings before interest and taxes in the standards case as in the no-newstandards case in the year after the expected compliance date of the amended standards. The implicit assumption behind this scenario is that the industry can only maintain its operating profit in absolute dollars after the standard takes effect. A comparison of industry financial impacts under the two scenarios is presented in section V.B.2.a of this document. 3. Manufacturer Interviews DOE interviewed manufacturers including domestic-based and foreign47 The gross margin percentages of 20 percent and 28 percent are based on manufacturer markups of 1.25 and 1.38 percent, respectively. PO 00000 Frm 00032 Fmt 4701 Sfmt 4702 based original equipment manufacturers (‘‘OEMs’’) as well as importers. Participants included manufacturers offering a range of product classes, including both freestanding and built-in designs. In interviews, DOE asked manufacturers to describe their major concerns regarding potential increases in energy conservation standards for MREFs. The following section highlights manufacturer concerns that helped inform the projected potential impacts of an amended standard on the industry. Manufacturer interviews are conducted under non-disclosure agreements (‘‘NDAs’’), so DOE does not document these discussions in the same way that it does public comments in the comment summaries and DOE’s responses throughout the rest of this document. a. Supply Chain Constraints In interviews, some manufacturers expressed concerns about the ongoing supply chain constraints related to sourcing high-quality components (e.g., VSCs, VIPs) as well as microprocessors and electronics. More stringent standards, particularly at TSLs requiring a large-scale implementation of VSCs, would require that industry source more high-efficiency compressors and electronic components, which are already difficult to secure. If these supply constraints continue through the end of the conversion period, industry could face production capacity constraints. b. Built-In Product Classes Some manufacturers urged DOE to conduct a separate analysis for built-in product classes. These manufacturers noted that built-in MREFs face design constraints related to standardized installation dimensions (i.e., maintaining the same width and not exceeding countertop depth). These manufacturers asserted that because of the desire to maintain the same external dimensions, increased insulation thickness would likely come at the expense of internal volume. For MREFs designed to store wine, manufacturers explained that even small changes to internal volume would have a significant impact in terms of ‘‘bottle count,’’ which is a key consumer feature and often referenced in marketing material (e.g., a 32-bottle wine cooler). Since these products are likely already optimized to hold the maximum number of standard-size wine bottles, even a small reduction in the interior width could mean losing an entire column of bottle space. Some manufacturers also noted built-ins have E:\FR\FM\31MRP2.SGM 31MRP2 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules restricted airflow. These manufacturers stated that because of these differences, freestanding products cannot be used as proxies for built-in products. 4. Discussion of MIA Comments In response to the January 2022 Preliminary Analysis, AHAM asserted that achieving additional energy savings beyond EL 1—particularly for built-in product classes—would require significant redesign of product platforms and retooling. Specifically for built-in products, AHAM asserted that given the low shipment volumes, the significant investment required to meet more stringent efficiencies would lead to significant degradation in INPV. (AHAM, No. 18, pp. 6, 9). AHAM also asserted that any efficiency levels that necessitate changes in chassis size would result in costly changes to tooling. (AHAM, No. 18, p. 6). As discussed in section IV.J.2.c, DOE relied on multiple sources, including manufacturer feedback from interviews, to estimate conversion costs for each of the analyzed efficiency levels. See Table V.20 for DOE’s capital and product conversion cost estimates. See chapter 12 of the NOPR TSD for INPV results by product grouping. ddrumheller on DSK120RN23PROD with PROPOSALS2 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 other gases due to ‘‘upstream’’ activities in the fuel production chain. These upstream activities comprise extraction, processing, and transporting fuels to the site of combustion. The analysis of electric power sector emissions of CO2, NOX, SO2, and Hg uses emissions factors intended to represent the marginal impacts of the change in electricity consumption associated with amended or new standards. The methodology is based on results published for the AEO, including a set of side cases that implement a variety of efficiency-related policies. The methodology is described in appendix 13A in the NOPR TSD. The analysis presented in this notice uses projections from AEO 2022. Power sector emissions of CH4 and N2O from fuel combustion are estimated using Emission Factors for Greenhouse Gas Inventories published by the VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 Environmental Protection Agency (EPA).48 FFC upstream emissions, which include emissions from fuel combustion during extraction, processing, and transportation of fuels, and ‘‘fugitive’’ emissions (direct leakage to the atmosphere) of CH4 and CO2, are estimated based on the methodology described in chapter 15 of the NOPR TSD. The emissions intensity factors are expressed in terms of physical units per MWh or MMBtu of site energy savings. For power sector emissions, specific emissions intensity factors are calculated by sector and end use. Total emissions reductions are estimated using the energy savings calculated in the NIA. 1. Air Quality Regulations Incorporated in DOE’s Analysis DOE’s no-new-standards case for the electric power sector reflects the AEO, which incorporates the projected impacts of existing air quality regulations on emissions. AEO 2022 generally represents current legislation and environmental regulations, including recent government actions, that were in place at the time of preparation of AEO 2022, including the emissions control programs discussed in the following paragraphs.49 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 numerous States in the eastern half of the United States are also limited under the Cross-State Air Pollution Rule (‘‘CSAPR’’). 76 FR 48208 (Aug. 8, 2011). CSAPR requires these States to reduce certain emissions, including annual SO2 emissions, and went into effect as of January 1, 2015.50 48 Available at https://www.epa.gov/energy/ greenhouse-gas-equivalencies-calculator (last accessed September 22, 2022). 49 For further information, see the Assumptions to AEO 2022 report that sets forth the major assumptions used to generate the projections in the Annual Energy Outlook. Available at www.eia.gov/ outlooks/aeo/assumptions/ (last accessed September 22, 2022). 50 CSAPR requires states to address annual emissions of SO2 and NOX, precursors to the formation of fine particulate matter (PM2.5) pollution, in order to address the interstate transport of pollution with respect to the 1997 and 2006 PM2.5 National Ambient Air Quality Standards (‘‘NAAQS’’). CSAPR also requires certain states to address the ozone season (May-September) emissions of NOX, a precursor to the formation of ozone pollution, in order to address the interstate transport of ozone pollution with respect to the PO 00000 Frm 00033 Fmt 4701 Sfmt 4702 19413 AEO 2022 incorporates implementation of CSAPR, including the update to the CSAPR ozone season program emission budgets and target dates issued in 2016. 81 FR 74504 (Oct. 26, 2016). Compliance with CSAPR is flexible among EGUs and is enforced through the use of tradable emissions allowances. 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 another regulated EGU. However, beginning in 2016, SO2 emissions began to fall as a result of the Mercury and Air Toxics Standards (‘‘MATS’’) for power plants. 77 FR 9304 (Feb. 16, 2012). In the MATS final 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 are being reduced as a result of the control technologies installed on coal-fired power plants to comply with the MATS requirements for acid gas. In order to continue operating, coal power plants must have either flue gas desulfurization or dry sorbent injection systems installed. Both technologies, which are used to reduce acid gas emissions, also reduce SO2 emissions. Because of the emissions reductions under the MATS, 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 another regulated EGU. Therefore, energy conservation standards that decrease electricity generation would generally reduce SO2 emissions. DOE estimated SO2 emissions reduction using emissions factors based on AEO 2022. CSAPR also established limits on NOX emissions for numerous States in the eastern half of the United States. Energy conservation standards would have little effect on NOX emissions in those States covered by CSAPR emissions limits if excess NOX emissions allowances resulting from the lower electricity demand could be used to permit offsetting increases in NOX emissions from other EGUs. In such case, NOX emissions would remain near 1997 ozone NAAQS. 76 FR 48208 (Aug. 8, 2011). EPA subsequently issued a supplemental rule that included an additional five states in the CSAPR ozone season program; 76 FR 80760 (Dec. 27, 2011) (Supplemental Rule). E:\FR\FM\31MRP2.SGM 31MRP2 19414 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules ddrumheller on DSK120RN23PROD with PROPOSALS2 the limit even if electricity generation goes down. A different case could possibly result, depending on the configuration of the power sector in the different regions and the need for allowances, such that NOX emissions might not remain at the limit in the case of lower electricity demand. In this case, energy conservation standards might reduce NOX emissions in covered States. Despite this possibility, DOE has chosen to be conservative in its analysis and has maintained the assumption that standards will not reduce NOX emissions in States covered by CSAPR. Energy conservation standards would be expected to reduce NOX emissions in the States not covered by CSAPR. DOE used AEO 2022 data to derive NOX emissions factors for the group of States not covered by CSAPR. The MATS limit mercury emissions from power plants, but they do not include emissions caps and, as such, DOE’s energy conservation standards would be expected to slightly reduce Hg emissions. DOE estimated mercury emissions reduction using emissions factors based on AEO 2022, which incorporates the MATS. L. Monetizing Emissions Impacts As part of the development of this proposed rule, for the purpose of complying with the requirements of Executive Order 12866, DOE considered the estimated monetary benefits from the reduced emissions of CO2, CH4, N2O, NOX, and SO2 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 projection period for each TSL. This section summarizes the basis for the values used for monetizing the emissions benefits and presents the values considered in this NOPR. On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22–30087) granted the Federal government’s emergency motion for stay pending appeal of the February 11, 2022, preliminary injunction issued in Louisiana v. Biden, No. 21–cv–1074– JDC–KK (W.D. La.). As a result of the Fifth Circuit’s order, the preliminary injunction is no longer in effect, pending resolution of the Federal government’s appeal of that injunction or a further court order. Among other things, the preliminary injunction enjoined the defendants in that case from ‘‘adopting, employing, treating as binding, or relying upon’’ the interim estimates of the social cost of greenhouse gases—which were issued VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 by the Interagency Working Group on the Social Cost of Greenhouse Gases on February 26, 2021—to monetize the benefits of reducing greenhouse gas emissions. As reflected in this rule, DOE has reverted to its approach prior to the injunction and presents monetized GHG abatement benefits where appropriate and permissible under law. DOE requests comment on how to address the climate benefits and other nonmonetized effects of the proposal. 1. Monetization of Greenhouse Gas Emissions DOE estimates the monetized benefits of the reductions in emissions of CO2, CH4, and N2O by using a measure of the SC of each pollutant (e.g., SC–CO2). These estimates represent the monetary value of the net harm to society associated with a marginal increase in emissions of these pollutants in a given year, or the benefit of avoiding that increase. These estimates are intended to include (but are not limited to) climate-change-related changes in net agricultural productivity, human health, property damages from increased flood risk, disruption of energy systems, risk of conflict, environmental migration, and the value of ecosystem services. DOE exercises its own judgment in presenting monetized climate benefits as recommended by applicable Executive Orders, and DOE would reach the same conclusion presented in this proposed rulemaking in the absence of the social cost of greenhouse gases, including the February 2021 Interim Estimates presented by the Interagency Working Group on the Social Cost of Greenhouse Gases. DOE estimated the global social benefits of CO2, CH4, and N2O reductions (i.e., SC–GHGs) using the estimates presented in the TSD: Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates under Executive Order 13990, published in February 2021 by the IWG. The SC– GHGs is the monetary value of the net harm to society associated with a marginal increase in emissions in a given year, or the benefit of avoiding that increase. In principle, SC–GHGs includes the value of all climate change impacts, including (but not limited to) changes in net agricultural productivity, human health effects, property damage from increased flood risk and natural disasters, disruption of energy systems, risk of conflict, environmental migration, and the value of ecosystem services. The SC–GHGs therefore, reflects the societal value of reducing emissions of the gas in question by one metric ton. The SC–GHGs is the theoretically appropriate value to use in conducting benefit-cost analyses of PO 00000 Frm 00034 Fmt 4701 Sfmt 4702 policies that affect CO2, N2O, and CH4 emissions. As a member of the IWG involved in the development of the February 2021 SC–GHG TSD, DOE agrees that the interim SC–GHG estimates represent the most appropriate estimate of the SC–GHG until revised estimates have been developed reflecting the latest, peer reviewed science. The SC–GHGs estimates presented here were developed over many years, using transparent process, peer reviewed methodologies, the best science available at the time of that process, and with input from the public. Specifically, in 2009, the IWG, that included the DOE and other executive branch agencies and offices was established to ensure that agencies were using the best available science and to promote consistency in the social cost of carbon (SC–CO2) values used across agencies. The IWG published SC–CO2 estimates in 2010 that were developed from an ensemble of three widely cited integrated assessment models (‘‘IAMs’’) that estimate global climate damages using highly aggregated representations of climate processes and the global economy combined into a single modeling framework. The three IAMs were run using a common set of input assumptions in each model for future population, economic, and CO2 emissions growth, as well as equilibrium climate sensitivity—a measure of the globally averaged temperature response to increased atmospheric CO2 concentrations. These estimates were updated in 2013 based on new versions of each IAM. In August 2016 the IWG published estimates of the social cost of methane (SC–CH4) and nitrous oxide (SC–N2O) using methodologies that are consistent with the methodology underlying the SC– CO2 estimates. The modeling approach that extends the IWG SC–CO2 methodology to non-CO2 GHGs has undergone multiple stages of peer review. The SC–CH4 and SC–N2O estimates were developed by Marten et al.51 and underwent a standard doubleblind peer review process prior to journal publication. In 2015, as part of the response to public comments received to a 2013 solicitation for comments on the SC–CO2 estimates, the IWG announced a National Academies of Sciences, Engineering, and Medicine review of the SC–CO2 estimates to offer advice on how to approach future 51 Marten, A.L., E.A. Kopits, C.W. Griffiths, S.C. Newbold, and A. Wolverton. Incremental CH4 and N2O mitigation benefits consistent with the U.S. Government’s SC–CO2 estimates. Climate Policy. 2015. 15(2): pp. 272–298. E:\FR\FM\31MRP2.SGM 31MRP2 ddrumheller on DSK120RN23PROD with PROPOSALS2 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules updates to ensure that the estimates continue to reflect the best available science and methodologies. In January 2017, the National Academies released their final report, Valuing Climate Damages: Updating Estimation of the Social Cost of Carbon Dioxide, and recommended specific criteria for future updates to the SC–CO2 estimates, a modeling framework to satisfy the specified criteria, and both near-term updates and longer-term research needs pertaining to various components of the estimation process (National Academies, 2017).52 Shortly thereafter, in March 2017, President Trump issued Executive Order 13783, which disbanded the IWG, withdrew the previous TSDs, and directed agencies to ensure SC–CO2 estimates used in regulatory analyses are consistent with the guidance contained in OMB’s Circular A–4, ‘‘including with respect to the consideration of domestic versus international impacts and the consideration of appropriate discount rates’’ (Executive Order (‘‘E.O.’’) 13783, Section 5(c)). Benefit-cost analyses following E.O. 13783 used SC–GHG estimates that attempted to focus on the U.S.-specific share of climate change damages as estimated by the models and were calculated using two discount rates recommended by Circular A–4, 3 percent and 7 percent. All other methodological decisions and model versions used in SC–GHG calculations remained the same as those used by the IWG in 2010 and 2013, respectively. On January 20, 2021, President Biden issued E.O. 13990, which re-established the IWG and directed it to ensure that the U.S. Government’s estimates of the social cost of carbon and other greenhouse gases reflect the best available science and the recommendations of the National Academies (2017). The IWG was tasked with first reviewing the SC–GHG estimates currently used in Federal analyses and publishing interim estimates within 30 days of the E.O. that reflect the full impact of GHG emissions, including by taking global damages into account. The interim SC– GHG estimates published in February 2021 are used here to estimate the climate benefits for this proposed rulemaking. The E.O. instructs the IWG to undertake a fuller update of the SC– GHG estimates by January 2022 that takes into consideration the advice of the National Academies (2017) and 52 National Academies of Sciences, Engineering, and Medicine. Valuing Climate Damages: Updating Estimation of the Social Cost of Carbon Dioxide. 2017. The National Academies Press: Washington, DC. VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 other recent scientific literature. The February 2021 SC–GHG TSD provides a complete discussion of the IWG’s initial review conducted under E.O.13990. In particular, the IWG found that the SC– GHG estimates used under E.O. 13783 fail to reflect the full impact of GHG emissions in multiple ways. First, the IWG found that the SC–GHG estimates used under E.O. 13783 fail to fully capture many climate impacts that affect the welfare of U.S. citizens and residents, and those impacts are better reflected by global measures of the SC– GHG. Examples of omitted effects from the E.O. 13783 estimates include direct effects on U.S. citizens, assets, and investments located abroad, supply chains, U.S. military assets and interests abroad, and tourism, and spillover pathways such as economic and political destabilization and global migration that can lead to adverse impacts on U.S. national security, public health, and humanitarian concerns. In addition, assessing the benefits of U.S. GHG mitigation activities requires consideration of how those actions may affect mitigation activities by other countries, as those international mitigation actions will provide a benefit to U.S. citizens and residents by mitigating climate impacts that affect U.S. citizens and residents. A wide range of scientific and economic experts have emphasized the issue of reciprocity as support for considering global damages of GHG emissions. If the United States does not consider impacts on other countries, it is difficult to convince other countries to consider the impacts of their emissions on the United States. The only way to achieve an efficient allocation of resources for emissions reduction on a global basis— and so benefit the U.S. and its citizens— is for all countries to base their policies on global estimates of damages. As a member of the IWG involved in the development of the February 2021 SC– GHG TSD, DOE agrees with this assessment and, therefore, in this proposed rule DOE centers attention on a global measure of SC–GHG. This approach is the same as that taken in DOE regulatory analyses from 2012 through 2016. A robust estimate of climate damages that accrue only to U.S. citizens and residents does not currently exist in the literature. As explained in the February 2021 TSD, existing estimates are both incomplete and an underestimate of total damages that accrue to the citizens and residents of the U.S. because they do not fully capture the regional interactions and spillovers discussed above, nor do they include all of the important physical, PO 00000 Frm 00035 Fmt 4701 Sfmt 4702 19415 ecological, and economic impacts of climate change recognized in the climate change literature. As noted in the February 2021 SC–GHG TSD, the IWG will continue to review developments in the literature, including more robust methodologies for estimating a U.S.-specific SC–GHG value, and explore ways to better inform the public of the full range of carbon impacts. As a member of the IWG, DOE will continue to follow developments in the literature pertaining to this issue. Second, the IWG found that the use of the social rate of return on capital (7 percent under current OMB Circular A– 4 guidance) to discount the future benefits of reducing GHG emissions inappropriately underestimates the impacts of climate change for the purposes of estimating the SC–GHG. Consistent with the findings of the National Academies (2017) and the economic literature, the IWG continued to conclude that the consumption rate of interest is the theoretically appropriate discount rate in an intergenerational context,53 and recommended that discount rate uncertainty and relevant aspects of intergenerational ethical considerations be accounted for in selecting future discount rates. Furthermore, the damage estimates developed for use in the SC–GHG are estimated in consumption-equivalent terms, and so an application of OMB Circular A–4’s guidance for regulatory analysis would then use the consumption discount rate to calculate the SC–GHG. DOE agrees with this assessment and will continue to follow developments in the literature 53 Interagency Working Group on Social Cost of Carbon. Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866. 2010. United States Government. (Last accessed September 22, 2022.) www.epa.gov/sites/default/ files/2016-12/documents/scc_tsd_2010.pdf; Interagency Working Group on Social Cost of Carbon. Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866. 2013. (Last accessed September 22, 2022.) www.federalregister.gov/ documents/2013/11/26/2013-28242/technicalsupport-document-technical-update-of-the-socialcost-of-carbon-for-regulatory-impact; Interagency Working Group on Social Cost of Greenhouse Gases, United States Government. Technical Support Document: Technical Update on the Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866. August 2016. (Last accessed September 22, 2022.) www.epa.gov/sites/default/ files/2016-12/documents/sc_co2_tsd_august_ 2016.pdf; Interagency Working Group on Social Cost of Greenhouse Gases, United States Government. Addendum to Technical Support Document on Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866: Application of the Methodology to Estimate the Social Cost of Methane and the Social Cost of Nitrous Oxide. August 2016. (Last accessed September 22, 2022.) www.epa.gov/sites/default/ files/2016-12/documents/addendum_to_sc-ghg_tsd_ august_2016.pdf. E:\FR\FM\31MRP2.SGM 31MRP2 ddrumheller on DSK120RN23PROD with PROPOSALS2 19416 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules pertaining to this issue. DOE also notes that while OMB Circular A–4, as published in 2003, recommends using 3% and 7% discount rates as ‘‘default’’ values, Circular A–4 also reminds agencies that ‘‘different regulations may call for different emphases in the analysis, depending on the nature and complexity of the regulatory issues and the sensitivity of the benefit and cost estimates to the key assumptions.’’ On discounting, Circular A–4 recognizes that ‘‘special ethical considerations arise when comparing benefits and costs across generations,’’ and Circular A–4 acknowledges that analyses may appropriately ‘‘discount future costs and consumption benefits . . . at a lower rate than for intragenerational analysis.’’ In the 2015 Response to Comments on the Social Cost of Carbon for Regulatory Impact Analysis, OMB, DOE, and the other IWG members recognized that ‘‘Circular A–4 is a living document’’ and ‘‘the use of 7 percent is not considered appropriate for intergenerational discounting. There is wide support for this view in the academic literature, and it is recognized in Circular A–4 itself.’’ Thus, DOE concludes that a 7% discount rate is not appropriate to apply to value the social cost of greenhouse gases in the analysis presented in this analysis. In this analysis, to calculate the present and annualized values of climate benefits, DOE uses the same discount rate as the rate used to discount the value of damages from future GHG emissions, for internal consistency. That approach to discounting follows the same approach that the February 2021 TSD recommends ‘‘to ensure internal consistency—i.e., future damages from climate change using the SC–GHG at 2.5 percent should be discounted to the base year of the analysis using the same 2.5 percent rate.’’ DOE has also consulted the National Academies’ 2017 recommendations on how SC–GHG estimates can ‘‘be combined in RIAs with other cost and benefits estimates that may use different discount rates.’’ The National Academies reviewed ‘‘several options,’’ including ‘‘presenting all discount rate combinations of other costs and benefits with [SC–GHG] estimates.’’ As a member of the IWG involved in the development of the February 2021 SC–GHG TSD, DOE agrees with this assessment and will continue to follow developments in the literature pertaining to this issue. While the IWG works to assess how best to incorporate the latest, peer reviewed science to develop an updated set of SC–GHG estimates, it set the interim estimates to be the most recent estimates developed by the IWG prior to the group being disbanded in 2017. The estimates rely on the same models and harmonized inputs and are calculated using a range of discount rates. As explained in the February 2021 SC–GHG TSD, the IWG has recommended that agencies to revert to the same set of four values drawn from the SC–GHG distributions based on three discount rates as were used in regulatory analyses between 2010 and 2016 and subject to public comment. For each discount rate, the IWG combined the distributions across models and socioeconomic emissions scenarios (applying equal weight to each) and then selected a set of four values recommended for use in benefitcost analyses: an average value resulting from the model runs for each of three discount rates (2.5 percent, 3 percent, and 5 percent), plus a fourth value, selected as the 95th percentile of estimates based on a 3 percent discount rate. The fourth value was included to provide information on potentially higher-than-expected economic impacts from climate change. As explained in the February 2021 SC–GHG TSD, and DOE agrees, this update reflects the immediate need to have an operational SC–GHG for use in regulatory benefitcost analyses and other applications that was developed using a transparent process, peer reviewed methodologies, and the science available at the time of that process. Those estimates were subject to public comment in the context of dozens of proposed rulemakings as well as in a dedicated public comment period in 2013. There are a number of limitations and uncertainties associated with the SC– GHG estimates. First, the current scientific and economic understanding of discounting approaches suggests discount rates appropriate for intergenerational analysis in the context of climate change are likely to be less than 3 percent, near 2 percent or lower.54 Second, the IAMs used to produce these interim estimates do not include all of the important physical, ecological, and economic impacts of climate change recognized in the climate change literature and the science underlying their ‘‘damage functions’’—i.e., the core parts of the IAMs that map global mean temperature changes and other physical impacts of climate change into economic (both market and nonmarket) damages—lags behind the most recent research. For example, limitations include the incomplete treatment of catastrophic and non-catastrophic impacts in the IAMs, their incomplete treatment of adaptation and technological change, the incomplete way in which interregional and intersectoral linkages are modeled, uncertainty in the extrapolation of damages to high temperatures, and inadequate representation of the relationship between the discount rate and uncertainty in economic growth over long time horizons. Likewise, the socioeconomic and emissions scenarios used as inputs to the models do not reflect new information from the last decade of scenario generation or the full range of projections. The modeling limitations do not all work in the same direction in terms of their influence on the SC–CO2 estimates. However, as discussed in the February 2021 TSD, the IWG has recommended that, taken together, the limitations suggest that the interim SC–GHG estimates used in this final rule likely underestimate the damages from GHG emissions. DOE concurs with this assessment. DOE’s derivations of the SC–GHG (SC–CO2, SC–N2O, and SC–CH4) values used for this NOPR are discussed in the following sections, and the results of DOE’s analyses estimating the benefits of the reductions in emissions of these GHGs are presented in section I.B.6 of this document. 54 Interagency Working Group on Social Cost of Greenhouse Gases (IWG). 2021. Technical Support Document: Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates under Executive Order 13990. February. United States Government. Available at: https://www.whitehouse.gov/briefingroom/blog/2021/02/26/a-return-to-scienceevidence-based-estimates-of-the-benefits-ofreducing-climate-pollution/. (Last accessed September 22, 2022). 55 For example, the February 2021 TSD discusses how the understanding of discounting approaches suggests that discount rates appropriate for intergenerational analysis in the context of climate change may be lower than 3 percent. VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 PO 00000 Frm 00036 Fmt 4701 Sfmt 4702 a. Social Cost of Carbon The SC–CO2 values used for this NOPR were generated using the values presented in the 2021 update from the IWG’s February 2021 SC–GHG TSD. Table IV.7 shows the updated sets of SC–CO2 estimates from the latest interagency update in 5-year increments from 2020 to 2050. The full set of annual values used is presented in Appendix 14–A of the NOPR TSD. For purposes of capturing the uncertainties involved in regulatory impact analysis, DOE has determined it is appropriate include all four sets of SC–CO2 values, as recommended by the IWG.55 E:\FR\FM\31MRP2.SGM 31MRP2 19417 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules TABLE IV.7—ANNUAL SC–CO2VALUES FROM 2021 INTERAGENCY UPDATE [2020–2050 (2020$ per metric ton CO2)] Discount rate and statistic Year 5% (Average) 2020 2025 2030 2035 2040 2045 2050 3% (Average) 2.5% (Average) 14 17 19 22 25 28 32 For 2051 to 2070, DOE used estimates published by EPA, adjusted to 2020$.56 These estimates are based on methods, assumptions, and parameters identical to the 2020–2050 estimates published by the IWG. DOE expects additional climate benefits to accrue for any longer-life MREFs after 2070, but a lack of available SC–CO2 estimates for emissions years beyond 2070 prevents DOE from monetizing these potential benefits in this analysis. If further analysis of monetized climate benefits beyond 2070 becomes available prior to the publication of the final rule, DOE will include that analysis in the final rule. 51 56 62 67 73 79 85 DOE multiplied the CO2 emissions reduction estimated for each year by the SC–CO2 value for that year in each of the four cases. DOE adjusted the values to 2021$ using the implicit price deflator for gross domestic product (‘‘GDP’’) from the Bureau of Economic Analysis. 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 SC–CO2 values in each case. b. Social Cost of Methane and Nitrous Oxide The SC–CH4 and SC- N2O values used for this NOPR were generated using the 3% (95th percentile) 76 83 89 96 103 110 116 152 169 187 206 225 242 260 values presented in the February 2021 SC–GHG TSD. Table IV.8 shows the updated sets of SC–CH4 and SC–N2O estimates from the latest interagency update in 5-year increments from 2020 to 2050. The full set of annual values used is presented in appendix 14–A of the NOPR TSD. To capture the uncertainties involved in regulatory impact analysis, DOE has determined it is appropriate to include all four sets of SC–CH4 and SC–N2O values, as recommended by the IWG. DOE derived values after 2050 using the approach described above for the SC–CO2. TABLE IV.8—ANNUAL SC–CH4 AND SC–N2O VALUES FROM 2021 INTERAGENCY UPDATE, 2020–2050 [2020$ per metric ton] SC–CH4 (discount rate and statistic) SC–N2O (discount rate and statistic) Year 5% (average) ddrumheller on DSK120RN23PROD with PROPOSALS2 2020 2025 2030 2035 2040 2045 2050 .............................................. .............................................. .............................................. .............................................. .............................................. .............................................. .............................................. 3% (average) 670 800 940 1100 1300 1500 1700 1500 1700 2000 2200 2500 2800 3100 DOE multiplied the CH4 and N2O emissions reduction estimated for each year by the SC–CH4 and SC–N2O estimates for that year in each of the cases. DOE adjusted the values to 2021$ using the implicit price deflator for gross domestic product (‘‘GDP’’) from the Bureau of Economic Analysis. To calculate a present value of the stream of monetary values, DOE discounted the values in each of the cases using the specific discount rate that had been 56 See EPA, Revised 2023 and Later Model Year Light-Duty Vehicle GHG Emissions Standards: Regulatory Impact Analysis, Washington, DC, December 2021. Available at: https:// www.federalregister.gov/documents/2021/12/30/ VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 2.5% (average) 3% (95th Percentile) 2000 2200 2500 2800 3100 3500 3800 5% (average) 3900 4500 5200 6000 6700 7500 8200 used to obtain the SC–CH4 and SC–N2O estimates in each case. 2. Monetization of Other Emissions Impacts For this NOPR analysis, DOE estimated the monetized value of NOX and SO2 emissions reductions from electricity generation using the latest benefit-per-ton estimates for that sector from the EPA’s Benefits Mapping and Analysis Program.57 DOE used EPA’s values for PM2.5-related benefits 2021-27854/revised-2023-and-later-model-yearlight-duty-vehicle-greenhouse-gas-emissionsstandards (last accessed September 22, 2022). 57 Estimating the Benefit per Ton of Reducing PM2.5 Precursors from 21 Sectors. (Last accessed PO 00000 Frm 00037 Fmt 4701 Sfmt 4702 3% (average) 5800 6800 7800 9000 10000 12000 13000 18000 21000 23000 25000 28000 30000 33000 2.5% (average) 27000 30000 33000 36000 39000 42000 45000 3% (95th Percentile) 48000 54000 60000 67000 74000 81000 88000 associated with NOX and SO2 and for ozone-related benefits associated with NOX for 2025 2030, and 2040, calculated with discount rates of 3 percent and 7 percent. DOE used linear interpolation to define values for the years not given in the 2025 to 2040 period; for years beyond 2040 the values are held constant. DOE derived values specific to the sector for MREFs using a method described in appendix 14B of the NOPR TSD. September 22, 2022) www.epa.gov/benmap/ estimating-benefit-ton-reducing-pm25-precursors21-sectors. E:\FR\FM\31MRP2.SGM 31MRP2 19418 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules DOE multiplied the site emissions reduction (in 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. M. Utility Impact Analysis The utility impact analysis estimates the changes in installed electrical capacity and generation projected to result for each considered TSL. The analysis is based on published output from the NEMS associated with AEO 2022. NEMS produces the AEO Reference case, as well as a number of side cases that estimate the economywide impacts of changes to energy supply and demand. For the current analysis, impacts are quantified by comparing the levels of electricity sector generation, installed capacity, fuel consumption and emissions in the AEO 2022 Reference case and various side cases. Details of the methodology are provided in the appendices to chapters 13 and 15 of the NOPR 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 potential new or amended energy conservation standards. ddrumheller on DSK120RN23PROD with PROPOSALS2 N. Employment Impact Analysis DOE considers employment impacts in the domestic economy as one factor in selecting a proposed 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. 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 consumers on energy, (2) reduced spending on new energy supply by the utility industry, (3) increased consumer spending on the products to which the new standards apply and other goods and services, and (4) the VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 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 BLS. BLS regularly publishes its estimates of the number of jobs per million dollars of economic activity in different sectors of the economy, as well as the jobs created elsewhere in the economy by this same economic activity. Data from BLS indicate that expenditures in the utility sector generally create fewer jobs (both directly and indirectly) than expenditures in other sectors of the economy.58 There are many reasons for these differences, including wage differences and the fact that the utility sector is more capitalintensive 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 laborintensive 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 NOPR using an input/output model of the U.S. economy called Impact of Sector Energy Technologies version 4 (‘‘ImSET’’).59 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 that the uncertainties involved in projecting employment impacts, especially 58 See U.S. Department of Commerce—Bureau of Economic Analysis. Regional Multipliers: A User Handbook for the Regional Input-Output Modeling System (RIMS II). 1997. U.S. Government Printing Office: Washington, DC. Available at apps.bea.gov/ scb/pdf/regional/perinc/meth/rims2.pdf (last accessed September 30, 2022). 59 Livingston, O.V., S.R. Bender, M.J. Scott, and R.W. Schultz. ImSET 4.0: Impact of Sector Energy Technologies Model Description and User Guide. 2015. Pacific Northwest National Laboratory: Richland, WA. PNNL–24563. PO 00000 Frm 00038 Fmt 4701 Sfmt 4702 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 used ImSET only to generate results for near-term timeframes (2029–2033), where these uncertainties are reduced. For more details on the employment impact analysis, see chapter 16 of the NOPR 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 MREFs. It addresses the TSLs examined by DOE, the projected impacts of each of these levels if adopted as energy conservation standards for MREFs, and the standards levels that DOE is proposing to adopt in this NOPR. Additional details regarding DOE’s analyses are contained in the NOPR TSD supporting this document. A. Trial Standard Levels In general, DOE typically evaluates potential amended standards for products and equipment by grouping individual efficiency levels for each class into TSLs. Use of TSLs allows DOE to identify and consider manufacturer cost interactions between the product classes, to the extent that there are such interactions, and market cross elasticity from consumer purchasing decisions that may change when different standard levels are set. In the analysis conducted for this NOPR, DOE analyzed the benefits and burdens of five TSLs for MREFs. DOE developed TSLs that combine efficiency levels for each analyzed product class. These TSLs were developed by combining specific efficiency levels for each of the MREF product classes analyzed by DOE. TSL 1 represents a 10 percent increase in efficiency, corresponding to the lowest analyzed efficiency level above the baseline for each analyzed product class. TSL 2 represents efficiency levels consistent with Energy Star requirements for coolers and a modest increase in efficiency for certain combination cooler product classes. TSL 3 increases the efficiency for freestanding (FC) and built-in (BIC) coolers by an additional 10% compared to TSL 1, while maintaining the same efficiency levels as TSL 2 for combination coolers. TSL 4 further increases the efficiency levels for the product classes that make up the vast majority of MREF shipments (FCC, FC, C–13A). TSL 5 represents max-tech for each product class. DOE presents the E:\FR\FM\31MRP2.SGM 31MRP2 19419 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules results for the TSLs in this document, while the results for all efficiency levels that DOE analyzed are in the NOPR TSD. Table V.1 presents the TSLs and the corresponding efficiency levels that DOE has identified for potential amended energy conservation standards for MREFs. TABLE V.1—TRIAL STANDARD LEVELS FOR MREFS FCC TSL TSL TSL TSL TSL 1 2 3 4 5 ............................................................. ............................................................. ............................................................. ............................................................. ............................................................. B. Economic Justification and Energy Savings 1. Economic Impacts on Individual Consumers DOE analyzed the economic impacts on MREF consumers by looking at the effects that potential amended standards at each TSL would have on the LCC and PBP. DOE also examined the impacts of potential standards on selected consumer subgroups. These analyses are discussed in the following sections. a. Life-Cycle Cost and Payback Period In general, higher-efficiency products affect consumers in two ways: (1) purchase price increases and (2) annual EL EL EL EL EL 1 2 2 3 5 FC EL EL EL EL EL 1 1 2 3 5 BICC BIC EL EL EL EL EL EL EL EL EL EL 1 3 3 3 5 1 3 2 2 5 operating costs decrease. Inputs used for calculating the LCC and PBP include total installed costs and operating costs (i.e., annual energy use, energy prices, energy price trends, and repair costs). The LCC calculation also uses product lifetime and a discount rate. Chapter 8 of the NOPR TSD provides detailed information on the LCC and PBP analyses. Table V.2 through Table V.17 show the LCC and PBP results for the TSLs 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, impacts are measured relative to the C–13A EL EL EL EL EL C–13A–BI 1 2 2 3 5 EL EL EL EL EL 1 2 2 3 5 C–3A EL EL EL EL EL 1 1 1 1 4 C–3A–BI EL EL EL EL EL 1 1 1 1 4 efficiency distribution in the no-newstandards 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 the baseline product 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. TABLE V.2—AVERAGE LCC AND PBP RESULTS FOR FCC Average costs (2021$) TSL Efficiency level Installed cost 1 ............................ 2,3 ......................... 4 ............................ ............................... 5 ............................ Baseline ................ 1 ............................ 2 ............................ 3 ............................ 4 ............................ 5 ............................ First year’s operating cost 533.1 538.3 559.6 586.0 627.6 713.1 Lifetime operating cost 27.6 25.0 22.3 19.7 17.1 11.9 Simple payback years LCC 242.8 220.2 195.9 173.6 150.0 104.3 775.9 758.5 755.5 759.6 777.5 817.4 ........................ 2.0 5.0 6.8 9.0 11.5 Average lifetime years 10.6 10.6 10.6 10.6 10.6 10.6 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.3—AVERAGE LCC SAVINGS RELATIVE TO THE NO-NEW-STANDARDS CASE FOR FCC Life-cycle cost savings ddrumheller on DSK120RN23PROD with PROPOSALS2 TSL Efficiency level 1 ............................................................................................... 2,3 ............................................................................................ 4 ............................................................................................... .................................................................................................. 5 ............................................................................................... Average LCC savings * (2021$) 1 2 3 4 5 17.4 17.2 12.6 ¥5.4 ¥45.3 * The savings represent the average LCC for affected consumers. VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 PO 00000 Frm 00039 Fmt 4701 Sfmt 4702 E:\FR\FM\31MRP2.SGM 31MRP2 Percent of consumers that experience net cost 2.8 33.5 49.5 65.7 77.8 19420 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules TABLE V.4—AVERAGE LCC AND PBP RESULTS FOR FC Average costs (2021$) TSL Efficiency level Installed cost 1,2 ......................... 3 ............................ 4 ............................ ............................... 5 ............................ Baseline ................ 1 ............................ 2 ............................ 3 ............................ 4 ............................ 5 ............................ First year’s operating cost 1,391.3 1,415.2 1,421.3 1,487.3 1,705.2 1,727.0 Lifetime operating cost 41.5 37.4 33.6 29.5 27.6 26.6 473.2 425.8 382.3 335.5 313.6 302.6 Simple payback years LCC 1,864.5 1,841.0 1,803.6 1,822.8 2,018.8 2,029.6 ........................ 5.8 3.8 8.0 22.5 22.5 Average lifetime years 14.6 14.6 14.6 14.6 14.6 14.6 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 NO-NEW-STANDARDS CASE FOR FC Life-cycle cost savings TSL Efficiency level 1,2 ............................................................................................ 3 ............................................................................................... 4 ............................................................................................... .................................................................................................. 5 ............................................................................................... Average LCC savings * (2021$) 1 2 3 4 5 Percent of consumers that experience net cost 23.5 47.2 28.0 ¥168.0 ¥178.8 8.8 1.6 45.5 94.7 94.5 * The savings represent the average LCC for affected consumers. TABLE V.6—AVERAGE LCC AND PBP RESULTS FOR BICC Average costs (2021$) TSL Efficiency level Installed cost 1 ............................ ............................... 2–4 ........................ ............................... 5 ............................ Baseline ................ 1 ............................ 2 ............................ 3 ............................ 4 ............................ 5 ............................ First year’s operating cost 735.1 741.3 766.3 797.7 847.2 949.6 Lifetime operating cost 27.6 25.0 22.3 19.7 17.1 12.0 244.8 221.3 197.8 174.3 150.8 106.1 Simple payback years LCC 979.8 962.5 964.1 972.0 998.0 1,055.7 ........................ 2.4 5.9 7.9 10.6 13.8 Average lifetime years 10.7 10.7 10.7 10.7 10.7 10.7 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 NO-NEW-STANDARDS CASE FOR BICC Life-cycle cost savings TSL Efficiency level 1 ............................................................................................... .................................................................................................. 2–4 ........................................................................................... .................................................................................................. 5 ............................................................................................... Average LCC savings * (2021$) 1 2 3 4 5 Percent of consumers that experience net cost 17.2 11.3 2.9 ¥23.2 ¥80.9 1.0 11.1 15.3 20.1 22.7 ddrumheller on DSK120RN23PROD with PROPOSALS2 * The savings represent the average LCC for affected consumers. TABLE V.8—AVERAGE LCC AND PBP RESULTS FOR BIC Average costs (2021$) TSL Efficiency level Installed cost 1 ............................ VerDate Sep<11>2014 Baseline ................ 1 ............................ 19:21 Mar 30, 2023 Jkt 259001 1,871.9 1,897.3 PO 00000 Frm 00040 First year’s operating cost Lifetime operating cost 41.6 37.6 Fmt 4701 Sfmt 4702 474.4 428.9 Simple payback years LCC 2,346.3 2,326.2 E:\FR\FM\31MRP2.SGM ........................ 6.4 31MRP2 Average lifetime years 14.6 14.6 19421 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules TABLE V.8—AVERAGE LCC AND PBP RESULTS FOR BIC—Continued Average costs (2021$) TSL Efficiency level First year’s operating cost Installed cost 3,4 ......................... 2 ............................ ............................... 5 ............................ 2 3 4 5 ............................ ............................ ............................ ............................ 1,903.8 1,974.0 2,205.9 2,229.1 Lifetime operating cost 33.6 29.7 27.7 26.5 383.4 337.9 315.2 301.5 Simple payback years LCC 2,287.2 2,311.9 2,521.1 2,530.6 4.0 8.6 24.0 23.6 Average lifetime years 14.6 14.6 14.6 14.6 Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the baseline product. TABLE V.9 AVERAGE LCC SAVINGS RELATIVE TO THE NO-NEW-STANDARDS CASE FOR BIC Life-cycle cost savings Efficiency Level TSL 1 ............................................................................................... 3,4 ............................................................................................ 2 ............................................................................................... .................................................................................................. 5 ............................................................................................... Average LCC savings * (2021$) 1 2 3 4 5 Percent of consumers that experience net cost 20.3 57.3 21.2 ¥187.9 ¥197.4 18.7 3.6 53.4 94.6 94.3 * The savings represent the average LCC for affected consumers. TABLE V.10—AVERAGE LCC AND PBP RESULTS FOR C–13A Average costs (2021$) TSL Efficiency level Installed cost 1 ............................ 2,3 ......................... 4 ............................ ............................... 5 ............................ Baseline ................ 1 ............................ 2 ............................ 3 ............................ 4 ............................ 5 ............................ Lifetime operating cost First year’s operating cost 1,148.0 1,151.6 1,154.7 1,192.3 1,234.6 1,301.3 33.8 30.6 28.9 27.3 25.7 24.6 295.5 267.2 253.0 238.9 224.9 215.3 Simple payback years LCC 1,443.5 1,418.7 1,407.7 1,431.2 1,459.5 1,516.6 ........................ 1.1 1.4 6.9 10.7 16.7 Average lifetime years 10.6 10.6 10.6 10.6 10.6 10.6 Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the baseline product. TABLE V.11—AVERAGE LCC SAVINGS RELATIVE TO THE NO-NEW-STANDARDS CASE FOR C–13A Life-cycle cost savings TSL Efficiency level 1 ............................................................................................... 2,3 ............................................................................................ 4 ............................................................................................... .................................................................................................. 5 ............................................................................................... Average LCC savings * (2021$) 1 2 3 4 5 Percent of consumers that experience net cost 24.8 35.5 12.0 ¥16.3 ¥73.4 0.3 1.0 47.5 74.3 90.3 * The savings represent the average LCC for affected consumers. ddrumheller on DSK120RN23PROD with PROPOSALS2 TABLE V.12—AVERAGE LCC AND PBP RESULTS FOR C–13A–BI Average costs (2021$) TSL Efficiency level Installed cost 1 ............................ 2,3 ......................... 4 ............................ VerDate Sep<11>2014 Baseline ................ 1 ............................ 2 ............................ 3 ............................ 4 ............................ 19:21 Mar 30, 2023 Jkt 259001 First year’s operating cost Lifetime operating cost 37.1 33.6 31.8 30.0 28.2 327.9 296.5 280.8 265.2 249.5 1,371.7 1,375.4 1,378.7 1,418.8 1,463.8 PO 00000 Frm 00041 Fmt 4701 Sfmt 4702 Simple payback years LCC 1,699.6 1,672.0 1,659.6 1,684.0 1,713.3 E:\FR\FM\31MRP2.SGM ........................ 1.1 1.3 6.7 10.4 31MRP2 Average lifetime years 10.6 10.6 10.6 10.6 10.6 19422 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules TABLE V.12—AVERAGE LCC AND PBP RESULTS FOR C–13A–BI—Continued Average costs (2021$) TSL Efficiency level Installed cost 5 ............................ 5 ............................ First year’s operating cost Lifetime operating cost 27.1 239.0 1,534.8 Simple payback years LCC 1,773.9 16.3 Average lifetime years 10.6 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.13—AVERAGE LCC SAVINGS RELATIVE TO THE NO-NEW-STANDARDS CASE FOR C–13A–BI Life-cycle cost savings TSL Efficiency level 1 ............................................................................................... 2,3 ............................................................................................ 4 ............................................................................................... Average LCC Savings * (2021$) 1 2 3 4 5 5 ............................................................................................... Percent of consumers that experience net cost 27.6 39.6 15.3 ¥14.1 ¥74.6 0.3 0.7 44.4 72.0 89.7 * The savings represent the average LCC for affected consumers. TABLE V.14—AVERAGE LCC AND PBP RESULTS FOR C–3A Average costs (2021$) TSL Efficiency level Installed cost 1–4 ........................ 5 ............................ Baseline ................ 1 ............................ 2 ............................ 3 ............................ 4 ............................ Lifetime operating cost First year’s operating cost 1,289.8 1,295.4 1,344.7 1,510.5 1,611.2 34.0 30.8 29.3 27.7 26.4 388.9 351.7 334.3 316.6 300.9 Simple payback years LCC 1,678.7 1,647.1 1,678.9 1,827.0 1,912.1 ........................ 1.7 11.5 35.0 41.9 Average lifetime years 14.6 14.6 14.6 14.6 14.6 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.15—AVERAGE LCC SAVINGS RELATIVE TO THE NO-NEW-STANDARDS CASE FOR C–3A Life-cycle cost savings TSL Efficiency level 1–4 ........................................................................................... Average LCC savings * (2021$) 1 2 3 4 5 ............................................................................................... Percent of consumers that experience net cost 31.5 ¥0.3 ¥148.4 ¥233.4 0.0 63.9 98.3 99.4 * The savings represent the average LCC for affected consumers. TABLE V.16—AVERAGE LCC AND PBP RESULTS FOR C–3A–BI Average costs (2021$) TSL Efficiency level ddrumheller on DSK120RN23PROD with PROPOSALS2 Installed cost 1–4 ........................ 5 ............................ Baseline ................ 1 ............................ 2 ............................ 3 ............................ 4 ............................ First year’s operating cost Lifetime operating cost 38.9 35.2 33.3 31.4 30.0 444.5 401.8 380.5 359.2 343.1 1,760.9 1,766.9 1,819.3 1,995.8 2,103.0 Simple payback years LCC 2,205.4 2,168.7 2,199.8 2,355.0 2,446.1 ........................ 1.6 10.5 31.6 38.7 Average lifetime years 14.6 14.6 14.6 14.6 14.6 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. VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 PO 00000 Frm 00042 Fmt 4701 Sfmt 4702 E:\FR\FM\31MRP2.SGM 31MRP2 19423 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules TABLE V.17—AVERAGE LCC SAVINGS RELATIVE TO THE NO-NEW-STANDARDS CASE FOR C–3A–BI Life-cycle cost savings TSL Efficiency level 1–4 ........................................................................................... Average LCC savings * (2021$) 1 2 3 4 5 ............................................................................................... Percent of consumers that experience net cost 36.7 5.5 ¥149.6 ¥240.7 0.0 57.8 97.5 98.9 * The savings represent the average LCC for affected consumers. b. Consumer Subgroup Analysis In the consumer subgroup analysis, DOE estimated the impact of the considered TSLs on senior-only households. DOE did not consider lowincome consumers in this NOPR because MREFs are not products generally used by this subgroup, as they typically cost more than comparable compact refrigerators, which are able to maintain lower temperatures compared to MREFs, and therefore serve a wider range of applications. Table V.18 compares the average LCC savings and PBP at each TSL for the senior-only consumer subgroup with similar metrics for the entire consumer sample for all product classes. In most cases, the average LCC savings and PBP for senioronly households at the considered efficiency levels are improved (i.e., higher LCC savings and equal or lesser payback periods) from the average for all households. Chapter 11 of the NOPR TSD presents the complete LCC and PBP results for the subgroup. TABLE V.18—COMPARISON OF LCC SAVINGS AND PBP FOR SENIOR-ONLY CONSUMER SUBGROUP AND ALL CONSUMERS Average LCC savings * (2021$) Simple payback years TSL ddrumheller on DSK120RN23PROD with PROPOSALS2 Senior-only households FCC 1 ............ 2,3 ......... 4 ............ 5 ............ FC 1,2 ......... 3 ............ 4 ............ 5 ............ BICC 1 ............ 2–4 ........ 5 ............ BIC 1 ............ 3,4 ......... 2 ............ 5 ............ C–13A 1 ............ 2,3 ......... 4 ............ 5 ............ C–13A–BI 1 ............ 2,3 ......... 4 ............ 5 ............ C–3A 1–4 ........ 5 ............ C–3A–BI 1–4 ........ 5 ............ All households Senior-only households All households 18.4 19.0 15.1 ¥40.5 17.4 17.2 12.6 ¥45.3 2.0 4.8 6.5 11.1 2.0 5.0 6.8 11.5 26.1 51.2 33.4 ¥178.1 23.5 47.2 28.0 ¥178.8 5.6 3.6 7.7 21.7 5.8 3.8 8.0 22.5 18.4 1.6 ¥94.3 17.2 2.9 ¥80.9 2.5 8.3 14.4 2.4 7.9 13.8 20.4 59.8 18.8 ¥224.5 20.3 57.3 21.2 ¥197.4 6.7 4.2 8.9 24.6 6.4 4.0 8.6 23.6 26.4 37.9 14.2 ¥72.9 24.8 35.5 12.0 ¥73.4 1.1 1.3 6.7 16.3 1.1 1.4 6.9 16.7 29.1 41.7 14.0 ¥86.7 27.6 39.6 15.3 ¥74.6 1.1 1.4 7.0 17.0 1.1 1.3 6.7 16.3 33.5 ¥237.1 31.5 ¥233.4 1.7 40.6 1.7 41.9 39.5 ¥268.9 36.7 ¥240.7 1.7 40.1 1.6 38.7 * The savings represent the average LCC for affected consumers. c. Rebuttable Presumption Payback As discussed in section IV.F.9, EPCA establishes a rebuttable presumption that an energy conservation standard is economically justified if the increased VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 purchase cost for a product that meets the standard is less than three times the value of the first year’s energy savings resulting from the standard. In calculating a rebuttable presumption PO 00000 Frm 00043 Fmt 4701 Sfmt 4702 payback period for each of the considered TSLs, DOE used discrete values, and, as required by EPCA, based the energy use calculation on the DOE test procedure for MREFs, with E:\FR\FM\31MRP2.SGM 31MRP2 19424 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules considered TSLs for MREFs. While DOE examined the rebuttable presumption criterion, it considered whether the proposed 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), that considers the full range of impacts adjustment for icemaker adder, as discussed in more detail in section III.B of this document. In contrast, the PBPs presented in section I.B.a were calculated using distributions that reflect the range of energy use in the field. Table V.19 presents the rebuttable presumption payback periods for the to the consumer, manufacturer, Nation, and environment. The results of that analysis serve as the basis for DOE to definitively evaluate the economic justification for a potential standard level, thereby supporting or rebutting the results of any preliminary determination of economic justification. TABLE V.19—REBUTTABLE PRESUMPTION PAYBACK PERIODS Rebuttable payback period (years) Efficiency level FCC 1 2 3 4 5 ........................................ ........................................ ........................................ ........................................ ........................................ FC 2.0 4.8 6.6 8.7 11.2 BICC 5.5 3.6 7.6 21.6 21.6 2. Economic Impacts on Manufacturers DOE performed an MIA to estimate the impact of amended energy conservation standards on manufacturers of MREFs. The following section describes the expected impacts on manufacturers at each considered TSL. Chapter 12 of the NOPR TSD explains the analysis in further detail. a. Industry Cash Flow Analysis Results In this section, DOE provides GRIM results from the analysis, which examines changes in the industry that would result from a standard. The following tables summarize the estimated financial impacts (represented by changes in INPV) of potential amended energy conservation standards on manufacturers of MREFs, as well as the conversion costs that DOE estimates manufacturers of MREFs would incur at each TSL. The impact of potential amended energy conservation standards were analyzed under two scenarios: (1) the preservation of gross margin percentage; and (2) the preservation of operating profit, as discussed in section IV.J.2.d of this document. The preservation of gross margin percentages applies a ‘‘gross margin percentage’’ of 20 percent for freestanding compact coolers and 28 BIC 2.3 5.7 7.7 10.3 13.3 C–13A 6.2 3.9 8.3 23.2 22.8 C–13A–BI 1.1 1.3 6.7 10.4 16.3 percent for all other product classes, across all efficiency levels.60 This scenario assumes that a manufacturer’s per-unit dollar profit would increase as MPCs increase in the standards cases and represents the upper bound to industry profitability under potential new and amended energy conservation standards. The preservation of operating profit scenario reflects manufacturers’ concerns about their inability to maintain margins as MPCs increase to reach more stringent efficiency levels. In this scenario, while manufacturers make the necessary investments required to convert their facilities to produce compliant products, operating profit does not change in absolute dollars and decreases as a percentage of revenue. The preservation of operating profit scenario results in the lower (or more severe) bound to impacts of potential amended standards on industry. Each of the modeled scenarios results in a unique set of cash flows and corresponding INPV for each TSL. INPV is the sum of the discounted cash flows to the industry from the NOPR publication year through the end of the analysis period (2023–2058). The ‘‘change in INPV’’ results refer to the difference in industry value between the 1.0 1.3 6.4 10.1 15.7 C–3A C–3A–BI 1.7 11.1 33.8 40.4 ........................ 1.6 10.2 30.7 37.6 ........................ no-new-standards case and standards case at each TSL. To provide perspective on the short-run cash flow impact, DOE includes a comparison of free cash flow between the no-newstandards case and the standards case at each TSL in the year before amended standards would take effect. This figure provides an understanding of the magnitude of the required conversion costs relative to the cash flow generated by the industry in the no-new-standards case. Conversion costs are one-time investments for manufacturers to bring their manufacturing facilities and product designs into compliance with potential amended standards. As described in section IV.J.2.c of this document, conversion cost investments occur between the year of publication of the final rule and the year by which manufacturers must comply with the new standard. The conversion costs can have a significant impact on the shortterm cash flow on the industry and generally result in lower free cash flow in the period between the publication of the final rule and the compliance date of potential amended standards. Conversion costs are independent of the manufacturer markup scenarios and are not presented as a range in this analysis. ddrumheller on DSK120RN23PROD with PROPOSALS2 TABLE V.20—MANUFACTURER IMPACT ANALYSIS RESULTS FOR MISCELLANEOUS REFRIGERATION PRODUCTS INPV ....................... Change in INPV ..... Free Cash Flow (2028). Change in Free Cash Flow (2028). Unit No-NewStandards Case 2021$ Million .......... % ............................ 2021$ Million .......... 742.0 ........................ 55.3 711.3 to 714.7 (4.1) to (3.7) 37.1 695.4 to 706.2 (6.3) to (4.8) 30.1 697.3 to 706.6 (6.0) to (4.8) 31.5 652.3 to 679.4 (12.1) to (8.4) 9.5 356.7 to 458.8 (51.9) to (38.2) (169.3) % ............................ ........................ (33.0) (45.7) (43.1) (82.8) (406.0) TSL 1 TSL 2 TSL 3 TSL 4 60 The gross margin percentages of 20 percent and 28 percent are based on manufacturer markups of 1.25 and 1.38 percent, respectively. VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 PO 00000 Frm 00044 Fmt 4701 Sfmt 4702 E:\FR\FM\31MRP2.SGM 31MRP2 TSL 5 19425 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules TABLE V.20—MANUFACTURER IMPACT ANALYSIS RESULTS FOR MISCELLANEOUS REFRIGERATION PRODUCTS—Continued Product Conversion Costs. Capital Conversion Costs. Total Conversion Costs. Unit No-NewStandards Case 2021$ Million .......... ........................ 52.4 66.4 68.8 101.1 364.5 2021$ Million .......... ........................ 1.2 6.2 1.2 25.8 174.5 2021$ Million .......... ........................ 53.6 72.6 67.6 126.9 539.0 TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 ddrumheller on DSK120RN23PROD with PROPOSALS2 *Parentheses denote negative (-) values. The following cash flow discussion refers to product classes as defined in Table I.1 in section I of this document and the efficiency levels and design options as detailed in Table IV.1 in section IV.C of this document. At TSL 1, the standard represents the lowest analyzed efficiency level above baseline for all product classes (EL 1). The change in INPV is expected to range from ¥4.1 to ¥3.7 percent. At this level, free cash flow is estimated to decrease by 33.0 percent compared to the no-new-standards case value of $55.3 million in the year 2028, the year before the standards year. Currently, approximately 24 percent of domestic MREF shipments meet the efficiencies required at TSL 1. At TSL 1, DOE analyzed implementing various design options for the range of directly analyzed product classes. These design options could include implementing more efficient single-speed compressors, tube and fin evaporators and/or condensers, among other technologies. At this level, capital conversion costs are minimal since most manufacturers can achieve TSL 1 efficiencies with relatively simple component changes. Product conversion costs may be necessary for developing, qualifying, sourcing, and testing more efficient components. DOE estimates capital conversion costs of $1.2 million and product conversion costs of $52.4 million. Conversion costs total $53.6 million. At TSL 1, the shipment-weighted average MPC for all MREFs is expected to increase by 0.8 percent relative to the no-new-standards case shipmentweighted average MPC for all MREFs in 2029. Given the relatively small increase in production costs, DOE does not project a notable drop in shipments in the year the standard takes effect. In the preservation of gross margin percentage scenario, the minor increase in cashflow from the higher MSP is slightly outweighed by the $53.6 million in conversion costs, causing a slightly negative change in INPV at TSL 1 under this scenario. Under the preservation of operating profit scenario, manufacturers earn the same per-unit operating profit VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 as would be earned in the no-newstandards case, but manufacturers do not earn additional profit from their investments. In this scenario, the manufacturer markup decreases in 2030, the year after the analyzed compliance year. This reduction in the manufacturer markup and the $53.6 million in conversion costs incurred by manufacturers cause a slightly negative change in INPV at TSL 1 under the preservation of operating profit scenario. At TSL 2, the standard represents efficiency levels consistent with Energy Star requirements for coolers and a modest increase in efficiency for certain combination cooler product classes. The change in INPV is expected to range from ¥6.3 to ¥4.8 percent. At this level, free cash flow is estimated to decrease by 45.7 percent compared to the no-new-standards case value of $55.3 million in the year 2028, the year before the standards year. Currently, approximately 11.5 percent of domestic MREF shipments meet the efficiencies required at TSL 2. The design options DOE analyzed for most product classes include implementing similar design options as TSL 1, such as more efficient singlespeed compressors. For built-in coolers, the analyzed design options also include implementing variable-speed compressors and increased insulation thickness. For freestanding compact coolers, C–13A and C–13A-bi, TSL 2 corresponds to EL 2. For built-in compact coolers and built-in coolers, TSL 2 corresponds to EL 3. For the remaining product classes, the efficiencies required at TSL 2 are the same as TSL 1. The increase in conversion costs compared to TSL 1 are largely driven by the higher efficiencies required for built-in coolers, which account for 3 percent of MREF shipments. For products that do not meet this level, increasing insulation thickness would likely mean new cabinets, liners, and fixtures as well as new shelf designs. Implementing variable-speed compressors could require more advanced controls and electronics and new test stations. DOE PO 00000 Frm 00045 Fmt 4701 Sfmt 4702 estimates capital conversion costs of $6.2 million and product conversion costs of $66.4 million. Conversion costs total $72.6 million. At TSL 2, the shipment-weighted average MPC for all MREFs is expected to increase by 4.2 percent relative to the no-new-standards case shipmentweighted average MPC for all MREFs in 2029. Given the projected increase in production costs, DOE expects an estimated 4 percent drop in shipments in the year the standard takes effect relative to the no-new-standards case. In the preservation of gross margin percentage scenario, the slight increase in cashflow from the higher MSP is outweighed by the $72.6 million in conversion costs, causing a slightly negative change in INPV at TSL 2 under this scenario. Under the preservation of operating profit scenario, the manufacturer markup decreases in 2030, the year after the analyzed compliance year. This reduction in the manufacturer markup and the $72.6 million in conversion costs incurred by manufacturers cause a negative change in INPV at TSL 2 under the preservation of operating profit scenario. At TSL 3, the standard represents an increase in efficiency for freestanding and built-in coolers by additional 10 percent as compared to TSL 1, while maintaining the same efficiency levels as TSL 2 for combination coolers. The change in INPV is expected to range from ¥6.0 to ¥4.8 percent. At this level, free cash flow is estimated to decrease by 43.1 percent compared to the no-new-standards case value of $55.3 million in the year 2028, the year before the standards year. Currently, approximately 5.3 percent of domestic MREF shipments meet the efficiencies required at TSL 3. At this level, DOE analyzed similar design options as TSL 1 and TSL 2, such as implementing incrementally more efficient single-speed compressors. For all product classes except freestanding coolers and built-in coolers, the efficiencies required at TSL 3 are the same as TSL 2. For freestanding coolers, TSL 3 corresponds to EL 2. For built-in coolers, TSL 3 reflects a lower efficiency E:\FR\FM\31MRP2.SGM 31MRP2 ddrumheller on DSK120RN23PROD with PROPOSALS2 19426 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules level (EL 2) as compared to TSL 2 (EL 3). Industry capital conversion costs decrease at TSL 3 as compared to TSL 2 due to the lower efficiency level required for built-in coolers. As previously discussed, DOE expects manufacturers of built-in coolers would likely need to increase insulation thickness at TSL 2 (EL 3) and incorporate variable-speed compressors. However, at TSL 3, DOE’s engineering analysis and manufacturer feedback indicate that manufacturers could achieve EL 2 efficiencies for built-in coolers with relatively straightforward component swaps versus a larger product redesign associated with increasing insulation. DOE estimates capital conversion costs of $1.2 million and product conversion costs of $68.8 million. Conversion costs total $70.0 million. At TSL 3, the shipment-weighted average MPC for all MREFs is expected to increase by 3.9 percent relative to the no-new-standards case shipmentweighted average MPC for all MREFs in 2029. Given the projected increase in production costs, DOE expects an estimated 4 percent drop in shipments in the year the standard takes effect relative to the no-new-standards case. In the preservation of gross margin percentage scenario, the slight increase in cashflow from the higher MSP is outweighed by the $70.0 million in conversion costs, causing a slightly negative change in INPV at TSL 3 under this scenario. Under the preservation of operating profit scenario, the manufacturer markup decreases in 2030, the year after the analyzed compliance year. This reduction in the manufacturer markup and the $70.0 million in conversion costs incurred by manufacturers cause a slightly negative change in INPV at TSL 3 under the preservation of operating profit scenario. At TSL 4, the standard reflects an increase in efficiency level for the product classes that make up the vast majority of MREF shipments (FCC, FC, C–13A). The change in INPV is expected to range from ¥12.1 to ¥8.4 percent. At this level, free cash flow is estimated to decrease by 82.8 percent compared to the no-new-standards case value of $55.3 million in the year 2028, the year before the standards year. Currently, approximately 3.4 percent of domestic MREF shipments meet the efficiencies required at TSL 4. For all product classes except built-in coolers, C–3A and C–3A–BI, TSL 4 corresponds to EL 3. For built-in coolers, TSL 4 corresponds to EL 2. For C–3A–BI, TSL 4 corresponds to EL 1. For C–3A, the efficiencies required at VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 TSL 4 are the same as TSL 3 (EL 1). At this level, conversion costs are largely driven by the efficiencies required for freestanding coolers, which accounts for approximately 12 percent of industry shipments. DOE’s shipments analysis estimates that no freestanding cooler shipments currently meet the efficiencies required at TSL 4. All manufacturers would need to update their product platforms, which could include increasing insulation thickness and implementing variable-speed compressors. Increasing insulation thickness would likely result in the loss of interior volume and would require redesign of the cabinet as well as the designs and tooling associated with the interior of the product, such as the liner, shelving, racks, and drawers. DOE estimates capital conversion costs of $25.8 million and product conversion costs of $101.1 million. Conversion costs total $126.9 million. At TSL 4, the shipment-weighted average MPC for all MREFs is expected to increase by 10.0 percent relative to the no-new-standards case shipmentweighted average MPC for all MREFs in 2029. Given the projected increase in production costs, DOE expects an estimated 10 percent drop in shipments in the year the standard takes effect relative to the no-new-standards case. In the preservation of gross margin percentage scenario, the increase in cashflow from the higher MSP is outweighed by the $126.9 million in conversion costs and the drop in annual shipments, causing a negative change in INPV at TSL 4 under this scenario. Under the preservation of operating profit scenario, the manufacturer markup decreases in 2030, the year after the analyzed compliance year. This reduction in the manufacturer markup, the $126.9 million in conversion costs incurred by manufacturers, and the drop in annual shipments cause a negative change in INPV at TSL 4 under the preservation of operating profit scenario. At TSL 5, the standard represents the max-tech efficiency levels for all product classes. The change in INPV is expected to range from ¥51.9 to ¥38.2 percent. At this level, free cash flow is estimated to decrease by 406.0 percent compared to the no-new-standards case value of $55.3 million in the year 2028, the year before the standards year. Currently, approximately 2.7 percent of domestic MREF shipments meet the efficiencies required at TSL 5. DOE’s shipments analysis estimates that no shipments meet the efficiencies required across all product classes except for built-in compact coolers, which account for only 4 percent of PO 00000 Frm 00046 Fmt 4701 Sfmt 4702 industry shipments. A max-tech standard would necessitate significant investment to redesign nearly all product platforms and incorporate design options such as the most efficient variable-speed compressors, triple-pane glass, increased foam insulation thickness, and VIP technology. Capital conversion costs may be necessary for new tooling for VIP placement as well as new testing stations for highefficiency components. Increasing insulation thickness would likely result in the loss of interior volume and would require redesign of the cabinet as well as the designs and tooling associated with the interior of the product, such as the liner, shelving, racks, and drawers. Product conversion costs at max-tech are significant as manufacturers work to completely redesign their product platforms. For products implementing VIPs, product conversion costs may be necessary for prototyping and testing for VIP placement, design, and sizing. Manufacturers implementing triplepane glass may need to redesign the door frame and hinges to support the added thickness and weight. DOE estimates capital conversion costs of $174.5 million and product conversion costs of $364.5 million. Conversion costs total $539.0 million. At TSL 5, the large conversion costs result in a free cash flow dropping below zero in the years before the standards year. The negative free cash flow calculation indicates manufacturers may need to access cash reserves or outside capital to finance conversion efforts. At TSL 5, the shipment-weighted average MPC for all MREFs is expected to increase by 32.7 percent relative to the no-new-standards case shipmentweighted average MPC for all MREFs in 2029. Given the projected increase in production costs, DOE expects an estimated 20 percent drop in shipments in the year the standard takes effect relative to the no-new-standards case. In the preservation of gross margin percentage scenario, the increase in cashflow from the higher MSP is outweighed by the $539.0 million in conversion costs and drop in annual shipments, causing a significant negative change in INPV at TSL 5 under this scenario. Under the preservation of operating profit scenario, the manufacturer markup decreases in 2030, the year after the analyzed compliance year. This reduction in the manufacturer markup, the $539.0 million in conversion costs incurred by manufacturers, and the drop in annual shipments cause a significant decrease in INPV at TSL 5 under the preservation of operating profit scenario. E:\FR\FM\31MRP2.SGM 31MRP2 19427 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules DOE seeks comments, information, and data on the capital conversion costs and product conversion costs estimated for each TSL. b. Direct Impacts on Employment To quantitatively assess the potential impacts of amended energy conservation standards on direct employment in the MREF industry, DOE used the GRIM to estimate the domestic labor expenditures and number of direct employees in the no-new-standards case and in each of the standards cases during the analysis period. DOE calculated these values using statistical data from the 2020 ASM,61 BLS employee compensation data,62 results of the engineering analysis, and manufacturer interviews. Labor expenditures related to product manufacturing depend on the labor intensity of the product, the sales volume, and an assumption that wages remain fixed in real terms over time. The total labor expenditures in each year are calculated by multiplying the total MPCs by the labor percentage of MPCs. The total labor expenditures in the GRIM were then converted to total production employment levels by dividing production labor expenditures by the average fully burdened wage multiplied by the average number of hours worked per year per production worker. To do this, DOE relied on the ASM inputs: Production Workers Annual Wages, Production Workers Annual Hours, Production Workers for Pay Period, and Number of Employees. DOE also relied on the BLS employee compensation data to determine the fully burdened wage ratio. The fully burdened wage ratio factors in paid leave, supplemental pay, insurance, retirement and savings, and legally required benefits. The number of production employees is then multiplied by the U.S. labor percentage to convert total production employment to total domestic production employment. The U.S. labor percentage represents the industry fraction of domestic manufacturing production capacity for the covered product. This value is derived from manufacturer interviews, product database analysis, and publicly available information. DOE estimates that 7.8 percent of MREFs are produced domestically. The domestic production employees estimate covers production line workers, including line supervisors, who are directly involved in fabricating and assembling products within the 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 proposed rulemaking. Non-production workers account for the remainder of the direct employment figure. The non-production employees estimate covers domestic workers who are not directly involved in the production process, such as sales, engineering, human resources, and management. Using the amount of domestic production workers calculated above, non-production domestic employees are extrapolated by multiplying the ratio of non-production workers in the industry compared to production employees. DOE assumes that this employee distribution ratio remains constant between the no-newstandards case and standards cases. Using the GRIM, DOE estimates in the absence of amended energy conservation standards there would be 228 domestic workers for MREFs in 2029. Table V.21 shows the range of the impacts of energy conservation standards on U.S. manufacturing employment in the MREF industry. The following discussion provides a qualitative evaluation of the range of potential impacts presented in Table V.21. TABLE V.21—DOMESTIC DIRECT EMPLOYMENT IMPACTS FOR MISCELLANEOUS REFRIGERATION PRODUCT MANUFACTURERS IN 2029 No-newstandards case Direct Employment in 2029 (Production Workers + Non-Production Workers) ... Potential Changes in Direct Employment Workers in 2029 * ................................. TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 228 227 220 220 209 207 ........................ (201) to (1) (201) to (8) (201) to (8) (201) to (19) (201) to (21) ddrumheller on DSK120RN23PROD with PROPOSALS2 *DOE presents a range of potential employment impacts. Numbers in parentheses denote negative values. The direct employment impacts shown in Table V.21 represent the potential domestic employment changes that could result following the compliance date for the MREF product classes in this proposal. The upper bound estimate corresponds to a change in the number of domestic workers that would result from amended energy conservation standards if manufacturers continue to produce the same scope of covered products within the United States after compliance takes effect. The lower bound estimate represents the maximum decrease in production workers if manufacturing moved to lower labor-cost countries. At lower TSLs, DOE believes the likelihood of changes in production location due to amended standards are low due to the relatively minor production line updates required. However, as amended standards increase in stringency and both the complexity and cost of production facility updates increases, manufacturers are more likely to revisit their production location decisions and/or their make vs. buy decisions. Additional detail on the analysis of direct employment can be found in chapter 12 of the NOPR TSD. Additionally, the employment impacts discussed in this section are independent of the employment impacts from the broader U.S. economy, which are documented in chapter 16 of the NOPR TSD. 61 U.S. Census Bureau, Annual Survey of Manufactures. ‘‘Summary Statistics for Industry Groups and Industries in the U.S (2020).’’ Available at: www.census.gov/data/tables/time-series/econ/ asm/2018-2020-asm.html (Last accessed September 22, 2022). 62 U.S. Bureau of Labor Statistics. Employer Costs for Employee Compensation. June 16, 2022. Available at: www.bls.gov/news.release/pdf/ ecec.pdf (Last accessed September 22, 2022). VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 PO 00000 Frm 00047 Fmt 4701 Sfmt 4702 c. Impacts on Manufacturing Capacity In interviews, manufacturers noted that the majority of MREFs—namely freestanding compact coolers—are manufactured in Asia and rebranded by home appliance manufacturers. Manufacturers had few concerns about E:\FR\FM\31MRP2.SGM 31MRP2 19428 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules manufacturing constraints below the max-tech level and the implementation of VIPs. However, at max-tech, some manufacturers expressed technical uncertainty about industry’s ability to meet the efficiencies required as few OEMs offer products at max-tech today. For example, DOE is not aware of any OEMs that currently offer freestanding compact coolers that meet TSL 5 efficiencies. DOE’s shipments analysis estimates that except for built-in compact coolers, which only accounts for 4 percent of MREF shipments, no shipments of other product classes meet the max-tech efficiencies. Some low-volume domestic and European-based OEMs offer niche or high-end MREFs (i.e., built-ins, combination coolers, freestanding compact coolers that can be integrated into kitchen cabinetry). In interviews, these manufacturers stated that, due to their low volume and wide range of product offerings, they could face engineering resource constraints should amended standards necessitate a significant redesign, such as requiring insulation thickness changes or VIPs (TSL 4 for freestanding coolers and built-in coolers and TSL 5 for all other product classes). These manufacturers further stated that the extent of their resource constraints depend, in part, on the outcome of other ongoing DOE energy conservation standards rulemakings that impact related products, in particular, the potential energy conservation standards for refrigerators, refrigerator-freezers, and freezers. Pursuant to a consent decree entered on September 20, 2022, DOE has agreed to sign and post on DOE’s publicly accessible website a rulemaking document for refrigerators, refrigerator-freezers, and freezers by December 30, 2023, that, when effective, would be DOE’s final agency action for standards for these products.63 DOE seeks comment on whether manufacturers expect manufacturing capacity constraints would limit product availability to consumers in the timeframe of the amended standard compliance date (2029). small business manufacturers. Based on this classification, DOE identified two domestic OEMs that qualify as small businesses. For a discussion of the impacts on the small business manufacturer subgroup, see the Regulatory Flexibility Analysis in section VI.B of this document and chapter 12 of the NOPR TSD. d. Impacts on Subgroups of Manufacturers Using average cost assumptions to develop industry cash flow estimates may not capture the differential impacts among subgroups of manufacturers. Small manufacturers, niche players, or manufacturers exhibiting a cost structure that differs substantially from the industry average could be affected disproportionately. DOE investigated small businesses as a manufacturer subgroup that could be disproportionally impacted by energy conservation standards and could merit additional analysis. DOE analyzes the impacts on small businesses in a separate analysis in section VI.B of this document as part of the Regulatory Flexibility Analysis. The manufacturers of the products covered in this rulemaking have a primary North American Industry Classification System (‘‘NAICS’’) code of 335220: ‘‘Major Household Appliance Manufacturing’’ or a secondary NAICS code of 333415: ‘‘Air-Conditioning and Warm Air Heating Equipment and Commercial and Industrial Refrigeration Equipment Manufacturing.’’ The Small Business Administration (‘‘SBA’’) defines a small business as a company that has fewer than 1,500 employees and fewer than 1,250 employees for NAICS codes 335220 and 333415, respectively. DOE used the higher threshold of 1,500 employees to identify e. Cumulative Regulatory Burden One aspect of assessing manufacturer burden involves looking at the cumulative impact of multiple DOE standards and the product-specific regulatory actions of other Federal agencies that affect the manufacturers of a covered product or equipment. While any one regulation may not impose a significant burden on manufacturers, the combined effects of several existing or impending regulations may have serious consequences for some manufacturers, groups of manufacturers, or an entire industry. Assessing the impact of a single regulation may overlook this cumulative regulatory burden. In addition to energy conservation standards, other regulations can significantly affect manufacturers’ financial operations. Multiple regulations affecting the same manufacturer can strain profits and lead companies to abandon product lines or markets with lower expected future returns than competing products. For these reasons, DOE conducts an analysis of cumulative regulatory burden as part of its rulemakings pertaining to appliance efficiency. For the cumulative regulatory burden analysis, DOE examines Federal, product-specific regulations that could affect MREF manufacturers that take effect approximately three years before or after the 2029 compliance date. TABLE V.22—COMPLIANCE DATES AND EXPECTED CONVERSION EXPENSES OF FEDERAL ENERGY CONSERVATION STANDARDS AFFECTING MISCELLANEOUS REFRIGERATION PRODUCTS ORIGINAL EQUIPMENT MANUFACTURERS Number of OEMs * ddrumheller on DSK120RN23PROD with PROPOSALS2 Federal energy conservation standard Room Air Conditioners † 87 FR 20608 (April 7, 2022) ................................. Commercial Water Heating Equipment † 87 FR 30610 (May 19, 2022) ...... Consumer Furnaces † 87 FR 40590 (July 7, 2022) ..................................... Consumer Clothes Dryers † 87 FR 51734 (August 23, 2022) ..................... Microwave Ovens † 87 FR 52282 (August 24, 2022) .................................. Consumer Conventional Cooking Products 88 FR 6818 (February 1, 2023) .......................................................................................................... Residential Clothes Washers † 88 FR 13520 (March 3, 2023) .................... Refrigerators, Refrigerator-Freezers, and Freezers † 88 FR 12452 (February 27, 2023) .......................................................................................... Number of OEMs affected from today’s rule ** Approx. standards year Industry conversion costs (millions $) Industry conversion costs/product revenue *** (%) 8 14 15 15 18 4 1 1 5 7 2026 2026 2029 2027 2026 $22.8 34.6 150.6 149.7 46.1 (2020$) (2020$) (2020$) (2020$) (2021$) 0.5 4.7 1.4 1.8 0.7 34 19 7 6 2027 2027 183.4 (2021$) 690.8 (2021$) 1.2 5.2 49 19 2027 1,323.6 (2021$) 3.8 * This column presents the total number of OEMs identified in the energy conservation standard rule contributing to cumulative regulatory burden. ** This column presents the number of OEMs producing MREFs that are also listed as OEMs in the identified energy conservation standard contributing to cumulative regulatory burden. 63 Natural Resources Defense Council, Inc., et al. v Granholm, et al, No. 1:20–cv–09127 (S.D.N.Y.), VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 and State of New York, et al. v Granholm, et al. No. 1:20–cv–09362 (S.D.N.Y.). PO 00000 Frm 00048 Fmt 4701 Sfmt 4702 E:\FR\FM\31MRP2.SGM 31MRP2 19429 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules *** This column presents industry conversion costs as a percentage of product revenue during the conversion period. Industry conversion costs are the upfront investments manufacturers must make to sell compliant products/equipment. The revenue used for this calculation is the revenue from just the covered product/equipment associated with each row. The conversion period is the time frame over which conversion costs are made and lasts from the publication year of the final rule to the compliance year of the final rule. The conversion period typically ranges from 3 to 5 years, depending on the energy conservation standard. † These rulemakings are in the proposed rule stage and all values are subject to change until finalized. In addition to the rulemakings listed in Table V.29, DOE has ongoing rulemakings for other products or equipment that MREF manufacturers produce, including but not limited to automatic commercial ice makers; 64 dehumidifiers; 65 and dishwashers.66 If DOE proposes or finalizes any energy conservation standards for these products or equipment prior to finalizing energy conservation standards MREFs, DOE will include the energy conservation standards for these other products or equipment as part of the cumulative regulatory burden for the MREF final rule. DOE requests information regarding the impact of cumulative regulatory burden on manufacturers of MREFs associated with multiple DOE standards or product-specific regulatory actions of other Federal agencies. 3. National Impact Analysis This section presents DOE’s estimates of the NES and the NPV of consumer benefits that would result from each of the TSLs considered as potential amended standards. a. Significance of Energy Savings To estimate the energy savings attributable to potential amended standards for MREFs, DOE compared their energy consumption under the nonew-standards case to their anticipated energy consumption under each TSL. The savings are measured over the entire lifetime of products purchased in the 30-year period that begins in the year of anticipated compliance with amended standards (2029–2058). Table V.23 presents DOE’s projections of the NES for each TSL considered for freestanding and built-in MREFs. The savings were calculated using the approach described in section IV.H.2 of this document. TABLE V.23—CUMULATIVE NATIONAL ENERGY SAVINGS FOR MREFS; 30 YEARS OF SHIPMENTS [2029–2058] TSL Coolers Combination coolers Total (quads) Primary Energy ........................................................................................................ ddrumheller on DSK120RN23PROD with PROPOSALS2 FFC .......................................................................................................................... 1 2 3 4 5 1 2 3 4 5 0.07 0.15 0.17 0.25 0.46 0.07 0.16 0.18 0.26 0.47 0.02 0.03 0.03 0.05 0.07 0.02 0.04 0.04 0.05 0.07 0.09 0.19 0.20 0.30 0.52 0.10 0.19 0.21 0.31 0.54 OMB Circular A–4 67 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 years, rather than 30 years, of product shipments. The choice of a 9year 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.68 The review timeframe established in EPCA is generally not synchronized with the product lifetime, product manufacturing cycles, or other factors specific to consumer MREFs. 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.24. The impacts are counted over the lifetime of consumer MREFs purchased in 2029–2037. 64 www.regulations.gov/docket/EERE-2017-BTSTD-0022. 65 www.regulations.gov/docket/EERE-2019-BTSTD-0043. 66 www.regulations.gov/docket/EERE-2019-BTSTD-0039. 67 U.S. Office of Management and Budget. Circular A–4: Regulatory Analysis. September 17, 2003. https://obamawhitehouse.archives.gov/omb/ circulars_a004_a-4/ (last accessed September 30, 2022). 68 Section 325(m) of EPCA requires DOE to review its standards at least once every 6 years, and requires, for certain products, a 3-year period after any new standard is promulgated before compliance is required, except that in no case may any new standards be required within 6 years of the compliance date of the previous standards. While adding a 6-year review to the 3-year compliance period adds up to 9 years, DOE notes that it may undertake reviews at any time within the 6-year period and that the 3-year compliance date may yield to the 6-year backstop. A 9-year analysis period may not be appropriate given the variability that occurs in the timing of standards reviews and the fact that for some products, the compliance period is 5 years rather than 3 years. VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 PO 00000 Frm 00049 Fmt 4701 Sfmt 4702 E:\FR\FM\31MRP2.SGM 31MRP2 19430 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules TABLE V.24—CUMULATIVE NATIONAL ENERGY SAVINGS FOR MREFS; 9 YEARS OF SHIPMENTS [2029–2037] TSL Coolers Combination coolers Total (quads) Primary Energy ........................................................................................................ FFC .......................................................................................................................... b. Net Present Value of Consumer Costs and Benefits DOE estimated the cumulative NPV of the total costs and savings for 1 2 3 4 5 1 2 3 4 5 consumers that would result from the TSLs considered for MREFs. In accordance with OMB’s guidelines on regulatory analysis,69 DOE calculated NPV using both a 7-percent and a 3- 0.02 0.04 0.05 0.07 0.12 0.02 0.04 0.05 0.07 0.13 0.01 0.01 0.01 0.01 0.02 0.01 0.01 0.01 0.01 0.02 0.03 0.05 0.06 0.08 0.14 0.03 0.05 0.06 0.09 0.15 percent real discount rate. Table V.25 shows the consumer NPV results with impacts counted over the lifetime of products purchased in 2029–2058. TABLE V.25—CUMULATIVE NET PRESENT VALUE OF CONSUMER BENEFITS FOR MREFS; 30 YEARS OF SHIPMENTS (2029–2058) [Million $2021] TSL 3% Discount Rate .................................................................................................... 7% Discount Rate .................................................................................................... 1 2 3 4 5 1 2 3 4 5 Coolers 348.5 460.4 610.3 547.4 (1061.9) 127.1 126.7 189.7 97.8 (848.7) Combination coolers 143.4 207.3 207.3 143.4 (296.0) 56.3 80.8 80.8 37.6 (195.3) Total 492.0 667.6 817.5 690.9 (1357.9) 183.5 207.5 270.5 135.3 (1044.0) Note: Numbers in parentheses denote negative values. The NPV results based on the aforementioned 9-year analytical period are presented in Table V.26. The impacts are counted over the lifetime of products purchased in 2029–2037. 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.26—CUMULATIVE NET PRESENT VALUE OF CONSUMER BENEFITS FOR MREFS; 9 YEARS OF SHIPMENTS (2029– 2037) [Million $2021] TSL ddrumheller on DSK120RN23PROD with PROPOSALS2 3% Discount Rate .................................................................................................... 7% Discount Rate .................................................................................................... 69 U.S. Office of Management and Budget. Circular A–4: Regulatory Analysis. September 17, VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 1 2 3 4 5 1 2 3 4 2003. https://obamawhitehouse.archives.gov/omb/ PO 00000 Frm 00050 Fmt 4701 Sfmt 4702 Coolers 130.2 162.7 222.1 180.0 (484.1) 63.5 58.6 91.9 36.9 Combination coolers 54.1 78.1 78.1 40.9 (132.2) 28.5 40.7 40.7 12.3 Total 184.3 240.7 300.1 220. (616.3) 92.0 99.4 132.7 49.1 circulars_a004_a-4/ (last accessed September 30, 2022). E:\FR\FM\31MRP2.SGM 31MRP2 19431 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules TABLE V.26—CUMULATIVE NET PRESENT VALUE OF CONSUMER BENEFITS FOR MREFS; 9 YEARS OF SHIPMENTS (2029– 2037)—Continued [Million $2021] TSL Coolers 5 The previous results reflect the use of a default trend to estimate the change in price for consumer MREFs over the analysis period (see section IV.H.3 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 NOPR TSD. In the high-price-decline case, the NPV of consumer benefits is higher than in the default case. In the low-pricedecline case, the NPV of consumer benefits is lower than in the default case. c. Indirect Impacts on Employment It is estimated that that amended energy conservation standards for MREFs would reduce energy expenditures 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. 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 (2029– 2033), where these uncertainties are reduced. The results suggest that the proposed standards would be likely to have a (465.5) Combination coolers Total (108.9) (574.4) 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 NOPR TSD presents detailed results regarding anticipated indirect employment impacts. in that document. DOE invites comment from the public regarding the competitive impacts that are likely to result from this proposed rule. In addition, stakeholders may also provide comments separately to DOJ regarding these potential impacts. See the ADDRESSES section for information to send comments to DOJ. 4. Impact on Utility or Performance of Products 6. Need of the Nation to Conserve Energy As discussed in section III.F.1.d of this document, DOE has tentatively concluded that the standards proposed in this NOPR would not lessen the utility or performance of the MREFs under consideration in this rulemaking. Manufacturers of these products currently offer units that meet or exceed the proposed standards. 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. Chapter 15 in the NOPR TSD presents the estimated impacts on electricity generating capacity, relative to the no-newstandards case, for the TSLs that DOE considered in this rulemaking. Energy conservation resulting from potential energy conservation standards for MREFs is expected to yield environmental benefits in the form of reduced emissions of certain air pollutants and greenhouse gases. Table V.27 provides DOE’s estimate of cumulative emissions reductions expected to result from the TSLs considered in this rulemaking. 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 NOPR TSD. 5. Impact of Any Lessening of Competition DOE considered any lessening of competition that would be likely to result from new or amended standards. As discussed in section III.F.1.e of this document, the Attorney General determines the impact, if any, of any lessening of competition likely to result from a proposed standard, and transmits such determination in writing to the Secretary, together with an analysis of the nature and extent of such impact. To assist the Attorney General in making this determination, DOE has provided DOJ with copies of this NOPR and the accompanying TSD for review. DOE will consider DOJ’s comments on the proposed rule in determining whether to proceed to a final rule. DOE will publish and respond to DOJ’s comments TABLE V.27—CUMULATIVE EMISSIONS REDUCTION FOR MREFS SHIPPED IN 2029–2058 Trial standard level ddrumheller on DSK120RN23PROD with PROPOSALS2 1 2 3 4 5 Power Sector Emissions CO2 (million metric tons) ..................................................... CH4 (thousand tons) ............................................................ N2O (thousand tons) ............................................................ NOX (thousand tons) ........................................................... SO2 (thousand tons) ............................................................ Hg (tons) .............................................................................. VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 PO 00000 Frm 00051 3.0 0.2 0.03 1.5 1.5 0.01 Fmt 4701 Sfmt 4702 6.0 0.5 0.07 3.0 3.0 0.02 E:\FR\FM\31MRP2.SGM 6.6 0.5 0.07 3.3 3.2 0.02 31MRP2 9.7 0.8 0.11 4.8 4.7 0.03 16.9 1.3 0.19 8.4 8.3 0.05 19432 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules TABLE V.27—CUMULATIVE EMISSIONS REDUCTION FOR MREFS SHIPPED IN 2029–2058—Continued Trial standard level 1 2 3 4 5 Upstream Emissions CO2 (million metric tons) ..................................................... CH4 (thousand tons) ............................................................ N2O (thousand tons) ............................................................ NOX (thousand tons) ........................................................... SO2 (thousand tons) ............................................................ Hg (tons) .............................................................................. 0.2 21.7 0.00 3.5 0.02 0.00 0.5 43.4 0.00 7.0 0.03 0.00 0.5 47.5 0.00 7.6 0.03 0.00 0.7 69.5 0.00 11.1 0.05 0.00 1.3 121.4 0.01 19.4 0.09 0.00 6.5 43.9 0.07 10.0 3.0 0.02 7.1 48.0 0.08 10.9 3.3 0.02 10.4 70.3 0.11 15.9 4.8 0.03 18.2 122.7 0.19 27.9 8.4 0.05 Total FFC Emissions CO2 (million metric tons) ..................................................... CH4 (thousand tons) ............................................................ N2O (thousand tons) ............................................................ NOX (thousand tons) ........................................................... SO2 (thousand tons) ............................................................ Hg (tons) .............................................................................. As part of the analysis for this rulemaking, DOE estimated monetary benefits likely to result from the reduced emissions of CO2 that DOE estimated for each of the considered 3.3 22.0 0.03 5.0 1.5 0.01 TSLs for MREFs. Section IV.L of this document discusses the SC–CO2 values that DOE used. Table V.28 presents the value of CO2 emissions reduction at each TSL for each of the SC–CO2 cases. The time-series of annual values is presented for the proposed TSL in chapter 14 of the NOPR TSD. TABLE V.28—PRESENT MONETIZED VALUE OF CO2 EMISSIONS REDUCTION FOR MREFS SHIPPED IN 2029–2058 [Million 2021$] SC–CO2 Case (Discount rate and statistics) TSL 5% (Average) 1 2 3 4 5 3% (Average) 27.4 54.9 59.6 87.1 152.1 As discussed in section IV.L.1 of this document, DOE estimated the climate benefits likely to result from the reduced emissions of methane and N2O that DOE estimated for each of the 2.5% (Average) 121.9 244.0 265.3 387.7 677.7 3% (95th Percentile) 192.4 385.2 418.9 612.4 1,070.6 considered TSLs for MREFs. Table V.29 presents the value of the CH4 emissions reduction at each TSL, and Table V.30 presents the value of the N2O emissions reduction at each TSL. The time-series 369.7 740.2 804.8 1176.1 2,055.8 of annual values is presented for the proposed TSL in chapter 14 of the NOPR TSD. TABLE V.29—PRESENT MONETIZED VALUE OF METHANE EMISSIONS REDUCTION FOR MREFS SHIPPED IN 2029–2058 [Million 2021$] SC–CH4 case (Discount rate and statistics) TSL ddrumheller on DSK120RN23PROD with PROPOSALS2 5% (Average) 1 2 3 4 5 VerDate Sep<11>2014 3% (Average) 8.5 17.1 18.6 27.1 47.4 19:21 Mar 30, 2023 Jkt 259001 PO 00000 2.5% (Average) 26.5 53.1 57.8 84.6 147.9 Frm 00052 Fmt 4701 Sfmt 4702 3% (95th Percentile) 37.4 74.8 81.5 119.2 208.6 E:\FR\FM\31MRP2.SGM 31MRP2 70.1 140.4 152.8 223.5 391.0 19433 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules TABLE V.30—PRESENT MONETIZED VALUE OF NITROUS OXIDE EMISSIONS REDUCTION FOR MREFS SHIPPED IN 2029– 2058 [Million 2021$] SC–N2O case (Discount rate and statistics) TSL 5% (Average) 3% (Average) 1 2 3 4 5 0.1 0.2 0.2 0.4 0.6 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 global and U.S. economy continues to evolve rapidly. DOE, together with other Federal agencies, will continue to review 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. DOE notes that the proposed standards would be economically justified even without inclusion of monetized benefits of reduced GHG emissions. DOE also estimated the monetary value of the health benefits associated with NOX and SO2 emissions reductions anticipated to result from the considered TSLs for MREFs. The dollarper-ton values that DOE used are discussed in section IV.L of this document. Table V.31 presents the present value for NOX emissions reduction for each TSL calculated using 7-percent and 3-percent discount rates, and Table V.32 presents similar results for SO2 emissions reductions. The results in these tables reflect application of EPA’s low dollar-per-ton values, which DOE used to be conservative. The time-series of annual values is presented for the proposed TSL in chapter 14 of the NOPR TSD. ddrumheller on DSK120RN23PROD with PROPOSALS2 2.5% (Average) 3% (95th Percentile) 0.5 0.9 1.0 1.5 2.6 0.7 1.4 1.6 2.3 4.0 TABLE V.31—PRESENT MONETIZED VALUE OF NOX EMISSIONS REDUCTION FOR MREFS SHIPPED IN 2029–2058 [Million 2021$] TSL 1 2 3 4 5 3% Discount rate 7% Discount rate 181.8 363.8 395.8 578.3 1,009.8 65.7 131.4 142.4 207.5 361.4 1.2 2.5 2.7 3.9 6.8 therefore reduces the need for electricity generation. To the extent that the reduced generation includes a reduction in combustion of coal, this rule will also include health benefits derived from emission reductions of mercury and particulate matter. 7. Other Factors The Secretary of Energy, in determining whether a standard is economically justified, may consider any other factors that the Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)) No other factors were considered in this analysis. TABLE V.32—PRESENT MONETIZED VALUE OF SO2 EMISSIONS REDUCTION FOR MREFS SHIPPED IN 8. Summary of Economic Impacts 2029–2058 Table V.33 presents the NPV values that result from adding the estimates of the potential economic benefits 3% Discount 7% Discount TSL resulting from reduced GHG and NOX rate rate and SO2 emissions to the NPV of 1 73.7 27.1 consumer benefits calculated for each 2 147.4 54.1 TSL considered in this rulemaking. The 3 160.4 58.7 4 234.2 85.4 consumer benefits are domestic U.S. 5 408.7 148.6 monetary savings that occur as a result of purchasing the covered MREFs, and DOE has not considered the monetary are measured for the lifetime of benefits of the reduction of Hg for this products shipped in 2029–2058. The proposed rule. Not all the public health climate benefits associated with reduced and environmental benefits from the GHG emissions resulting from the reduction of greenhouse gases, NOX, adopted standards are global benefits, and SO2 are captured in the values and are also calculated based on the above, and additional unquantified lifetime of MREFs shipped in 2029– benefits from the reductions of those 2058. pollutants as well as from the reduction of Hg, direct particulate matter (‘‘PM’’), and other co-pollutants may be significant. The energy savings from this proposal reduces electricity use and [Million 2021$] TABLE V.33—CONSUMER NPV COMBINED WITH PRESENT MONETIZED VALUE OF CLIMATE BENEFITS AND HEALTH BENEFITS Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 3% Discount rate for Consumer NPV and Health Benefits (billion 2021$) 5% Average SC–GHG case ................................................ 3% Average SC–GHG case ................................................ VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 PO 00000 Frm 00053 0.8 0.9 Fmt 4701 Sfmt 4702 1.3 1.5 E:\FR\FM\31MRP2.SGM 1.5 1.7 31MRP2 1.6 2.0 0.3 0.9 19434 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules TABLE V.33—CONSUMER NPV COMBINED WITH PRESENT MONETIZED VALUE OF CLIMATE BENEFITS AND HEALTH BENEFITS—Continued Category TSL 1 2.5% Average SC–GHG case ............................................. 3% 95th percentile SC–GHG case ...................................... TSL 2 1.0 1.2 TSL 3 1.6 2.1 TSL 4 1.9 2.3 TSL 5 2.2 2.9 1.3 2.5 0.5 0.9 1.2 1.8 ¥0.3 0.3 0.7 1.9 7% Discount rate for Consumer NPV and Health Benefits (billion 2021$) ddrumheller on DSK120RN23PROD with PROPOSALS2 5% Average SC–GHG case ................................................ 3% Average SC–GHG case ................................................ 2.5% Average SC–GHG case ............................................. 3% 95th percentile SC–GHG case ...................................... C. Conclusion When considering new or amended energy conservation standards, the 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)) For this NOPR, DOE considered the impacts of amended standards for MREFs at each TSL, beginning with the maximum technologically feasible level, to determine whether that level was economically justified. Where the maxtech level was not justified, DOE then considered the next most efficient level and undertook the same evaluation until it reached the highest efficiency level that is 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. In addition, as discussed in section V.B.1.b of this document, DOE conducted a subgroup analysis for seniors, the results of which are comparable to all MREF consumers (see Table V.18.) DOE did not consider low- VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 0.3 0.4 0.5 0.7 0.5 0.7 0.9 1.3 income consumers in this NOPR because MREFs are not products generally used by this subgroup, as they typically cost more than comparable compact refrigerators, which are able to maintain lower temperatures compared to MREFs, and therefore serve a wider range of applications. 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, 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 PO 00000 Frm 00054 Fmt 4701 Sfmt 4702 0.6 0.8 1.0 1.4 standard 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 NOPR 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.70 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.71 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 MREF Standards Table V.34 and Table V.35 summarize the quantitative impacts estimated for each TSL for MREFs. The national impacts are measured over the lifetime 70 P.C. Reiss and M.W. White. Household Electricity Demand, Revisited. Review of Economic Studies. 2005. 72(3): pp. 853–883. doi: 10.1111/ 0034–6527.00354. 71 Sanstad, A.H. Notes on the Economics of Household Energy Consumption and Technology Choice. 2010. Lawrence Berkeley National Laboratory. www1.eere.energy.gov/buildings/ appliance_standards/pdfs/consumer_ee_theory.pdf (last accessed September 22, 2022). E:\FR\FM\31MRP2.SGM 31MRP2 19435 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules of MREFs purchased in the 30-year period that begins in the anticipated year of compliance with amended standards (2029–2058). The energy savings, emissions reductions, and value of emissions reductions refer to full-fuel-cycle results. The efficiency levels contained in each TSL are described in section I.A of this document. TABLE V.34—SUMMARY OF ANALYTICAL RESULTS FOR MISCELLANEOUS REFRIGERATION PRODUCT TSLS: NATIONAL IMPACTS Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 Cumulative FFC National Energy Savings Quads ................................................................................... 0.10 0.19 0.21 0.31 0.54 7.1 48.0 0.08 10.9 3.3 0.02 10.4 70.3 0.11 15.9 4.8 0.03 18.2 122.7 0.19 27.9 8.4 0.05 2.0 0.5 0.8 3.3 1.3 0.7 2.0 3.5 0.8 1.4 5.8 4.9 ¥1.4 0.9 Cumulative FFC Emissions Reduction CO2 (million metric tons) ..................................................... CH4 (thousand tons) ............................................................ N2O (thousand tons) ............................................................ NOX (thousand tons) ........................................................... SO2 (thousand tons) ............................................................ Hg (tons) .............................................................................. 3.3 22.0 0.03 5.0 1.5 0.01 6.5 43.9 0.07 10.0 3.0 0.02 Present Monetized Value of Benefits and Costs (3% discount rate, billion 2021$) Consumer Operating Cost Savings ..................................... Climate Benefits * ................................................................. Health Benefits ** ................................................................. Total Monetized Benefits † ................................................... Consumer Incremental Product Costs ................................. Consumer Net Benefits ........................................................ Total Net Monetized Benefits .............................................. 0.6 0.1 0.3 1.0 0.1 0.5 0.9 1.3 0.3 0.5 2.1 0.6 0.7 1.5 1.4 0.3 0.6 2.3 0.6 0.8 1.7 Present Monetized Value of Benefits and Costs (7% discount rate, billion 2021$) Consumer Operating Cost Savings ..................................... Climate Benefits * ................................................................. Health Benefits ** ................................................................. Total Monetized Benefits † ................................................... Consumer Incremental Product Costs ................................. Consumer Net Benefits ........................................................ 0.3 0.1 0.1 0.5 0.1 0.2 0.5 0.3 0.2 1.0 0.3 0.2 0.6 0.3 0.2 1.1 0.3 0.3 0.8 0.5 0.3 1.6 0.7 0.1 1.4 0.8 0.5 2.7 2.5 ¥1.0 Total Net Monetized Benefits ....................................... 0.4 0.7 0.8 0.9 0.3 Note: This table presents the costs and benefits associated with consumer MREFs shipped in 2029–2058. These results include benefits to consumers which accrue after 2058 from the products shipped in 2029–2058. * Climate benefits are calculated using four different estimates of the SC–CO2, SC–CH4 and SC–N2O. Together, these represent the global SC–GHG. For presentational purposes of this table, the climate benefits associated with the average SC–GHG at a 3 percent discount rate are shown, but the Department does not have a single central SC–GHG point estimate. On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22–30087) granted the Federal government’s emergency motion for stay pending appeal of the February 11, 2022, preliminary injunction issued in Louisiana v. Biden, No. 21–cv–1074–JDC–KK (W.D. La.). As a result of the Fifth Circuit’s order, the preliminary injunction is no longer in effect, pending resolution of the Federal government’s appeal of that injunction or a further court order. Among other things, the preliminary injunction enjoined the defendants in that case from ‘‘adopting, employing, treating as binding, or relying upon’’ the interim estimates of the social cost of greenhouse gases—which were issued by the Interagency Working Group on the Social Cost of Greenhouse Gases on February 26, 2021—to monetize the benefits of reducing greenhouse gas emissions. As reflected in this rule, DOE has reverted to its approach prior to the injunction and presents monetized GHG abatement benefits where appropriate and permissible under law. ** Health benefits are calculated using benefit-per-ton values for NOX and SO2. DOE is currently only monetizing (for NOX and SO2) PM2.5 precursor health benefits and (for NOX) ozone precursor health benefits, but will continue to assess the ability to monetize other effects such as health benefits from reductions in direct PM2.5 emissions. The health benefits are presented at real discount rates of 3 and 7 percent. See section IV.L of this document for more details. † Total and net benefits include consumer, climate, and health benefits. For presentation purposes, total and net benefits for both the 3-percent and 7-percent cases are presented using the average SC–GHG with 3-percent discount rate, but the Department does not have a single central SC–GHG point estimate. DOE emphasizes the importance and value of considering the benefits calculated using all four SC–GHG estimates. ddrumheller on DSK120RN23PROD with PROPOSALS2 TABLE V.35—SUMMARY OF ANALYTICAL RESULTS FOR MISCELLANEOUS REFRIGERATION PRODUCTS TSLS: MANUFACTURER AND CONSUMER IMPACTS Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 697.3 to 706.6 (6.0) to (4.8) 652.3 to 679.4 (12.1) to (8.4) 356.7 to 458.8 (51.9) to (38.2) 17.2 12.6 ¥45.3 Manufacturer Impacts Industry NPV (million 2021$) (No-new-standards case INPV = $742.0) ................................................................ Industry NPV (% change) .................................................... 711.3 to 714.7 (4.1) to (3.7) 695.4 to 706.2 (6.3) to (4.8) Consumer Average LCC Savings (2021$) FCC ...................................................................................... VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 PO 00000 Frm 00055 17.4 Fmt 4701 Sfmt 4702 17.2 E:\FR\FM\31MRP2.SGM 31MRP2 19436 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules TABLE V.35—SUMMARY OF ANALYTICAL RESULTS FOR MISCELLANEOUS REFRIGERATION PRODUCTS TSLS: MANUFACTURER AND CONSUMER IMPACTS—Continued Category TSL 1 FC ........................................................................................ BICC ..................................................................................... BIC ....................................................................................... C–13A .................................................................................. C–13A–BI ............................................................................. C–3A .................................................................................... C–3A–BI ............................................................................... Shipment-Weighted Average * ............................................. TSL 2 23.5 17.2 20.3 24.8 27.6 31.5 36.7 19.6 TSL 3 23.5 2.9 21.2 35.5 39.6 31.5 36.7 20.9 TSL 4 TSL 5 47.2 2.9 57.3 35.5 39.6 31.5 36.7 25.0 28.0 2.9 57.3 12.0 15.3 31.5 36.7 15.6 ¥178.8 ¥80.9 ¥197.4 ¥73.4 ¥74.6 ¥233.4 ¥240.7 ¥74.0 5.0 3.8 7.9 4.0 1.4 1.3 1.7 1.6 4.3 6.8 8.0 7.9 4.0 6.9 6.7 1.7 1.6 6.9 11.5 22.5 13.8 23.6 16.7 16.3 41.9 38.7 14.4 33.5 1.6 15.3 3.6 1.0 0.7 0.0 0.0 22.1 49.5 45.5 15.3 3.6 47.5 44.4 0.0 0.03 45.5 77.8 94.5 22.7 94.3 90.3 89.7 99.4 98.9 80.8 Simple Payback Period (years) FCC ...................................................................................... FC ........................................................................................ BICC ..................................................................................... BIC ....................................................................................... C–13A .................................................................................. C–13A–BI ............................................................................. C–3A .................................................................................... C–3A–BI ............................................................................... Shipment-Weighted Average * ............................................. 2.0 5.8 2.4 6.4 1.1 1.1 1.7 1.6 2.5 5.0 5.8 7.9 8.6 1.4 1.3 1.7 1.6 4.7 Percent of Consumers with Net Cost FCC ...................................................................................... FC ........................................................................................ BICC ..................................................................................... BIC ....................................................................................... C–13A .................................................................................. C–13A–BI ............................................................................. C–3A .................................................................................... C–3A–BI ............................................................................... Shipment-Weighted Average * ............................................. 2.8 8.8 1.0 18.7 0.3 0.3 0.0 0.0 3.5 33.5 8.8 15.3 53.4 1.0 0.7 0.0 0.0 24.7 ddrumheller on DSK120RN23PROD with PROPOSALS2 Parentheses indicate negative (-) values. The entry ‘‘N/A’’ means not applicable because there is no change in the standard at certain TSLs. * Weighted by shares of each product class in total projected shipments in 2029. DOE first considered TSL 5, which represents the max-tech efficiency levels. For coolers (i.e., FCC, FC, BICC, and BIC), which account for approximately 82 percent of MREF shipments-size, DOE expects that products would require use of VIPs, VSCs, and triple-glazed doors at this TSL. DOE expects that VIPs would be used in the products’ side walls. In addition, the products would use the best-available-efficiency variable-speed compressors, forced-convection heat exchangers with multi-speed brushlessDC (‘‘BLDC’’) fans, and increase in cabinet wall thickness as compared to most baseline products. TSL 5 would save an estimated 0.54 quads of energy, an amount which DOE considers significant. Under TSL 5, the NPV of consumer benefit would be negative, i.e., ¥$1.04 billion using a discount rate of 7 percent, and ¥$1.36 billion using a discount rate of 3 percent. The cumulative emissions reductions at TSL 5 are 18.2 Mt of CO2, 8.4 thousand tons of SO2, 27.9 thousand tons of NOX, 0.05 tons of Hg, 123 thousand tons of CH4, and 0.19 thousand tons of N2O. The estimated monetary value of the climate benefits VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 from reduced GHG emissions (associated with the average SC–GHG at a 3-percent discount rate) at TSL 5 is $0.8 billion. The estimated monetary value of the health benefits from reduced SO2 and NOX emissions at TSL 5 is $0.5 billion using a 7-percent discount rate and $1.4 billion using a 3percent discount rate. Using a 7-percent discount rate for consumer benefits and costs, health benefits from reduced SO2 and NOX emissions, and the 3-percent discount rate case for climate benefits from reduced GHG emissions, the estimated total NPV at TSL 5 is $0.3 billion. Using a 3-percent discount rate for all benefits and costs, the estimated total NPV at TSL 5 is $0.9 billion. The estimated total monetized NPV is provided for additional information, however, consistent with the statutory factors and framework for determining whether a proposed standard level is economically justified, DOE considers a range of quantitative and qualitative benefits and burdens, including the costs and cost savings for consumers, impacts to consumer subgroups, energy savings, emission reductions, and impacts on manufacturers. PO 00000 Frm 00056 Fmt 4701 Sfmt 4702 At TSL 5, for the product classes with the largest market share, which are FCC, FC, and C–13A and together account for approximately 92 percent of annual shipments, the LCC savings are all negative (¥$45.3, ¥$178.8, and ¥$73.4, respectively) and their payback periods are 11.5 years, 22.5, and 16.7 years, respectively, which are all longer than their corresponding average lifetimes. For these product classes, the fraction of consumers experiencing a net LCC cost is 77.8 percent, 94.5 percent, and 90.3 percent due to increases in first cost of $180.0, $335.6, and $73.4, respectively. Overall, a majority of MREF consumers (80.8 percent) would experience a net cost and the average LCC savings would be negative for all analyzed product classes. At TSL 5, the projected change in INPV ranges from a decrease of $385.3 million to a decrease of $283.2 million, which corresponds to decreases of 51.9 percent and 38.2 percent, respectively. DOE estimates that industry must invest $539.0 million to comply with standards set at TSL 5. DOE estimates that approximately 2.7 percent of current MREF shipments meet the max-tech levels. For FCC, FC, E:\FR\FM\31MRP2.SGM 31MRP2 ddrumheller on DSK120RN23PROD with PROPOSALS2 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules and C–13A, which together account for approximately 92 percent of annual shipments, DOE estimates that zero shipments currently meet max-tech efficiencies. At TSL 5, manufacturers would likely need to implement all the most efficient design options analyzed in the engineering analysis. Manufacturers that do not currently offer products that meet TSL 5 efficiencies would need to develop new product platforms, which would require significant investment. Conversion costs are driven by the need for changes to cabinet construction, such as increasing foam insulation thickness and/or incorporating VIP technology. Increasing insulation thickness would likely result in the loss of interior volume and would require redesign of the cabinet as well as the designs and tooling associated with the interior of the product, such as the liner, shelving, racks, and drawers. Incorporating VIPs into MREF designs could also require redesign of the cabinet in order to maximize the efficiency benefit of this technology. In addition to insulation changes, manufacturers may need to implement triple-pane glass, which could require implementing reinforced hinges and redesigning the door structure. At this level, DOE expects an estimated 20-percent drop in shipments in the year the standard takes effect, as some consumers may forgo purchasing a new MREF due to the increased upfront cost of baseline models. The Secretary tentatively concludes that at TSL 5 for MREFs, the benefits of energy savings, positive NPV of consumer benefits, emission reductions, and the estimated monetary value of the emissions reductions would be outweighed by the economic burden on many consumers, and the impacts on manufacturers, including the significant potential reduction in INPV. A majority of MREF consumers (80.8 percent) would experience a net cost and the average LCC savings would be negative. Additionally, manufacturers would need to make significant upfront investments to update product platforms. The potential reduction in INPV could be as high as 51.9 percent. Consequently, the Secretary has tentatively concluded that TSL 5 is not economically justified. DOE then considered TSL 4, which represents EL 3 for all analyzed product classes except for C–3A and C–3A–BI, for which this TSL corresponds to EL 1 and BIC, for which this TSL corresponds to EL 2. At TSL 4, products of most classes would use highefficiency single-speed compressors with forced-convection evaporators and VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 condensers using brushless DC fan motors. Doors would be double-glazed with low-conductivity gas fill (e.g., argon) and a single low-emissivity glass layer. Products would not require use of VIPs, but the FC product class would require thicker walls than corresponding baseline products. TSL 4 would save an estimated 0.31 quads of energy, an amount DOE considers significant. Under TSL 4, the NPV of consumer benefit would be $0.14 billion using a discount rate of 7 percent, and $0.69 billion using a discount rate of 3 percent. The cumulative emissions reductions at TSL 4 are 10.4 Mt of CO2, 4.8 thousand tons of SO2, 15.9 thousand tons of NOX, 0.03 tons of Hg, 70.3 thousand tons of CH4, and 0.11 thousand tons of N2O. The estimated monetary value of the climate benefits from reduced GHG emissions (associated with the average SC–GHG at a 3-percent discount rate) at TSL 4 is $0.5 billion. The estimated monetary value of the health benefits from reduced SO2 and NOX emissions at TSL 4 is $0.3 billion using a 7-percent discount rate and $0.8 billion using a 3percent discount rate. Using a 7-percent discount rate for consumer benefits and costs, health benefits from reduced SO2 and NOX emissions, and the 3-percent discount rate case for climate benefits from reduced GHG emissions, the estimated total NPV at TSL 4 is $0.9 billion. Using a 3-percent discount rate for all benefits and costs, the estimated total NPV at TSL 4 is $2.0 billion. The estimated total monetized NPV is provided for additional information, however, consistent with the statutory factors and framework for determining whether a proposed standard level is economically justified, DOE considers a range of quantitative and qualitative benefits and burdens, including the costs and cost savings for consumers, impacts to consumer subgroups, energy savings, emission reductions, and impacts on manufacturers. At TSL 4, for the product classes with the largest market share, which are FCC, FC, and C–13A, the LCC savings are $12.6, $28.0, and $12.0, respectively, and their payback periods are 6.8 years, 8.0, and 6.9 years, respectively, which are all shorter than their corresponding average lifetimes. For these product classes, the fraction of consumers experiencing a net LCC cost is 49.5 percent, 45.5 percent, and 47.5 percent, and increases in first cost for these classes are $52.9, $96.0, and $44.3, respectively. Overall, the LCC savings would be positive for all MREF product classes, and more than half of MREF PO 00000 Frm 00057 Fmt 4701 Sfmt 4702 19437 consumers would experience a net benefit (51 percent). At TSL 4, the projected change in INPV ranges from a decrease of $89.8 million to a decrease of $62.7 million, which correspond to decreases of 12.1 percent and 8.4 percent, respectively. DOE estimates that industry must invest $126.9 million to comply with standards set at TSL 4. DOE estimates that approximately 3.4 percent of shipments currently meet the required efficiencies at TSL 4 as at maxtech. For most product classes (i.e., FCC, BICC, BIC, C–13A, C–13A–BI, C–3A, C– 3A–BI), DOE expects manufacturers could reach the required efficiencies with relatively straightforward component swaps, such as implementing incrementally more efficient compressors, rather than the full platform redesigns required at maxtech. DOE expects that FC manufacturers would need to increase foam insulation thickness and incorporate variable-speed compressor systems at this level. At TSL 4, DOE expects an estimated 10-percent drop in shipments in the year the standard takes effect, as some consumers may forgo purchasing a new MREF due to the increased upfront cost of baseline models. After considering the analysis and weighing the benefits and burdens, the Secretary has tentatively concluded that at a standard set at TSL 4 for MREFs would be economically justified. At this TSL, the average LCC savings are positive for all product classes for which an amended standard is considered, with a shipment-weighted average of $15.60 in consumer savings. The FFC national energy savings are significant and the NPV of consumer benefits is positive (and represents the maximum value) using both a 3-percent and 7-percent discount rate. Notably, the benefits to consumers outweigh the cost to manufacturers. At TSL 4, the NPV of consumer benefits, even measured at the more conservative discount rate of 7 percent is over 1.5 times higher than the maximum estimated manufacturers’ loss in INPV. The standard levels at TSL 4 are economically justified even without weighing the estimated monetary value of emissions reductions. When those emissions reductions are included— representing $0.5 billion in climate benefits (associated with the average SC–GHG at a 3-percent discount rate), and $0.8 billion (using a 3-percent discount rate) or $0.3 billion (using a 7percent discount rate) in health benefits—the rationale becomes stronger still. E:\FR\FM\31MRP2.SGM 31MRP2 19438 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules As stated, DOE conducts the walkdown analysis to determine the TSL that represents the maximum improvement in energy efficiency that is technologically feasible and economically justified as required under EPCA. The walk-down is not a comparative analysis, as a comparative analysis would result in the maximization of net benefits instead of energy savings that are technologically feasible and economically justified, which would be contrary to the statute. 86 FR 70892, 70908. Although DOE has not conducted a comparative analysis to select the proposed energy conservation standards, DOE notes that TSL 4 represents the option with positive LCC savings ($15.6) for all product classes compared to TSL 5 ($¥74.0). Further, when comparing the cumulative NPV of consumer benefit using a 7% discount rate, TSL 4 ($0.14 billion) has a higher benefit value than TSL 5 (¥$1.04 billion), while for a 3% discount rate, TSL 4 ($0.69 billion) is also higher than TSL 5 (¥1.36 billion), which yields negative NPV in both cases. These additional savings and benefits at TSL 4 are significant. DOE considers the impacts to be, as a whole, economically justified at TSL 4. Although DOE considered proposed amended standard levels for MREFs by grouping the efficiency levels for each product class into TSLs, DOE evaluates all analyzed efficiency levels in its analysis. For all product classes, the proposed standard level represents the maximum energy savings that does not result in negative LCC savings. The ELs at the proposed standard level result in positive LCC savings for all product classes, and reduce the decrease in INPV and conversion costs to the point where DOE has tentatively concluded they are economically justified, as discussed for TSL 4 in the preceding paragraphs. Therefore, based on the previous considerations, DOE proposes to adopt the energy conservation standards for MREFs at TSL 4. The proposed amended energy conservation standards for MREFs, which are expressed in kWh/yr, are shown in Table V.36. TABLE V.36—PROPOSED AMENDED ENERGY CONSERVATION STANDARDS FOR MREF Equations for maximum energy use (kWh/yr) Product class 1. Freestanding compact coolers (‘‘FCC’’) ..................................................................................................................... 2. Freestanding coolers (‘‘FC’’) ...................................................................................................................................... 3. Built-in compact coolers (‘‘BICC’’) .............................................................................................................................. 4. Built-in coolers (‘‘BIC’’) ............................................................................................................................................... C–3A. Cooler with all-refrigerator—automatic defrost .................................................................................................... C–3A–BI. Built-in cooler with all-refrigerator—automatic defrost ................................................................................... C–5–BI. Built-in cooler with refrigerator-freezer—automatic defrost with bottom-mounted freezer .............................. C–9. Cooler with upright freezer with automatic defrost without an automatic icemaker ............................................. C–9–BI. Built-in cooler with upright freezer with automatic defrost without an automatic icemaker ............................. C–13A. Compact cooler with all-refrigerator—automatic defrost ................................................................................... C–13A–BI. Built-in compact cooler with all-refrigerator—automatic defrost .................................................................. 5.52AV 5.52AV 5.52AV 6.30AV 4.11AV 4.67AV 5.47AV 5.58AV 6.38AV 4.74AV 5.22AV + + + + + + + + + + + 109.1 109.1 109.1 124.6 117.4 133.0 196.2 + 28I 147.7 + 28I 168.8 + 28I 155.0 170.5 AV = Total adjusted volume, expressed in ft3, as determined in appendix A to subpart B of 10 CFR part 430. I = 1 for a product with an automatic icemaker and = 0 for a product without an automatic icemaker. 2. Annualized Benefits and Costs of the Proposed Standards The benefits and costs of the proposed standards can also be expressed in terms of annualized values. The annualized net benefit is (1) the annualized national economic value (expressed in 2021$) 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, and (2) the annualized monetary value of the climate and health benefits from emission reductions. Table V.37 shows the annualized values for MREFs under TSL 4, expressed in 2021$. The results under the primary estimate are as follows. Using a 7-percent discount rate for consumer benefits and costs and NOx and SO2 reduction benefits, and a 3percent discount rate case for GHG social costs, the estimated cost of the proposed standards for MREFs is $81.2 million per year in increased equipment costs, while the estimated annual benefits are $97.6 million from reduced equipment operating costs, $28.9 million from GHG reductions, and $35.4 million from reduced NOX and SO2 emissions. In this case, the net benefit amounts to $80.6 million per year. Using a 3-percent discount rate for all benefits and costs, the estimated cost of the proposed standards for MREFs is $81.0 million per year in increased equipment costs, while the estimated annual benefits are $123.1 million in reduced operating costs, $28.9 million from GHG reductions, and $49.5 million from reduced NOX and SO2 emissions. In this case, the net benefit amounts to $120.4 million per year. TABLE V.37—ANNUALIZED MONETIZED BENEFITS AND COSTS OF PROPOSED ENERGY CONSERVATION STANDARDS FOR MREFS (TSL 4) ddrumheller on DSK120RN23PROD with PROPOSALS2 [Million 2021$/year] Primary estimate Low-net-benefits estimate High-net-benefits estimate 116.3 28.1 48.2 192.6 82.3 131.2 29.6 50.8 211.6 79.4 3% discount rate Consumer Operating Cost Savings ............................................................................................. Climate Benefits * ......................................................................................................................... Health Benefits ** ......................................................................................................................... Total Monetized Benefits † .......................................................................................................... Consumer Incremental Product Costs ‡ ...................................................................................... VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 PO 00000 Frm 00058 Fmt 4701 Sfmt 4702 E:\FR\FM\31MRP2.SGM 123.1 28.9 49.5 201.4 81.0 31MRP2 19439 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules TABLE V.37—ANNUALIZED MONETIZED BENEFITS AND COSTS OF PROPOSED ENERGY CONSERVATION STANDARDS FOR MREFS (TSL 4)—Continued [Million 2021$/year] Primary estimate Net Monetized Benefits ............................................................................................................... Low-net-benefits estimate High-net-benefits estimate 120.4 110.3 132.2 97.6 28.9 35.4 161.9 81.2 80.6 92.7 28.1 34.6 155.4 82.4 72.9 103.3 29.6 36.2 169.2 79.8 89.4 7% discount rate Consumer Operating Cost Savings ............................................................................................. Climate Benefits * (3% discount rate) .......................................................................................... Health Benefits ** ......................................................................................................................... Total Monetized Benefits † .......................................................................................................... Consumer Incremental Product Costs ........................................................................................ Net Monetized Benefits ............................................................................................................... Note: This table presents the costs and benefits associated with refrigerators, refrigerator-freezers, and freezers shipped in 2029–2058. These results include benefits to consumers which accrue after 2056 from the products shipped in 2029–2058. The Primary, Low-Net-Benefits, and High Net Benefits Estimates utilize projections of energy prices from the AEO2022 Reference case, Low Economic Growth case, and High Economic Growth case, respectively. In addition, incremental equipment costs reflect a medium decline rate in the Primary Estimate, a low decline rate in the Low-Net-Benefits Estimate, and a high decline rate in the High Net Benefits Estimate. The methods used to derive projected price trends are explained in section IV.H.3 of this document. Note that the Benefits and Costs may not sum to the Net Benefits due to rounding. * Climate benefits are calculated using four different estimates of the global SC–GHG (see section IV.L of this document). For presentational purposes of this table, the climate benefits associated with the average SC–GHG at a 3 percent discount rate are shown, but the Department does not have a single central SC–GHG point estimate, and it emphasizes the importance and value of considering the benefits calculated using all four SC–GHG estimates. On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22–30087) granted the Federal government’s emergency motion for stay pending appeal of the February 11, 2022, preliminary injunction issued in Louisiana v. Biden, No. 21–cv–1074–JDC–KK (W.D. La.). As a result of the Fifth Circuit’s order, the preliminary injunction is no longer in effect, pending resolution of the Federal government’s appeal of that injunction or a further court order. Among other things, the preliminary injunction enjoined the defendants in that case from ‘‘adopting, employing, treating as binding, or relying upon’’ the interim estimates of the social cost of greenhouse gases—which were issued by the Interagency Working Group on the Social Cost of Greenhouse Gases on February 26, 2021—to monetize the benefits of reducing greenhouse gas emissions. As reflected in this rule, DOE has reverted to its approach prior to the injunction and presents monetized GHG abatement benefits where appropriate and permissible under law. ** Health benefits are calculated using benefit-per-ton values for NOX and SO2. DOE is currently only monetizing (for SO2 and NOX) PM2.5 precursor health benefits and (for NOX) ozone precursor health benefits, but will continue to assess the ability to monetize other effects such as health benefits from reductions in direct PM2.5 emissions. The health benefits are presented at real discount rates of 3 and 7 percent. See section IV.L of this document for more details. † Total benefits for both the 3-percent and 7-percent cases are presented using the average SC–GHG with 3-percent discount rate, but the Department does not have a single central SC–GHG point estimate. D. Reporting, Certification, and Sampling Plan Manufacturers, including importers, must use product-specific certification templates to certify compliance to DOE. For MREFs, the certification template reflects the general certification requirements specified at 10 CFR 429.12 and the product-specific requirements specified at 10 CFR 429.14. As discussed in the previous paragraphs, DOE is not proposing to amend the product-specific certification requirements for these products. ddrumheller on DSK120RN23PROD with PROPOSALS2 VI. Procedural Issues and Regulatory Review A. Review Under Executive Orders 12866 and 13563 Executive Order (‘‘E.O.’’) 12866, ‘‘Regulatory Planning and Review,’’ 58 FR 51734 (Oct. 4, 1993) as supplemented and reaffirmed by E.O. 13563, ‘‘Improving Regulation and Regulatory Review,’’ 76 FR 3821 (January 21, 2011), requires agencies, to the extent permitted by law, 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 VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 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 E.O. 13563 requires agencies to use the best available techniques to quantify anticipated present and future benefits and costs as accurately as possible. In its guidance, the Office of Information and Regulatory Affairs PO 00000 Frm 00059 Fmt 4701 Sfmt 4702 (‘‘OIRA’’) in the Office of Management and Budget (‘‘OMB’’) has emphasized that such techniques may include identifying changing future compliance costs that might result from technological innovation or anticipated behavioral changes. For the reasons stated in the preamble, this proposed/ final regulatory action is consistent with these principles. Section 6(a) of E.O. 12866 also requires agencies to submit ‘‘significant regulatory actions’’ to OIRA for review. OIRA has determined that this proposed regulatory action constitutes a ‘‘significant regulatory action within the scope of section 3(f)(1)’’ of E.O. 12866. Accordingly, pursuant to section 6(a)(3)(C) of E.O. 12866, DOE has provided to OIRA an assessment, including the underlying analysis, of benefits and costs anticipated from the proposed 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 E:\FR\FM\31MRP2.SGM 31MRP2 19440 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules ddrumheller on DSK120RN23PROD with PROPOSALS2 to the identified potential alternatives. These assessments are summarized in this preamble and further detail can be found in the TSD for this rulemaking. B. Review Under the Regulatory Flexibility Act The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires preparation of an initial regulatory flexibility analysis (‘‘IRFA’’) for any rule that by law must be proposed for public comment, unless the agency certifies that the rule, if promulgated, will not have a significant economic impact on a substantial number of small entities. As required by E.O. 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 website (www.energy.gov/gc/ office-general-counsel). DOE has prepared the following IRFA for the products that are the subject of this proposed rulemaking. For manufacturers of miscellaneous refrigeration products (‘‘MREFs’’), the SBA has set a size threshold, which defines those entities classified as ‘‘small businesses’’ for the purposes of the statute. DOE used the SBA’s small business size standards to determine whether any small entities would be subject to the requirements of the rule. (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/document/support--tablesize-standards. The manufacturing of the products covered in this rulemaking are classified under NAICS code 335220: ‘‘Major Household Appliance Manufacturing’’ or NAICS code 333415: ‘‘Air-Conditioning and Warm Air Heating Equipment and Commercial and Industrial Refrigeration Equipment Manufacturing.’’ The SBA sets a threshold of 1,500 employees or fewer and 1,250 employees or fewer for an entity to be considered as a small business for NAICS codes 335220 and 333415, respectively. DOE used the higher threshold of 1,500 employees to identify small business manufacturers. 1. Description of Reasons Why Action Is Being Considered DOE is proposing amended energy conservation standards for MREFs. EPCA authorizes DOE to regulate the VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 energy efficiency of a number of consumer products and certain industrial equipment. Title III, Part B of EPCA established the Energy Conservation Program for Consumer Products Other Than Automobiles which, in addition to identifying particular consumer products and commercial equipment as covered under the statute, permits the Secretary of Energy to classify additional types of consumer products as covered products. (42 U.S.C. 6292(a)(20)) DOE added MREFs as covered products through a final determination of coverage published in the Federal Register on July 18, 2016. 81 FR 46768. EPCA further provides that, not later than 6 years after the 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 NOPR including new proposed energy conservation standards (proceeding to a final rule, as appropriate). (42 U.S.C. 6295(m)(1)) This rulemaking is in accordance with DOE’s obligations under EPCA. 2. Objectives of, and Legal Basis for, Rule EPCA authorizes DOE to regulate the energy efficiency of a number of consumer products and certain industrial equipment. Title III, Part B of EPCA established the Energy Conservation Program for Consumer Products Other Than Automobiles which, in addition to identifying particular consumer products and commercial equipment as covered under the statute, permits the Secretary of Energy to classify additional types of consumer products as covered products. (42 U.S.C. 6292(a)(20)) DOE added MREFs as covered products through a final determination of coverage published in the Federal Register on July 18, 2016. 81 FR 46768. MREFs are consumer refrigeration products other than refrigerators, refrigerator-freezers, or freezers, which include coolers and combination cooler refrigeration products. 10 CFR 430.2. MREFs include refrigeration products such as coolers (e.g., wine chillers and other specialty products) and combination cooler refrigeration products (e.g., wine chillers and other specialty compartments combined with a refrigerator, refrigerator-freezers, or freezers). EPCA further provides that, not later than 6 years after the 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 PO 00000 Frm 00060 Fmt 4701 Sfmt 4702 amended, or a NOPR including new proposed energy conservation standards (proceeding to a final rule, as appropriate). (42 U.S.C. 6295(m)(1)) Not later than three years after issuance of a final determination not to amend standards, DOE must publish either a notice of determination that standards for the product do not need to be amended, or a NOPR including new proposed energy conservation standards (proceeding to a final rule, as appropriate). (42 U.S.C. 6295(m)(3)(B)) 3. Description on Estimated Number of Small Entities Regulated DOE reviewed this proposed rule under the provisions of the Regulatory Flexibility Act and the procedures and policies published on February 19, 2003. 68 FR 7990. DOE conducted a market survey to identify potential small manufacturers of MREFs. DOE began its assessment by reviewing DOE’s CCD,72 California Energy Commission’s Modernized Appliance Efficiency Database System (‘‘MAEDbS’’),73 individual company websites, and prior MREF rulemakings to identify manufacturers of the covered product. DOE then consulted publicly available data, such as manufacturer websites, manufacturer specifications and product literature, import/export logs (e.g., bills of lading from Panjiva,74) and basic model numbers, to identify original equipment manufacturers (‘‘OEMs’’) of covered MREFs. DOE further relied on public data and subscription-based market research tools (e.g., Dun & Bradstreet reports)75 to determine company, location, headcount, and annual revenue. DOE also asked industry representatives if they were aware of any small manufacturers during manufacturer interviews. DOE screened out companies that do not offer products covered by this rulemaking, do not meet the SBA’s definition of a ‘‘small business,’’ or are foreign-owned and operated. DOE initially identified 38 OEMs that sell MREFs in the United States. Of the 38 OEMs identified, DOE tentatively 72 U.S. Department of Energy’s Compliance Certification Database is available at: www.regulations.doe.gov/certification-data/ #q=Product_Group_s%3A* (Last accessed May 2, 2022). 73 California Energy Commission’s Modernized Appliance Efficiency Database System is available at: cacertappliances.energy.ca.gov/Pages/ ApplianceSearch.aspx (Last accessed May 2, 2022). 74 S&P Global. Panjiva Market Intelligence is available at: panjiva.com/import-export/UnitedStates (Last accessed May 5, 2022). 75 D&B Hoovers | Company Information | Industry Information | Lists, app.dnbhoovers.com/ (Last accessed May 5, 2022). E:\FR\FM\31MRP2.SGM 31MRP2 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules determined that two companies qualify as small businesses and are not foreignowned and operated. DOE reached out to both small businesses and invited them to participate in voluntary interviews. Neither of the small business consented to participate in formal MIA interviews. DOE also requested information about small businesses and potential impacts on small businesses while interviewing larger manufacturers. ddrumheller on DSK120RN23PROD with PROPOSALS2 4. Description and Estimate of Compliance Requirements Including Differences in Cost, if Any, for Different Groups of Small Entities One of the small businesses identified has 14 MREF models certified in DOE’s CCD. Of those 14 models, nine models are FCC, two are BIC, and three are C– 13A combination coolers. None of the nine FCC models meet the TSL 4 efficiencies. Of the two BIC, one meets the efficiencies required at TSL 3. However, the two models have identical dimensions and share many components. Given the product similarities and low volume of sales, DOE expects the manufacturer would likely discontinue the non-compliant model. None of the three C–13A models meet the TSL 4 efficiencies. To meet the required efficiencies for their FCC models, DOE expects the manufacturer would likely need to incorporate incrementally more efficient compressors, along with other design options. DOE expects these updates to be relatively straight forward component swaps. Some product conversion costs would be necessary for sourcing, qualifying, and testing more efficient components. To meet the efficiencies required for their C–13A models, DOE expects the manufacturer would likely need to implement variable-speed compressors, along with other design options. Implementing variable-speed compressors could require more advanced controls and electronics and new test stations. DOE estimated conversion costs for this small manufacturer by using product platform estimates to scale-down the industry conversion costs. DOE estimates that the small would incur minimal capital conversion costs and product conversion costs of approximately $1.37 million related to sourcing and testing more efficient components and variablespeed compressors to meet proposed amended standards. Based on subscription-based market research reports, the small business has an annual revenue of approximately $85 million. The total conversion costs of $1.37 are approximately 0.3 percent of VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 company revenue over the 5-year conversion period. Based on a review of publicly available information, the other small business primarily sources their MREF products from Asian-based OEMs. However, DOE has tentatively determined that they make some MREF products in-house at a domestic manufacturing facility. DOE identified one FCC model certified in CCD. To meet the required efficiencies, DOE expects the manufacturer would likely need to incorporate incrementally more efficient compressors, along with other design options. As previously discussed, DOE expects these updates to be relatively straight forward component swaps. DOE estimated conversion costs for this small manufacturer by using product platform estimates to scale-down the industry conversion costs. DOE estimates that the small manufacturer would incur minimal capital conversion costs and approximately $420,000 in product conversion costs related to sourcing and testing more efficient components to meet proposed amended standards. Based on subscription-based market research reports, the small business has an annual revenue of approximately $200 million. The total conversion costs of approximately $420,000 are less than 1 percent of the estimated company revenue over the 5-year conversion period. DOE seeks comments, information, and data on the number of small businesses in the industry, the names of those small businesses, and their market shares by product class. DOE also requests comment on the potential impacts of the proposed standards on small manufacturers. 5. Duplication, Overlap, and Conflict With Other Rules and Regulations DOE is not aware of any rules or regulations that duplicate, overlap, or conflict with the proposed rule. 6. Significant Alternatives to the Rule The discussion in the previous section analyzes impacts on small businesses that would result from DOE’s proposed rule, represented by TSL 4. In reviewing alternatives to the proposed rule, DOE examined energy conservation standards set at lower efficiency levels. While TSL 1, TSL 2, and TSL 3 would reduce the impacts on small business manufacturers, it would come at the expense of a reduction in energy savings. TSL 1 achieves 69 percent lower energy savings compared to the energy savings at TSL 4. TSL 2 achieves 37 percent lower energy savings compared to the energy savings PO 00000 Frm 00061 Fmt 4701 Sfmt 4702 19441 at TSL 4. TSL 3 achieves 31 percent lower energy savings compared to the energy savings at TSL 4. Based on the presented discussion, establishing standards at TSL 4 balances the benefits of the energy savings at TSL 4 with the potential burdens placed on MREF manufacturers, including small business manufacturers. Accordingly, DOE does not propose one of the other TSLs considered in the analysis, or the other policy alternatives examined as part of the regulatory impact analysis and included in chapter 17 of the NOPR TSD. Additional compliance flexibilities may be available through other means. 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. (42 U.S.C. 6295(t)) Additionally, manufacturers subject to DOE’s energy efficiency standards may apply to DOE’s Office of Hearings and Appeals for exception relief under certain circumstances. Manufacturers should refer to 10 CFR part 430, subpart E, and 10 CFR part 1003 for additional details. C. Review Under the Paperwork Reduction Act Manufacturers of miscellaneous refrigeration products 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 miscellaneous refrigeration products, 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 miscellaneous refrigeration products. (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 35 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. E:\FR\FM\31MRP2.SGM 31MRP2 19442 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules 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. ddrumheller on DSK120RN23PROD with PROPOSALS2 D. Review Under the National Environmental Policy Act of 1969 DOE is analyzing this proposed regulation in accordance with the National Environmental Policy Act of 1969 (‘‘NEPA’’) and DOE’s NEPA implementing regulations (10 CFR part 1021). DOE’s regulations include a categorical exclusion for rulemakings that establish energy conservation standards for consumer products or industrial equipment. 10 CFR part 1021, subpart D, appendix B5.1. DOE anticipates that this rulemaking qualifies for categorical exclusion B5.1 because it is a rulemaking that establishes energy conservation standards for consumer products or industrial equipment, none of the exceptions identified in categorical exclusion B5.1(b) apply, no extraordinary circumstances exist that require further environmental analysis, and it otherwise meets the requirements for application of a categorical exclusion. See 10 CFR 1021.410. DOE will complete its NEPA review before issuing the final rule. E. Review Under Executive Order 13132 E.O. 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 proposed rule and has tentatively 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 VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 governs and prescribes Federal preemption of State regulations as to energy conservation for the miscellaneous refrigeration products that are the subject of this proposed 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 E.O. 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 E.O. 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 proposed rule meets the relevant standards of E.O. 12988. G. Review Under the Unfunded Mandates Reform Act of 1995 Title II of the Unfunded Mandates Reform Act of 1995 (‘‘UMRA’’) requires each Federal agency to assess the effects of Federal regulatory actions on State, local, and Tribal governments and the private sector. Pub. L. 104–4, section 201 (codified at 2 U.S.C. 1531). For a proposed regulatory action likely to result in a rule that may cause the expenditure by State, local, and Tribal governments, in the aggregate, or by the private sector of $100 million or more PO 00000 Frm 00062 Fmt 4701 Sfmt 4702 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 proposed ‘‘significant intergovernmental mandate,’’ and requires an agency plan for giving notice and opportunity for timely input to potentially affected small governments before establishing any requirements that might significantly or uniquely affect 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 www.energy.gov/sites/prod/ files/gcprod/documents/umra_97.pdf. Although this proposed rule does not contain a Federal intergovernmental mandate, it may require expenditures of $100 million or more in any one year by the private sector. Such expenditures may include: (1) investment in research and development and in capital expenditures by miscellaneous refrigeration product 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 miscellaneous refrigeration products, 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 proposed rule. (2 U.S.C. 1532(c)) The content requirements of section 202(b) of UMRA relevant to a private sector mandate substantially overlap the economic analysis requirements that apply under section 325(o) of EPCA and Executive Order 12866. The SUPPLEMENTARY INFORMATION section of this NOPR and the TSD for this proposed 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 proposed rule unless DOE publishes an explanation for doing otherwise, or the selection of such an E:\FR\FM\31MRP2.SGM 31MRP2 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules alternative is inconsistent with law. As required by 42 U.S.C. 6295(m) this proposed rule would establish amended energy conservation standards for miscellaneous refrigeration products that are designed to achieve the maximum improvement in energy efficiency that DOE has determined to be both technologically feasible and economically justified, as required by 6295(o)(2)(A) and 6295(o)(3)(B). A full discussion of the alternatives considered by DOE is presented in chapter 17 of the TSD for this proposed 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. ddrumheller on DSK120RN23PROD with PROPOSALS2 I. Review Under Executive Order 12630 Pursuant to E.O. 12630, ‘‘Governmental Actions and Interference with Constitutionally Protected Property Rights,’’ 53 FR 8859 (Mar. 15, 1988), DOE has determined that this proposed 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). Pursuant to OMB Memorandum M–19–15, Improving Implementation of the Information Quality Act (April 24, 2019), DOE published updated guidelines which are available at www.energy.gov/sites/prod/files/2019/ 12/f70/DOE%20Final%20Updated %20IQA%20Guidelines %20Dec%202019.pdf. DOE has reviewed this NOPR under the OMB and DOE guidelines and has concluded VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 that it is consistent with applicable policies in those guidelines. K. Review Under Executive Order 13211 E.O. 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 proposed significant energy action. A ‘‘significant energy action’’ is defined as any action by an agency that promulgates or is expected to lead to promulgation of a final rule, and that (1) is a significant regulatory action under Executive Order 12866, or any successor order; and (2) is likely to have a significant adverse effect on the supply, distribution, or use of energy, or (3) is designated by the Administrator of OIRA as a significant energy action. For any proposed significant energy action, the agency must give a detailed statement of any adverse effects on energy supply, distribution, or use should the proposal be implemented, and of reasonable alternatives to the action and their expected benefits on energy supply, distribution, and use. DOE has tentatively concluded that this regulatory action, which proposes amended energy conservation standards for miscellaneous refrigeration products, is not a significant energy action because the proposed 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 proposed rule. L. Information Quality 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 PO 00000 Frm 00063 Fmt 4701 Sfmt 4702 19443 important public policies or private sector decisions.’’ 70 FR 2664, 2667. In response to OMB’s Bulletin, DOE conducted formal peer reviews of the energy conservation standards development process and the analyses that are typically used and has prepared a report describing that peer review.76 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. Because available data, models, and technological understanding have changed since 2007, DOE has engaged with the National Academy of Sciences to review DOE’s analytical methodologies to ascertain whether modifications are needed to improve the Department’s analyses. DOE is in the process of evaluating the resulting report.77 VII. Public Participation A. Attendance at the Public Meeting Webinar The time and date of the webinar meeting are listed in the DATES section at the beginning of this document. Webinar registration information, participant instructions, and information about the capabilities available to webinar participants will be published on DOE’s website at www1.eere.energy.gov/buildings/ appliance_standards/ standards.aspx?productid=39. Participants are responsible for ensuring their systems are compatible with the webinar software. B. Procedure for Submitting Prepared General Statements for Distribution Any person who has plans to present a prepared general statement may request that copies of his or her statement be made available at the public meeting. Such persons may submit requests, along with an advance electronic copy of their statement in PDF (preferred), Microsoft Word or Excel, WordPerfect, or text (ASCII) file format, to the appropriate address 76 The 2007 ‘‘Energy Conservation Standards Rulemaking Peer Review Report’’ is available at the following website: energy.gov/eere/buildings/ downloads/energy-conservation-standardsrulemaking-peer-review-report-0 (last accessed August 30, 2022). 77 The report is available at www.nationalacademies.org/our-work/review-ofmethods-for-setting-building-and-equipmentperformance-standards (Last accessed September 22, 2022) E:\FR\FM\31MRP2.SGM 31MRP2 19444 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules ddrumheller on DSK120RN23PROD with PROPOSALS2 shown in the ADDRESSES section at the beginning of this document. The request and advance copy of statements must be received at least one week before the public meeting and are to be emailed. Please include a telephone number to enable DOE staff to make follow-up contact, if needed. C. Conduct of the Public Meeting DOE will designate a DOE official to preside at the public meeting and may also use a professional facilitator to aid discussion. The meeting will not be a judicial or evidentiary-type public hearing, but DOE will conduct it in accordance with section 336 of EPCA. (42 U.S.C. 6306) A court reporter will be present to record the proceedings and prepare a transcript. DOE reserves the right to schedule the order of presentations and to establish the procedures governing the conduct of the public meeting. There shall not be discussion of proprietary information, costs or prices, market share, or other commercial matters regulated by U.S. antitrust laws. After the public meeting, interested parties may submit further comments on the proceedings, as well as on any aspect of the rulemaking, until the end of the comment period. The public meeting will be conducted in an informal, conference style. DOE will present a general overview of the topics addressed in this rulemaking, allow time for prepared general statements by participants, and encourage all interested parties to share their views on issues affecting this rulemaking. Each participant will be allowed to make a general statement (within time limits determined by DOE), before the discussion of specific topics. DOE will allow, as time permits, other participants to comment briefly on any general statements. At the end of all prepared statements on a topic, DOE will permit participants to clarify their statements briefly. Participants should be prepared to answer questions by DOE and by other participants concerning these issues. DOE representatives may also ask questions of participants concerning other matters relevant to this rulemaking. The official conducting the public meeting will accept additional comments or questions from those attending, as time permits. The presiding official will announce any further procedural rules or modification of the previous procedures that may be needed for the proper conduct of the public meeting. A transcript of the public meeting will be included in the docket, which can be viewed as described in the Docket section at the beginning of this VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 document and will be accessible on the DOE website. In addition, any person may buy a copy of the transcript from the transcribing reporter. D. Submission of Comments DOE will accept comments, data, and information regarding this proposed rule before or after the public meeting, but no later than the date provided in the DATES section at the beginning of this proposed rule. Interested parties may submit comments, data, and other information using any of the methods described in the ADDRESSES section at the beginning of this document. Submitting comments via www.regulations.gov. The www.regulations.gov web page will require you to provide your name and contact information. Your contact information will be viewable to DOE Building Technologies staff only. Your contact information will not be publicly viewable except for your first and last names, organization name (if any), and submitter representative name (if any). If your comment is not processed properly because of technical difficulties, DOE will use this information to contact you. If DOE cannot read your comment due to technical difficulties and cannot contact you for clarification, DOE may not be able to consider your comment. However, your contact information will be publicly viewable if you include it in the comment itself or in any documents attached to your comment. Any information that you do not want to be publicly viewable should not be included in your comment, nor in any document attached to your comment. Otherwise, persons viewing comments will see only first and last names, organization names, correspondence containing comments, and any documents submitted with the comments. Do not submit to www.regulations.gov information for which disclosure is restricted by statute, such as trade secrets and commercial or financial information (hereinafter referred to as Confidential Business Information (‘‘CBI’’)). Comments submitted through www.regulations.gov cannot be claimed as CBI. Comments received through the website will waive any CBI claims for the information submitted. For information on submitting CBI, see the Confidential Business Information section. DOE processes submissions made through www.regulations.gov before posting. Normally, comments will be posted within a few days of being submitted. However, if large volumes of comments are being processed PO 00000 Frm 00064 Fmt 4701 Sfmt 4702 simultaneously, your comment may not be viewable for up to several weeks. Please keep the comment tracking number that www.regulations.gov provides after you have successfully uploaded your comment. Submitting comments via email, hand delivery/courier, or postal mail. Comments and documents submitted via email, hand delivery/courier, or postal mail also will be posted to www.regulations.gov. If you do not want your personal contact information to be publicly viewable, do not include it in your comment or any accompanying documents. Instead, provide your contact information in a cover letter. Include your first and last names, email address, telephone number, and optional mailing address. The cover letter will not be publicly viewable as long as it does not include any comments. Include contact information each time you submit comments, data, documents, and other information to DOE. If you submit via postal mail or hand delivery/ courier, please provide all items on a CD, if feasible, in which case it is not necessary to submit printed copies. No telefacsimiles (‘‘faxes’’) will be accepted. Comments, data, and other information submitted to DOE electronically should be provided in PDF (preferred), Microsoft Word or Excel, WordPerfect, or text (ASCII) file format. Provide documents that are not secured, that are written in English, and that are free of any defects or viruses. Documents should not contain special characters or any form of encryption and, if possible, they should carry the electronic signature of the author. Campaign form letters. Please submit campaign form letters by the originating organization in batches of between 50 to 500 form letters per PDF or as one form letter with a list of supporters’ names compiled into one or more PDFs. This reduces comment processing and posting time. Confidential Business Information. Pursuant to 10 CFR 1004.11, any person submitting information that he or she believes to be confidential and exempt by law from public disclosure should submit via email two well-marked copies: one copy of the document marked ‘‘confidential’’ including all the information believed to be confidential, and one copy of the document marked ‘‘non-confidential’’ with the information believed to be confidential deleted. DOE will make its own determination about the confidential status of the information and treat it according to its determination. E:\FR\FM\31MRP2.SGM 31MRP2 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules ddrumheller on DSK120RN23PROD with PROPOSALS2 It is DOE’s policy that all comments may be included in the public docket, without change and as received, including any personal information provided in the comments (except information deemed to be exempt from public disclosure). E. Issues on Which DOE Seeks Comment Although DOE welcomes comments on any aspect of this proposal, DOE is particularly interested in receiving comments and views of interested parties concerning the following issues: (1) DOE requests comment on its proposal to amended refrigerator and freezer definitions to clarify that products that would otherwise be considered a refrigerator or a freezer that also include a cooler compartment would be considered a refrigerator or a freezer, unless a miscellaneous refrigeration product energy conservation standard is applicable for the product. (2) DOE invites comment from the public regarding the competitive impacts that are likely to result from this proposed rule. (3) DOE requests comments on its proposal to consolidate the presentation of maximum allowable energy use for products of classes that may or may not have an automatic icemaker. (4) DOE requests comment on its proposal to establish energy conservation standards for combination cooler 5–BI using the analysis for combination class 3A as proxy for setting the standard level, based on a baseline efficiency equal to 6.08AV + 218 +28*I kWh/yr, where I is equal to 0 if the model has no automatic icemaker and equal to 1 if it does. (5) DOE seeks further comment on any of the technologies screened out in this NOPR analysis as they were determined to not meet the screening criteria (i.e., practicable to manufacture, install, and service and do not result in adverse impacts on consumer utility, product availability, health, safety, or use of unique-pathway proprietary technologies). DOE also seeks comment on those technologies retained for further consideration in the engineering analysis, based on the determination that they are technologically feasible and also meet the other screening criteria. (6) DOE requests any further input from commenters regarding the approach for design option selection and implementation for a given model, beyond the information DOE has already considered. (7) DOE seeks comment on the range of VSC nominal efficiencies and the VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 relative overall efficiency gains offered by VSCs when operating at reduced compressor speeds along with reduced fan speeds in MREF products. (8) In interviews, manufacturers noted that the majority of MREFs—namely freestanding compact coolers—are manufactured in Asia and rebranded by home appliance manufacturers. Manufacturers had few concerns about manufacturing constraints below the max-tech level and the implementation of VIPs. However, at max-tech, some manufacturers expressed technical uncertainty about industry’s ability to meet the efficiencies required as few OEMs offer products at max-tech today. For example, DOE is not aware of any OEMs that currently offer freestanding compact coolers that meet TSL 5 efficiencies. DOE’s shipments analysis estimates that except for built-in compact coolers, which only accounts for 4 percent of MREF shipments, no shipments of other product classes meet the max-tech efficiencies. (9) DOE seeks comment on whether manufacturers expect manufacturing capacity constraints would limit product availability to consumers in the timeframe of the amended standard compliance date (2029). (10) DOE requests information regarding the impact of cumulative regulatory burden on manufacturers of MREFs associated with multiple DOE standards or product-specific regulatory actions of other Federal agencies. (11) DOE requests comment on the assumption used in developing the dealer/retailer markups and welcomes any feedback on the overall markup in the wholesaler channel. (12) DOE requests comment on its methodology to develop market share distributions by adjusted volume in the compliance year for each product class with two representative volumes, as well as data to further inform these distributions. (13) DOE requests comment and data on its price learning methodology used to project MREF prices in the future. (14) DOE requests comment on its methodology to develop market share distributions by efficiency level for each product class for the no-new-standards case in the compliance year, as well as data to further inform these distributions. (15) DOE requests comment and data on the assumptions and methodology used to calculate MREF survival probabilities. (16) DOE requests comment and data on its efficiency distribution assumptions and projection into future years. Specifically, DOE is requesting comment and data on the efficiency PO 00000 Frm 00065 Fmt 4701 Sfmt 4702 19445 distribution of non-AHAM members, to more accurately derive the efficiency distribution for the whole MREF market. (17) DOE requests comment on the overall methodology and results of the LCC and PBP analyses. (18) DOE requests comment on the overall methodology and results of the shipments analysis. More specifically, DOE seeks comment and data related to the total MREF shipments, market saturation, MREF shipments by product class, and non-AHAM-member shipments. (19) DOE requests comment on the assumption that the current efficiency distribution would remain fixed over the analysis period, and data to inform an efficiency trend by product class or overall for the MREF market. (20) DOE requests comment on the overall methodology and results of the consumer subgroup analysis. (21) 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. Additionally, DOE welcomes comments on other issues relevant to the conduct of this rulemaking that may not specifically be identified in this document. VIII. Approval of the Office of the Secretary The Secretary of Energy has approved publication of this notice of proposed rulemaking and announcement of public meeting. List of Subjects in 10 CFR Part 430 Administrative practice and procedure, Confidential business information, Energy conservation, Household appliances, Imports, Intergovernmental relations, Small businesses. Signing Authority This document of the Department of Energy was signed on March 10, 2023, by Francisco Alejandro Moreno, Acting Assistant Secretary for Energy Efficiency and Renewable Energy, pursuant to delegated authority from the Secretary of Energy. That document with the original signature and date is maintained by DOE. For administrative purposes only, and in compliance with requirements of the Office of the Federal Register, the undersigned DOE Federal Register Liaison Officer has been authorized to sign and submit the document in electronic format for publication, as an official document of the Department of Energy. This administrative process in no way alters E:\FR\FM\31MRP2.SGM 31MRP2 19446 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules the legal effect of this document upon publication in the Federal Register. Signed in Washington, DC, on March 13, 2023. Treena V. Garrett, Federal Register Liaison Officer, U.S. Department of Energy. For the reasons set forth in the preamble, DOE proposes to amend part 430 of chapter II, subchapter D, of title 10 of the Code of Federal Regulations, as set forth below: PART 430—ENERGY CONSERVATION PROGRAM FOR CONSUMER PRODUCTS 1. The authority citation for part 430 continues to read as follows: ■ Authority: 42 U.S.C. 6291–6309; 28 U.S.C. 2461 note. 2. Section 430.2 is amended by revising the definitions of ‘‘Freezer’’ and ‘‘Refrigerator’’ to read as follows: ■ § 430.2 Definitions. * * * * Freezer means a cabinet, used with one or more doors, that has a source of refrigeration that requires single-phase, alternating current electric energy input only and consists of one or more compartments where at least one of the compartments is capable of maintaining compartment temperatures of 0 °F (¥17.8 °C) or below as determined according to the provisions in § 429.14(d)(2) of this chapter. It does not include any refrigerated cabinet that consists solely of an automatic ice maker and an ice storage bin arranged so that operation of the automatic icemaker fills the bin to its capacity. However, the term does not include: (1) Any product that does not include a compressor and condenser unit as an integral part of the cabinet assembly; or (2) Any miscellaneous refrigeration product that must comply with an applicable miscellaneous refrigeration product energy conservation standard. * * * * * Refrigerator means a cabinet, used with one or more doors, that has a source of refrigeration that requires single-phase, alternating current electric energy input only and consists of one or ddrumheller on DSK120RN23PROD with PROPOSALS2 * more compartments where at least one of the compartments is capable of maintaining compartment temperatures above 32 °F (0 °C) and below 39 °F (3.9 °C) as determined according to § 429.14(d)(2) of this chapter. A refrigerator may include a compartment capable of maintaining compartment temperatures below 32 °F (0 °C), but does not provide a separate low temperature compartment capable of maintaining compartment temperatures below 8 °F (¥13.3 °C) as determined according to § 429.14(d)(2). However, the term does not include: (1) Any product that does not include a compressor and condenser unit as an integral part of the cabinet assembly; (2) A cooler; or (3) Any miscellaneous refrigeration product that must comply with an applicable miscellaneous refrigeration product energy conservation standard. * * * * * ■ 3. Appendix A to subpart B of part 430 is amended by: ■ a. Revising section 5.3(a)(ii); and ■ b. Adding section 5.4. The revision and addition read as follows. Appendix A to Subpart B of Part 430— Uniform Test Method for Measuring the Energy Consumption of Refrigerators, Refrigerator-Freezers, and Miscellaneous Refrigeration Products * * * * * * * 4. Appendix B to subpart B of part 430 is amended by: ■ a. Adding new paragraph (c) in section 5.2; ■ b. Adding new paragraph (d) in section 5.3; and ■ c. Adding section 5.4. ■ The additions read as follows. Appendix B to Subpart B of Part 430— Uniform Test Method for Measuring the Energy Consumption of Freezers * * 5.2 * * * * * * (c) When testing freezers with a cooler compartment, refer to section 5.2 of appendix A. * * 5.3 * * * * * * (d) Freezers with a cooler compartment: the applicable ‘‘K’’ value in section 5.8.2 of HRF–1–2019 shall be equal to either 0.7 or 0.85 as determined by the product’s freezer configuration. 5.4 Test Cycle Energy Calculations for Freezer With a Cooler Compartment * Refer to section 5.4 of appendix A. 5.3 * * * (a) * * * (ii) For miscellaneous refrigeration products: To demonstrate compliance with the energy conservation standards at 10 CFR 430.32(aa) applicable to products manufactured on or after October 28, 2019, but before the compliance date of any amended standards published after January 1, 2022, IET, expressed in kilowatt-hours per cycle, equals 0.23 for a product with one or more automatic icemakers and otherwise equals 0 (zero). To demonstrate compliance with any amended standards published after January 1, 2022, IET, expressed in kilowatthours per cycle, is as defined section 5.9.2.1 of HRF–1–2019. * with section 5.9.3 of HRF–1–2019. If both compartments are at or colder than their standardized temperatures for both tests, use the equation in section 5.9.3.1. Otherwise, use the approach and equations in section 5.9.3.2, where applicable, the ‘‘k’’ value shall be 0.0. * 5.4 Test Cycle Energy Calculations for Cooler-Freezers For cooler-freezers, determine the average per-cycle energy consumption consistent * * * * * 5. Amend § 430.32 by revising paragraph (aa) to read as follows: ■ § 430.32 Energy and water conservation standards and their compliance dates. * * * * * (aa) Miscellaneous refrigeration products. The energy standards as determined by the equations of the following table(s) shall be rounded off to the nearest kWh per year. If the equation calculation is halfway between the nearest two kWh per year values, the standard shall be rounded up to the higher of these values. (1) The following standards remain in effect from October 28, 2019 until [date 5 years after the publication of the final rule]. AEU (kWh/yr) Product class 1. 2. 3. 4. Freestanding compact ............................................................................................................................................................... Freestanding .............................................................................................................................................................................. Built-in compact ......................................................................................................................................................................... Built-in ........................................................................................................................................................................................ AV = Total adjusted volume, expressed in ft3, as determined in appendix A to subpart B of 10 CFR part 430. VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 PO 00000 Frm 00066 Fmt 4701 Sfmt 4702 E:\FR\FM\31MRP2.SGM 31MRP2 7.88AV 7.88AV 7.88AV 7.88AV + + + + 155.8 155.8 155.8 155.8 Federal Register / Vol. 88, No. 62 / Friday, March 31, 2023 / Proposed Rules The following standards apply to products manufacturer starting on [date 5 years after the publication of the final rule]. AEU (kWh/yr) Product class 1. 2. 3. 4. 19447 Freestanding compact ............................................................................................................................................................... Freestanding .............................................................................................................................................................................. Built-in compact ......................................................................................................................................................................... Built-in ........................................................................................................................................................................................ 5.52AV 5.52AV 5.52AV 6.30AV + + + + 109.1 109.1 109.1 124.6 AV = Total adjusted volume, expressed in ft3, as determined in appendix A to subpart B of 10 CFR part 430. (2) The following standards remain in effect from October 28, 2019 until [date 5 years after the publication of the final rule]. AEU (kWh/yr) Product class C–3A. Cooler with all-refrigerator—automatic defrost ................................................................................................................... C–3A–BI. Built-in cooler with all-refrigerator—automatic defrost .................................................................................................. C–9. Cooler with upright freezer with automatic defrost without an automatic icemaker ............................................................ C–9–BI. Built-in cooler with upright freezer with automatic defrost without an automatic icemaker ............................................ C–9I. Cooler with upright freezer with automatic defrost with an automatic icemaker ................................................................ C–9I–BI. Built-in cooler with upright freezer with automatic defrost with an automatic icemaker ................................................ C–13A. Compact cooler with all-refrigerator—automatic defrost .................................................................................................. C–13A–BI. Built-in compact cooler with all-refrigerator—automatic defrost ................................................................................. 4.57AV 5.19AV 5.58AV 6.38AV 5.58AV 6.38AV 5.93AV 6.52AV + + + + + + + + 130.4 147.8 147.7 168.8 231.7 252.8 193.7 213.1 AV = Total adjusted volume, expressed in ft3, as determined in appendix A to subpart B of 10 CFR part 430. The following standards apply to products manufacturer starting on [date 5 years after the publication of the final rule]. Product class AEU (kWh/yr) C–3A. Cooler with all-refrigerator—automatic defrost ................................................................................................................... C–3A–BI. Built-in cooler with all-refrigerator—automatic defrost .................................................................................................. C–5–BI. Built-in cooler with refrigerator-freezer with automatic defrost with bottom-mounted freezer ........................................ 4.11AV + 117.4 4.67AV + 133.0 5.47AV + 196.2 + 28I 5.58AV + 147.7 + 28I 6.38AV + 168.8 + 28I 4.74AV + 155.0 5.22AV + 170.5 C–9. Cooler with upright freezer with automatic defrost without an automatic icemaker ............................................................ C–9–BI. Built-in cooler with upright freezer with automatic defrost without an automatic icemaker ............................................ C–13A. Compact cooler with all-refrigerator—automatic defrost .................................................................................................. C–13A–BI. Built-in compact cooler with all-refrigerator—automatic defrost ................................................................................. AV = Total adjusted volume, expressed in ft3, as determined in appendix A to subpart B of 10 CFR part 430. I = 1 for a product with an automatic icemaker and = 0 for a product without an automatic icemaker. [FR Doc. 2023–05363 Filed 3–30–23; 8:45 am] ddrumheller on DSK120RN23PROD with PROPOSALS2 BILLING CODE 6450–01–P VerDate Sep<11>2014 19:21 Mar 30, 2023 Jkt 259001 PO 00000 Frm 00067 Fmt 4701 Sfmt 9990 E:\FR\FM\31MRP2.SGM 31MRP2

Agencies

DEPARTMENT OF ENERGY

[Federal Register Volume 88, Number 62 (Friday, March 31, 2023)]
[Proposed Rules]
[Pages 19382-19447]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-05363]



[[Page 19381]]

Vol. 88

Friday,

No. 62

March 31, 2023

Part II





Department of Energy





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10 CFR Part 430





 Energy Conservation Program: Energy Conservation Standards for 
Miscellaneous Refrigeration Products; Proposed Rule

Federal Register / Vol. 88 , No. 62 / Friday, March 31, 2023 / 
Proposed Rules

[[Page 19382]]


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DEPARTMENT OF ENERGY

10 CFR Part 430

[EERE-2020-BT-STD-0039]
RIN 1904-AF00


Energy Conservation Program: Energy Conservation Standards for 
Miscellaneous Refrigeration Products

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

ACTION: Notice of proposed rulemaking; announcement of public meeting.

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SUMMARY: The Energy Policy and Conservation Act, as amended (``EPCA''), 
prescribes energy conservation standards for various consumer products 
and certain commercial and industrial equipment, including 
miscellaneous refrigeration products. 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 result in significant energy savings. In this 
notice of proposed rulemaking (``NOPR''), DOE proposes amended energy 
conservation standards for miscellaneous refrigeration products, and 
also announces a public meeting to receive comment on these proposed 
standards and associated analyses and results.

DATES: 
    Comments: DOE will accept comments, data, and information regarding 
this NOPR no later than May 30, 2023.
    Meeting: DOE will hold a public meeting via webinar on Tuesday, May 
2, 2023, from 1:00 p.m. to 4:00 p.m. See section IV, ``Public 
Participation,'' for webinar registration information, participant 
instructions and information about the capabilities available to 
webinar participants. Comments regarding the likely competitive impact 
of the proposed standard should be sent to the Department of Justice 
contact listed in the ADDRESSES section on or before May 1, 2023.

ADDRESSES: Interested persons are encouraged to submit comments using 
the Federal Rulemaking Portal at www.regulations.gov, under by docket 
number EERE-2020-BT-STD-0039. Follow the instructions for submitting 
comments. Alternatively, interested persons may submit comments, 
identified by docket number EERE-2020-BT-STD-0039, by any of the 
following methods:
    Email: [email protected]. Include the docket number EERE-
2020-BT-STD-0039 in the subject line of the message.
    Postal Mail: Appliance and Equipment Standards Program, U.S. 
Department of Energy, Building Technologies Office, Mailstop EE-5B, 
1000 Independence Avenue SW, Washington, DC 20585-0121. Telephone: 
(202) 287-1445. If possible, please submit all items on a compact disc 
(``CD''), in which case it is not necessary to include printed copies.
    Hand Delivery/Courier: Appliance and Equipment Standards Program, 
U.S. Department of Energy, Building Technologies Office, 950 L'Enfant 
Plaza SW, 6th Floor, Washington, DC 20024. Telephone: (202) 287-1445. 
If possible, please submit all items on a CD, in which case it is not 
necessary to include printed copies.
    No telefacsimiles (``faxes'') will be accepted. For detailed 
instructions on submitting comments and additional information on this 
process, see section VII of this document.
    Docket: The docket for this activity, which includes Federal 
Register notices, 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.
    The docket web page can be found at www.regulations.gov/docket/EERE-2020-BT-STD-0039. The docket web page contains instructions on how 
to access all documents, including public comments, in the docket. See 
section VII of this document for information on how to submit comments 
through www.regulations.gov.
    EPCA requires the Attorney General to provide DOE a written 
determination of whether the proposed standard is likely to lessen 
competition. The U.S. Department of Justice Antitrust Division invites 
input from market participants and other interested persons with views 
on the likely competitive impact of the proposed standard. Interested 
persons may contact the Division at [email protected] on or 
before the date specified in the DATES section. Please indicate in the 
``Subject'' line of your email the title and Docket Number of this 
proposed rule.

FOR FURTHER INFORMATION CONTACT: Mr. Lucas Adin, 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. Email: [email protected].
    Mr. Matthew Schneider, U.S. Department of Energy, Office of the 
General Counsel, GC-33, 1000 Independence Avenue SW, Washington, DC 
20585-0121. Telephone: (240) 597-6265. Email: 
[email protected].
    For further information on how to submit a comment, review other 
public comments and the docket, or participate in the public meeting, 
contact the Appliance and Equipment Standards Program staff at (202) 
287-1445 or by email: [email protected].

SUPPLEMENTARY INFORMATION: 

Table of Contents

I. Synopsis of the Proposed 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 Miscellaneous 
Refrigeration Products
    3. Test Procedure
    4. Off Mode and Standby Mode
    C. Deviation From Appendix A
III. General Discussion
    A. Product Classes and Scope of Coverage
    B. Definitions
    C. Test Procedure
    D. Technological Feasibility
    1. General
    2. Maximum Technologically Feasible Levels
    E. Energy Savings
    1. Determination of Savings
    2. Significance of Savings
    F. Economic Justification
    1. Specific Criteria
    a. Economic Impact on Manufacturers and Consumers
    b. Savings in Operating Costs Compared To Increase in Price (LCC 
and PBP)
    c. Energy Savings
    d. Lessening of Utility 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. Product Classes With Automatic Icemakers
    b. Addition of a Built-In Combination Cooler-Refrigerator-
Freezer With Bottom-Mounted Freezer and Automatic Icemaker Product 
Class
    2. Technology Options
    B. Screening Analysis

[[Page 19383]]

    1. Screened-Out Technologies
    2. Technology Options
    C. Engineering Analysis
    1. Efficiency Analysis
    a. Built-In Classes
    b. Baseline Efficiency/Energy Use
    c. Higher Efficiency Levels
    d. VIP and VSC Analysis
    2. Cost Analysis
    3. Cost-Efficiency Results
    4. Manufacturer Selling Price
    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. Energy 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 and Key Inputs
    a. Manufacturer Production Costs
    b. Shipments Projections
    c. Product and Capital Conversion Costs
    d. Manufacturer Markup Scenarios
    3. Manufacturer Interviews
    a. Supply Chain Constraints
    b. Built-in Product Classes
    4. Discussion of MIA Comments
    K. Emissions Analysis
    1. Air Quality Regulations Incorporated in DOE's Analysis
    L. Monetizing Emissions Impacts
    1. Monetization of Greenhouse Gas Emissions
    a. Social Cost of Carbon
    b. Social Cost of Methane and Nitrous Oxide
    2. Monetization of Other Emissions Impacts
    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. Direct Impacts on 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 Economic Impacts
    C. Conclusion
    1. Benefits and Burdens of TSLs Considered for MREF Standards
    2. Annualized Benefits and Costs of the Proposed Standards
    D. Reporting, Certification, and Sampling Plan
VI. Procedural Issues and Regulatory Review
    A. Review Under Executive Orders 12866 and 13563
    B. Review Under the Regulatory Flexibility Act
    1. Description of Reasons Why Action Is Being Considered
    2. Objectives of, and Legal Basis for, Rule
    3. Description on Estimated Number of Small Entities Regulated
    4. Description and Estimate of Compliance Requirements Including 
Differences in Cost, if Any, for Different Groups of Small Entities
    5. Duplication, Overlap, and Conflict With Other Rules and 
Regulations
    6. Significant Alternatives to the Rule
    C. Review Under the Paperwork Reduction Act
    D. Review Under the National Environmental Policy Act 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. Information Quality
VII. Public Participation
    A. Attendance at the Public Meeting Webinar
    B. Procedure for Submitting Prepared General Statements for 
Distribution
    C. Conduct of the Public Meeting
    D. Submission of Comments
    E. Issues on Which DOE Seeks Comment
VIII. Approval of the Office of the Secretary

I. Synopsis of the Proposed Rule

    The Energy Policy and Conservation Act, Public Law 94-163, as 
amended (``EPCA''),\1\ authorizes DOE to regulate the energy efficiency 
of a number of consumer products and certain industrial equipment. (42 
U.S.C. 6291-6317) Title III, Part B \2\ of EPCA, established the Energy 
Conservation Program for Consumer Products Other Than Automobiles. (42 
U.S.C. 6291-6309) These products include miscellaneous refrigeration 
products (``MREFs''), the subject of this rulemaking.
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    \1\ All references to EPCA in this document refer to the statute 
as amended through the Energy Act of 2020, Public Law. 116-260 (Dec. 
27, 2020), which reflect the last statutory amendments that impact 
Parts A and A-1 of EPCA.
    \2\ For editorial reasons, upon codification in the U.S. Code, 
Part B was redesignated Part A.
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    Pursuant to EPCA, any new or amended energy conservation standard 
must be designed to achieve the maximum improvement in energy 
efficiency that DOE determines is technologically feasible and 
economically justified. (42 U.S.C. 6295(o)(2)(A)) Furthermore, the new 
or amended standard must result in a 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 (proceeding to a final rule, as appropriate). (42 U.S.C. 
6295(m))
    In accordance with these and other statutory provisions discussed 
in this document, DOE proposes amended energy conservation standards 
for miscellaneous refrigeration products. The proposed standards, which 
are expressed in kWh/yr, are shown in Table I.1. These proposed 
standards, if adopted, would apply to all miscellaneous refrigeration 
products listed in Table I.1 manufactured in, or imported into, the 
United States starting on the date 5 years after the publication of the 
final rule for this rulemaking.

   Table I.1--Proposed Energy Conservation Standards for Miscellaneous
                         Refrigeration Products
------------------------------------------------------------------------
                                      Equations for maximum energy use
          Product class                           (kWh/yr)
------------------------------------------------------------------------
1. Freestanding compact coolers    5.52AV + 109.1
 (``FCC'').
2. Freestanding coolers (``FC'').  5.52AV + 109.1
3. Built-in compact coolers        5.52AV + 109.1
 (``BICC'').

[[Page 19384]]

 
4. Built-in coolers (``BIC'')....  6.30AV + 124.6
C-3A. Cooler with all-             4.11AV + 117.4
 refrigerator--automatic defrost.
C-3A-BI. Built-in cooler with all- 4.67AV + 133.0
 refrigerator--automatic defrost.
C-5-BI. Built-in cooler with       5.47AV + 196.2 + 28I
 refrigerator-freezer--automatic
 defrost with bottom-mounted
 freezer.
C-9. Cooler with upright freezer   5.58AV + 147.7 + 28I
 with automatic defrost without
 an automatic icemaker.
C-9-BI. Built-in cooler with       6.38AV + 168.8 + 28I
 upright freezer with automatic
 defrost without an automatic
 icemaker.
C-13A. Compact cooler with all-    4.74AV + 155.0
 refrigerator--automatic defrost.
C-13A-BI. Built-in compact cooler  5.22AV + 170.5
 with all-refrigerator--automatic
 defrost.
------------------------------------------------------------------------
AV = Total adjusted volume, expressed in ft\3\, as determined in
  appendix A to subpart B of 10 CFR part 430.
I = 1 for a product with an automatic icemaker and = 0 for a product
  without an automatic icemaker.

A. Benefits and Costs to Consumers

    Table I.2 presents DOE's evaluation of the economic impacts of the 
proposed standards on consumers of MREFs, as measured by the average 
life-cycle cost (``LCC'') savings and the simple payback period 
(``PBP'').\3\ The average LCC savings are positive for all product 
classes, and the PBP is less than the average lifetime of MREFs, which 
varies by product class (see section IV.F.6 of this document).
---------------------------------------------------------------------------

    \3\ The average LCC savings refer to consumers that are affected 
by a standard and 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 new or amended standards 
(see section IV.F.8 of this document). The simple PBP, which is 
designed to compare specific efficiency levels, is measured relative 
to the baseline product (see section IV.C of this document).

    Table I.2--Impacts of Proposed Energy Conservation Standards on Consumers of Miscellaneous Refrigeration
                                                    Products
----------------------------------------------------------------------------------------------------------------
             Product class                  Average LCC savings [2021$]         Simple payback period (years)
----------------------------------------------------------------------------------------------------------------
FCC...................................  12.6...............................  6.8
FC....................................  28.0...............................  8.0
BICC..................................  2.9................................  7.9
BIC...................................  57.3...............................  4.0
C-13A.................................  12.0...............................  6.9
C-13A-BI..............................  15.3...............................  6.7
C-3A..................................  31.5...............................  1.7
C-3A-BI...............................  36.7...............................  1.6
----------------------------------------------------------------------------------------------------------------
Note: See Table I.1 for definition of the product class acronyms.

    DOE's analysis of the impacts of the proposed 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 starting with the publication year (2023) of the 
NOPR and extending over a 30-year period following the expected 
compliance date of the standards (2023 to 2058). Using a real discount 
rate of 7.7 percent, DOE estimates that the INPV for manufacturers of 
MREFs, in the case without amended standards is $742.0 million.\4\ 
Under the proposed standards, the change in INPV is estimated to range 
from -12.1 percent to -8.4 percent, which is approximately -$89.8 
million to -$62.7 million. In order to bring products into compliance 
with amended standards, it is estimated that the industry would incur 
total conversion costs of $126.9 million.
---------------------------------------------------------------------------

    \4\ Unless otherwise noted, all monetary values in this document 
are expressed in 2021 dollars.
---------------------------------------------------------------------------

    DOE's analysis of the impacts of the proposed standards on 
manufacturers is described in section IV.J of this document. The 
analytic results of the manufacturer impact analysis (``MIA'') are 
presented in section V.B.2 of this document.

C. National Benefits and Costs

    DOE's analyses indicate that the proposed energy conservation 
standards for MREFs would save a significant amount of energy. Relative 
to the case without amended standards, the lifetime energy savings for 
MREFs purchased in the 30-year period that begins in the anticipated 
year of compliance with the amended standards (2029-2058) amount to 
0.31 quadrillion British thermal units (``Btu''), or quads.\5\ This 
represents a savings of 19.6 percent relative to the energy use of 
these products in the case without amended standards (refer ed 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.1 of this document.
---------------------------------------------------------------------------

    The cumulative net present value (``NPV'') of total consumer 
benefits of the proposed standards for MREFs ranges from $0.14 billion 
(at a 7-percent discount rate) to $0.69 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 
miscellaneous refrigeration products purchased in 2029-2058.
    In addition, the proposed standards for MREFs are projected to 
yield significant environmental benefits. DOE estimates that the 
proposed standards would result in cumulative emission

[[Page 19385]]

reductions (over the same period as for energy savings) of 10.4 million 
metric tons (``Mt'') \6\ of carbon dioxide (``CO2''), 4.8 
thousand tons of sulfur dioxide (``SO2''), 15.9 thousand 
tons of nitrogen oxides (``NOX''), 70.3 thousand tons of 
methane (``CH4''), 0.11 thousand tons of nitrous oxide 
(``N2O''), and 0.03 tons of mercury (``Hg'').\7\ DOE used 
interim SC-GHG values developed by an Interagency Working Group on the 
Social Cost of Greenhouse Gases (IWG) for the CO2 
projections.
---------------------------------------------------------------------------

    \6\ A metric ton is equivalent to 1.1 short tons. Results for 
emissions other than CO2 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 2022 (``AEO 2022''). AEO 2022 represents current Federal and 
state legislation and final implementation of regulations as of the 
time of its preparation. See section IV.K of this document for 
further discussion of AEO 2022 assumptions that effect air pollutant 
emissions.
---------------------------------------------------------------------------

    DOE estimates the value of climate benefits from a reduction in 
greenhouse gases (GHG) using four different estimates of the social 
cost of CO2 (``SC-CO2''), the social cost of 
methane (``SC-CH4''), and the social cost of nitrous oxide 
(``SC-N2O''). Together these represent the social cost of 
GHG (SC-GHG).\8\ DOE used interim SC-GHG values developed by an 
Interagency Working Group on the Social Cost of Greenhouse Gases 
(IWG).\9\ The derivation of these values is discussed in section IV.L 
of this document. For presentational purposes, the monetized climate 
benefits associated with the average SC-GHG at a 3-percent discount 
rate are estimated to be $0.5 billion. DOE does not have a single 
central SC-GHG point estimate and it emphasizes the importance and 
value of considering the benefits calculated using all four SC-GHG 
estimates.
---------------------------------------------------------------------------

    \8\ On March 16, 2022, the Fifth Circuit Court of Appeals (No. 
22-30087) granted the Federal government's emergency motion for stay 
pending appeal of the February 11, 2022, preliminary injunction 
issued in Louisiana v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a 
result of the Fifth Circuit's order, the preliminary injunction is 
no longer in effect, pending resolution of the Federal government's 
appeal of that injunction or a further court order. Among other 
things, the preliminary injunction enjoined the defendants in that 
case from ``adopting, employing, treating as binding, or relying 
upon'' the interim estimates of the social cost of greenhouse 
gases--which were issued by the Interagency Working Group on the 
Social Cost of Greenhouse Gases on February 26, 2021--to monetize 
the benefits of reducing greenhouse gas emissions. As reflected in 
this rule, DOE has reverted to its approach prior to the injunction 
and presents monetized GHG abatement benefits where appropriate and 
permissible under law.
    \9\ See Interagency Working Group on Social Cost of Greenhouse 
Gases, Technical Support Document: Social Cost of Carbon, Methane, 
and Nitrous Oxide. Interim Estimates Under Executive Order 13990, 
Washington, DC, February 2021 (``February 2021 SC-GHG TSD''). 
www.whitehouse.gov/wp-content/uploads/2021/02/TechnicalSupportDocument_SocialCostofCarbonMethaneNitrousOxide.pdf 
(Last accessed September 22, 2022).
---------------------------------------------------------------------------

    DOE estimated the monetary health benefits of SO2 and 
NOX emissions reductions, also discussed in section IV.L of 
this document. DOE estimated the present value of the monetized health 
benefits would be $0.3 billion using a 7-percent discount rate, and 
$0.8 billion using a 3-percent discount rate.\10\ DOE is currently only 
monetizing (for SO2 and NOX) PM2.5 
precursor health benefits and (for NOX) ozone precursor 
health benefits, but will continue to assess the ability to monetize 
other effects such as health benefits from reductions in direct 
PM2.5 emissions.
---------------------------------------------------------------------------

    \10\ DOE estimates the economic value of these emissions 
reductions resulting from the considered TSLs for the purpose of 
complying with the requirements of Executive Order 12866.
---------------------------------------------------------------------------

    Table I.3 summarizes the economic benefits and costs expected to 
result from the proposed standards for miscellaneous refrigeration 
products. There are other important unquantified effects, including 
certain unquantified climate benefits, unquantified public health 
benefits from the reduction of toxic air pollutants, direct 
PM2.5 and other emissions, unquantified energy security 
benefits, and distributional effects, among others.

  Table I.3--Summary of Monetized Benefits and Costs of Proposed Energy
 Conservation Standards for Miscellaneous Refrigeration Products (TSL 4)
                             [Billion 2021$]
------------------------------------------------------------------------
 
------------------------------------------------------------------------
                            3% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings.........................             2.0
Climate Benefits *......................................             0.5
Health Benefits **......................................             0.8
Total Monetized Benefits [dagger].......................             3.3
Consumer Incremental Product Costs [Dagger].............             1.3
Monetized Net Benefits..................................             2.0
------------------------------------------------------------------------
                            7% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings.........................             0.8
Climate Benefits * (3% discount rate)...................             0.5
Health Benefits **......................................             0.3
Total Monetized Benefits [dagger].......................             1.6
Consumer Incremental Product Costs......................             0.7
Monetized Net Benefits..................................             0.9
------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with product
  name shipped in 2029-2058. These results include benefits to consumers
  which accrue after 2058 from the products shipped in 2029-2058.
* Climate benefits are calculated using four different estimates of the
  social cost of carbon (SC-CO2), methane (SC-CH4), and nitrous oxide
  (SC-N2O) (model average at 2.5 percent, 3 percent, and 5 percent
  discount rates; 95th percentile at 3 percent discount rate) (see
  section IV.L of this document). Together these represent the global SC-
  GHG. For presentational purposes of this table, the climate benefits
  associated with the average SC-GHG at a 3 percent discount rate are
  shown, but the Department does not have a single central SC-GHG point
  estimate. On March 16, 2022, the Fifth Circuit Court of Appeals (No.
  22-30087) granted the Federal government's emergency motion for stay
  pending appeal of the February 11, 2022, preliminary injunction issued
  in Louisiana v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a result
  of the Fifth Circuit's order, the preliminary injunction is no longer
  in effect, pending resolution of the Federal government's appeal of
  that injunction or a further court order. Among other things, the
  preliminary injunction enjoined the defendants in that case from
  ``adopting, employing, treating as binding, or relying upon'' the
  interim estimates of the social cost of greenhouse gases--which were
  issued by the Interagency Working Group on the Social Cost of
  Greenhouse Gases on February 26, 2021--to monetize the benefits of
  reducing greenhouse gas emissions. As reflected in this rule, DOE has
  reverted to its approach prior to the injunction and presents
  monetized GHG abatement benefits, where appropriate and permissible
  under law.
** Health benefits are calculated using benefit-per-ton values for NOX
  and SO2. DOE is currently only monetizing (for SO2 and NOX) PM2.5
  precursor health benefits and (for NOX) ozone precursor health
  benefits, but will continue to assess the ability to monetize other
  effects such as health benefits from reductions in direct PM2.5
  emissions. See section IV.L of this document for more details.
[dagger] Total and net benefits include those consumer, climate, and
  health benefits that can be quantified and monetized. For presentation
  purposes, total and net benefits for both the 3-percent and 7-percent
  cases are presented using the average SC-GHG with 3-percent discount
  rate, but the Department does not have a single central SC-GHG point
  estimate. DOE emphasizes the importance and value of considering the
  benefits calculated using all four SC-GHG estimates.

    The benefits and costs of the proposed standards can also be 
expressed in terms of annualized values. The monetary values for the 
total annualized net benefits are (1) the reduced consumer operating 
costs, minus (2) the increase in product purchase prices and 
installation costs, plus (3) the value of climate and health benefits 
of emission reductions, all annualized.\11\
---------------------------------------------------------------------------

    \11\ To convert the time-series of costs and benefits into 
annualized values, DOE calculated a present value in 2022, 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., 2030), and then discounted the present value from each year 
to 2022. 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.
---------------------------------------------------------------------------

    The national operating savings are domestic private U.S. consumer 
monetary savings that occur as a result

[[Page 19386]]

of purchasing the covered products and are measured for the lifetime of 
miscellaneous refrigeration products shipped in 2029-2058. The benefits 
associated with reduced emissions achieved as a result of the proposed 
standards are also calculated based on the lifetime of miscellaneous 
refrigeration products shipped in 2029-2058. Total benefits for both 
the 3-percent and 7-percent cases are presented using the average GHG 
social costs with 3-percent discount rate. Estimates of SC-GHG values 
are presented for all four discount rates in section IV.L of this 
document.
    Table I.4 presents the total estimated monetized benefits and costs 
associated with the proposed standard, expressed in terms of annualized 
values. The results under the primary estimate are as follows.
    Using a 7-percent discount rate for consumer benefits and costs and 
health benefits from reduced NOx and SO2 emissions, and the 
3-percent discount rate case for climate benefits from reduced GHG 
emissions, the estimated cost of the standards proposed in this rule is 
$81.2 million per year in increased equipment costs, while the 
estimated annual benefits are $97.6 million in reduced equipment 
operating costs, $28.9 million in monetized climate benefits, and $35.4 
million in monetized health benefits. In this case, the monetized net 
benefit would amount to $80.6 million per year.
    Using a 3-percent discount rate for all benefits and costs, the 
estimated cost of the proposed standards is $81.0 million per year in 
increased equipment costs, while the estimated annual benefits are 
$123.1 million in reduced operating costs, $28.9 million in monetized 
climate benefits, and $49.5 million in monetized health benefits. In 
this case, the monetized net benefit would amount to $120.4 million per 
year.

 Table I.4--Annualized Monetized Benefits and Costs of Proposed Energy Conservation Standards for Miscellaneous
                                         Refrigeration Products (TSL 4)
                                              [Million 2021$/year]
----------------------------------------------------------------------------------------------------------------
                                                                                     Low-net-        High-net-
                                                                      Primary        benefits        benefits
                                                                     estimate        estimate        estimate
----------------------------------------------------------------------------------------------------------------
                                                3% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings.................................           123.1           116.3           131.2
Climate Benefits *..............................................            28.9            28.1            29.6
Health Benefits **..............................................            49.5            48.2            50.8
Total Monetized Benefits [dagger]...............................           201.4           192.6           211.6
Consumer Incremental Product Costs [dagger].....................            81.0            82.3            79.4
Monetized Net Benefits..........................................           120.4           110.3           132.2
----------------------------------------------------------------------------------------------------------------
                                                7% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings.................................            97.6            92.7           103.3
Climate Benefits * (3% discount rate)...........................            28.9            28.1            29.6
Health Benefits **..............................................            35.4            34.6            36.2
Total Monetized Benefits [dagger]...............................           161.9           155.4           169.2
Consumer Incremental Product Costs..............................            81.2            82.4            79.8
Monetized Net Benefits..........................................            80.6            72.9            89.4
----------------------------------------------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with miscellaneous refrigeration products shipped in
  2029-2058. These results include benefits to consumers which accrue after 2058 from the products shipped in
  2029-2058. The Primary, Low-Net-Benefits, and High Net Benefits Estimates utilize projections of energy prices
  from the AEO 2022 Reference case, Low Economic Growth case, and High Economic Growth case, respectively. In
  addition, incremental equipment costs reflect a medium decline rate in the Primary Estimate, a low decline
  rate in the Low-Net-Benefits Estimate, and a high decline rate in the High Net Benefits Estimate. The methods
  used to derive projected price trends are explained in section IV.H.3 of this document. Note that the Benefits
  and Costs may not sum to the Net Benefits due to rounding.
* Climate benefits are calculated using four different estimates of the global SC-GHG (see section IV.L of this
  NOPR). For presentational purposes of this table, the climate benefits associated with the average SC-GHG at a
  3 percent discount rate are shown, but the Department does not have a single central SC-GHG point estimate,
  and it emphasizes the importance and value of considering the benefits calculated using all four SC-GHG
  estimates. On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22-30087) granted the Federal
  government's emergency motion for stay pending appeal of the February 11, 2022, preliminary injunction issued
  in Louisiana v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a result of the Fifth Circuit's order, the
  preliminary injunction is no longer in effect, pending resolution of the Federal government's appeal of that
  injunction or a further court order. Among other things, the preliminary injunction enjoined the defendants in
  that case from ``adopting, employing, treating as binding, or relying upon'' the interim estimates of the
  social cost of greenhouse gases--which were issued by the Interagency Working Group on the Social Cost of
  Greenhouse Gases on February 26, 2021--to monetize the benefits of reducing greenhouse gas emissions. As
  reflected in this rule, DOE has reverted to its approach prior to the injunction and presents monetized GHG
  abatement benefits where appropriate and permissible under law.
** Health benefits are calculated using benefit-per-ton values for NOX and SO2. DOE is currently only monetizing
  (for SO2 and NOX) PM2.5 precursor health benefits and (for NOX) ozone precursor health benefits, but will
  continue to assess the ability to monetize other effects such as health benefits from reductions in direct
  PM2.5 emissions. The health benefits are presented at real discount rates of 3 and 7 percent. See section IV.L
  of this document for more details.
[dagger] Total benefits for both the 3-percent and 7-percent cases are presented using the average SC-GHG with 3-
  percent discount rate, but the Department does not have a single central SC-GHG point estimate.

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

D. Conclusion

    DOE has tentatively concluded that the proposed standards represent 
the maximum improvement in energy efficiency that is technologically 
feasible and economically justified, and would result in the 
significant conservation of energy. Specifically, with regards to 
technological feasibility products achieving these standard levels are 
already commercially available for all product classes covered by this 
proposal. As for economic justification,

[[Page 19387]]

DOE's analysis shows that the benefits of the proposed standard exceed, 
to a great extent, the burdens of the proposed standards.
    Using a 7-percent discount rate for consumer benefits and costs and 
NOX and SO2 reduction benefits, and a 3-percent 
discount rate case for GHG social costs, the estimated cost of the 
proposed standards for miscellaneous refrigeration products is $81.2 
million per year in increased product costs, while the estimated annual 
benefits are $97.6 million in reduced product operating costs, $28.9 
million in monetized climate benefits and $35.4 million in monetized 
health benefits. The net monetized benefit amounts to $80.6 million per 
year.
    The significance of energy savings offered by a new or amended 
energy conservation standard cannot be determined without knowledge of 
the specific circumstances surrounding a given rulemaking.\12\ For 
example, some covered products and equipment have substantial energy 
consumption occur during periods of peak energy demand. The impacts of 
these products on the energy infrastructure can be more pronounced than 
products with relatively constant demand. Accordingly, DOE evaluates 
the significance of energy savings on a case-by-case basis.
---------------------------------------------------------------------------

    \12\ Procedures, Interpretations, and Policies for Consideration 
in New or Revised Energy Conservation Standards and Test Procedures 
for Consumer Products and Commercial/Industrial Equipment, 86 FR 
70892, 70901 (Dec. 13, 2021).
---------------------------------------------------------------------------

    As previously mentioned, the proposed standards are projected to 
result in estimated national energy savings of 0.31 quad (FFC), the 
equivalent of the electricity use of 3.4 million homes in one year. In 
addition, they are projected to reduce GHG emissions. The NPV of 
consumer benefit for these projected energy savings is $0.14 billion 
using a discount rate of 7 percent, and $0.69 billion using a discount 
rate of 3 percent. The cumulative emissions reductions associated with 
these energy savings are 10.4 Mt of CO2, 4.8 thousand tons 
of SO2, 15.9 thousand tons of NOX, 0.03 tons of 
Hg, 70.3 thousand tons of CH4, and 0.11 thousand tons of 
N2O. The estimated monetary value of the climate benefits 
from reduced GHG emissions (associated with the average SC-GHG at a 3-
percent discount rate) is $0.5 billion. The estimated monetary value of 
the health benefits from reduced SO2 and NOX 
emissions is $0.3 billion using a 7-percent discount rate and $0.8 
billion using a 3-percent discount rate. As such, DOE has initially 
determined the energy savings from the proposed standard levels are 
``significant'' within the meaning of 42 U.S.C. 6295(o)(3)(B). A more 
detailed discussion of the basis for this tentative conclusion is 
contained in the remainder of this document and the accompanying 
technical support document (``TSD'').
    DOE also considered more stringent energy efficiency levels as 
potential standards and is still considering them in this rulemaking. 
However, DOE has tentatively concluded that the potential burdens of 
the more stringent energy efficiency levels would outweigh the 
projected benefits.
    Based on consideration of the public comments DOE receives in 
response to this document and related information collected and 
analyzed during the course of this rulemaking effort, DOE may adopt 
energy efficiency levels presented in this document that are either 
higher or lower than the proposed standards, or some combination of 
level(s) that incorporate the proposed standards in part.

II. Introduction

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

A. Authority

    EPCA authorizes DOE to regulate the energy efficiency of a number 
of consumer products and certain industrial equipment. Title III, Part 
B of EPCA established the Energy Conservation Program for Consumer 
Products Other Than Automobiles which, in addition to identifying 
particular consumer products and commercial equipment as covered under 
the statute, permits the Secretary of Energy to classify additional 
types of consumer products as covered products. (42 U.S.C. 6292(a)(20)) 
DOE added MREFs as covered products through a final determination of 
coverage published in the Federal Register on July 18, 2016 (the ``July 
2016 Final Coverage Determination''). 81 FR 46768. MREFs are consumer 
refrigeration products other than refrigerators, refrigerator-freezers, 
or freezers, which include coolers and combination cooler refrigeration 
products. 10 CFR 430.2. MREFs include refrigeration products such as 
coolers (e.g., wine chillers and other specialty products) and 
combination cooler refrigeration products (e.g., wine chillers and 
other specialty compartments combined with a refrigerator, 
refrigerator-freezers, or freezers). EPCA further provides that, not 
later than 6 years after the 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 NOPR 
including new proposed energy conservation standards (proceeding to a 
final rule, as appropriate). (42 U.S.C. 6295(m)(1)) Not later than 
three years after issuance of a final determination not to amend 
standards, DOE must publish either a notice of determination that 
standards for the product do not need to be amended, or a NOPR 
including new proposed energy conservation standards (proceeding to a 
final rule, as appropriate). (42 U.S.C. 6295(m)(3)(B))
    The energy conservation program under EPCA consists essentially of 
four parts: (1) testing, (2) labeling, (3) the establishment of Federal 
energy conservation standards, and (4) certification and enforcement 
procedures. Relevant provisions of EPCA specifically include 
definitions (42 U.S.C. 6291), test procedures (42 U.S.C. 6293), 
labeling provisions (42 U.S.C. 6294), energy conservation standards (42 
U.S.C. 6295), and the authority to require information and reports from 
manufacturers (42 U.S.C. 6296).
    Federal energy efficiency requirements for covered products 
established under EPCA generally supersede State laws and 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 EPCA. (See 42 
U.S.C. 6297(d))
    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) and 42 U.S.C. 6295(r)) 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 42 U.S.C. 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 miscellaneous refrigeration products 
appears at 10 CFR part 430, subpart B, appendix A,

[[Page 19388]]

Uniform Test Method for Measuring the Energy Consumption of 
Refrigerators, Refrigerator-Freezers, and Miscellaneous Refrigeration 
Products (``appendix A'').
    DOE must follow specific statutory criteria for prescribing new or 
amended standards for covered products, including refrigerators, 
refrigerator-freezers, and freezers. Any new or amended standard for a 
covered product must be designed to achieve the maximum improvement in 
energy efficiency that the Secretary of Energy (``Secretary'') 
determines is technologically feasible and economically justified. (42 
U.S.C. 6295(o)(2)(A) and 6295(o)(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 refrigerators, refrigerator-freezers, and freezers, 
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 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 considers relevant.
(42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII))
    Further, EPCA 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 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, EPCA 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 product 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 the 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))
    Finally, pursuant to the amendments contained in the Energy 
Independence and Security Act of 2007 (``EISA 2007''), Public Law 110-
140, any final rule for new or amended energy conservation standards 
promulgated after July 1, 2010, is required to 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 current test procedures for miscellaneous 
refrigeration products address standby mode and off mode energy use. In 
this rulemaking, DOE intends to incorporate such energy use into any 
amended energy conservation standards that it may adopt.

B. Background

1. Current Standards
    DOE added MREFs as covered products through a final determination 
of coverage published in the Federal Register on July 18, 2016 (the 
``July 2016 Final Coverage Determination''). 81 FR 46768. In that 
determination, DOE noted that MREFs, on average, consume more than 150 
kilowatt hours per year (``kWh/yr'') and that the aggregate annual 
national energy use of these products exceeds 4.2 terawatt hours 
(``TWh''). 81 FR 46768, 46775. In addition to establishing coverage, 
the July 2016 Final Coverage Determination established definitions for 
``miscellaneous refrigeration products,'' ``coolers,'' and 
``combination cooler refrigeration products'' in 10 CFR 430.2. 81 FR 
46768, 46791-46792.
    On October 28, 2016, DOE published a direct final rule (the 
``October 2016 Direct Final Rule'') in which it adopted energy 
conservation standards for MREFs consistent with the recommendations 
from a negotiated rulemaking working group established under the 
Appliance Standards and Rulemaking Federal Advisory Committee. 81 FR 
75194. Concurrent with the October 2016 Direct Final Rule, DOE 
published a NOPR in which it proposed and requested comments on the 
standards set forth in the direct final rule. 81 FR 74950. On May 26, 
2017, DOE published a notice in the Federal Register in which it 
determined that the comments received in response to the October 2016 
Direct Final Rule did not provide a reasonable basis for withdrawing 
the rule and, therefore, confirmed the adoption of the energy 
conservation standards established in that direct final rule. 82 FR 
24214.
    These current standards for MREFs are set forth in DOE's 
regulations at 10 CFR 430.32(aa)(1)-(2) and are repeated

[[Page 19389]]

solely for reference in Table II.1 to aid the reader.

       Table II.1--Federal Energy Conservation Standards for MREFs
------------------------------------------------------------------------
                                      Equations for maximum energy use
          Product class                           (kWh/yr)
------------------------------------------------------------------------
1. Freestanding compact coolers    7.88AV + 155.8
 (``FCC'').
2. Freestanding coolers (``FC'').  7.88AV + 155.8
3. Built-in compact coolers        7.88AV + 155.8
 (``BICC'').
4. Built-in coolers (``BIC'')....  7.88AV + 155.8
C-3A. Cooler with all-             4.57AV + 130.4
 refrigerator--automatic defrost.
C-3A-BI. Built-in cooler with all- 5.19AV + 147.8
 refrigerator--automatic defrost.
C-9. Cooler with upright freezer   5.58AV + 147.7
 with automatic defrost without
 an automatic icemaker.
C-9-BI. Built-in cooler with       6.38AV + 168.8
 upright freezer with automatic
 defrost without an automatic
 icemaker.
C-9I. Cooler with upright freezer  5.58AV + 231.7
 with automatic defrost with an
 automatic icemaker.
C-9I-BI. Built-in cooler with      6.38AV + 252.8
 upright freezer with automatic
 defrost with an automatic
 icemaker.
C-13A. Compact cooler with all-    5.93AV + 193.7
 refrigerator--automatic defrost.
C-13A-BI. Built-in compact cooler  6.52AV + 213.1
 with all-refrigerator--automatic
 defrost.
------------------------------------------------------------------------
AV = Total adjusted volume, expressed in ft\3\, as determined in
  appendix A to subpart B of 10 CFR part 430.

2. History of Standards Rulemaking for Miscellaneous Refrigeration 
Products
    On December 8, 2020, DOE published a notice that it was initiating 
an early assessment review to determine whether any new or amended 
standards would satisfy the relevant requirements of EPCA for a new or 
amended energy conservation standard for MREFs and a request for 
information (``RFI''). 85 FR 78964 (``December 2020 Early Assessment 
Review RFI'').
    Comments received following the publication of the December 2020 
Early Assessment Review RFI helped DOE identify and resolve issues 
related to the subsequent preliminary analysis.\13\ DOE published a 
notice of public meeting and availability of the preliminary technical 
support document (``TSD'') on January 21, 2022 (``January 2022 
Preliminary Analysis''). 87 FR 3229. DOE subsequently held a public 
meeting on March 7, 2022, to discuss and receive comments on the 
January 2022 Preliminary Analysis. The January 2022 Preliminary 
Analysis that presented the methodology and results of the preliminary 
analysis is available at: www.regulations.gov/document/EERE-2020-BT-STD-0039-0009.
---------------------------------------------------------------------------

    \13\ Comments are available at www.regulations.gov/docket/EERE-2020-BT-STD-0039/comments.
---------------------------------------------------------------------------

    DOE received five docket comments in response to the January 2022 
Preliminary Analysis from the interested parties listed in Table II.1.

     Table II.1--January 2022 Preliminary Analysis Written Comments
------------------------------------------------------------------------
                                   Reference in this
         Organization(s)                 NOPR          Organization type
------------------------------------------------------------------------
Association of Home Appliance     AHAM..............  Trade
 Manufacturers.                                        Organization.
Appliance Standards Awareness     ASAP..............  Efficiency
 Project.                                              Organization.
California Investor-Owned         CA IOUs...........  Utility Supplier.
 Utilities.
Northwest Energy Efficiency       NEEA..............  Efficiency
 Alliance.                                             Organization.
Sub Zero Group, Inc.............  Sub Zero..........  Manufacturer.
------------------------------------------------------------------------

    A parenthetical reference at the end of a comment quotation or 
paraphrase provides the location of the item in the public record.\14\
---------------------------------------------------------------------------

    \14\ The parenthetical reference provides a reference for 
information located in the docket of DOE's rulemaking to develop 
energy conservation standards for miscellaneous refrigeration 
products. (Docket No. EERE-2020-BT-STD-0039, which is maintained at 
https://www.regulations.gov/document/EERE-2020-BT-STD-0039). The 
references are arranged as follows: (commenter name, comment docket 
ID number, page of that document).
---------------------------------------------------------------------------

3. Test Procedure
    EPCA sets forth generally applicable criteria and procedures for 
DOE's adoption and amendment of test procedures. (42 U.S.C. 6293) 
Manufacturers of covered products must use these test procedures to 
certify to DOE that their product complies with energy conservation 
standards and to quantify the efficiency of their product.
    On October 12, 2021, DOE published in the Federal Register a final 
rule amending the test procedures for MREFs and other consumer 
refrigeration products at appendix A and appendix B of 10 CFR part 430 
(the ``October 2021 TP Final Rule''). 86 FR 56790 (October 12, 2021). 
The October 2021 TP Final Rule incorporates by reference the most 
recent industry test procedure, AHAM Standard HRF-1, ``Energy and 
Internal Volume of Consumer Refrigeration Products'' (``AHAM HRF-1-
2019''). However, DOE did not require the change in icemaker energy use 
included in the 2019 revision of HRF-1. 86 FR 56793. While DOE had 
proposed to implement this change in the proposed test procedure 
rulemaking (84 FR 70842, 70848-70850 (December 23, 2019)), DOE 
indicated in the October 2021 TP Final Rule that it would not require 
the calculations until the compliance dates of any amended energy 
conservation standards for these products, which incorporated the 
amended automatic icemaker energy consumption. 86 FR 56793. DOE 
determined that the test procedure amendments are not expected to 
impact the measured energy use of consumer refrigeration products, 
including MREFs, as compared to the test procedure in place at the time 
of the October 2021 Test Procedure Final Rule. 86 FR 56790.

[[Page 19390]]

    The analysis presented in this NOPR is based on the test procedure 
as finalized in the October 2021 TP Final Rule, except for the 
calculation of the change in energy use attributed to icemaker energy 
use, which aligns with the icemaker energy use in HRF-1-2019. The value 
of the revised icemaker energy use and the plans to implement this 
change coincident with the date of future energy conservation standards 
were discussed at length in the October 2021 TP Final Rule. (See 86 FR 
56822, October 12, 2021) Hence, this change is proposed in this 
document.
4. Off Mode and Standby Mode
    Pursuant to the amendments contained in the Energy Independence and 
Security Act of 2007 (``EISA 2007''), Public Law 110-140, any final 
rule for new or amended energy conservation standards promulgated after 
July 1, 2010, is required to 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 
test procedures for refrigeration products measure the energy use of 
these products during extended time periods that include periods when 
the compressor and other key components are cycled off. All of the 
energy these products use during the ``off cycles'' is already included 
in the measurements. 79 FR 22320, 22345. The approach of testing with 
connected functions on but not connected to a network account for 
energy consumption of such functions as part of active mode testing, 
and as a result, this method provides consumers with representative 
estimates of energy consumption.

C. Deviation From Appendix A

    In accordance with section 3(a) of 10 CFR part 430, subpart C, 
appendix A (``appendix A''), DOE notes that it is deviating from the 
provision in appendix A regarding the pre-NOPR stages for an energy 
conservation standards rulemaking. Section 6(a)(2) of appendix A states 
that if the Department determines it is appropriate to proceed with a 
rulemaking, the preliminary stages of a rulemaking to issue or amend an 
energy conservation standard that DOE will undertake will be a 
framework document and preliminary analysis, or an advance notice of 
proposed rulemaking. For the reasons that follow, DOE finds it 
appropriate to deviate from this step-in appendix A and to instead 
publish this NOPR without issuing a framework document. A framework 
document is intended to introduce and summarize the various analyses 
DOE conducts during the rulemaking process and requests initial 
feedback from interested parties. As discussed in the preceding 
section, prior to this NOPR, DOE issued an early assessment request for 
information in which DOE identified and sought comment on the analyses 
conducted in support of the most recent energy conservation standards 
rulemaking, for which, DOE provided a 75-day comment period. 85 FR 
78964, 78965-78966 (Dec. 8, 2020) (the ``December 2020 Early Assessment 
Review RFI'') DOE then issued the January 2022 Preliminary Analysis, 
seeking further general comments from stakeholders regarding the 
analyses conducted to support the upcoming standards rulemaking, for 
which, DOE provided a 60-day comment period for the January 2022 
Preliminary Analysis. 87 FR 3229 (Jan. 21, 2022)
    As DOE is intending to rely on substantively the same analytical 
methods as in the most recent rulemaking, publication of a framework 
document would be largely redundant with the published early assessment 
RFI and preliminary analysis. As such, DOE is not publishing a 
framework document.
    Section 6(f)(2) of appendix A provides that the length of the 
public comment period for the NOPR will be at least 75 days. For this 
NOPR, DOE finds it appropriate to provide a 60-day comment period. As 
previously discussed, DOE provided a 60-day comment period on January 
2022 Preliminary Analysis. 87 FR 3229. DOE subsequently held a public 
meeting on March 7, 2022, to discuss and received comments on the 
January 2022 Preliminary Analysis. Consequently, DOE has determined it 
is appropriate to provide a 60-day comment period on the NOPR, which 
the Department believes will provide interested parties with a 
meaningful opportunity to comment on the proposed rule.

III. General Discussion

    DOE developed this proposal after considering oral and written 
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))
    To simplify the structure for presentation of maximum allowable 
energy use equations, DOE is proposing, for class pairs for which one 
class includes an icemaker and the other does not, to represent the 
icemaker energy use adder in a single energy use equation rather than 
in two separate equations. The product class discussion in section IV 
below explores this issue further. In addition, DOE is proposing 
standard levels for a new class covering built-in combination cooler-
refrigerator-freezers with a bottom-mounted freezer, both with and 
without an automatic icemaker, (``combination cooler 5-BI''). This is 
also discussion in greater detail in section IV of this document.

B. Definitions

    In 10 CFR 430.2, DOE has established definitions for a variety of 
refrigeration products, including refrigerators, refrigerator-freezers, 
freezers, and coolers and combination cooler refrigeration products 
defined as MREFs. DOE recognizes that there are some products that may, 
based on their physical and operational characteristics, meet more than 
one of the definitions in Sec.  430.2. This includes certain 
combination cooler refrigeration products, such as cooler-
refrigerators, cooler-refrigerator-freezers, or cooler-freezers. When 
standards for miscellaneous refrigeration products were established, 
they were not established for all potential combination products. 
Rather, standards were established for combination products that were 
on the market at the time of the final rule. 81 FR 75194, 75210, 75215-
75216 (October 28, 2016). In doing so, DOE anticipated that 
manufacturers would eventually introduce combination products for which 
standards were not originally established under Sec.  430.32(aa). In 
these cases, a particular product could also meet the definition of a 
refrigerator, refrigerator-freezer, or freezer. To specifically 
delineate between those products and MREF products currently

[[Page 19391]]

subject to an energy conservation standard in Sec.  430.32(aa), the 
definitions of refrigerator, refrigerator-freezer, or freezer in Sec.  
430.2 contain a provision that excludes any miscellaneous refrigeration 
product that must comply with an applicable miscellaneous refrigeration 
product energy conservation standard. Consequently, MREF products not 
exempted by that provision may still be defined as a refrigerator, 
refrigerator-freezer, or freezer.
    In this NOPR, DOE is clarifying that a product that combines a 
cooler with a refrigerator, refrigerator-freezer, or freezer that 
otherwise meets the definition of one of those product types in Sec.  
430.2 and is not excluded from the definition through coverage by a 
standard in 10 CFR 430.32(aa) as a miscellaneous refrigeration product, 
must be tested and certified as a refrigerator, refrigerator-freezer, 
or freezer according to the applicable test procedure in appendix A or 
appendix B (with additional instruction addressing the cooler 
compartment of a cooler-freezer, as applicable--these additional 
instructions are discussed in section III.C of this document), be 
certified according to the certification requirements in 10 CFR 429.14, 
and meet the energy conservation standard for the applicable product 
class of refrigerator, refrigerator-freezer, or freezer. DOE concludes 
that the current regulations require this approach for such products 
and is proposing the changes to the regulatory language simply as 
clarification.
    To ensure this clarification is properly applied, DOE identified 
potential clarifying amendments to the refrigerator and freezer 
definitions in Sec.  430.2 that would lead to the appropriate 
determination of coverage for combination refrigeration products that 
do not have a prescribed MREF energy conservation standard. In 
particular, in this NOPR DOE proposes to amend the refrigerator and 
freezer definitions to clarify that the definitions do apply to 
products that have a cooler compartment included in addition to the 
fresh food compartment (for a refrigerator) or freezer compartment (for 
a freezer). DOE notes that this coverage status is already clear in the 
refrigerator-freezer definition, which explicitly allows for additional 
compartments other than the fresh food and freezer compartments, which 
are defined based on operating temperature, by including allowing the 
product to have compartments that may operate outside these defined 
parameters. DOE's proposal would make similar clarifications for the 
refrigerator and freezer definitions.
    DOE requests comment on its proposal to amend the refrigerator and 
freezer definitions in Sec.  430.2 to clarify that products that would 
otherwise be considered a refrigerator or a freezer that also include a 
cooler compartment would be considered a refrigerator or a freezer, 
unless a miscellaneous refrigeration product energy conservation 
standard in Sec.  430.32(aa) is applicable for the product.

C. Test Procedure

    EPCA sets forth generally applicable criteria and procedures for 
DOE's adoption and amendment of test procedures. (42 U.S.C. 6293) 
Manufacturers of covered products must use these test procedures to 
certify to DOE that their product complies with energy conservation 
standards and to quantify the efficiency of their product. DOE's 
current energy conservation standards for miscellaneous refrigeration 
products are expressed in terms of Annual Energy Use, expressed in kWh/
year. (See 10 CFR 430.32(a).)
    As previously discussed, DOE planned to delay adopting for consumer 
refrigeration products the revised icemaker energy use adder of 28 kWh/
yr that is in AHAM HRF-1-2019--which is the industry test standard--
until the compliance date of a possible amended standard. As discussed 
in the October 2021 TP final rule, DOE determined it would not require 
testing with the amended icemaker energy use adder until the compliance 
dates of the next amended energy conservation standards for 
refrigeration products. 86 FR 56815. Therefore, as discussed 
previously, this NOPR proposes product classes that implement the 28 
kWh/year icemaker adder, consistent with the icemaker energy use in 
HRF-1-2019, and also proposes to adopt the updated icemaker adder for 
MREF, to be used on or after the compliance date of revised standards.
    As previously discussed, DOE is proposing clarifying amendments to 
product definitions indicating that products that include a cooler 
compartment in addition to a fresh food or freezer compartment but do 
not have an MREF energy conservation standard, would still meet the 
refrigerator or freezer definitions, as applicable. Additionally, DOE 
is proposing clarifying amendments to appendix A and appendix B, as it 
relates to testing combination cooler-freezers as well as testing 
combination refrigeration products that do not have a prescribed MREF 
energy conservation standards.
    Specifically, DOE is proposing to add sub-sections to appendix A 
and appendix B to clarify the calculation of average per-cycle energy 
consumption for combination cooler-freezers and freezers with a cooler 
compartment, by referring to section 5.9.3 of HRF-1 2019 and stating 
specific ``k'' values to be used in equations presented therein. DOE 
also proposes to amend appendix B section 5.2 to refer to section 5.2 
of appendix A when testing freezers with cooler compartments, because 
the appendix A requirements are more appropriate for products with more 
than one compartment. Lastly, DOE proposes to amend appendix B by 
adding a clarification to section 5.3 to specify the value of variable 
``K'' when referencing section 5.8.2 of HRF-1-2019.
    ASAP stated in response to the January 2022 Preliminary Analysis 
that they understand that produce growers with a source of 
refrigeration likely meet the definition of a cooler but, due to unique 
components present in a produce grower that maintain an environment 
with temperature and humidity controls that are conducive to growing 
plants, produce growers cannot be tested in the same manner as coolers 
whose primary function is to chill beverage products. NEEA commented on 
a need for implementing different test procedures for produce growers, 
citing technology differences between produce growers and other 
miscellaneous refrigeration products. NEEA stated that test procedures 
for produce growers should include energy use measurements for cabinet 
temperature and humidity control systems, water distribution systems, 
and carbon dioxide injection systems. ASAP and NEEA encouraged DOE to 
establish test procedures for these products. (ASAP, No. 19, p. 3; 
NEEA, No. 21, pp. 3-4)
    DOE is aware of the produce grower market and appreciates input on 
this topic. At this point, only GE Appliances, a Haier Company 
(``GEA'') has submitted a petition for waiver from test procedures 
covering MREFs. GEA initially also requested an interim waiver. In an 
initial denial of the petition for interim waiver, DOE tentatively 
concluded that the GEA model meets the definition of a cooler, because 
the product consists of a cabinet used with one or more doors, and 
maintains compartment temperatures no lower than 39 degrees Fahrenheit, 
as determined when tested in a 90-degree Fahrenheit ambient 
temperature. 86 FR 35766, 35768 (July 7, 2021). In addition to this, 
DOE tentatively determined that the requested alternate test procedure

[[Page 19392]]

would not result in measured energy use of the basic model that is 
representative of actual energy used during representative average use. 
Id. In November 2021, GEA submitted a revised petition for waiver and 
interim waiver for its grower product that proposed a revised 
alternative test method designed to address the concerns that DOE 
expressed in its denial of the GEA's original petition. Having 
considered the merits of GEA's revised approach, and receiving no 
comments in opposition, DOE approved use of the revised alternate test 
procedure for rating GEA's product through the publication of a 
notification of decision and order on October 17, 2022 (87 FR 62835), 
reiterating that while the In-Home Grower basic model meets the cooler 
definition, it is not subject to the cooler energy conservation 
standards because of its unique characteristics, as discussed in the 
November 2021 Notification of Petition for Waiver. (87 FR 62835, 62838)
    In consideration of the other produce growers mentioned in ASAP's 
comment--the Viking Under-counter Micro Green & Herb Cabinet--GCV12, 
the Seedo Automated Home Grow Device, and the Bloom In-Home Grow 
System--DOE has not received waiver petitions for these products but 
will consider investigating these products, including whether they may 
be subject to testing requirements based on meeting the definition of 
an MREF product, as GEA's product does.
    NEEA advocated for the implementation of a test procedure to 
calculate the energy impact of interior lighting in all miscellaneous 
refrigeration products. NEEA claims that the use of lighting differs 
largely depending on manufacturer and personal usage, and with the 
proliferation of glass doors for coolers, interior lighting plays a 
large role in energy calculations. (NEEA, No. 21, pp. 4-5)
    AHAM states the vast majority of the miscellaneous refrigeration 
product designs on the market no longer use incandescent lighting and 
have shifted to light-emitting diode (``LED'') technology, meaning 
efficiency gains from lighting are limited, and efforts to further 
regulate lighting options in miscellaneous refrigeration products will 
place undue burden on manufacturers. (AHAM, No. 18, p. 7)
    The test procedure does not include measurement of energy use with 
lighting turned on. DOE last finalized its test procedure for consumer 
refrigeration products including MREFs on October 12, 2021. 86 FR 
56790. As part of the rulemaking to establish this test procedure, DOE 
published a request for information (``RFI'') (82 FR 29780) on June 30, 
2017, and a NOPR (84 FR 70842) on December 23, 2019. No comments in 
response to the RFI or NOPR suggested that lighting energy use should 
be included as part of the test procedure. In the final rule initially 
establishing the test procedures for MREF on July 18, 2016, DOE 
indicated that it set the requirement to test these products with light 
switches in the off position based on field surveys indicating that 90 
percent of consumers kept light switches off in coolers. 81 FR 46768, 
46782. This requirement was also consistent with the recommendations of 
the Working Group that negotiated MREF test procedures and energy 
conservation standards under the auspices of the Appliance Standards 
and Rulemaking Federal Advisory Committee (``ASRAC''). Id. When DOE 
next considers revisions to the test procedure for MREF, DOE may 
request information regarding trends affecting lighting energy use in 
these products, and, based on information obtained, may consider at 
that time, whether the test procedure should be revised to include 
lighting energy.

D. Technological Feasibility

1. General
    In each energy conservation standards rulemaking, DOE conducts a 
screening analysis based on information gathered on all current 
technology options and prototype designs that could improve the 
efficiency of the products or equipment that are the subject of the 
rulemaking. As the first step in such an analysis, DOE develops a list 
of technology options for consideration in consultation with 
manufacturers, design engineers, and other interested parties. DOE then 
determines which of those means for improving efficiency are 
technologically feasible. DOE considers technologies incorporated in 
commercially available products or in working prototypes to be 
technologically feasible. Sections 6(b)(3)(i) and 7(b)(1) of CFR the 
Process Rule.
    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; (3) adverse impacts on 
health or safety, and (4) unique-pathway proprietary technologies. 
Sections 6(b)(3)(ii)-(v) and 7(b)(2)-(5) of the Process Rule. Section 
IV.B of this document discusses the results of the screening analysis 
for miscellaneous refrigeration products, 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 NOPR 
technical support document (``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 
miscellaneous refrigeration products, 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.1.c of this proposed rule and in chapter 
5 of the NOPR TSD.

E. Energy Savings

1. Determination of Savings
    For each trial standard level (``TSL''), DOE projected energy 
savings from application of the TSL to miscellaneous refrigeration 
products purchased in the 30-year period that begins in the year of 
compliance with the proposed standards (2029-2058).\15\ The savings are 
measured over the entire lifetime of miscellaneous refrigeration 
products purchased in the previous 30-year 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.
---------------------------------------------------------------------------

    \15\ Each TSL is composed of specific efficiency levels for each 
product class. The TSLs considered for this NOPR are described in 
section V.A of this document. DOE conducted a sensitivity analysis 
that considers impacts for products shipped in a 9-year period.
---------------------------------------------------------------------------

    DOE used its national impact analysis (``NIA'') spreadsheet model 
to estimate national energy savings (``NES'') from potential amended or 
new standards for miscellaneous refrigeration products.

[[Page 19393]]

The NIA spreadsheet model (described in section IV.H of this document) 
calculates energy savings in terms of site energy, which is the energy 
directly consumed by products at the locations where they are used. For 
electricity, DOE reports NES in terms of primary energy savings, which 
is the savings in the energy that is used to generate and transmit the 
site electricity. DOE also calculates NES in terms of 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 energy conservation standards.\16\ 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.
---------------------------------------------------------------------------

    \16\ 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 any new or amended 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))
    The significance of energy savings offered by a new or amended 
energy conservation standard cannot be determined without knowledge of 
the specific circumstances surrounding a given rulemaking.\17\ For 
example, some covered products and equipment have most of their energy 
consumption occur during periods of peak energy demand. The impacts of 
these products on the energy infrastructure can be more pronounced than 
products with relatively constant demand.
---------------------------------------------------------------------------

    \17\ The numeric threshold for determining the significance of 
energy savings established in a final rule published on February 14, 
2020 (85 FR 8626, 8670), was subsequently eliminated in a final rule 
published on December 13, 2021 (86 FR 70892).
---------------------------------------------------------------------------

    Accordingly, DOE evaluates the significance of energy savings on a 
case-by-case basis, taking into account the significance of cumulative 
FFC national energy savings, the cumulative FFC emissions reductions, 
health benefits, and the need to confront the global climate crisis, 
among other factors. DOE has initially determined the energy savings 
from the proposed standard levels are ``significant'' within the 
meaning of 42 U.S.C. 6295(o)(3)(B).

F. Economic Justification

1. Specific Criteria
    As noted previously, 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 of 
this document. 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 manufacturing 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 consumer costs and benefits expected to result from particular 
standards. DOE also evaluates the impacts of potential standards on 
identifiable subgroups \18\ of consumers that may be affected 
disproportionately by a standard.
---------------------------------------------------------------------------

    \18\ For this NOPR, DOE analyzed the impacts of the considered 
standard levels on senior-only households.
---------------------------------------------------------------------------

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 products 
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 expense (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 new 
or 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 new or amended standards. DOE's LCC and 
PBP analysis is discussed in further detail in section IV.F of this 
document.
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 III.E, DOE uses the NIA spreadsheet model to 
project NES.
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

[[Page 19394]]

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 
proposed in this document would not reduce the utility or performance 
of the products under consideration in this rulemaking.
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 proposed 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 proposed 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 will transmit a copy of this proposed 
rule to the Attorney General with a request that the Department of 
Justice (``DOJ'') provide its determination on this issue. DOE will 
publish and respond to the Attorney General's determination in the 
final rule. DOE invites comment from the public regarding the 
competitive impacts that are likely to result from this proposed rule. 
In addition, stakeholders may also provide comments separately to DOJ 
regarding these potential impacts. See the ADDRESSES section for 
information to send comments to DOJ.
f. Need for National Energy Conservation
    DOE also considers the need for national energy and water 
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 proposed 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.
    DOE maintains that environmental and public health benefits 
associated with the more efficient use of energy are important to take 
into account when considering the need for national energy 
conservation. The proposed standards are likely to result in 
environmental and health benefits in the form of reduced emissions of 
air pollutants and greenhouse gases (``GHGs'') 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; the estimated emissions impacts are reported in section I.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
    In determining whether an energy conservation standard is 
economically justified, DOE may consider any other factors that the 
Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)) To 
the extent DOE identifies any relevant information regarding economic 
justification that does not fit into the other categories described 
previously, 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 effects that proposed 
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.9 of this proposed rule.

IV. Methodology and Discussion of Related Comments

    This section addresses the analyses DOE has performed for this 
rulemaking with regard to miscellaneous refrigeration products. 
Separate paragraphs address each component of DOE's analyses.
    DOE used several analytical tools to estimate the impact of the 
standards proposed 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 projections 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 website for this rulemaking: www.regulations.gov/docket/EERE-2020-BT-STD-0039. Additionally, DOE used output from the 
latest version of the Energy Information Administration's (``EIA's'') 
Annual Energy Outlook (``AEO''), a widely known energy projection for 
the United States, for the emissions and utility impact analyses.
    DOE received some comments in response to the January 2022 
Preliminary Analysis that, rather than addressing specific aspects of 
the analysis, are general statements regarding the appropriateness of 
amending energy conservation standards and/or the efficiency levels 
that might be appropriate.
    AHAM stated they support DOE in its efforts to ensure a national 
marketplace through the Appliance Standards Program. AHAM also stated 
that amended standards for MREFs may not be justified under EPCA given 
the relatively low number of shipments in the MREF product category and 
the limited opportunity for energy savings that result from that fact. 
AHAM therefore stated, especially given DOE's large backlog of 
rulemakings (many of which involve products with larger energy savings 
opportunities), DOE should prioritize other rulemakings. (AHAM, No. 18, 
p. 1)
    While miscellaneous refrigeration products have a smaller number of 
shipments when compared to refrigerators, refrigerator-freezers, and 
freezers, (``RFs''), that is not a factor DOE considers in determining 
when to proceed with reviewing a standard. DOE is mandated by 42 U.S.C. 
6295(m)(1) to reconsider energy standards no later than 6 years after 
issuance of any final rule establishing or amending standards.

[[Page 19395]]

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 miscellaneous refrigeration 
products. The key findings of DOE's market assessment are summarized in 
the following sections. See chapter 3 of the NOPR TSD for further 
discussion of the market and technology assessment.
1. Scope of Coverage and Product Classes
    In the January 2022 Preliminary Analysis, DOE identified one 
potential product class modification for miscellaneous refrigeration 
products. DOE did receive a comment in response to the January 2022 
Preliminary Analysis regarding the product class structure, which is 
addressed.
a. Product Classes With Automatic Icemakers
    DOE has identified an opportunity to simplify and consolidate the 
presentation of maximum allowable energy use for products within 
product classes that may or may not have an automatic icemaker.
    To represent the annual energy consumed by automatic icemakers in 
MREFs, DOE's test procedures specify a constant energy-use adder of 84 
kWh/year (by use of a 0.23 kWh/day adder; see section 5.3(a)(i) of 10 
CFR part 430, subpart B, appendix A and section 5.3.(a) of appendix B). 
With this constant adder, the standard levels for product classes with 
an automatic icemaker are equal to the standards of their counterparts 
without an icemaker plus the 84 kWh/year. Consistent with prior 
discussions in the test procedure rulemaking, this NOPR proposes to 
amend this equation such that representations made on or after the 
compliance date of any potential new energy conservation standards, the 
adder to be used shall change from 84 kWh/yr to 28 kWh/yr. DOE 
determined as part of the October 2021 TP Final Rule that the revised 
adder would more accurately reflect energy use during a representative 
average use cycle. 86 FR 56811. However, DOE indicated that it would 
not require this change in the test procedure until the date of 
potential future energy conservation standard amendments. Id. at 86 FR 
56793. Thus, this change is being proposed in this document, with an 
implementation date to coincide with the compliance date of the 
standards proposed in this document.
    DOE has concluded that because the standards for the product 
classes with and without automatic icemakers are effectively the same, 
except for the constant adder, there is an opportunity to express the 
maximum allowable energy use for both icemaking and non-icemaking 
classes with the same equation, thus consolidating the presentation of 
classes and simplifying the energy conservation standards. The equation 
would, for those classes that may or may not have an icemaker, include 
a term equal to the icemaking energy use adder multiplied by a factor 
that is defined to equal 1 for products with icemakers and to equal 
zero for products without icemakers. This approach would consolidate 
the product class structure with a single product class descriptor and 
maximum energy use equation, while continuing to reflect that products 
with and without icemakers may have different maximum energy use 
values.
    DOE requests comments on its proposal to consolidate the 
presentation of maximum allowable energy use for products of classes 
that may or may not have an automatic icemaker.
b. Addition of a Built-In Combination Cooler-Refrigerator-Freezer With 
Bottom-Mounted Freezer and Automatic Icemaker Product Class
    Sub Zero stated they are planning to introduce a built-in 
combination cooler-refrigerator-freezer with bottom-mounted freezer and 
automatic icemaker. Sub Zero noted, although this configuration is an 
MREF covered product, it was not on the market in 2016 so a standard 
level was not set; using the same methodology used to set levels for 
the eight combination cooler types for which a standard was prescribed, 
the allowable maximum energy use would be 6.08AV + 302 kWh/yr. Sub Zero 
stated it is their understanding that they will need to request 
exception relief from DOE to certify this new product and requested 
that a future standard level for this product class be set in the 
upcoming MREF rulemaking. (Sub Zero, No. 17, pp. 2-3)
    DOE is proposing energy use levels for the built-in combination 
cooler-refrigerator-freezer with a bottom-mounted freezer, with and 
without an automatic icemaker (``combination cooler 5-BI''), as 
requested by Sub Zero.\19\ DOE agrees with Sub Zero that the baseline 
energy use for the class with an automatic icemaker would be using the 
methodology established in the MREF negotiations for setting energy use 
standards for new classes of combination products, if calculated on the 
basis of the 84 kWh/yr icemaker energy use of the current test 
procedure. When considering the revised 28 kWh/yr icemaker, to be 
implemented at the compliance date of any amended energy conservation 
standards, the baseline energy use equation for the product class would 
be 6.08AV + 246 kWh/yr. Since there are no products on the market that 
could serve as the basis for analysis to support setting a future 
standard, DOE is using combination cooler class 3A as a proxy for 
setting of a future energy conservation standard for the new 
combination cooler 5-BI class.
---------------------------------------------------------------------------

    \19\ Although Sub Zero requested a new class only for models 
with an automatic icemaker, DOE is extending the proposal to also 
include products without an automatic icemaker, consistent with the 
consolidation of the icemaker energy use into the energy use 
equation in the presentation of energy use standards.
---------------------------------------------------------------------------

    DOE requests comment on its proposal to establish energy 
conservation standards for combination cooler 5-BI using the analysis 
for combination class 3A as proxy for setting the standard level, based 
on a baseline efficiency equal to 6.08AV + 218 +28*I kWh/yr, where I is 
equal to 0 if the model has no automatic icemaker and equal to 1 if it 
does.
2. Technology Options
    In the preliminary market analysis and technology assessment, DOE 
identified 37 technology options that would be expected to improve the 
efficiency of miscellaneous refrigeration products, as measured by the 
DOE test procedure:

Table IV.1--Technology Options Identified in the Preliminary Analysis

Insulation
    1. Improved resistivity of insulation (insulation type)
    2. Increased insulation thickness
    3. Vacuum-insulated panels
    4. Gas-filled insulation panels
Gaskets and Anti-Sweat Heat
    5. Improved gaskets
    6. Double door gaskets

[[Page 19396]]

    7. Anti-sweat heat
Doors
    8. Low-E coatings
    9. Inert gas fill
    10. Vacuum-insulated glass
    11. Additional panes
    12. Frame design
    13. Solid door
Compressor
    14. Improved compressor efficiency
    15. Variable-speed compressors
    16. Linear compressors
Evaporator
    17. Increased surface area
    18. Forced-convection evaporator
    19. Tube and fin enhancements (including microchannel designs)
    20. Multiple evaporators
Condenser
    21. Increased surface area
    22. Tube and fin enhancements (including microchannel designs
    23. Forced-convection condenser
Defrost System
    24. Off-cycle defrost
    25. Reduced energy for active defrost
    26. Adaptive defrost
    27. Condenser hot gas defrost
Control System
    28. Electronic temperature control
    29. Air-distribution control
Other Technologies
    30. Fan and fan motor improvements
    31. Improved expansion valve
    32. Fluid control or solenoid off-cycle valve
    33. Alternative refrigerants
    34. Improved refrigerant piping
    35. Component location
    36. Alternative refrigeration systems

    Commenters provided feedback on some of these technology options. 
These comments are summarized below, along with DOE's responses.
    AHAM stated several of the evaluated technology options are 
impractical or provide limited to no benefit given current 
manufacturing and design processes past EL 1. However, AHAM did not 
provide sufficient detail that would enable DOE to revise the listed 
technology options and subsequent analysis. (AHAM, No. 18, p. 7)
    AHAM also cited issues with DOE's use of LED lighting in its 
analysis, DOE's over-reliance on vacuum-insulated panels (``VIPs'') in 
its analysis, and an insufficient supply of variable-speed compressors 
(``VSCs''). Specifically, AHAM states that the widespread use of LED 
lighting in the market currently means the possible efficiency gains 
from lighting will be limited. When considering VIPs, AHAM argues that 
DOE overused VIPs in its analysis in a manner that is not consistent 
with their current use on the market or overall effectiveness. Finally, 
AHAM points to the use of VSCs in the higher ELs as risky due to a 
potential shortfall of supply from manufacturers if they are included 
in a standards rulemaking as a primary design option for energy 
efficiency. (AHAM, No. 18, p. 7)
    DOE is aware of the widespread use of LED lighting in the market 
currently. Therefore, lighting technologies were not considered as a 
technology option in the preliminary analysis. Likewise, they were also 
not considered in the NOPR analysis.
    When considering the impact of VIPs, DOE took into consideration 
relevant rulemaking analyses for refrigerator, refrigerator-freezer, 
and freezer classes as a basis for VIP effectiveness as well as 
manufacturer feedback. With this information, VIP implementation in the 
NOPR analysis was more limited than in the preliminary analysis. For 
this analysis VIPs were only implemented partially in the max-tech 
levels of every directly analyzed class.
    The impact of VSCs on the miscellaneous refrigeration product 
analyses was primarily based on their ability to provide a higher level 
of efficiency when compared to their single-speed counterparts. As a 
result of this compressor efficiency increase, they are prevalent in 
the higher ELs of the efficiency analyses. DOE acknowledges that more 
stringent standards would likely necessitate adoption of more efficient 
technologies, such as variable-speed compressors. However, DOE expects 
that standards, if adopted, would provide sufficient certainty for 
manufacturers and suppliers to establish additional capacity in the 
supply chain, if needed.

B. Screening Analysis

    DOE uses the following five 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 a significant adverse impact on 
the utility of the product for 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.
    (5) Unique-Pathway Proprietary Technologies. If a design option 
utilizes proprietary technology that represents a unique pathway to 
achieving a given efficiency level, that technology will not be 
considered further due to the potential for monopolistic concerns.
    10 CFR part 430, subpart C, appendix A, sections 6(b)(3) and 7(b).
    In summary, if DOE determines that a technology, or a combination 
of technologies, fails to meet one or more of the listed five criteria, 
it will be excluded from further consideration in the engineering 
analysis. The reasons for eliminating any technology are discussed in 
the following sections.
    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
    In the January 2022 Preliminary Analysis, DOE screened out the 
following technologies on the basis of technological feasibility, 
practicability to manufacture, install, and service, adverse impacts on 
utility or availability, adverse impacts on health or safety, and use 
of unique-pathway proprietary technologies.

Table IV.2--Technologies Screened Out in the Preliminary Analysis

Solid doors
Ultra-low-E (reflective) glass doors
Vacuum-insulated glass
Improved gaskets and double gaskets
Linear compressors
Fluid control or solenoid off-cycle valves
Evaporator tube and fin enhancements
Condenser tube and fin enhancements (except microchannel condensers)
Condenser hot gas defrost
Improved refrigerant piping

[[Page 19397]]

Component location
Alternative refrigeration systems
Improved VIPs
2. Technology Options
    Through a review of each technology, DOE concluded in the 
preliminary analysis that all of the other identified technologies 
listed in section IV.A.2 of this document met all five screening 
criteria to be examined further as design options in DOE's NOPR 
analysis. In summary, DOE did not screen out the following technology 
options:

Table IV.2--Technologies Remaining in the Preliminary Analysis

Insulation
    1. Improved resistivity of insulation (insulation type)
    2. Increased insulation thickness
    3. Gas-filled insulation panels
    4. Vacuum-insulated panels
Gasket and Anti-Sweat Heat
    5. Anti-sweat heat
Doors
    6. Low-E coatings
    7. Inert gas fill
    8. Additional panes
    9. Frame design
Compressor
    10. Improved compressor efficiency
    11. Variable-speed compressors
Evaporator
    12. Forced-convection evaporator
    13. Increased surface area
    14. Multiple evaporators
Condenser
    15. Increased surface area
    16. Microchannel designs
    17. Forced-convection condenser
Defrost System
    18. Reduced energy for automatic defrost
    19. Adaptive defrost
    20. Off-cycle defrost
Control System
    21. Electronic Temperature control
    22. Air-distribution control
Other Technologies
    23. Fan and fan motor improvements
    24. Improved expansion valve
    25. Alternative Refrigerants

    DOE has initially determined that these technology options are 
technologically feasible because they are being used or have previously 
been used in commercially available products or working prototypes. DOE 
also finds that all of the remaining technology 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, unique-pathway proprietary 
technologies). For additional details, see chapter 4 of the NOPR TSD.
    DOE received comments regarding the screened-out technologies; 
relevant comments are addressed.
    AHAM agreed with DOE's decision to screen out solid doors as a 
technology option for the reason that ELs requiring solid doors will 
result in a significant loss in consumer utility. AHAM also agreed with 
DOE's decision to screen out Ultra-Low-E Glass Doors for similar 
reason, in that this technology also prevents the consumer from being 
able to see clearly into the cabinet. AHAM stated, should DOE include a 
door technology option in its final analysis for a possible amended 
standard, that analysis should provide careful justification to ensure 
that consumer utility and consumer costs are not unduly impacted. 
(AHAM, No. 18, p. 8)
    The CA IOUs urged DOE to reconsider several technologies that they 
claimed were screened out of the analysis or improperly categorized. 
These technologies include ultra-low E glass doors, Inert Gas-Filled 
Glass, vacuum insulated glass, microchannel heat exchangers, and 
variable speed compressors. In considering ultra-low E glass doors, the 
CA IOUs request the DOE define an acceptable emissivity that does not 
significantly hinder visibility while providing energy savings. For 
inert gas-filled glass, the CA IOUs claim that triple-pane Argon-filled 
glass with low-e coating is widely available throughout the market and 
should be considered at lower ELs. Considering vacuum insulated glass, 
the CA IOUs point to several manufacturers offering the glass for 
refrigeration applications. Finally, the CA IOUs urged DOE to make more 
consideration into the implementation of microchannel heat exchangers 
and VSCs, claiming that their energy benefits were not fully considered 
in the preliminary analysis. (CA IOUs, No. 20, pp. 4-6)
    DOE screened out ultra-low E glass panels due to loss in consumer 
utility associated with reduced visibility. DOE considers ultra-low E 
glass panels to be those with at least three glass layers and more than 
one low E coating. A large portion of the MREF market utilizes 
transparent glass doors as an option to allow the consumer to see 
inside the cooler compartment. Despite its ability to improve 
efficiency, ultra-low E glass reduces visibility into the cooler 
cabinet. In interviews, manufacturers specifically indicated that they 
avoid use of glass panels with more than one low E layer due to 
visibility concerns. DOE did include in its analysis triple-glazed 
panels with argon fill and one low E layer, consistent with panels that 
have been observed in available cooler products.
    DOE likewise did not consider vacuum insulated glass as it impacts 
practicability of manufacture, repair, and installation. While it 
remains available as a technology option for use in refrigeration 
equipment (e.g., walk-in cooler doors), DOE is not currently aware of 
vacuum-insulated glass currently in use for any MREFs. Also, because 
MREFs are typically much smaller than commercial refrigeration 
equipment, vacuum-insulated glass may not yet be available for all MREF 
sizes.
    While the CA IOUs claim that five commercial refrigeration 
manufacturers already have integrated microchannel condenser coils in 
their equipment outside the MREF product category, DOE has not observed 
microchannel condensers in any of the products in the teardown analysis 
for MREFs. DOE notes that microchannel condensers may allow for 
refrigerant charge reductions and improved heat transfer but known 
drawbacks to these designs include irregular refrigerant distribution 
and greater pressure drops on the refrigerant side and air side. 
Therefore, microchannel condensers may not provide efficiency 
improvements. Hence, DOE screened out microchannel condensers as a 
technology option.
    Variable speed compressors were included in the NOPR analysis and 
are implemented in higher-level ELs throughout the analyzed product 
classes. Published EER levels for VSCs are generally much higher than 
published EERs for single-speed compressors in the capacity range 
suitable for compact products, but DOE has not found many MREF products 
that use VSCs, nor many related compact refrigerators that use VSCs, 
and thus has little evidence on which to base confident predictions of 
large efficiency improvements. DOE received a range of estimates of the 
improvement potential associated with this technology from 
manufacturers during interviews. DOE believes that its MREF NOPR 
engineering analysis is representative of performance improvement 
potential using variable-speed compressors.
    The door technology options that remain for increasing the 
efficiency of miscellaneous refrigeration products include low-e 
coatings, inert gas fills, additional panes, and frame design changes. 
Of these options, gas fills, additional panes, and low-e coating were 
the options implemented in the final EL analyses, with max-tech doors 
including triple-pane glass, argon gas fill, and a low-e layer on the 
outermost glass. These options were implemented based on their current 
use in the market.
    DOE seeks further comment on any of the technologies screened out 
in this NOPR analysis as they were determined to not meet the screening 
criteria (i.e.,

[[Page 19398]]

practicable to manufacture, install, and service and do not result in 
adverse impacts on consumer utility, product availability, health, 
safety, or use of unique-pathway proprietary technologies). DOE also 
seeks comment on those technologies retained for further consideration 
in the engineering analysis, based on the determination that they are 
technologically feasible and also meet the other screening criteria.

C. Engineering Analysis

    The purpose of the engineering analysis is to establish the 
relationship between the efficiency and cost of miscellaneous 
refrigeration products. There are two elements to consider in the 
engineering analysis; the selection of efficiency levels to analyze 
(i.e., the ``efficiency analysis'') and the determination of product 
cost at each efficiency level (i.e., the ``cost analysis''). In 
determining the performance of higher-efficiency products, DOE 
considers technologies and design option combinations not eliminated by 
the screening analysis. For each product class, DOE estimates the 
baseline cost, as well as the incremental cost for the product at 
efficiency levels above the baseline. The output of the engineering 
analysis is a set of cost-efficiency ``curves'' that are used in 
downstream analyses (i.e., the LCC and PBP analyses and the NIA).
1. Efficiency Analysis
    DOE typically uses one of two approaches to develop energy 
efficiency levels for the engineering analysis: (1) relying on observed 
efficiency levels in the market (i.e., the efficiency-level approach), 
or (2) determining the incremental efficiency improvements associated 
with incorporating specific design options to a baseline model (i.e., 
the design-option approach). Using the efficiency-level approach, the 
efficiency levels established for the analysis are determined based on 
the market distribution of existing products (in other words, based on 
the range of efficiencies and efficiency level ``clusters'' that 
already exist on the market). Using the design option approach, the 
efficiency levels established for the analysis are determined through 
detailed engineering calculations and/or computer simulations of the 
efficiency improvements from implementing specific design options that 
have been identified in the technology assessment. DOE may also rely on 
a combination of these two approaches. For example, the efficiency-
level approach (based on actual products on the market) may be extended 
using the design option approach to ``gap fill'' levels (to bridge 
large gaps between other identified efficiency levels) and/or to 
extrapolate to the max-tech level (particularly in cases where the max-
tech level exceeds the maximum efficiency level currently available on 
the market).
    For the January 2022 Preliminary Analysis, DOE used the physical 
teardown approach supplemented with a catalog teardown approach for 
coolers. Several products from the cooler class (compact and standard 
size) and one product from the combination cooler class C-13A were used 
in physical teardowns. The physical teardown combination cooler was 
used to determine manufacturer production costs (``MPCs'') for one 
analyzed product class (C-13A), but that analysis primarily relied on 
the engineering conducted for the October 15, 2021, preliminary 
analysis for consumer refrigerators, refrigerator-freezers, and 
freezers (86 FR 57378) as the basis for other MPCs and incremental 
costs.
    For this NOPR analysis, DOE chose to analyze classes C-3A and C-9 
in addition to the original C-13A. Due to the lack of physical teardown 
products for these classes, the analysis relied heavily on adjusted 
analyses from the consumer refrigerators, refrigerator-freezers, and 
freezers (``RF'') classes 3 and 9. RF product class 3 represents 
refrigerator-freezers with automatic defrost with top-mounted freezers 
without an automatic icemaker while RF product class 9 represents 
upright freezers with automatic defrost without an automatic icemaker. 
Product class 3 was chosen as a proxy to C-3A due to its similar 
configuration, and its analysis was able to be adapted relatively 
easily. Likewise, C-9's analysis used RF product class 9's analysis due 
to similarities in configuration.\20\ A survey approach was taken to 
determine sizing and pricing for representative models, and relevant 
design options from C-13A were used in the additional analyses. DOE 
also considered input provided during manufacturer interviews to 
improve upon design option energy savings and representative ELs.
---------------------------------------------------------------------------

    \20\ As described in section IV.C.1.c of this document, DOE 
conducted engineering analysis for class C-9, but did not conduct 
further analysis due to the limited potential for efficiency 
increase.
---------------------------------------------------------------------------

    General comments regarding the efficiency analysis are addressed 
below.
    AHAM noted DOE builds its incremental MPC based on a set path of 
technology options, but there is no standard ordering of technology 
choice within a single company, let alone across the total industry. 
AHAM stated DOE should recognize there is limited new technology that 
would allow for significant per-unit reduction in energy consumption, 
particularly true of technology options that DOE evaluated to reach 
efficiency levels beyond EL 1. (AHAM, No. 18, pp. 6-7)
    In response, DOE notes that the ordering of technologies is not 
intended to be aligned with the ordering that would be considered by a 
single company, nor is it intended to represent the ordering that the 
total industry would adopt. Instead, it is intended to provide 
reasonable representation, both of design options used by specific 
reverse-engineered products, and of an ordering that would prioritize 
the most cost-effective options, with gradual reductions in cost-
effectiveness as the EL increases. Also, the certified data shows that 
existing products on the market demonstrate significant per-unit 
reduction in energy consumption. For example, among DOE's tested and 
reverse-engineered compact coolers was a 3.4 cuft cooler certified with 
energy use 45% less than the standard, and a 5.1 cuft cooler certified 
with energy use 49% less than the standard. These levels were EL3 for 
the preliminary analysis and beyond EL4 for the NOPR analysis, 
certainly beyond EL1. DOE test results confirmed that their energy use 
was consistent with the certifications.
    CA IOUs stated that in its review of products currently available 
on the market, it was revealed that the incremental design options may 
not be the most appropriate (as presented by DOE in Table 5.5.1 of the 
preliminary TSD) as products on the market contain a combination of 
technologies DOE has attributed to different ELs. For example, smaller 
units within the compact category utilize efficiency features affecting 
the thermal envelope (argon and/or triple-pane glass), whereas larger 
units can utilize condenser, evaporator, and compressor efficiency 
features. (CA IOUs, No. 20, pp. 1-2)
    When analyzing the models pointed to by CA IOUs, DOE was unable to 
confirm the efficiency level for one of the provided MREF models, due 
to the fact it was not listed on the Compliance Certification Database 
(``CCD'') as of August 2022. The compact model referred to above was 
located on the CCD system and rated at around 13% lower energy use than 
baseline; however, the model did not match the CCD rated AV, therefore, 
the efficiency information may not be up to date. Information regarding 
the design options used by each model was also limited, with relevant 
engineering design options absent from promotional

[[Page 19399]]

material, user manuals, and specification sheets.
    Considering the issues related to gathering information on the 
specific models referenced in the comment, DOE is unable to point to 
specific reasoning behind the design options implemented in each model. 
DOE does note, however, that it considers design options in a manner as 
described previously: with design options used by specific reverse-
engineered products, and of an ordering that prioritizes the most cost-
effective options for initial EL steps and gradual reduction in cost-
effectiveness as the EL increases.
    DOE requests any further input from commenters regarding the 
approach for design option selection and implementation for a given 
model, beyond the information DOE has already considered.
a. Built-In Classes
    In this NOPR analysis, DOE chose to continue using freestanding 
MREF classes as proxies for built-in classes. DOE's analysis of the 
current market for miscellaneous refrigeration products showed built-in 
and freestanding products occupying the same range of efficiencies, and 
DOE did not identify any unique characteristic that would inhibit 
efficiency improvements for built-in products relative to freestanding 
products based on a review on the market. As a result, DOE chose to 
apply its freestanding products analyses to built-in classes. Several 
comments were received following the preliminary analysis (which used 
the same approach) and are addressed below.
    According to AHAM, and echoed by Sub Zero and NEEA, freestanding 
product classes are not a good proxy for built-in product classes, and 
DOE should evaluate them separately. AHAM stated that DOE's assumption 
that the products can employ similar technology options in order to 
achieve higher efficiency levels is fundamentally flawed as built-in 
designs face difference constraints than freestanding designs. NEEA and 
Sub Zero both specifically mentioned insulation thickness increases and 
airflow as a major difference between built-in and freestanding 
products. (AHAM, No. 18, p. 9; Sub Zero, No. 17, p. 2; NEEA, No. 21, 
pp. 2-3)
    Based on the comments provided, DOE revisited its review of the 
range of efficiency levels attainable by built-in and freestanding 
coolers. DOE noted that many products certified as freestanding have 
installation instructions that provide requirements for both 
freestanding and built-in installation and are advertised for both 
installations. DOE found that for such products, the majority of high-
efficiency models are advertised as capable of both freestanding and 
built-in installations. For coolers between 2 and 6 cubic feet, DOE 
found that all of the most efficient products reviewed (roughly 37% 
better than baseline or more) were capable of both configurations, 
whereas some of the products that were less efficient in that adjusted 
volume range were advertised as freestanding only. This suggests that 
built-in products are not inhibited in their ability to achieve high 
efficiencies. For larger coolers between 14 and 16 cubic feet in 
adjusted volume, DOE found products up to 15% greater than the baseline 
level that were configurable in both, based on manufacturer 
instructions. There were a few large cooler products that reached the 
highest available efficiency reviewed, up to roughly 30% better than 
baseline, that are advertised as only capable of a freestanding 
configuration.
    DOE also reviewed the depth of the various models considered to 
determine if models advertised for built-in installation have any clear 
dimensional limitation that might make achieving high efficiency levels 
more difficult. DOE was unable to determine a clear correlation between 
depth and energy use, for any of the models or capacity ranges 
considered, nor between depth and instructions or advertising for 
built-in installation. In fact, DOE found that the most efficient 
freestanding-only model in the large cubic volume range had the 
smallest depth of all the other models reviewed, suggesting that 
dimensional restriction on depth was not a key factor relative to the 
overall unit efficiency.
    DOE also observed that the highest efficiency levels for coolers of 
the built-in class and efficiency levels for freestanding coolers 
having installation instructions or advertising for both freestanding 
and built-in installation were at or close to the maximum technology 
efficiency levels analyzed by DOE. DOE has not been provided evidence 
that manufacturers are using design options in built-ins other than 
those that have passed screening for this analysis. There are also no 
manufacturer comments that suggest other design options have been used 
to achieve max-tech efficiency levels in built-in products. Hence, DOE 
concludes built-ins are using the same set of design options as 
analyzed at max-tech for freestanding classes. Consequently, DOE did 
not conduct separate analysis for built-in classes.
    While DOE chose, in this NOPR analysis, to continue using 
freestanding classes as proxies for built-in classes, DOE requests 
additional information regarding the constraints for built-in designs 
relative to freestanding designs, and the associated specific 
efficiency and cost impacts.
b. Baseline Efficiency/Energy Use
    For each product/equipment class, DOE generally selects a baseline 
model as a reference point for each class, and measures changes 
resulting from potential energy conservation standards against the 
baseline. The baseline model in each product/equipment class represents 
the characteristics of a product/equipment typical of that class (e.g., 
capacity, physical size). Generally, a baseline model is one that just 
meets current energy conservation standards, or, if no standards are in 
place, the baseline is typically the most common or least efficient 
unit on the market.
    For the January 2022 Preliminary Analysis, DOE chose baseline 
efficiency levels represented by the current Federal energy 
conservation standards, expressed as maximum annual energy consumption 
as a function of the product's adjusted volume. The baseline levels 
differ for coolers and combination coolers to account for design 
differences; all coolers share the same baseline level, i.e., the 
baseline is the same function of adjusted volume for both freestanding 
and built-in models, for both compact and standard-size models.
    For this NOPR, DOE kept the cooler baselines the same as the 
preliminary analysis; the combination cooler baseline has also been 
kept the same. From these baselines DOE conducted direct analyses for 
three different AV coolers, and two combination coolers (C-13A, and C-
3A). In conducting these analyses, eight teardown units were used in 
construction of cost curves, and had their characteristics determined 
in large part by testing and reverse-engineering. Further information 
on the design characteristics of specific analyzed baseline models is 
summarized in the NOPR TSD.
c. Higher Efficiency Levels
    For the NOPR analysis, DOE analyzed up to five incremental 
efficiency levels beyond the baseline for each of the analyzed product 
classes. The efficiency levels start at EL1, 10% more efficient than 
the current energy conservation standard. For the compact coolers NOPR 
analysis, DOE extended the efficiency levels in steps of 10% of the 
current energy conservation standard up to EL 4; for full-size coolers, 
EL 4 is analyzed at 35%. For combination coolers (excluding C-9) 
efficiency levels above EL 1 are in steps of 5% up to EL 4.

[[Page 19400]]

Finally, EL 5 represents maximum technology (``max-tech''), using 
design option analysis to extend the analysis beyond EL 4 using all 
applicable design options, including max efficiency variable-speed 
compressors, and maximum practical use of VIPs. For coolers, the 
current Energy Star specifications correspond to EL 1 for freestanding 
full-size coolers (10%), EL 2 for freestanding compact coolers (20%), 
and EL 3 for both classes of built-in coolers (30%).
    DOE conducted analysis for product class C-9 starting with analysis 
for a class 9 upright freezer with comparable total refrigerated 
volume. In its analysis, DOE concluded that application of all of the 
design options being considered at max-tech would be required for the 
product to be compliant with the current energy conservation standards. 
Currently, the CCD includes only one product that is certified as C-9--
an LG product certified with energy use 17% below the standard. DOE did 
not purchase, test, and reverse-engineer this product, in-part because 
of the limited product offering and expected insignificant potential 
for energy savings for the class. Thus, DOE is relying primarily on its 
analysis of the RF product class 9 freezer, to suggest that 
opportunities for energy savings are likely limited and likely not 
cost-effective, even if improved efficiency is technically feasible. 
DOE has not analyzed efficiency levels beyond baseline for this product 
class in this NOPR, but has taken into consideration all design options 
applied at max-tech in its analysis.
    DOE received comments regarding intermediate efficiency levels as 
shown below.
    The CA IOUs expressed concern that the cost analysis performed in 
the preliminary TSD is overly conservative; the marked drop in 
calculated benefits between the lower ELs does not accurately reflect 
the more nuanced state of the market. As such, they suggested DOE 
implement an intermediate EL, between EL 1 and EL 2, for the Cooler-FC 
and Cooler-F product classes. They also suggested an intermediate EL 
between EL 2 and EL 3 for product class C-13A. NEEA voiced similar 
concerns to CA IOUs and also suggested similar intermediate EL levels 
for coolers and C-13A. ASAP also urged DOE to consider an intermediate 
EL for compact coolers between ELs 1 and 2. (CA IOUs, No. 20, pp. 1-2; 
NEEA, No. 21, pp. 5-6; ASAP, No. 19, pp. 2-3)
    In response, DOE notes that the efficiency levels considered in the 
NOPR analysis differ significantly from those considered in the January 
2022 Preliminary Analysis.\21\ While all of the specific gap fill 
levels suggested by stakeholders may not have been included, DOE 
believes that, the levels suggested in this NOPR more accurately 
reflect the full efficiency range of the market. The proposed EL steps 
have been chosen to represent the full range of efficiency and reflect 
the products on the market for each product class.
---------------------------------------------------------------------------

    \21\ The January 2022 Preliminary Analysis TSD presenting the 
preliminary analysis is available at: www.regulations.gov/document/EERE-2020-BT-STD-0039-0009.
---------------------------------------------------------------------------

    ASAP noted, in the preliminary TSD for consumer refrigerators and 
freezers, DOE estimated a 9-percent improvement in compressor 
efficiency associated with converting from a single-speed compressor to 
a VSC with similar rated energy efficiency ratio (``EER'') values, and 
ASAP stated they expect there to be similar savings for compact 
coolers. ASAP further noted, however, in the preliminary analysis for 
the 5.1 cubic foot compact cooler representative unit, DOE appears to 
show energy savings of only about 2 percent when going from the most 
efficient single-speed compressor at EL 3 to a VSC and a triple-pane 
glass pack at EL 4. ASAP therefore stated concern that DOE may be 
underestimating the energy savings associated with the design options 
incorporated at EL 4 and urged DOE to ensure that its analysis is 
appropriately capturing the savings from the incorporation of a VSC. 
(ASAP, No. 19, p. 2)
    When constructing a direct analysis of the 5.1 cubic foot compact 
cooler DOE considered numerous design options when moving from EL 3 to 
EL 4. The effect of the triple-pane glass and switch to VSC alone do 
not contribute to the ultimate percentage difference between El 3 and 
EL 4. DOE has continued to work with manufacturers in order to 
accurately create ELs for both coolers and combination coolers that are 
based on real-world information and energy consumption.
    The efficiency levels analyzed for this NOPR beyond the baseline 
are shown in Table IV.3.

        Table IV.3--Incremental Efficiency Levels for Analyzed Products (% Energy Use Less Than Baseline)
----------------------------------------------------------------------------------------------------------------
                                                      Coolers                           Combination coolers
   Product class (AV, cu.ft.)    -------------------------------------------------------------------------------
                                   FCC (3.1) (%)   FCC (5.1) (%)   FC (15.3) (%)   C-13A (5) (%)   C-3A (21) (%)
----------------------------------------------------------------------------------------------------------------
EL 1............................              10              10              10              10              10
EL 2 *..........................              20              20              20              16              15
EL 3............................              30              30              30              20              20
EL 4............................              40              40              35              25              24
EL 5............................              59              50              38              28              30
----------------------------------------------------------------------------------------------------------------
* ENERGY STAR % level varies based on specific teardown units analyzed.

d. VIP and VSC Analysis
    DOE received comments on the implementation of VIPs in its 
analyses, and the comments are addressed below.
    AHAM stated DOE does not account for the limitations of VIPs and 
that DOE's modeling does not apply VIPs as they would likely be used in 
actual products and, as a result, overestimates their use and impact in 
its analysis. AHAM stated DOE should note the following when evaluating 
the effectiveness of VIPs: covering all sides of an MREF casing in VIPs 
is not reasonable or a good design practice, there are costs associated 
with VIPs beyond the price of the panels themselves, a failed VIP in 
the field cannot be repaired and it will require a total product 
replacement, and VIPs are not effective for smaller products because of 
``edge effects.'' AHAM stated DOE should further discuss these issues 
with manufacturers during manufacturer interviews and evaluate more 
products in order to get a better understanding of the complexities and 
costs associated with VIPs and update its analysis accordingly. (AHAM, 
No. 18, pp. 7-8)

[[Page 19401]]

    In communicating with manufacturers DOE received similar comments 
relating to decreased effectiveness of VIPs on miscellaneous 
refrigeration products. For the NOPR analysis DOE aimed to adjust the 
usage of VIPs in order to provide more accuracy in associated energy 
savings. More focus was put on increasing efficiency in glass panels, 
gas fills, and thickness changes when moving up in efficiency levels. 
Only partial VIP coverage was included in max-tech levels for the NOPR 
analysis.
    ASAP expressed concern that DOE is underestimating the potential 
savings from upgrading from a single-speed compressor to a VSC by not 
accounting for the higher EER values of VSCs. ASAP noted that, in the 
preliminary TSD, DOE states compressors typically present in MREFs have 
capacities of 300 to 400 Btu per hour, but at a capacity of 300 BTU per 
hour, for example, even the least efficient VSC has a higher EER than 
the most efficient single-speed compressor. ASAP further noted that the 
EER of the most efficient VSC at 300 BTU per hour appears to be about 
30 percent higher than the most efficient single-speed compressor. ASAP 
therefore urged DOE to ensure that its analysis is capturing the 
improved full-load efficiency of VSCs relative to single-speed 
compressors. (ASAP, No. 19, p. 1)
    In the preliminary analysis, as laid out in figure 5.5.1 in the 
preliminary TSD, DOE analyzed the capacity and efficiency ratings of 
numerous VSCs through publicly available compressor performance data. 
79 FR 71705. This figure does show that VSCs account for a higher EER 
when compared to single-speed compressors as capacity (Btu/h) is 
decreased. However, relating back ASAP's claim relating to 300 Btu/h 
capacity compressors, manufacturer feedback indicates that these EER 
efficiency increases are not generally realized when implementing this 
technology. Manufacturers have reported a wide range of overall 
efficiency increases associated with use of variable-speed compressors. 
In in the NOPR analysis DOE considered manufacturer feedback regarding 
experience with implementing VSC's in order to avoid overestimating 
efficiency increases. The analysis primarily considers energy savings 
associated with increased heat exchanger effectiveness associated with 
lower compressor speed operation and reduced fan speeds, assuming that 
fans would be operated at reduced speed when operating at low 
compressor speed. VSCs are generally implemented at higher EL levels 
throughout the analysis, consistent with their projected cost 
effectiveness.
    DOE seeks comment on the range of VSC nominal efficiencies and the 
relative overall efficiency gains offered by VSCs when operating at 
reduced compressor speeds along with reduced fan speeds in MREF 
products.
2. Cost Analysis
    The cost analysis portion of the engineering analysis is conducted 
using one or a combination of cost approaches. The selection of cost 
approach depends on a suite of factors, including the availability and 
reliability of public information, characteristics of the regulated 
product, the availability and timeliness of purchasing the product on 
the market. The cost approaches are summarized as follows:
    [ballot] Physical teardowns: Under this approach, DOE physically 
dismantles a commercially available product, component-by-component, to 
develop a detailed bill of materials for the product.
    [ballot] Catalog teardowns: In lieu of physically deconstructing a 
product, DOE identifies each component using parts diagrams (available 
from manufacturer websites or appliance repair websites, for example) 
to develop the bill of materials for the product.
    [ballot] Price surveys: If neither a physical nor catalog teardown 
is feasible (for example, for tightly integrated products such as 
fluorescent lamps, which are infeasible to disassemble and for which 
parts diagrams are unavailable) or cost-prohibitive and otherwise 
impractical (e.g., large commercial boilers), DOE conducts price 
surveys using publicly available pricing data published on major online 
retailer websites and/or by soliciting prices from distributors and 
other commercial channels.
    In the present case, DOE conducted the analysis using primarily 
physical teardowns. Physical teardowns were used to provide a baseline 
of technology options and their pricing for a specific product class at 
a specific EL level. Then with technology option information, DOE 
estimated the cost of various design options including compressors, 
VIPs, and insulation, by extrapolating the costs from price surveys of 
relevant refrigerators, refrigerator-freezers, and freezers.
    AHAM stated VSC supply is not sufficient to accommodate a standard 
that requires their use for all MREF products, indicating that this 
will drive up costs, and further noting that DOE's analysis does not 
account for these increased costs. AHAM also stated MREFs are enclosed 
systems and the use of VSCs entails significant redesign costs for 
those that do not currently employ VSCs, which DOE's analysis also must 
account for. (AHAM, No. 18, p. 8)
    DOE has considered the comments regarding VSC availability and cost 
of VSC implementation. For this NOPR analysis, DOE estimated the cost 
of implementing VSCs based on the costs of relevant variable-speed 
compressors available on the market for other refrigeration products. 
Regarding component availability, DOE acknowledges that more stringent 
standards would likely necessitate adoption of more efficient 
technologies, such as variable-speed compressors. However, DOE expects 
that standards, if adopted, would provide sufficient time and 
regulatory certainty for manufacturers and suppliers to establish 
additional capacity in the supply chain, if needed. Should this NOPR 
proceed to a final rule, compliance with any amended standards would 
not be required until 5-years after a final rule is published. DOE 
expects that this 5-year compliance period provides adequate time for 
OEMs to sign supply contracts with their compressor suppliers ahead of 
anticipated demand.
    DOE seeks comment on whether manufacturers expect manufacturing 
capacity constraints would limit product availability to consumers in 
the timeframe of the amended standard compliance date.
3. Cost-Efficiency Results
    The results of the engineering analysis are presented as cost-
efficiency data for each of the efficiency levels for each of the 
product classes that were analyzed, as well as those extrapolated from 
a product class with similar cooling capacity and features. DOE 
developed estimates of MPCs for each unit in the teardown sample, and 
also performed additional modeling for each of the teardown samples, to 
develop a comprehensive set of MPCs at each efficiency level. The 
resulting weighted average incremental MPCs (i.e., the additional costs 
manufacturers would likely incur by producing miscellaneous 
refrigeration products at each efficiency level compared to the 
baseline) are provided in Tables 5.5.5 and 5.5.6 in chapter 5 of the 
NOPR TSD. See chapter 5 of the NOPR TSD for additional detail on the 
engineering analysis.
    DOE seeks comment on the method for estimating manufacturing 
production costs and on the resulting cost-efficiency curves.
    See section VII.E of this document for a list of issues on which 
DOE seeks comment.

[[Page 19402]]



                 Table IV.1--Incremental Design Options * by Efficiency Level and Product Class
----------------------------------------------------------------------------------------------------------------
 Product
class (AV                          EL1              EL2              EL3              EL4              EL5
   ***)
----------------------------------------------------------------------------------------------------------------
FCC (3.1)  EL Percent......  10%............  20%............  30%............  40%............  59%.
           Design Options    Tube and Fin     Static           Higher-EER       Variable-Speed   Partial VIP;
            Added.            Evaporator;      Condenser;.      Compressor;      Compressor;      Triple Pane
                              Argon Filled                      Tube and Fin     Roll Bond        Glass **; Tube
                              Glass.                            Condenser.       Evaporator;      and Fin Bond
                                                                                 Manual           Evaporator.
                                                                                 Defrost;
                                                                                 Increased
                                                                                 Insulation
                                                                                 Thickness.
FCC (5.1)  EL Percent......  10%............  20%............  30%............  40%............  50%.
           Design Options    Argon Filled     Higher-EER       Higher-EER       Higher-EER       Variable-Speed
            Added.            Glass; Higher-   Compressor.      Compressor;      Compressor;      Compressor;
                              EER Compressor.                   Hot Wall         Tube and Fin     Partial VIP;
                                                                Condenser.       Evaporator;      Triple Pane
                                                                                 HotWall + Tube   Glass **.
                                                                                 and Fin
                                                                                 Condenser;
                                                                                 Increased
                                                                                 Insulation
                                                                                 Thickness.
FC (15.3)  EL Percent......  10%............  20%............  30%............  35%............  38%.
           Design Options    Higher-EER       Higher-EER       Variable-Speed   Triple Pane      Partial VIP.
            Added.            Compressor;      Compressor.      Compressor;      Glass **.
                              Hot Wall +                        Variable
                              Tube and Fin                      Defrost; 3x
                              Condenser.                        Tube and Fin
                                                                Evaporator;
                                                                Increased
                                                                Insulation
                                                                Thickness.
C-13A (5)  EL Percent......  10%............  16%............  20%............  25%............  28%.
           Design Options    Higher-EER       Higher-EER       Variable-Speed   Triple Pane      Partial VIP.
            Added.            Compressor.      Compressor.      Compressor.      Glass **.
C-3A       EL Percent......  10%............  15%............  20%............  24%............
 (20.6).
           Design Options    Higher-EER       Variable-Speed   Triple Pane      Partial VIP;
            Added.            Compressor.      Compressor;      Glass**; Timed   Variable (off-
                                               Variable (off-   (off-cycle)      cycle) Defrost.
                                               cycle) Defrost.  Defrost;
                                                                Higher-EER
                                                                Variable Speed
                                                                Compressor.
----------------------------------------------------------------------------------------------------------------
* Design options are cumulative between efficiency levels (except for component replacements).
** Triple-pane glass pack consists of soft-coated low-E glass and argon gas fill (with a reduced gap size to
  maintain door thickness).
*** AV represented in ft\3\.


                   Table IV.2--Cost-Efficiency Curves for Miscellaneous Refrigeration Products
----------------------------------------------------------------------------------------------------------------
Product Class (AV
        *)                              EL0          EL1          EL2          EL3          EL4          EL5
----------------------------------------------------------------------------------------------------------------
FCC (3.1)........  EL Percent.....           0%          10%          20%          30%          40%          59%
                   MPC............      $273.66      $289.88      $299.61      $309.88      $343.55      $392.74
                   Incremental MPC        $0.00       $16.21       $25.94       $36.22       $69.88      $119.08
FCC (5.1)........  EL Percent.....           0%          10%          20%          30%          40%          50%
                   MPC............      $307.76      $310.89      $313.29      $327.72      $354.18      $439.26
                   Incremental MPC        $0.00        $3.13        $5.53       $19.96       $46.42      $131.50
FC (15.3)........  EL Percent.....           0%          10%          20%          30%          35%          38%
                   MPC............      $648.22      $661.71      $665.13      $709.87      $832.95      $845.25
                   Incremental MPC        $0.00       $13.49       $16.91       $61.65      $184.72      $197.02
C-13A (5)........  EL Percent.....           0%          10%          15%          20%          25%          28%
                   MPC............      $533.25      $535.25      $537.01      $565.74      $589.63      $627.33
                   Incremental MPC        $0.00        $2.00        $3.76       $32.48       $56.37       $94.07
C-3A (20.6)......  EL Percent.....           0%          10%          16%          20%          24%  ...........
                   MPC............      $601.00      $604.17      $639.47      $733.13      $790.03  ...........
                   Incremental MPC        $0.00        $3.17       $38.47      $132.13      $189.03  ...........
C-9 (20) **......  EL Percent.....           0%  ...........  ...........  ...........  ...........  ...........
                   MPC............      $514.16  ...........  ...........  ...........  ...........  ...........
                   Incremental MPC           $0  ...........  ...........  ...........  ...........  ...........
----------------------------------------------------------------------------------------------------------------
* Adjusted volumes provided in ft\3\.
** Only considered at baseline.

4. Manufacturer Selling Price
    To account for manufacturers' non-production costs and profit 
margin, DOE applies a multiplier (the manufacturer markup) to the MPC. 
The resulting manufacturer selling price (``MSP'') is the price at 
which the manufacturer distributes a unit into commerce. DOE developed 
an average manufacturer markup by examining the annual Securities and 
Exchange Commission (``SEC'') 10-K reports \22\ filed by publicly-
traded manufacturers primarily engaged in appliance manufacturing and 
whose combined product range includes miscellaneous refrigeration 
products. See chapter 12 of the NOPR TSD for additional detail on the 
manufacturer markup.
---------------------------------------------------------------------------

    \22\ U.S. Securities and Exchange Commission, Electronic Data 
Gathering, Analysis, and Retrieval (EDGAR) system. Available at 
www.sec.gov/edgar/search/ (last accessed September 22, 2022).
---------------------------------------------------------------------------

D. Markups Analysis

    The markups analysis develops appropriate markups (e.g., retailer 
markups and distributor markups) in the distribution chain and sales 
taxes to

[[Page 19403]]

convert the MSP estimates derived in the engineering analysis to 
consumer prices, which are then used in the LCC and PBP analysis. At 
each step in the distribution channel, companies markup equipment 
prices to cover business costs and profit margin.
    For MREFs, DOE identified two distribution channels: (1) 
manufacturers to retailers to consumers, and (2) manufactures to 
wholesalers to dealers/retailers to consumers. The parties involved in 
the distribution channel are retailers, wholesalers and dealers.
    DOE developed baseline and incremental markups for each actor in 
the distribution channel. Baseline markups are applied to the price of 
products with baseline efficiency, while incremental markups are 
applied to the difference in price between baseline and higher-
efficiency models (the incremental cost increase). The incremental 
markup is typically less than the baseline markup and is designed to 
maintain similar per-unit operating profit before and after new or 
amended standards.
    DOE relied on economic data from the U.S. Census Bureau to estimate 
average baseline and incremental markups. Specifically, DOE used the 
2017 Annual Retail Trade Survey for the ``electronics and appliance 
stores'' sector to develop retailer markups, and the 2017 Annual 
Wholesale Trade Survey for the ``household appliances, and electrical 
and electronic goods merchant wholesalers'' sector to estimate 
wholesaler markups. DOE recognized that the overall markup in the 
wholesaler channel should be higher than the direct retailer channel. 
Considering that most of the wholesalers and dealers/retailers hold 
special contract in the wholesaler channel, DOE assumed that the 
dealer/retailer markups are half of the values of the retailer makeups 
in the direct retailer channel.
    DOE requests comment on the assumption used in developing the 
dealer/retailer markups and welcomes any feedback on the overall markup 
in the wholesaler channel.
    Chapter 6 of the NOPR TSD provides details on DOE's development of 
markups for MREFs.

E. Energy Use Analysis

    The purpose of the energy use analysis is to determine the annual 
energy consumption of MREFs at different efficiencies in representative 
U.S. households, and to assess the energy savings potential of 
increased MREF efficiency. The energy use analysis estimates the range 
of energy use of MREFs in the field (i.e., as they are actually used by 
consumers). The energy use analysis provides 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 or new standards.
    DOE determined a range of annual energy use of MREFs as a function 
of unit volume. DOE developed distributions of adjusted volume of 
product classes (Table IV.3) with more than one representative unit 
base on the capacity distributions reported in the TraQline[supreg] 
wine chiller data spanning from 2020 Q1 to 2022 Q1.^{23 24} DOE 
also developed a sample of households that use MREFs based on the 
TraQline wine chiller data (see section IV.G for details). For each 
volume and considered efficiency level, DOE derived the energy 
consumption as measured by the DOE test procedure at 10 CFR part 430, 
subpart B, appendix A, with the exception that DOE used in its analysis 
the reduced icemaker energy use contribution that would take effect on 
the compliance date of new standards.
---------------------------------------------------------------------------

    \23\ TraQline is a market research company that specialized in 
tracking consumer purchasing behavior across a wide range of 
products using quarterly online surveys.
    \24\ DOE acknowledges that the pandemics which span the sample 
period may contribute to the medium- to long-term consumer behavior 
changes. DOE will continue monitor the consumer behavior trend and 
may make alternative estimation in the next rulemaking phase.
---------------------------------------------------------------------------

    DOE requests comment on its methodology to develop market share 
distributions by adjusted volume in the compliance year for each 
product class with two representative volumes, as well as data to 
further inform these distributions in subsequent rounds of this 
rulemaking.

 Table IV.3--Distribution of Adjusted Interior Volumes by Product Class
------------------------------------------------------------------------
                 Adjusted volume (ft\3\)                    Percentage
------------------------------------------------------------------------
                                   FCC
------------------------------------------------------------------------
3.1.....................................................            83.4
5.1.....................................................            16.6
------------------------------------------------------------------------
                                  BICC
------------------------------------------------------------------------
3.1.....................................................            81.3
5.1.....................................................            18.7
------------------------------------------------------------------------
                               FC and BIC
------------------------------------------------------------------------
15.3....................................................           100.0
------------------------------------------------------------------------
                                  C-3A
------------------------------------------------------------------------
21......................................................           100.0
------------------------------------------------------------------------
                                   C-9
------------------------------------------------------------------------
20......................................................           100.0
------------------------------------------------------------------------
                                  C-13A
------------------------------------------------------------------------
5.......................................................           100.0
------------------------------------------------------------------------

    Chapter 7 of the NOPR TSD provides details on DOE's energy use 
analysis for MREFs.

F. Life-Cycle Cost and Payback Period Analysis

    DOE conducted the LCC and PBP analyses to evaluate the economic 
impacts on individual consumers of potential energy conservation 
standards for MREFs. 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:
     The LCC is the total consumer expense of an appliance or 
product over the life of that product, consisting of total installed 
cost (manufacturer selling price, distribution chain markups, sales 
tax, and installation costs) plus operating costs (expenses for energy 
use, maintenance, and repair). To compute the operating costs, DOE 
discounts future operating costs to the time of purchase and sums them 
over the lifetime of the product.
     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 
at higher efficiency levels by the change in annual operating cost for 
the year that amended or new standards are assumed to take effect.
    For any given efficiency level, DOE measures the change in LCC 
relative to the LCC in the no-new-standards case, which reflects the 
estimated efficiency distribution of MREFs in the absence of new or 
amended energy conservation standards. In contrast, the PBP for a given 
efficiency level is measured relative to the baseline product.
    NEEA encouraged DOE to calculate and consider the return on 
investment

[[Page 19404]]

(ROI) for each efficiency level as an additional metric of cost-
effectiveness, which would only require the use of simple payback and 
device lifetime. (NEEA, No. 21, pp. 6-7).
    DOE acknowledges that ROI is a metric that can be useful in 
evaluating investments in energy efficiency. However, the measures that 
DOE has historically used to evaluate the economic impacts of standards 
on consumers--LCC savings and PBP--are more closely related to the 
language in EPCA that 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)) Therefore, DOE finds it reasonable to continue to 
use those measures.
    For each considered efficiency level in each product class, DOE 
calculated the LCC and PBP for a nationally representative set of 
housing units. As stated previously, DOE developed household samples 
based on TraQline wine chiller survey data. The survey panel is 
weighted against the U.S. Census based on their demographic 
characteristic to make the sample representative of the U.S. 
population. The wine chiller survey asked respondents about the product 
features of the wine chillers they recently purchased, as well as the 
purchasing channel of the products. To account for the more recent MREF 
consumers, DOE used the latest two years of survey data (2020 Q1 to 
2022 Q1) to construct the household sample used in this NOPR.\25\
---------------------------------------------------------------------------

    \25\ DOE acknowledges that the pandemics which span the sample 
period may contribute to the medium- to long-term consumer behavior 
changes. DOE will continue monitor the consumer behavior trend and 
may make alternative estimation in the next rulemaking phase.
---------------------------------------------------------------------------

    For each sample household, DOE determined the energy consumption 
for the MREF(s) and the appropriate energy price. By developing a 
representative sample of households, the analysis captured the 
variability in energy consumption and energy prices associated with the 
use of MREFs.
    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 (if applicable), 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 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 MREF user samples. The 
model calculated the LCC and PBP for products at each efficiency level 
for 10,000 housing units per simulation run. The analytical results 
include a distribution of 10,000 data points showing the range of LCC 
savings for a given efficiency level relative to the no-new-standards 
case efficiency distribution. In performing an iteration of the Monte 
Carlo simulation for a given consumer, product efficiency is chosen 
based on its probability. If the chosen product efficiency is greater 
than or equal to the efficiency of the standard level under 
consideration, the LCC and PBP calculation reveals that a consumer is 
not impacted by the standard level. By accounting for consumers who 
already purchase more-efficient products, DOE avoids overstating the 
potential benefits from increasing product efficiency.
    DOE calculated the LCC and PBP for all consumers of MREFs as if 
each were to purchase a new product in the expected year of required 
compliance with new or amended standards. New and amended standards 
would apply to MREFs manufactured 5 years after the date on which any 
new or amended standard is published. (42 U.S.C. 6295(l)(2)) At this 
time, DOE estimates publication of a final rule in 2024. Therefore, for 
purposes of its analysis, DOE used 2029 as the first year of compliance 
with any amended standards for MREFs.
    Table IV.4 summarizes the approach and data DOE used to derive 
inputs to the LCC and PBP calculations. The paragraphs 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 NOPR TSD and its appendices.

Table IV.4--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 project product
                                          costs.
Installation Costs.....................  Assumed no change with
                                          efficiency level. Not
                                          considered in the analysis.
Annual Energy Use......................  Derived from engineering inputs
                                          (See chapter 5 of the NOPR
                                          TSD).
                                         Variability: Based on the
                                          product class and rep unit
                                          volume, where applicable.
Energy Prices..........................  Electricity: Based on 2021
                                          average and marginal
                                          electricity price data from
                                          the Edison Electric Institute.
                                         Variability: Electricity prices
                                          vary by region.
Energy Price Trends....................  Based on AEO 2022 price
                                          projections.
Repair and Maintenance Costs...........  Assumed no change with
                                          efficiency level. Not
                                          considered in the analysis.
Product Lifetime.......................  Average: 12.6 years.
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.
Compliance Date........................  2029.
------------------------------------------------------------------------
* References for the data sources mentioned in this table are provided
  in the sections following the table or in chapter 8 of the NOPR TSD.


[[Page 19405]]

1. Product Cost
    To calculate consumer product costs, DOE multiplied the MSPs 
developed in the engineering analysis by the markups described 
previously (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.
    Economic literature and historical data suggest that the real costs 
of many products may trend downward over time according to ``learning'' 
or ``experience'' curves. Experience curve analysis implicitly includes 
factors such as efficiencies in labor, capital investment, automation, 
materials prices, distribution, and economies of scale at an industry-
wide level.\26\ In the experience curve method, the real cost of 
production is related to the cumulative production or ``experience'' 
with a manufactured product. DOE used historical Producer Price Index 
(PPI) data for ``household refrigerator and home freezer 
manufacturing'' from the Labor Department's Bureau of Labor Statistics' 
(``BLS'') spanning the time period between 1989 and 2021 as a proxy of 
the production cost for MREFs.\27\ This is the most relevant price 
index for MREFs as the main technology options are similar to full-size 
refrigerators and several refrigerator manufacturers also produce 
MREFs. An inflation-adjusted price index was calculated by dividing the 
PPI series by the gross domestic product index from Bureau of Economic 
Analysis for the same years. The cumulative production of MREFs were 
assembled from the estimated annual shipments using the stock 
accounting approach between 2016 and 2021, and a flat shipment trend 
was assumed prior to 1951. The estimated learning rate (defined as the 
fractional reduction in price expected from each doubling of cumulative 
production) is 15.5  1.7 percent.
---------------------------------------------------------------------------

    \26\ Taylor, M. and Fujita, K.S. Accounting for Technological 
Change in Regulatory Impact Analyses: The Learning Curve Technique. 
LBNL-6195E. Lawrence Berkeley National Laboratory, Berkeley, CA. 
April 2013. https://escholarship.org/uc/item/3c8709p4#page-1.
    \27\ Household refrigerator and home freezer manufacturing PPI 
series ID: PCU3352203352202; www.bls.gov/ppi/.
---------------------------------------------------------------------------

    DOE included variable-speed compressors as a technology option for 
higher efficiency levels. To develop future prices specific for that 
technology, DOE applied a different price trend to the controls portion 
of the variable-speed compressor, which represents part of the price 
increment when moving from an efficiency level achieved with the 
highest efficiency single-speed compressor to an efficiency level with 
variable-speed compressor. DOE used PPI data on ``semiconductors and 
related device manufacturing'' between 1967 and 2021 to estimate the 
historic price trend of electronic components in the control.\28\ The 
regression, performed as an exponential trend line fit, results in an 
R-square of 0.99, with an annual price decline rate of 6.3 percent. See 
chapter 8 of the TSD for further details on this topic.
---------------------------------------------------------------------------

    \28\ Semiconductors and related device manufacturing PPI series 
ID: PCU334413334413; www.bls.gov/ppi/.
---------------------------------------------------------------------------

    AHAM noted that any declining costs are due to value engineering 
and/or productivity improvements, and agreed with DOE's decision not to 
use a price learning curve in the preliminary analysis. AHAM also 
stated that MREFs are not identical to refrigerators and freezers, and 
therefore DOE should not apply the learning curve from the 
refrigerators, refrigerator-freezers, and freezers rulemaking analysis. 
(AHAM, No. 18, p. 6) On the other hand, NEEA, ASAP and the CA IOUs, 
encouraged DOE to incorporate a price learning curve. ASAP and the CA 
IOUs expressed concern that assuming constant prices will result in 
overestimating the cost to achieve higher efficiency levels in the 
assumed compliance year and beyond and suggested the use of price data 
from consumer refrigerators to inform the development of an appropriate 
learning rate for MREFs, as many of the same design options are used 
for MREFs. (NEEA, No. 21, pp. 4-5, ASAP, No. 19 at p. 3, CA IOUs, No. 
20, pp. 2-4).
    As discussed earlier, in this NOPR DOE developed a price learning 
based on the historical refrigerator and freezer PPI and the cumulative 
production estimated specifically for MREFs, assuming that the 
refrigerator and freezer PPI is representative of MREFs. Given that 
similar design options are considered for units in higher efficiency 
levels as for consumer refrigerators, DOE also considered a separate 
price learning for the controls portion of the variable-speed 
compressor in MREFs at higher efficiency levels. DOE is requesting 
comment on this approach.
2. Installation Cost
    Installation cost includes labor, overhead, and any miscellaneous 
materials and parts needed to install the product. DOE is not aware of 
any data that suggest the cost of installation changes as a function of 
efficiency for MREFs. DOE therefore assumed that installation costs are 
the same regardless of EL and do not impact the LCC or PBP. As a 
result, DOE did not include installation costs in the LCC and PBP 
analysis.
3. Annual Energy Consumption
    DOE determined the energy consumption for MREFs at different 
efficiency levels using the approach described previously in section 
IV.E of this document.
4. Energy Prices
    Because marginal electricity price more accurately captures the 
incremental savings associated with a change in energy use from higher 
efficiency, it provides a better representation of incremental change 
in consumer costs than average electricity prices. Therefore, DOE 
applied average electricity prices for the energy use of the product 
purchased in the no-new-standards case, and marginal electricity prices 
for the incremental change in energy use associated with the other 
efficiency levels considered.
    DOE derived electricity prices in 2021 using data from EEI Typical 
Bills and Average Rates reports. Based upon comprehensive, industry-
wide surveys, this semi-annual report presents typical monthly electric 
bills and average kilowatt-hour costs to the customer as charged by 
investor-owned utilities. For the residential sector, DOE calculated 
electricity prices using the methodology described in Coughlin and 
Beraki (2018).\29\
---------------------------------------------------------------------------

    \29\ Coughlin, K. and B. Beraki.2018. Residential Electricity 
Prices: A Review of Data Sources and Estimation Methods. Lawrence 
Berkeley National Lab. Berkeley, CA. Report No. LBNL-2001169. 
https://ees.lbl.gov/publications/residential-electricity-prices-review (Last accessed September 22, 2022).
---------------------------------------------------------------------------

    To estimate energy prices in future years, DOE multiplied the 2021 
energy prices by the projection of annual average price changes from 
the Reference case in AEO 2022, which has an end year of 2050.\30\ To 
estimate price trends after 2050, DOE used the 2050 electricity prices, 
held constant.
---------------------------------------------------------------------------

    \30\ EIA. Annual Energy Outlook 2022 with Projections to 2050. 
Washington, DC. Available at www.eia.gov/forecasts/aeo/ (last 
accessed September 22, 2022).
---------------------------------------------------------------------------

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 compared to baseline 
efficiency

[[Page 19406]]

products. DOE is not aware of any data that suggest the cost of repair 
or maintenance for MREFs changes as a function of efficiency. DOE 
therefore assumed that these costs are the same regardless of EL and do 
not impact the LCC or PBP. As a result, DOE did not include maintenance 
and repair costs in the LCC and PBP analysis.
6. Product Lifetime
    For MREFs, DOE used lifetime estimates from products that operate 
using the same refrigeration technology: covered refrigerators and 
refrigerator-freezers. DOE assumed a maximum lifetime of 40 years for 
all product classes and an average lifetime of 10.3 years for compact 
coolers and 17.3 years for full-size coolers. DOE also assumed that the 
probability function for the annual survival of MREFs would take the 
form of a Weibull distribution. See chapter 8 of the NOPR TSD for a 
more detailed discussion.
    DOE requests comment and data on the assumptions and methodology 
used to calculate MREF survival probabilities.
7. Discount Rates
    In the calculation of LCC, DOE applies discount rates appropriate 
to households to estimate the present value of future operating cost 
savings. DOE estimated a distribution of residential discount rates for 
MREFs based on consumer financing costs and the opportunity cost of 
consumer funds.
    DOE applies weighted average discount rates calculated from 
consumer debt and asset data, rather than marginal or implicit discount 
rates.\31\ The LCC analysis estimates net present value over the 
lifetime of the product, so the appropriate discount rate will reflect 
the general opportunity cost of household funds, taking this time scale 
into account. Given the long-time horizon modeled in the LCC analysis, 
the application of a marginal interest rate associated with an initial 
source of funds is inaccurate. Regardless of the method of purchase, 
consumers are expected to continue to rebalance their debt and asset 
holdings over the LCC analysis period, based on the restrictions 
consumers face in their debt payment requirements and the relative size 
of the interest rates available on debts and assets. DOE estimates the 
aggregate impact of this rebalancing using the historical distribution 
of debts and assets.
---------------------------------------------------------------------------

    \31\ The implicit discount rate is inferred from a consumer 
purchase decision between two otherwise identical goods with 
different first cost and operating cost. It is the interest rate 
that equates the increment of first cost to the difference in net 
present value of lifetime operating cost, incorporating the 
influence of several factors: transaction costs; risk premiums and 
response to uncertainty; time preferences; interest rates at which a 
consumer is able to borrow or lend. The implicit discount rate is 
not appropriate for the LCC analysis because it reflects a range of 
factors that influence consumer purchase decisions, rather than the 
opportunity cost of the funds that are used in purchases.
---------------------------------------------------------------------------

    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. It 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, 2013, 2016, and 2019.\32\ Using the 
SCF and other sources, DOE 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 type, 
is 4.1 percent. See chapter 8 of the NOPR TSD for further details on 
the development of consumer discount rates.
---------------------------------------------------------------------------

    \32\ U.S. Board of Governors of the Federal Reserve System. 
Survey of Consumer Finances. 1995, 1998, 2001, 2004, 2007, 2010, 
2013, 2016, and 2019. (Last accessed September 22, 2022.) https://www.federalreserve.gov/econresdata/scf/scfindex.htm.
---------------------------------------------------------------------------

8. Energy Efficiency Distribution in the No-New-Standards Case
    To accurately estimate the share of consumers that would be 
affected by a potential energy conservation standard at a particular 
efficiency level, DOE's LCC analysis considered the projected 
distribution (market shares) of product efficiencies under the no-new-
standards case (i.e., the case without amended or new energy 
conservation standards).
    In the January 2022 Preliminary Analysis, DOE estimated the energy 
efficiency distribution of MREFs for 2029 using model counts from DOE's 
CCD. DOE assumed that the distribution of models was equivalent to the 
distribution of products sold. AHAM commented that the distribution DOE 
obtained through this approach did not reflect the shipment breakdown 
by efficiency seen in the market and submitted shipment data by product 
class and efficiency level collected from its members to illustrate the 
discrepancy between the CCD data and the AHAM efficiency distributions. 
(AHAM, No. 18, p. 2-5)
    DOE appreciates AHAM's data submission and, for this NOPR, DOE is 
using the efficiency distribution by product class as provided by AHAM. 
DOE understands that this approach inherently assumes that the rest of 
the MREF market has a similar distribution of efficiencies. However, 
due to lack of efficiency data from non-AHAM members, DOE is not able 
to verify whether this assumption is incorrect. For this analysis, DOE 
also assumed that the current distribution of product efficiencies 
would remain constant in 2029, and during the analysis period, in the 
no-new-standards case.
    The estimated market shares for the no-new-standards case for MREFs 
are shown in Table IV.5 of this document. See chapter 8 of the NOPR TSD 
for further information on the derivation of the efficiency 
distributions.

                                                    Table IV.5--Efficiency Distributions for the No-New-Standards Case in the Compliance Year
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  Total adjusted                                               2029 Market share (%)
                          Product class                             volume (cu.  ---------------------------------------------------------------------------------------------------------------
                                                                       ft.)            EL 0            EL 1            EL 2            EL 3            EL 4            EL 5           Total *
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Cooler-FC.......................................................             3.1              79              18               3               0               0               0             100
                                                                             5.1
Cooler-BIC......................................................             3.1              18               6               1               1               0              74             100
                                                                             5.1
Cooler-F........................................................            15.3              42              58               0               0               0               0             100
Cooler-BI.......................................................            15.3              72               8              20               0               0               0             100
C-13A...........................................................               5              99               1               0               0               0               0             100
C-3A............................................................              21             100               0               0               0               0  ..............             100
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* The total may not sum to 100% due to rounding.


[[Page 19407]]

    DOE requests comment and data on its efficiency distribution 
assumptions and projection into future years. Specifically, DOE is 
requesting comment and data on the efficiency distribution of non-AHAM 
members, to more accurately derive the efficiency distribution for the 
whole MREF market.
9. Payback Period Analysis
    The payback period 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. Payback 
periods are expressed in years. Payback periods 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 previously, EPCA 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 calculating 
the energy savings in accordance with the applicable DOE test 
procedure, and multiplying those savings by the average energy price 
projection for the year in which compliance with the amended standards 
would be required.

G. Shipments Analysis

    DOE uses projections of annual product shipments to calculate the 
national impacts of potential amended or new energy conservation 
standards on energy use, NPV, and future manufacturer cash flows.\33\ 
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.
---------------------------------------------------------------------------

    \33\ 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.
---------------------------------------------------------------------------

    DOE defined two broad MREF product categories (coolers, and 
combination cooler refrigeration products) and developed models to 
estimate shipments for each category. DOE used various data and 
assumptions to develop the shipments for each product class considered 
in this rulemaking.
    Given the limited available data sources on historical shipments of 
coolers, DOE assumed a penetration rate of 13.3 percent in the U.S. 
households based on online surveys \34\ to estimate the annual 
shipments starting from 2016, the start year of AEO 2022 housing 
projection data. ^{35 36} DOE multiplied the estimated 
penetration by the total number of households from the AEO 2022, and 
then determined the number of new shipments by dividing the total stock 
by the mean product lifetime. DOE projected the annual shipments by 
incorporating the lifetime distributions by product class and assuming 
that the growth of new sales is consistent with the housing projections 
from AEO 2022. To estimate shipments prior to 2016, DOE assumed a flat 
historical shipment trend at the 2016 level. With even more limited 
available data sources on historical shipments of combination cooler 
refrigeration products, DOE estimated total shipments of combination 
cooler refrigeration products in 2014 to be 36,000 units, based on 
feedback from manufacturers from the October 2016 Direct Final Rule. 
DOE assumed sales would increase in line with the increase in the 
number of households in AEO 2022. Finally, DOE incorporated the 2021 
shipment data provided by AHAM to re-calibrate total shipments for each 
product class considered in this rulemaking.
---------------------------------------------------------------------------

    \34\ DOE also reviewed the recent release of the EIA 2020 
Residential Energy Consumption Survey (RECS 2020), which identified 
wine chillers in representative U.S. households. DOE found that the 
penetration rate of wine chillers in RECS 2020 is significantly 
lower compared to that estimated by DOE for MREFs based on previous 
market surveys. Due to the uncertainty on the breakdown of MREFs 
between wine chillers and other miscellaneous refrigeration 
applications in the U.S. market, DOE continued to use the 13.3 
percent penetration rate for MREFs in this NOPR. However, DOE also 
modeled an alternative shipments scenario based on the lower 
penetration rate of MREFs in American homes derived from the RECS 
2020 data. For more details on this alternative scenario and the 
resulting NES and NPV results, see chapter 9 and appendix 10C of the 
NOPR TSD, respectively. As part of its request for comment below, 
DOE requests input on its shipments modeling.
    \35\ Greenblatt, J.B., S.J. Young, H.-C. Yang, T. Long, B. 
Beraki, S.K. Price, S. Pratt, H. Willem, L.-B. Desroches, and S.M. 
Donovan. U.S. Residential Miscellaneous Refrigeration Products: 
Results from Amazon Mechanical Turk Surveys. 2014. Lawrence Berkeley 
National Laboratory: Berkeley, CA. Report No. LBNL-6537E.
    \36\ Donovan, S.M., S.J. Young, and J.B. Greenblatt. Ice-Making 
in the U.S.: Results from an Amazon Mechanical Turk Survey. Lawrence 
Berkeley National Laboratory. Report No. LBNL-183899.
---------------------------------------------------------------------------

    AHAM commented that the methodology DOE used to develop shipments 
in the preliminary analysis was based on findings of a Lawrence 
Berkeley National Laboratory (``LBNL'') study taken place nine years 
ago and that DOE should improve its data collection effort and consider 
other data sources. AHAM conducted another data collection among its 
members for 2021 shipments by product class in response to DOE's 
comment regarding AHAM shipments from the RFI (AHAM, No. 18 at p. 2-5). 
A separate confidential shipment data submission disaggregated by 
product class and capacity was provided by AHAM along with its comment.
    AHAM stated that the data they provided for 2021 shipments by 
product class and efficiency varies substantially from the data and 
assumptions in DOE's aforementioned shipments analysis (AHAM, No. 18 at 
p. 2). Furthermore, AHAM asserted that the bulk of the market lies at 
lower efficiency levels, its membership represents a majority of the 
market, and shipments are significantly lower than what DOE is 
projecting. Finally, AHAM noted that DOE should further investigate 
other data sources to collect accurate information from non-AHAM 
members (including NPD,\37\ TraQline data, and manufacturer interviews) 
rather than relying on calculations whose assumptions may not be 
accurate. Sub Zero echoed AHAM's comments and suggested DOE rethink its 
approach using manufacturer-provided data (Sub Zero, No. 17 at p. 2).
---------------------------------------------------------------------------

    \37\ https://www.npd.com/.
---------------------------------------------------------------------------

    DOE appreciates the shipments data submitted by AHAM, which were 
disaggregated by product class and efficiency. As discussed earlier in 
this NOPR, DOE used the efficiency distributions by product class to 
match those submitted by AHAM. DOE also assumed that the market share 
of each product class (in relation to the total MREF shipments) matched 
the market shares provided by AHAM. To estimate total MREF shipments, 
DOE utilized the AHAM shipments data and AHAM-member information and 
reviewed the TraQline data from 2020 Q1 to 2022 Q1 to estimate non-
AHAM-member

[[Page 19408]]

shipments.\38\ Based on this approach, DOE's estimate of the MREF 
shipments for the whole market was consistent with the total number of 
shipments estimated using DOE's approach discussed earlier and used in 
the January 2022 Preliminary Analysis. Hence, DOE continued using the 
same approach to develop the total MREF shipments, but incorporated the 
product class breakdown provided by AHAM to re-distribute the total 
shipments by product class.
---------------------------------------------------------------------------

    \38\ DOE also collected and reviewed manufacturer interview data 
but was unable to collect a representative sample that would allow 
it to estimate non-AHAM-member shipments data.
---------------------------------------------------------------------------

    DOE is requesting comment on this approach and welcomes comment and 
data related to the total MREF shipments, MREF shipments by product 
class, and the non-AHAM-member shipments.

H. National Impact Analysis

    The NIA assesses the NES and the 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.\39\ 
(``Consumer'' in this context refers to consumers of the product being 
regulated.) DOE calculates the NES and NPV for the potential standard 
levels considered 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. For the present analysis, DOE 
projected the energy savings, operating cost savings, product costs, 
and NPV of consumer benefits over the lifetime of MREFs sold from 2029 
through 2058.
---------------------------------------------------------------------------

    \39\ The NIA accounts for impacts in the 50 states and U.S. 
territories.
---------------------------------------------------------------------------

    DOE evaluates the impacts of new or 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.
    DOE uses a model coded in the Python programming language to 
calculate the energy savings and the national consumer costs and 
savings from each TSL and presents the results in the form of a 
spreadsheet. 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.6 summarizes the inputs and methods DOE used for the NIA 
analysis for the NOPR. Discussion of these inputs and methods follows 
the table. See chapter 10 of the NOPR TSD for further details.

    Table IV.6--Summary of Inputs and Methods for the National Impact
                                Analysis
------------------------------------------------------------------------
                 Inputs                               Method
------------------------------------------------------------------------
Shipments..............................  Annual shipments from shipments
                                          model.
Compliance Date of Standard............  2029.
Efficiency Trends......................  No trend assumed.
Annual Energy Consumption per Unit.....  Calculated for each efficiency
                                          level based on inputs from
                                          energy use analysis.
Total Installed Cost per Unit..........  Prices for the year of
                                          compliance are calculated in
                                          the LCC analysis. Prices in
                                          subsequent years are
                                          calculated incorporating price
                                          learning based on historical
                                          data.
Annual Energy Cost per Unit............  Calculated for each efficiency
                                          level using the energy use per
                                          unit, and electricity prices
                                          and trends.
Repair and Maintenance Cost per Unit...  Annual values do not change
                                          with efficiency level.
Energy Price Trends....................  AEO 2022 projections to 2050
                                          and fixed at 2050 prices
                                          thereafter.
Energy Site-to-Primary and FFC           A time-series conversion factor
 Conversion.                              based on AEO 2022.
Discount Rate..........................  3 percent and 7 percent.
Present Year...........................  2022.
------------------------------------------------------------------------

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.F.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 year of anticipated compliance with 
an amended standard.
    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 (2029). In this scenario, the market 
shares 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.
    In the absence of data on trends in efficiency, DOE assumed no 
efficiency trend over the analysis period for both the no-new-standards 
and standards cases. For a given case, market shares by efficiency 
level were held fixed to their 2029 distribution. DOE requests comment 
on its assumption of no efficiency trend and seeks historical product 
efficiency data.
2. National Energy Savings
    The NES analysis involves a comparison of national energy 
consumption of the considered products between each potential standards 
case (TSL) and the case with no new or amended energy conservation 
standards. DOE calculated the national energy consumption by 
multiplying the number of units (stock) of each product (by vintage or 
age) by the unit energy consumption (also by vintage). DOE calculated 
annual NES based on the difference in national energy consumption for 
the no-new standards case and for each higher efficiency standard case. 
DOE estimated energy consumption and savings based on site

[[Page 19409]]

energy and converted the electricity consumption and savings to primary 
energy (i.e., the energy consumed by power plants to generate site 
electricity) using annual conversion factors derived from AEO 2022. 
Cumulative energy savings are the sum of the NES for each year over the 
timeframe of the analysis.
    Use of higher-efficiency products is occasionally associated with a 
direct rebound effect, which refers to an increase in utilization of 
the product due to the increase in efficiency. DOE did not find any 
data on the rebound effect specific to MREFs that would indicate that 
consumers would alter their utilization of their product as a result of 
an increase in efficiency. MREFs are typically plugged in and operate 
continuously; therefore, DOE assumed a rebound rate of 0.
    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 (Aug. 17, 2012). NEMS is a public domain, 
multi-sector, partial equilibrium model of the U.S. energy sector \40\ 
that EIA uses to prepare its Annual Energy Outlook. The FFC factors 
incorporate losses in production and delivery in the case of natural 
gas (including fugitive emissions) and additional energy used to 
produce and deliver the various fuels used by power plants. The 
approach used for deriving FFC measures of energy use and emissions is 
described in appendix 10B of the NOPR TSD.
---------------------------------------------------------------------------

    \40\ For more information on NEMS, refer to The National Energy 
Modeling System: An Overview 2018, DOE/EIA-0581(2018), April 2019. 
Available at www.eia.gov/outlooks/aeo/nems/documentation/ (last 
accessed September 22, 2022).
---------------------------------------------------------------------------

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 operating costs (energy costs and repair and maintenance 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 projection period.
    As discussed in section IV.F.1 of this document, DOE developed MREF 
price trends based on an experience curve calculated using historical 
PPI data. DOE applied the same trends to project prices for each 
product class at each considered efficiency level. By 2058, which is 
the end date of the projection period, the average price of single-
speed compressor MREFs is projected to drop 14 percent and the average 
price of MREFs with a variable-speed compressor is projected to drop 
about 15 percent relative to 2029, the compliance year. DOE's 
projection of product prices is described in appendix 10C of the NOPR 
TSD.
    To evaluate the effect of uncertainty regarding the price trend 
estimates, DOE investigated the impact of different product price 
projections on the consumer NPV for the considered TSLs for MREFs. In 
addition to the default price trend, DOE considered high and low- 
price- decline sensitivity cases. For the single-speed compressor MREFs 
and the non-variable- speed controls portion of MREFs, DOE estimated 
the high price decline and the low- price- decline scenarios based on 
household refrigerator and home freezer PPI data limited to the period 
between the period 1989-2008 and 2009-2021, respectively. For the 
variable-speed controls portion of MREFs, DOE estimated the high price 
decline and the low- price- decline scenarios based on an exponential 
trend line fit of the semiconductor PPI between the period 1994-2021 
and 1967-1993, respectively. The derivation of these price trends and 
the results of these sensitivity cases are described in appendix 10C of 
the NOPR 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 regional energy 
prices by the projection of annual national-average residential energy 
price changes in the Reference case from AEO 2022, which has an end 
year of 2050. To estimate price trends after 2050, DOE used the average 
annual rate of change in prices from 2020 through 2050. As part of the 
NIA, DOE also analyzed scenarios that used inputs from variants of the 
AEO 2022 Reference case that have lower and higher economic growth. 
Those cases have lower and higher energy price trends compared to the 
Reference case. NIA results based on these cases are presented in 
appendix 10C of the NOPR TSD.
    In calculating the NPV, DOE multiplies the net savings in future 
years by a discount factor to determine their present value. For this 
NOPR, 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.\41\ 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
---------------------------------------------------------------------------

    \41\ United States Office of Management and Budget. Circular A-
4: Regulatory Analysis. September 17, 2003. Section E. Available at 
https://obamawhitehouse.archives.gov/omb/circulars_a004_a-4/ (last 
accessed September 30, 2022).
---------------------------------------------------------------------------

I. Consumer Subgroup Analysis

    In analyzing the potential impact of new or amended energy 
conservation standards on consumers, DOE evaluates the impact on 
identifiable subgroups of consumers that may be disproportionately 
affected by a new or amended national standard. The purpose of a 
subgroup analysis is to determine the extent of any such 
disproportional impacts. 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 NOPR, DOE analyzed the impacts of the considered standard 
levels on senior-only households. DOE did not consider low-income 
consumers in this NOPR because MREFs are not products generally used by 
this subgroup, as they typically cost more than comparable compact 
refrigerators, which are able to maintain lower temperatures compared 
to MREFs, and therefore serve a wider range of applications. The 
analysis used a subset of the TraQline consumer sample composed of 
households that meet the criteria for this subgroup. DOE used the LCC 
and PBP spreadsheet model to

[[Page 19410]]

estimate the impacts of the considered efficiency levels on senior-only 
households. Chapter 11 in the NOPR TSD describes the consumer subgroup 
analysis. However, DOE acknowledges the potential limitations of this 
dataset to capture possible areas of the market, in particular smaller 
businesses (e.g. restaurants and bars), that are users of products such 
as wine chillers. DOE believes it is likely that a fraction of the 
purchasers of MREFs are likely small business owners who utilize such 
cooler products to keep beverages cool within restaurants.
    DOE requests comment on the subgroup analysis for MREF products, 
and specifically whether to any significant extent these products are 
in use by smaller or comparatively lower-income, small businesses. DOE 
is also interested in understanding the number of potential small 
business purchasers of MREFs that would be impacted at DOE's proposed 
TSL 4 and how such impacts may be different than those of the overall 
samples.

J. Manufacturer Impact Analysis

1. Overview
    DOE performed an MIA to estimate the financial impacts of amended 
energy conservation standards on manufacturers of MREFs and to estimate 
the potential impacts of such standards on direct employment and 
manufacturing capacity. The MIA has both quantitative and qualitative 
aspects and includes analyses of projected 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 standards cases. To capture the 
uncertainty relating to manufacturer pricing strategies following 
amended standards, the GRIM estimates a range of possible impacts under 
different scenarios.
    The qualitative part of the MIA addresses manufacturer 
characteristics and market trends. Specifically, the MIA considers such 
factors as a potential standard's impact on manufacturing capacity, 
competition within the industry, the cumulative impact of other DOE and 
non-DOE, Federal regulations, and impacts on manufacturer subgroups. 
The complete MIA is outlined in chapter 12 of the NOPR TSD.
    DOE conducted the MIA for this rulemaking in three phases. In Phase 
1 of the MIA, DOE prepared a profile of the MREF manufacturing industry 
based on the market and technology assessment and publicly available 
information. This included a top-down analysis of MREF manufacturers 
that DOE used to derive preliminary financial inputs for the GRIM 
(e.g., revenues; materials, labor, overhead, and depreciation expenses; 
selling, general, and administrative expenses (``SG&A''); and R&D 
expenses). DOE also used public sources of information to further 
calibrate its initial characterization of the MREF manufacturing 
industry, including company filings of Form 10-Ks from the SEC,\42\ 
corporate annual reports, the U.S. Census Bureau's Annual Survey of 
Manufactures (``ASM''),\43\ and reports from Dun & Bradstreet.\44\
---------------------------------------------------------------------------

    \42\ U.S. Securities and Exchange Commission, Electronic Data 
Gathering, Analysis, and Retrieval (EDGAR) system. Available at 
www.sec.gov/edgar/search/ (last accessed July 1, 2022).
    \43\ U.S. Census Bureau, Annual Survey of Manufactures. 
``Summary Statistics for Industry Groups and Industries in the U.S 
(2020).'' Available at: www.census.gov/data/tables/time-series/econ/asm/2018-2020-asm.html (Last accessed July 15, 2022).
    \44\ The Dun & Bradstreet Hoovers login is available at: 
app.dnbhoovers.com (Last accessed July 15, 2022).
---------------------------------------------------------------------------

    In Phase 2 of the MIA, DOE prepared a framework 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. 
In general, energy conservation standards can affect manufacturer cash 
flow in three distinct ways: (1) creating a need for increased 
investment, (2) raising production costs per unit, and (3) altering 
revenue due to higher per-unit prices and changes in sales volumes.
    In addition, during Phase 2, DOE developed interview guides to 
distribute to manufacturers of MREFs in order to develop other key GRIM 
inputs, including product and capital conversion costs, and to gather 
additional information on the anticipated effects of energy 
conservation standards on revenues, direct employment, capital assets, 
industry competitiveness, and manufacturer subgroups.
    In Phase 3 of the MIA, DOE conducted structured, detailed 
interviews with representative manufacturers. During these interviews, 
DOE discussed engineering, manufacturing, procurement, and financial 
topics to validate assumptions used in the GRIM and to identify key 
issues or concerns. See section IV.J.3 of this document for a 
description of the key issues raised by manufacturers during the 
interviews. As part of Phase 3, DOE also 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 may include small business manufacturers, low-
volume manufacturers, niche players, and/or manufacturers exhibiting a 
cost structure that largely differs from the industry average. DOE 
identified one subgroup for a separate impact analysis: small business 
manufacturers. The small business subgroup is discussed in section 
VI.B, ``Review under the Regulatory Flexibility Act'' and in chapter 12 
of the NOPR TSD.
2. Government Regulatory Impact Model and Key Inputs
    DOE uses the GRIM to quantify the changes in cash flow due to 
amended standards that result in a higher or lower industry value. The 
GRIM uses a standard, annual discounted cash flow analysis that 
incorporates manufacturer costs, manufacturer markups, shipments, and 
industry financial

[[Page 19411]]

information as inputs. The GRIM models changes in costs, distribution 
of shipments, investments, and manufacturer margins that could result 
from an amended energy conservation standard. The GRIM spreadsheet uses 
the inputs to arrive at a series of annual cash flows, beginning in 
2023 (the NOPR publication year) and continuing to 2058. DOE calculated 
INPVs by summing the stream of annual discounted cash flows during this 
period. For manufacturers of MREFs, DOE used a real discount rate of 
7.7 percent, which was derived from industry financials and then 
modified according to feedback received during manufacturer interviews.
    The GRIM calculates cash flows using standard accounting principles 
and compares changes in INPV between the no-new-standards case and each 
standards case. The difference in INPV between the no-new-standards 
case and a standards case represents the financial impact of the 
amended energy conservation standard on manufacturers. As discussed 
previously, DOE developed critical GRIM inputs using a number of 
sources, including publicly available data, results of the engineering 
analysis and shipments analysis, and information gathered from industry 
stakeholders during the course of manufacturer interviews. The GRIM 
results are presented in section I.B.2. Additional details about the 
GRIM, the discount rate, and other financial parameters can be found in 
chapter 12 of the NOPR TSD.
a. Manufacturer Production Costs
    Manufacturing more efficient equipment is typically more expensive 
than manufacturing baseline equipment due to the use of more complex 
components, which are typically more costly than baseline components. 
The changes in the MPCs of covered products can affect the revenues, 
gross margins, and cash flow of the industry. For a complete 
description of the MPCs, see chapter 5 of the NOPR TSD or section IV.C 
of this document.
b. Shipments Projections
    The GRIM estimates manufacturer revenues based on total unit 
shipment projections and the distribution of those shipments by 
efficiency level. Changes in sales volumes and efficiency mix over time 
can significantly affect manufacturer finances. For this analysis, the 
GRIM uses the NIA's annual shipment projections derived from the 
shipments analysis from 2023 (the NOPR publication year) to 2058 (the 
end year of the analysis period). See chapter 9 of the NOPR TSD for 
additional details or section IV.G of this document.
c. Product and Capital Conversion Costs
    Amended energy conservation standards could cause manufacturers to 
incur conversion costs to bring their production facilities and 
equipment designs into compliance. DOE evaluated the level of 
conversion-related expenditures that would be needed to comply with 
each considered efficiency level in each product class. For 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, 
marketing, and other non-capitalized costs necessary to make product 
designs comply with amended energy conservation standards. Capital 
conversion costs are investments in property, plant, and equipment 
necessary to adapt or change existing production facilities such that 
new compliant product designs can be fabricated and assembled.
Product Conversion Costs
    DOE based its estimates of the product conversion costs necessary 
to meet the varying efficiency levels on information from manufacturer 
interviews, the design paths analyzed in the engineering analysis, the 
prior MREF rulemaking analysis, and market share and model count 
information. 81 FR 75194. Generally, manufacturers indicated a 
preference to meet amended standards with design options that were 
direct and relatively straight forward component swaps. However, at 
higher efficiency levels, manufacturers anticipated the need for 
platform redesigns. Efficiency levels that significantly altered 
cabinet construction would require very large investments to update 
designs. Manufacturers noted that increasing foam thickness would 
require complete redesign of the cabinet, liner, and shelving due to 
loss of interior volume. Additionally, extensive use of VIPs would 
require redesign of the cabinet to maximize the benefits of VIPs.
Capital Conversion Costs
    DOE relied on information from manufacturer interviews and the 
engineering analysis to evaluate the level of capital conversion costs 
would likely incur at the considered standard levels. During 
interviews, manufacturers provided estimates and descriptions of the 
required tooling changes that would be necessary to upgrade product 
lines to meet the various efficiency levels. Based on these inputs, DOE 
modeled incremental capital conversion costs for efficiency levels that 
could be reached with individual components swaps. However, based on 
feedback, DOE modeled higher capital conversion costs when 
manufacturers would have to redesign their existing product platforms. 
DOE used information from manufacturer interviews to determine the cost 
of the manufacturing equipment and tooling necessary to implement 
complete redesigns.
    Increases in foam thickness require either reductions to interior 
volume or increases to exterior volume. Many MREFs are sized to fit 
standard widths, meaning any increase in foam thickness would likely 
result in the loss of interior volume. Additionally, many MREFs are 
sized to maximize storage of specific products (e.g., canned beverages 
or wine bottles) and small changes in wall thickness could dramatically 
decrease the unit storage capacity for those products. The reduction of 
interior volume has significant consequences for manufacturing. 
Redesigning the cabinet to increase the effectiveness of insulation 
likely requires manufacturers to update designs and tooling associated 
with the interior of the product. This could require investing in new 
tooling to accommodate changes to the liner, shelving, drawers, and 
doors.
    To minimize reductions to interior volume, manufacturers may choose 
to adopt VIP technology. Extensive incorporation of VIPs into designs 
require significant upfront capital due to differences in the handling, 
storing, and manufacturing of VIPs as compared to typical polyurethane 
foams. VIPs are relatively fragile and must be protected from punctures 
and rough handling. If VIPs have leaks of any size, the panel will 
eventually lose much of its thermal insulative properties and 
structural strength. If already installed within a cabinet wall, a 
punctured VIP may significantly reduce the structural strength of the 
MREF cabinet. As a result, VIPs require careful handling and 
installation. Manufacturers noted the need to allocate special 
warehouse space in order to ensure the VIPs are not jostled or roughly 
handled in the manufacturing environment. VIPs require significantly 
more warehouse space than polyurethane foams. The application of VIPs 
can be difficult and may require investment in hard-tooling or robotic 
systems to ensure the panels are positioned properly within the cabinet 
or door. Manufacturers noted that producing cabinets with VIPs are much 
more labor and time intensive than producing cabinets with typical 
polyurethane foams and the increase in

[[Page 19412]]

labor can affect total production capacity.
    To develop industry conversion cost estimates, DOE estimated the 
number of product platforms in DOE's CCD \45\ and California Energy 
Commission's Modernized Appliance Efficiency Database System 
(``MAEDbS'') \46\ and scaled up the product and capital conversion 
costs associated with the number of product platforms that would 
require updating at each efficiency level.
---------------------------------------------------------------------------

    \45\ U.S. Department of Energy's Compliance Certification 
Database is available at: www.regulations.doe.gov/certification-data/#q=Product_Group_s%3A* (Last accessed September 22, 2022).
    \46\ California Energy Commission's Modernized Appliance 
Efficiency Database System is available at: 
cacertappliances.energy.ca.gov/Pages/ApplianceSearch.aspx (Last 
accessed September 22, 2022). DOE used this database to gather 
product information not provided in DOE's CCD (e.g., manufacturer 
names).
---------------------------------------------------------------------------

    DOE acknowledges that manufacturers may follow different design 
paths to reach the various efficiency levels analyzed. An individual 
manufacturer's investments depend on a range of factors, including the 
company's current product offerings and product platforms, existing 
production facilities and infrastructure, and make vs. buy decisions 
for products. DOE's conversion cost methodology incorporated feedback 
from all manufacturers that took part in interviews and extrapolated 
industry values. While industry average values may not represent any 
single manufacturer, DOE's modeling provides reasonable estimates of 
industry-level investments.
    In general, DOE assumes all conversion-related investments occur 
between the year of publication of the final rule and the year by which 
manufacturers must comply with the new standard. The conversion cost 
figures used in the GRIM can be found in section V.B.2 of this 
document. For additional information on the estimated capital and 
product conversion costs, see chapter 12 of the NOPR TSD.
d. Manufacturer Markup Scenarios
    MSPs include direct manufacturing production costs (i.e., labor, 
materials, and overhead 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 for each product class and 
efficiency level. Modifying these markups in the standards case yields 
different sets of impacts on manufacturers. For the MIA, DOE modeled 
two standards case scenarios to represent uncertainty regarding the 
potential impacts on prices and profitability for manufacturers 
following the implementation of amended energy conservation standards: 
(1) a preservation of gross margin percentage scenario; and (2) a 
preservation of operating profit scenario. These scenarios lead to 
different manufacturer markup values that, when applied to the MPCs, 
result in varying revenue and cash flow impacts.
    Under the preservation of gross margin percentage scenario, DOE 
applied a single uniform ``gross margin percentage'' across all 
efficiency levels, which assumes that manufacturers would be able to 
maintain the same amount of profit as a percentage of revenues at all 
efficiency levels within a product class. As manufacturer production 
costs increase with efficiency, this scenario implies that the per-unit 
dollar profit will increase. DOE assumed a gross margin percentage of 
20 percent for freestanding compact coolers and 28 percent for all 
other product classes.\47\ Manufacturers tend to believe it is 
optimistic to assume that they would be able to maintain the same gross 
margin percentage as their production costs increase, particularly for 
minimally efficient products. Therefore, this scenario represents a 
high bound of industry profitability under an amended energy 
conservation standard.
---------------------------------------------------------------------------

    \47\ The gross margin percentages of 20 percent and 28 percent 
are based on manufacturer markups of 1.25 and 1.38 percent, 
respectively.
---------------------------------------------------------------------------

    In the preservation of operating profit scenario, as the cost of 
production goes up under a standards case, manufacturers are generally 
required to reduce their manufacturer markups to a level that maintains 
base-case operating profit. DOE implemented this scenario in the GRIM 
by lowering the manufacturer markups at each TSL to yield approximately 
the same earnings before interest and taxes in the standards case as in 
the no-new-standards case in the year after the expected compliance 
date of the amended standards. The implicit assumption behind this 
scenario is that the industry can only maintain its operating profit in 
absolute dollars after the standard takes effect.
    A comparison of industry financial impacts under the two scenarios 
is presented in section V.B.2.a of this document.
3. Manufacturer Interviews
    DOE interviewed manufacturers including domestic-based and foreign-
based original equipment manufacturers (``OEMs'') as well as importers. 
Participants included manufacturers offering a range of product 
classes, including both freestanding and built-in designs.
    In interviews, DOE asked manufacturers to describe their major 
concerns regarding potential increases in energy conservation standards 
for MREFs. The following section highlights manufacturer concerns that 
helped inform the projected potential impacts of an amended standard on 
the industry. Manufacturer interviews are conducted under non-
disclosure agreements (``NDAs''), so DOE does not document these 
discussions in the same way that it does public comments in the comment 
summaries and DOE's responses throughout the rest of this document.
a. Supply Chain Constraints
    In interviews, some manufacturers expressed concerns about the 
ongoing supply chain constraints related to sourcing high-quality 
components (e.g., VSCs, VIPs) as well as microprocessors and 
electronics. More stringent standards, particularly at TSLs requiring a 
large-scale implementation of VSCs, would require that industry source 
more high-efficiency compressors and electronic components, which are 
already difficult to secure. If these supply constraints continue 
through the end of the conversion period, industry could face 
production capacity constraints.
b. Built-In Product Classes
    Some manufacturers urged DOE to conduct a separate analysis for 
built-in product classes. These manufacturers noted that built-in MREFs 
face design constraints related to standardized installation dimensions 
(i.e., maintaining the same width and not exceeding countertop depth). 
These manufacturers asserted that because of the desire to maintain the 
same external dimensions, increased insulation thickness would likely 
come at the expense of internal volume. For MREFs designed to store 
wine, manufacturers explained that even small changes to internal 
volume would have a significant impact in terms of ``bottle count,'' 
which is a key consumer feature and often referenced in marketing 
material (e.g., a 32-bottle wine cooler). Since these products are 
likely already optimized to hold the maximum number of standard-size 
wine bottles, even a small reduction in the interior width could mean 
losing an entire column of bottle space. Some manufacturers also noted 
built-ins have

[[Page 19413]]

restricted airflow. These manufacturers stated that because of these 
differences, freestanding products cannot be used as proxies for built-
in products.
4. Discussion of MIA Comments
    In response to the January 2022 Preliminary Analysis, AHAM asserted 
that achieving additional energy savings beyond EL 1--particularly for 
built-in product classes--would require significant redesign of product 
platforms and retooling. Specifically for built-in products, AHAM 
asserted that given the low shipment volumes, the significant 
investment required to meet more stringent efficiencies would lead to 
significant degradation in INPV. (AHAM, No. 18, pp. 6, 9). AHAM also 
asserted that any efficiency levels that necessitate changes in chassis 
size would result in costly changes to tooling. (AHAM, No. 18, p. 6).
    As discussed in section IV.J.2.c, DOE relied on multiple sources, 
including manufacturer feedback from interviews, to estimate conversion 
costs for each of the analyzed efficiency levels. See Table V.20 for 
DOE's capital and product conversion cost estimates. See chapter 12 of 
the NOPR TSD for INPV results by product grouping.

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 other gases 
due to ``upstream'' activities in the fuel production chain. These 
upstream activities comprise extraction, processing, and transporting 
fuels to the site of combustion.
    The analysis of electric power sector emissions of CO2, 
NOX, SO2, and Hg uses emissions factors intended 
to represent the marginal impacts of the change in electricity 
consumption associated with amended or new standards. The methodology 
is based on results published for the AEO, including a set of side 
cases that implement a variety of efficiency-related policies. The 
methodology is described in appendix 13A in the NOPR TSD. The analysis 
presented in this notice uses projections from AEO 2022. Power sector 
emissions of CH4 and N2O from fuel combustion are 
estimated using Emission Factors for Greenhouse Gas Inventories 
published by the Environmental Protection Agency (EPA).\48\
---------------------------------------------------------------------------

    \48\ Available at https://www.epa.gov/energy/greenhouse-gas-equivalencies-calculator (last accessed September 22, 2022).
---------------------------------------------------------------------------

    FFC upstream emissions, which include emissions from fuel 
combustion during extraction, processing, and transportation of fuels, 
and ``fugitive'' emissions (direct leakage to the atmosphere) of 
CH4 and CO2, are estimated based on the 
methodology described in chapter 15 of the NOPR TSD.
    The emissions intensity factors are expressed in terms of physical 
units per MWh or MMBtu of site energy savings. For power sector 
emissions, specific emissions intensity factors are calculated by 
sector and end use. Total emissions reductions are estimated using the 
energy savings calculated in the NIA.
1. Air Quality Regulations Incorporated in DOE's Analysis
    DOE's no-new-standards case for the electric power sector reflects 
the AEO, which incorporates the projected impacts of existing air 
quality regulations on emissions. AEO 2022 generally represents current 
legislation and environmental regulations, including recent government 
actions, that were in place at the time of preparation of AEO 2022, 
including the emissions control programs discussed in the following 
paragraphs.\49\
---------------------------------------------------------------------------

    \49\ For further information, see the Assumptions to AEO 2022 
report that sets forth the major assumptions used to generate the 
projections in the Annual Energy Outlook. Available at www.eia.gov/outlooks/aeo/assumptions/ (last accessed September 22, 2022).
---------------------------------------------------------------------------

    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 numerous States in the eastern half of the United States 
are also limited under the Cross-State Air Pollution Rule (``CSAPR''). 
76 FR 48208 (Aug. 8, 2011). CSAPR requires these States to reduce 
certain emissions, including annual SO2 emissions, and went 
into effect as of January 1, 2015.\50\ AEO 2022 incorporates 
implementation of CSAPR, including the update to the CSAPR ozone season 
program emission budgets and target dates issued in 2016. 81 FR 74504 
(Oct. 26, 2016). Compliance with CSAPR is flexible among EGUs and is 
enforced through the use of tradable emissions allowances. 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 another regulated EGU.
---------------------------------------------------------------------------

    \50\ CSAPR requires states to address annual emissions of 
SO2 and NOX, precursors to the formation of 
fine particulate matter (PM2.5) pollution, in order to 
address the interstate transport of pollution with respect to the 
1997 and 2006 PM2.5 National Ambient Air Quality 
Standards (``NAAQS''). CSAPR also requires certain states to address 
the ozone season (May-September) emissions of NOX, a 
precursor to the formation of ozone pollution, in order to address 
the interstate transport of ozone pollution with respect to the 1997 
ozone NAAQS. 76 FR 48208 (Aug. 8, 2011). EPA subsequently issued a 
supplemental rule that included an additional five states in the 
CSAPR ozone season program; 76 FR 80760 (Dec. 27, 2011) 
(Supplemental Rule).
---------------------------------------------------------------------------

    However, beginning in 2016, SO2 emissions began to fall 
as a result of the Mercury and Air Toxics Standards (``MATS'') for 
power plants. 77 FR 9304 (Feb. 16, 2012). In the MATS final 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 are 
being reduced as a result of the control technologies installed on 
coal-fired power plants to comply with the MATS requirements for acid 
gas. In order to continue operating, coal power plants must have either 
flue gas desulfurization or dry sorbent injection systems installed. 
Both technologies, which are used to reduce acid gas emissions, also 
reduce SO2 emissions. Because of the emissions reductions 
under the MATS, 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 
another regulated EGU. Therefore, energy conservation standards that 
decrease electricity generation would generally reduce SO2 
emissions. DOE estimated SO2 emissions reduction using 
emissions factors based on AEO 2022.
    CSAPR also established limits on NOX emissions for 
numerous States in the eastern half of the United States. Energy 
conservation standards would have little effect on NOX 
emissions in those States covered by CSAPR emissions limits if excess 
NOX emissions allowances resulting from the lower 
electricity demand could be used to permit offsetting increases in 
NOX emissions from other EGUs. In such case, NOX 
emissions would remain near

[[Page 19414]]

the limit even if electricity generation goes down. A different case 
could possibly result, depending on the configuration of the power 
sector in the different regions and the need for allowances, such that 
NOX emissions might not remain at the limit in the case of 
lower electricity demand. In this case, energy conservation standards 
might reduce NOX emissions in covered States. Despite this 
possibility, DOE has chosen to be conservative in its analysis and has 
maintained the assumption that standards will not reduce NOX 
emissions in States covered by CSAPR. Energy conservation standards 
would be expected to reduce NOX emissions in the States not 
covered by CSAPR. DOE used AEO 2022 data to derive NOX 
emissions factors for the group of States not covered by CSAPR.
    The MATS limit mercury emissions from power plants, but they do not 
include emissions caps and, as such, DOE's energy conservation 
standards would be expected to slightly reduce Hg emissions. DOE 
estimated mercury emissions reduction using emissions factors based on 
AEO 2022, which incorporates the MATS.

L. Monetizing Emissions Impacts

    As part of the development of this proposed rule, for the purpose 
of complying with the requirements of Executive Order 12866, DOE 
considered the estimated monetary benefits from the reduced emissions 
of CO2, CH4, N2O, NOX, and 
SO2 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 projection period for each TSL. This section summarizes the basis 
for the values used for monetizing the emissions benefits and presents 
the values considered in this NOPR.
    On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22-
30087) granted the Federal government's emergency motion for stay 
pending appeal of the February 11, 2022, preliminary injunction issued 
in Louisiana v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a result of 
the Fifth Circuit's order, the preliminary injunction is no longer in 
effect, pending resolution of the Federal government's appeal of that 
injunction or a further court order. Among other things, the 
preliminary injunction enjoined the defendants in that case from 
``adopting, employing, treating as binding, or relying upon'' the 
interim estimates of the social cost of greenhouse gases--which were 
issued by the Interagency Working Group on the Social Cost of 
Greenhouse Gases on February 26, 2021--to monetize the benefits of 
reducing greenhouse gas emissions. As reflected in this rule, DOE has 
reverted to its approach prior to the injunction and presents monetized 
GHG abatement benefits where appropriate and permissible under law. DOE 
requests comment on how to address the climate benefits and other non-
monetized effects of the proposal.
1. Monetization of Greenhouse Gas Emissions
    DOE estimates the monetized benefits of the reductions in emissions 
of CO2, CH4, and N2O by using a 
measure of the SC of each pollutant (e.g., SC-CO2). These 
estimates represent the monetary value of the net harm to society 
associated with a marginal increase in emissions of these pollutants in 
a given year, or the benefit of avoiding that increase. These estimates 
are intended to include (but are not limited to) climate-change-related 
changes in net agricultural productivity, human health, property 
damages from increased flood risk, disruption of energy systems, risk 
of conflict, environmental migration, and the value of ecosystem 
services.
    DOE exercises its own judgment in presenting monetized climate 
benefits as recommended by applicable Executive Orders, and DOE would 
reach the same conclusion presented in this proposed rulemaking in the 
absence of the social cost of greenhouse gases, including the February 
2021 Interim Estimates presented by the Interagency Working Group on 
the Social Cost of Greenhouse Gases. DOE estimated the global social 
benefits of CO2, CH4, and N2O 
reductions (i.e., SC-GHGs) using the estimates presented in the TSD: 
Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates 
under Executive Order 13990, published in February 2021 by the IWG. The 
SC-GHGs is the monetary value of the net harm to society associated 
with a marginal increase in emissions in a given year, or the benefit 
of avoiding that increase. In principle, SC-GHGs includes the value of 
all climate change impacts, including (but not limited to) changes in 
net agricultural productivity, human health effects, property damage 
from increased flood risk and natural disasters, disruption of energy 
systems, risk of conflict, environmental migration, and the value of 
ecosystem services. The SC-GHGs therefore, reflects the societal value 
of reducing emissions of the gas in question by one metric ton. The SC-
GHGs is the theoretically appropriate value to use in conducting 
benefit-cost analyses of policies that affect CO2, 
N2O, and CH4 emissions. As a member of the IWG 
involved in the development of the February 2021 SC-GHG TSD, DOE agrees 
that the interim SC-GHG estimates represent the most appropriate 
estimate of the SC-GHG until revised estimates have been developed 
reflecting the latest, peer reviewed science.
    The SC-GHGs estimates presented here were developed over many 
years, using transparent process, peer reviewed methodologies, the best 
science available at the time of that process, and with input from the 
public. Specifically, in 2009, the IWG, that included the DOE and other 
executive branch agencies and offices was established to ensure that 
agencies were using the best available science and to promote 
consistency in the social cost of carbon (SC-CO2) values 
used across agencies. The IWG published SC-CO2 estimates in 
2010 that were developed from an ensemble of three widely cited 
integrated assessment models (``IAMs'') that estimate global climate 
damages using highly aggregated representations of climate processes 
and the global economy combined into a single modeling framework. The 
three IAMs were run using a common set of input assumptions in each 
model for future population, economic, and CO2 emissions 
growth, as well as equilibrium climate sensitivity--a measure of the 
globally averaged temperature response to increased atmospheric 
CO2 concentrations. These estimates were updated in 2013 
based on new versions of each IAM. In August 2016 the IWG published 
estimates of the social cost of methane (SC-CH4) and nitrous 
oxide (SC-N2O) using methodologies that are consistent with 
the methodology underlying the SC-CO2 estimates. The 
modeling approach that extends the IWG SC-CO2 methodology to 
non-CO2 GHGs has undergone multiple stages of peer review. 
The SC-CH4 and SC-N2O estimates were developed by 
Marten et al.\51\ and underwent a standard double-blind peer review 
process prior to journal publication. In 2015, as part of the response 
to public comments received to a 2013 solicitation for comments on the 
SC-CO2 estimates, the IWG announced a National Academies of 
Sciences, Engineering, and Medicine review of the SC-CO2 
estimates to offer advice on how to approach future

[[Page 19415]]

updates to ensure that the estimates continue to reflect the best 
available science and methodologies. In January 2017, the National 
Academies released their final report, Valuing Climate Damages: 
Updating Estimation of the Social Cost of Carbon Dioxide, and 
recommended specific criteria for future updates to the SC-
CO2 estimates, a modeling framework to satisfy the specified 
criteria, and both near-term updates and longer-term research needs 
pertaining to various components of the estimation process (National 
Academies, 2017).\52\ Shortly thereafter, in March 2017, President 
Trump issued Executive Order 13783, which disbanded the IWG, withdrew 
the previous TSDs, and directed agencies to ensure SC-CO2 
estimates used in regulatory analyses are consistent with the guidance 
contained in OMB's Circular A-4, ``including with respect to the 
consideration of domestic versus international impacts and the 
consideration of appropriate discount rates'' (Executive Order 
(``E.O.'') 13783, Section 5(c)). Benefit-cost analyses following E.O. 
13783 used SC-GHG estimates that attempted to focus on the U.S.-
specific share of climate change damages as estimated by the models and 
were calculated using two discount rates recommended by Circular A-4, 3 
percent and 7 percent. All other methodological decisions and model 
versions used in SC-GHG calculations remained the same as those used by 
the IWG in 2010 and 2013, respectively.
---------------------------------------------------------------------------

    \51\ Marten, A.L., E.A. Kopits, C.W. Griffiths, S.C. Newbold, 
and A. Wolverton. Incremental CH4 and N2O 
mitigation benefits consistent with the U.S. Government's SC-
CO2 estimates. Climate Policy. 2015. 15(2): pp. 272-298.
    \52\ National Academies of Sciences, Engineering, and Medicine. 
Valuing Climate Damages: Updating Estimation of the Social Cost of 
Carbon Dioxide. 2017. The National Academies Press: Washington, DC.
---------------------------------------------------------------------------

    On January 20, 2021, President Biden issued E.O. 13990, which re-
established the IWG and directed it to ensure that the U.S. 
Government's estimates of the social cost of carbon and other 
greenhouse gases reflect the best available science and the 
recommendations of the National Academies (2017). The IWG was tasked 
with first reviewing the SC-GHG estimates currently used in Federal 
analyses and publishing interim estimates within 30 days of the E.O. 
that reflect the full impact of GHG emissions, including by taking 
global damages into account. The interim SC-GHG estimates published in 
February 2021 are used here to estimate the climate benefits for this 
proposed rulemaking. The E.O. instructs the IWG to undertake a fuller 
update of the SC-GHG estimates by January 2022 that takes into 
consideration the advice of the National Academies (2017) and other 
recent scientific literature. The February 2021 SC-GHG TSD provides a 
complete discussion of the IWG's initial review conducted under 
E.O.13990. In particular, the IWG found that the SC-GHG estimates used 
under E.O. 13783 fail to reflect the full impact of GHG emissions in 
multiple ways.
    First, the IWG found that the SC-GHG estimates used under E.O. 
13783 fail to fully capture many climate impacts that affect the 
welfare of U.S. citizens and residents, and those impacts are better 
reflected by global measures of the SC-GHG. Examples of omitted effects 
from the E.O. 13783 estimates include direct effects on U.S. citizens, 
assets, and investments located abroad, supply chains, U.S. military 
assets and interests abroad, and tourism, and spillover pathways such 
as economic and political destabilization and global migration that can 
lead to adverse impacts on U.S. national security, public health, and 
humanitarian concerns. In addition, assessing the benefits of U.S. GHG 
mitigation activities requires consideration of how those actions may 
affect mitigation activities by other countries, as those international 
mitigation actions will provide a benefit to U.S. citizens and 
residents by mitigating climate impacts that affect U.S. citizens and 
residents. A wide range of scientific and economic experts have 
emphasized the issue of reciprocity as support for considering global 
damages of GHG emissions. If the United States does not consider 
impacts on other countries, it is difficult to convince other countries 
to consider the impacts of their emissions on the United States. The 
only way to achieve an efficient allocation of resources for emissions 
reduction on a global basis--and so benefit the U.S. and its citizens--
is for all countries to base their policies on global estimates of 
damages. As a member of the IWG involved in the development of the 
February 2021 SC-GHG TSD, DOE agrees with this assessment and, 
therefore, in this proposed rule DOE centers attention on a global 
measure of SC-GHG. This approach is the same as that taken in DOE 
regulatory analyses from 2012 through 2016. A robust estimate of 
climate damages that accrue only to U.S. citizens and residents does 
not currently exist in the literature. As explained in the February 
2021 TSD, existing estimates are both incomplete and an underestimate 
of total damages that accrue to the citizens and residents of the U.S. 
because they do not fully capture the regional interactions and 
spillovers discussed above, nor do they include all of the important 
physical, ecological, and economic impacts of climate change recognized 
in the climate change literature. As noted in the February 2021 SC-GHG 
TSD, the IWG will continue to review developments in the literature, 
including more robust methodologies for estimating a U.S.-specific SC-
GHG value, and explore ways to better inform the public of the full 
range of carbon impacts. As a member of the IWG, DOE will continue to 
follow developments in the literature pertaining to this issue.
    Second, the IWG found that the use of the social rate of return on 
capital (7 percent under current OMB Circular A-4 guidance) to discount 
the future benefits of reducing GHG emissions inappropriately 
underestimates the impacts of climate change for the purposes of 
estimating the SC-GHG. Consistent with the findings of the National 
Academies (2017) and the economic literature, the IWG continued to 
conclude that the consumption rate of interest is the theoretically 
appropriate discount rate in an intergenerational context,\53\ and 
recommended that discount rate uncertainty and relevant aspects of 
intergenerational ethical considerations be accounted for in selecting 
future discount rates.
---------------------------------------------------------------------------

    \53\ Interagency Working Group on Social Cost of Carbon. Social 
Cost of Carbon for Regulatory Impact Analysis Under Executive Order 
12866. 2010. United States Government. (Last accessed September 22, 
2022.) www.epa.gov/sites/default/files/2016-12/documents/scc_tsd_2010.pdf; Interagency Working Group on Social Cost of 
Carbon. Technical Update of the Social Cost of Carbon for Regulatory 
Impact Analysis Under Executive Order 12866. 2013. (Last accessed 
September 22, 2022.) www.federalregister.gov/documents/2013/11/26/2013-28242/technical-support-document-technical-update-of-the-social-cost-of-carbon-for-regulatory-impact; Interagency Working 
Group on Social Cost of Greenhouse Gases, United States Government. 
Technical Support Document: Technical Update on the Social Cost of 
Carbon for Regulatory Impact Analysis Under Executive Order 12866. 
August 2016. (Last accessed September 22, 2022.) www.epa.gov/sites/default/files/2016-12/documents/sc_co2_tsd_august_2016.pdf; 
Interagency Working Group on Social Cost of Greenhouse Gases, United 
States Government. Addendum to Technical Support Document on Social 
Cost of Carbon for Regulatory Impact Analysis Under Executive Order 
12866: Application of the Methodology to Estimate the Social Cost of 
Methane and the Social Cost of Nitrous Oxide. August 2016. (Last 
accessed September 22, 2022.) www.epa.gov/sites/default/files/2016-12/documents/addendum_to_sc-ghg_tsd_august_2016.pdf.
---------------------------------------------------------------------------

    Furthermore, the damage estimates developed for use in the SC-GHG 
are estimated in consumption-equivalent terms, and so an application of 
OMB Circular A-4's guidance for regulatory analysis would then use the 
consumption discount rate to calculate the SC-GHG. DOE agrees with this 
assessment and will continue to follow developments in the literature

[[Page 19416]]

pertaining to this issue. DOE also notes that while OMB Circular A-4, 
as published in 2003, recommends using 3% and 7% discount rates as 
``default'' values, Circular A-4 also reminds agencies that ``different 
regulations may call for different emphases in the analysis, depending 
on the nature and complexity of the regulatory issues and the 
sensitivity of the benefit and cost estimates to the key assumptions.'' 
On discounting, Circular A-4 recognizes that ``special ethical 
considerations arise when comparing benefits and costs across 
generations,'' and Circular A-4 acknowledges that analyses may 
appropriately ``discount future costs and consumption benefits . . . at 
a lower rate than for intragenerational analysis.'' In the 2015 
Response to Comments on the Social Cost of Carbon for Regulatory Impact 
Analysis, OMB, DOE, and the other IWG members recognized that 
``Circular A-4 is a living document'' and ``the use of 7 percent is not 
considered appropriate for intergenerational discounting. There is wide 
support for this view in the academic literature, and it is recognized 
in Circular A-4 itself.'' Thus, DOE concludes that a 7% discount rate 
is not appropriate to apply to value the social cost of greenhouse 
gases in the analysis presented in this analysis. In this analysis, to 
calculate the present and annualized values of climate benefits, DOE 
uses the same discount rate as the rate used to discount the value of 
damages from future GHG emissions, for internal consistency. That 
approach to discounting follows the same approach that the February 
2021 TSD recommends ``to ensure internal consistency--i.e., future 
damages from climate change using the SC-GHG at 2.5 percent should be 
discounted to the base year of the analysis using the same 2.5 percent 
rate.'' DOE has also consulted the National Academies' 2017 
recommendations on how SC-GHG estimates can ``be combined in RIAs with 
other cost and benefits estimates that may use different discount 
rates.'' The National Academies reviewed ``several options,'' including 
``presenting all discount rate combinations of other costs and benefits 
with [SC-GHG] estimates.''
    As a member of the IWG involved in the development of the February 
2021 SC-GHG TSD, DOE agrees with this assessment and will continue to 
follow developments in the literature pertaining to this issue. While 
the IWG works to assess how best to incorporate the latest, peer 
reviewed science to develop an updated set of SC-GHG estimates, it set 
the interim estimates to be the most recent estimates developed by the 
IWG prior to the group being disbanded in 2017. The estimates rely on 
the same models and harmonized inputs and are calculated using a range 
of discount rates. As explained in the February 2021 SC-GHG TSD, the 
IWG has recommended that agencies to revert to the same set of four 
values drawn from the SC-GHG distributions based on three discount 
rates as were used in regulatory analyses between 2010 and 2016 and 
subject to public comment. For each discount rate, the IWG combined the 
distributions across models and socioeconomic emissions scenarios 
(applying equal weight to each) and then selected a set of four values 
recommended for use in benefit-cost analyses: an average value 
resulting from the model runs for each of three discount rates (2.5 
percent, 3 percent, and 5 percent), plus a fourth value, selected as 
the 95th percentile of estimates based on a 3 percent discount rate. 
The fourth value was included to provide information on potentially 
higher-than-expected economic impacts from climate change. As explained 
in the February 2021 SC-GHG TSD, and DOE agrees, this update reflects 
the immediate need to have an operational SC-GHG for use in regulatory 
benefit-cost analyses and other applications that was developed using a 
transparent process, peer reviewed methodologies, and the science 
available at the time of that process. Those estimates were subject to 
public comment in the context of dozens of proposed rulemakings as well 
as in a dedicated public comment period in 2013.
    There are a number of limitations and uncertainties associated with 
the SC-GHG estimates. First, the current scientific and economic 
understanding of discounting approaches suggests discount rates 
appropriate for intergenerational analysis in the context of climate 
change are likely to be less than 3 percent, near 2 percent or 
lower.\54\ Second, the IAMs used to produce these interim estimates do 
not include all of the important physical, ecological, and economic 
impacts of climate change recognized in the climate change literature 
and the science underlying their ``damage functions''--i.e., the core 
parts of the IAMs that map global mean temperature changes and other 
physical impacts of climate change into economic (both market and 
nonmarket) damages--lags behind the most recent research. For example, 
limitations include the incomplete treatment of catastrophic and non-
catastrophic impacts in the IAMs, their incomplete treatment of 
adaptation and technological change, the incomplete way in which inter-
regional and intersectoral linkages are modeled, uncertainty in the 
extrapolation of damages to high temperatures, and inadequate 
representation of the relationship between the discount rate and 
uncertainty in economic growth over long time horizons. Likewise, the 
socioeconomic and emissions scenarios used as inputs to the models do 
not reflect new information from the last decade of scenario generation 
or the full range of projections. The modeling limitations do not all 
work in the same direction in terms of their influence on the SC-
CO2 estimates. However, as discussed in the February 2021 
TSD, the IWG has recommended that, taken together, the limitations 
suggest that the interim SC-GHG estimates used in this final rule 
likely underestimate the damages from GHG emissions. DOE concurs with 
this assessment.
---------------------------------------------------------------------------

    \54\ Interagency Working Group on Social Cost of Greenhouse 
Gases (IWG). 2021. Technical Support Document: Social Cost of 
Carbon, Methane, and Nitrous Oxide Interim Estimates under Executive 
Order 13990. February. United States Government. Available at: 
https://www.whitehouse.gov/briefing-room/blog/2021/02/26/a-return-to-science-evidence-based-estimates-of-the-benefits-of-reducing-climate-pollution/. (Last accessed September 22, 2022).
---------------------------------------------------------------------------

    DOE's derivations of the SC-GHG (SC-CO2, SC-
N2O, and SC-CH4) values used for this NOPR are 
discussed in the following sections, and the results of DOE's analyses 
estimating the benefits of the reductions in emissions of these GHGs 
are presented in section I.B.6 of this document.
a. Social Cost of Carbon
    The SC-CO2 values used for this NOPR were generated 
using the values presented in the 2021 update from the IWG's February 
2021 SC-GHG TSD. Table IV.7 shows the updated sets of SC-CO2 
estimates from the latest interagency update in 5-year increments from 
2020 to 2050. The full set of annual values used is presented in 
Appendix 14-A of the NOPR TSD. For purposes of capturing the 
uncertainties involved in regulatory impact analysis, DOE has 
determined it is appropriate include all four sets of SC-CO2 
values, as recommended by the IWG.\55\
---------------------------------------------------------------------------

    \55\ For example, the February 2021 TSD discusses how the 
understanding of discounting approaches suggests that discount rates 
appropriate for intergenerational analysis in the context of climate 
change may be lower than 3 percent.

[[Page 19417]]



                          Table IV.7--Annual SC-CO2Values From 2021 Interagency Update
                                     [2020-2050 (2020$ per metric ton CO2)]
----------------------------------------------------------------------------------------------------------------
                                                            Discount rate and statistic
                                  ------------------------------------------------------------------------------
               Year                                                                                 3% (95th
                                      5% (Average)        3% (Average)       2.5% (Average)       percentile)
----------------------------------------------------------------------------------------------------------------
                          2020                   14                  51                  76                 152
                          2025                   17                  56                  83                 169
                          2030                   19                  62                  89                 187
                          2035                   22                  67                  96                 206
                          2040                   25                  73                 103                 225
                          2045                   28                  79                 110                 242
                          2050                   32                  85                 116                 260
----------------------------------------------------------------------------------------------------------------

    For 2051 to 2070, DOE used estimates published by EPA, adjusted to 
2020$.\56\ These estimates are based on methods, assumptions, and 
parameters identical to the 2020-2050 estimates published by the IWG. 
DOE expects additional climate benefits to accrue for any longer-life 
MREFs after 2070, but a lack of available SC-CO2 estimates 
for emissions years beyond 2070 prevents DOE from monetizing these 
potential benefits in this analysis. If further analysis of monetized 
climate benefits beyond 2070 becomes available prior to the publication 
of the final rule, DOE will include that analysis in the final rule.
---------------------------------------------------------------------------

    \56\ See EPA, Revised 2023 and Later Model Year Light-Duty 
Vehicle GHG Emissions Standards: Regulatory Impact Analysis, 
Washington, DC, December 2021. Available at: https://www.federalregister.gov/documents/2021/12/30/2021-27854/revised-2023-and-later-model-year-light-duty-vehicle-greenhouse-gas-emissions-standards (last accessed September 22, 2022).
---------------------------------------------------------------------------

    DOE multiplied the CO2 emissions reduction estimated for 
each year by the SC-CO2 value for that year in each of the 
four cases. DOE adjusted the values to 2021$ using the implicit price 
deflator for gross domestic product (``GDP'') from the Bureau of 
Economic Analysis. 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 SC-
CO2 values in each case.
b. Social Cost of Methane and Nitrous Oxide
    The SC-CH4 and SC- N2O values used for this 
NOPR were generated using the values presented in the February 2021 SC-
GHG TSD. Table IV.8 shows the updated sets of SC-CH4 and SC-
N2O estimates from the latest interagency update in 5-year 
increments from 2020 to 2050. The full set of annual values used is 
presented in appendix 14-A of the NOPR TSD. To capture the 
uncertainties involved in regulatory impact analysis, DOE has 
determined it is appropriate to include all four sets of SC-
CH4 and SC-N2O values, as recommended by the IWG. 
DOE derived values after 2050 using the approach described above for 
the SC-CO2.

                                   Table IV.8--Annual SC-CH4 and SC-N2O Values From 2021 Interagency Update, 2020-2050
                                                                 [2020$ per metric ton]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                SC-CH4 (discount rate and statistic)                      SC-N2O (discount rate and statistic)
                                     -------------------------------------------------------------------------------------------------------------------
                Year                       5%           3%          2.5%          3% (95th           5%           3%          2.5%          3% (95th
                                       (average)    (average)    (average)      Percentile)      (average)    (average)    (average)      Percentile)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2020................................          670         1500         2000               3900         5800        18000        27000              48000
2025................................          800         1700         2200               4500         6800        21000        30000              54000
2030................................          940         2000         2500               5200         7800        23000        33000              60000
2035................................         1100         2200         2800               6000         9000        25000        36000              67000
2040................................         1300         2500         3100               6700        10000        28000        39000              74000
2045................................         1500         2800         3500               7500        12000        30000        42000              81000
2050................................         1700         3100         3800               8200        13000        33000        45000              88000
--------------------------------------------------------------------------------------------------------------------------------------------------------

    DOE multiplied the CH4 and N2O emissions 
reduction estimated for each year by the SC-CH4 and SC-
N2O estimates for that year in each of the cases. DOE 
adjusted the values to 2021$ using the implicit price deflator for 
gross domestic product (``GDP'') from the Bureau of Economic Analysis. 
To calculate a present value of the stream of monetary values, DOE 
discounted the values in each of the cases using the specific discount 
rate that had been used to obtain the SC-CH4 and SC-
N2O estimates in each case.
2. Monetization of Other Emissions Impacts
    For this NOPR analysis, DOE estimated the monetized value of 
NOX and SO2 emissions reductions from electricity 
generation using the latest benefit-per-ton estimates for that sector 
from the EPA's Benefits Mapping and Analysis Program.\57\ DOE used 
EPA's values for PM2.5-related benefits associated with 
NOX and SO2 and for ozone-related benefits 
associated with NOX for 2025 2030, and 2040, calculated with 
discount rates of 3 percent and 7 percent. DOE used linear 
interpolation to define values for the years not given in the 2025 to 
2040 period; for years beyond 2040 the values are held constant. DOE 
derived values specific to the sector for MREFs using a method 
described in appendix 14B of the NOPR TSD.
---------------------------------------------------------------------------

    \57\ Estimating the Benefit per Ton of Reducing PM2.5 Precursors 
from 21 Sectors. (Last accessed September 22, 2022) www.epa.gov/benmap/estimating-benefit-ton-reducing-pm25-precursors-21-sectors.

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

[[Page 19418]]

    DOE multiplied the site emissions reduction (in 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.

M. Utility Impact Analysis

    The utility impact analysis estimates the changes in installed 
electrical capacity and generation projected to result for each 
considered TSL. The analysis is based on published output from the NEMS 
associated with AEO 2022. 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. For the current analysis, impacts 
are quantified by comparing the levels of electricity sector 
generation, installed capacity, fuel consumption and emissions in the 
AEO 2022 Reference case and various side cases. Details of the 
methodology are provided in the appendices to chapters 13 and 15 of the 
NOPR 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 potential new or 
amended energy conservation standards.

N. Employment Impact Analysis

    DOE considers employment impacts in the domestic economy as one 
factor in selecting a proposed 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. 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 consumers on energy, (2) reduced spending on new 
energy supply by the utility industry, (3) increased consumer spending 
on the products to which the new standards apply and other goods and 
services, 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 BLS. BLS regularly publishes its 
estimates of the number of jobs per million dollars of economic 
activity in different sectors of the economy, as well as the jobs 
created elsewhere in the economy by this same economic activity. Data 
from BLS indicate that expenditures in the utility sector generally 
create fewer jobs (both directly and indirectly) than expenditures in 
other sectors of the economy.\58\ 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.
---------------------------------------------------------------------------

    \58\ See U.S. Department of Commerce--Bureau of Economic 
Analysis. Regional Multipliers: A User Handbook for the Regional 
Input-Output Modeling System (RIMS II). 1997. U.S. Government 
Printing Office: Washington, DC. Available at apps.bea.gov/scb/pdf/regional/perinc/meth/rims2.pdf (last accessed September 30, 2022).
---------------------------------------------------------------------------

    DOE estimated indirect national employment impacts for the standard 
levels considered in this NOPR using an input/output model of the U.S. 
economy called Impact of Sector Energy Technologies version 4 
(``ImSET'').\59\ 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.
---------------------------------------------------------------------------

    \59\ Livingston, O.V., S.R. Bender, M.J. Scott, and R.W. 
Schultz. ImSET 4.0: Impact of Sector Energy Technologies Model 
Description and User Guide. 2015. Pacific Northwest National 
Laboratory: Richland, WA. PNNL-24563.
---------------------------------------------------------------------------

    DOE notes that ImSET is not a general equilibrium forecasting 
model, and that 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 used ImSET only to generate results 
for near-term timeframes (2029-2033), where these uncertainties are 
reduced. For more details on the employment impact analysis, see 
chapter 16 of the NOPR 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 MREFs. 
It addresses the TSLs examined by DOE, the projected impacts of each of 
these levels if adopted as energy conservation standards for MREFs, and 
the standards levels that DOE is proposing to adopt in this NOPR. 
Additional details regarding DOE's analyses are contained in the NOPR 
TSD supporting this document.

A. Trial Standard Levels

    In general, DOE typically evaluates potential amended standards for 
products and equipment by grouping individual efficiency levels for 
each class into TSLs. Use of TSLs allows DOE to identify and consider 
manufacturer cost interactions between the product classes, to the 
extent that there are such interactions, and market cross elasticity 
from consumer purchasing decisions that may change when different 
standard levels are set.
    In the analysis conducted for this NOPR, DOE analyzed the benefits 
and burdens of five TSLs for MREFs. DOE developed TSLs that combine 
efficiency levels for each analyzed product class. These TSLs were 
developed by combining specific efficiency levels for each of the MREF 
product classes analyzed by DOE. TSL 1 represents a 10 percent increase 
in efficiency, corresponding to the lowest analyzed efficiency level 
above the baseline for each analyzed product class. TSL 2 represents 
efficiency levels consistent with Energy Star requirements for coolers 
and a modest increase in efficiency for certain combination cooler 
product classes. TSL 3 increases the efficiency for freestanding (FC) 
and built-in (BIC) coolers by an additional 10% compared to TSL 1, 
while maintaining the same efficiency levels as TSL 2 for combination 
coolers. TSL 4 further increases the efficiency levels for the product 
classes that make up the vast majority of MREF shipments (FCC, FC, C-
13A). TSL 5 represents max-tech for each product class. DOE presents 
the

[[Page 19419]]

results for the TSLs in this document, while the results for all 
efficiency levels that DOE analyzed are in the NOPR TSD.
    Table V.1 presents the TSLs and the corresponding efficiency levels 
that DOE has identified for potential amended energy conservation 
standards for MREFs.

                                                       Table V.1--Trial Standard Levels for MREFs
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             FCC         FC         BICC         BIC        C-13A      C-13A-BI      C-3A       C-3A-BI
--------------------------------------------------------------------------------------------------------------------------------------------------------
TSL 1..................................................       EL 1        EL 1        EL 1        EL 1        EL 1         EL 1        EL 1        EL 1
TSL 2..................................................       EL 2        EL 1        EL 3        EL 3        EL 2         EL 2        EL 1        EL 1
TSL 3..................................................       EL 2        EL 2        EL 3        EL 2        EL 2         EL 2        EL 1        EL 1
TSL 4..................................................       EL 3        EL 3        EL 3        EL 2        EL 3         EL 3        EL 1        EL 1
TSL 5..................................................       EL 5        EL 5        EL 5        EL 5        EL 5         EL 5        EL 4        EL 4
--------------------------------------------------------------------------------------------------------------------------------------------------------

B. Economic Justification and Energy Savings

1. Economic Impacts on Individual Consumers
    DOE analyzed the economic impacts on MREF consumers by looking at 
the effects that potential amended standards at each TSL would have on 
the LCC and PBP. DOE also examined the impacts of potential standards 
on selected consumer subgroups. These analyses are discussed in the 
following sections.
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 and operating costs (i.e., annual energy use, energy 
prices, energy price trends, and repair costs). The LCC calculation 
also uses product lifetime and a discount rate. Chapter 8 of the NOPR 
TSD provides detailed information on the LCC and PBP analyses.
    Table V.2 through Table V.17 show the LCC and PBP results for the 
TSLs 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, 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 the baseline product 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.

                                                     Table V.2--Average LCC and PBP Results for FCC
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2021$)
                                                         ---------------------------------------------------------------- Simple payback      Average
                TSL                   Efficiency level                     First year's      Lifetime                          years      lifetime years
                                                          Installed cost  operating cost  operating cost        LCC
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    Baseline............           533.1            27.6           242.8           775.9  ..............            10.6
1.................................  1...................           538.3            25.0           220.2           758.5             2.0            10.6
2,3...............................  2...................           559.6            22.3           195.9           755.5             5.0            10.6
4.................................  3...................           586.0            19.7           173.6           759.6             6.8            10.6
                                    4...................           627.6            17.1           150.0           777.5             9.0            10.6
5.................................  5...................           713.1            11.9           104.3           817.4            11.5            10.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
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.3--Average LCC Savings Relative to the No-New-Standards Case for FCC
----------------------------------------------------------------------------------------------------------------
                                                                        Life-cycle cost savings
                                        Efficiency   -----------------------------------------------------------
                 TSL                       level          Average LCC savings *       Percent of consumers that
                                                                 (2021$)                 experience net cost
----------------------------------------------------------------------------------------------------------------
1...................................               1                          17.4                           2.8
2,3.................................               2                          17.2                          33.5
4...................................               3                          12.6                          49.5
                                                   4                          -5.4                          65.7
5...................................               5                         -45.3                          77.8
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.


[[Page 19420]]


                                                      Table V.4--Average LCC and PBP Results for FC
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2021$)
                                                         ---------------------------------------------------------------- Simple payback      Average
                TSL                   Efficiency level                     First year's      Lifetime                          years      lifetime years
                                                          Installed cost  operating cost  operating cost        LCC
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    Baseline............         1,391.3            41.5           473.2         1,864.5  ..............            14.6
1,2...............................  1...................         1,415.2            37.4           425.8         1,841.0             5.8            14.6
3.................................  2...................         1,421.3            33.6           382.3         1,803.6             3.8            14.6
4.................................  3...................         1,487.3            29.5           335.5         1,822.8             8.0            14.6
                                    4...................         1,705.2            27.6           313.6         2,018.8            22.5            14.6
5.................................  5...................         1,727.0            26.6           302.6         2,029.6            22.5            14.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
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 No-New-Standards Case for FC
----------------------------------------------------------------------------------------------------------------
                                                                        Life-cycle cost savings
                                        Efficiency   -----------------------------------------------------------
                 TSL                       level          Average LCC savings *       Percent of consumers that
                                                                 (2021$)                 experience net cost
----------------------------------------------------------------------------------------------------------------
1,2.................................               1                          23.5                           8.8
3...................................               2                          47.2                           1.6
4...................................               3                          28.0                          45.5
                                                   4                        -168.0                          94.7
5...................................               5                        -178.8                          94.5
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.


                                                     Table V.6--Average LCC and PBP Results for BICC
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2021$)
                                                         ---------------------------------------------------------------- Simple payback      Average
                TSL                   Efficiency level                     First year's      Lifetime                          years      lifetime years
                                                          Installed cost  operating cost  operating cost        LCC
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    Baseline............           735.1            27.6           244.8           979.8  ..............            10.7
1.................................  1...................           741.3            25.0           221.3           962.5             2.4            10.7
                                    2...................           766.3            22.3           197.8           964.1             5.9            10.7
2-4...............................  3...................           797.7            19.7           174.3           972.0             7.9            10.7
                                    4...................           847.2            17.1           150.8           998.0            10.6            10.7
5.................................  5...................           949.6            12.0           106.1         1,055.7            13.8            10.7
--------------------------------------------------------------------------------------------------------------------------------------------------------
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 No-New-Standards Case for BICC
----------------------------------------------------------------------------------------------------------------
                                                                        Life-cycle cost savings
                                        Efficiency   -----------------------------------------------------------
                 TSL                       level          Average LCC savings *       Percent of consumers that
                                                                 (2021$)                 experience net cost
----------------------------------------------------------------------------------------------------------------
1...................................               1                          17.2                           1.0
                                                   2                          11.3                          11.1
2-4.................................               3                           2.9                          15.3
                                                   4                         -23.2                          20.1
5...................................               5                         -80.9                          22.7
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.


                                                     Table V.8--Average LCC and PBP Results for BIC
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2021$)
                                                         ---------------------------------------------------------------- Simple payback      Average
                TSL                   Efficiency level                     First year's      Lifetime                          years      lifetime years
                                                          Installed cost  operating cost  operating cost        LCC
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    Baseline............         1,871.9            41.6           474.4         2,346.3  ..............            14.6
1.................................  1...................         1,897.3            37.6           428.9         2,326.2             6.4            14.6

[[Page 19421]]

 
3,4...............................  2...................         1,903.8            33.6           383.4         2,287.2             4.0            14.6
2.................................  3...................         1,974.0            29.7           337.9         2,311.9             8.6            14.6
                                    4...................         2,205.9            27.7           315.2         2,521.1            24.0            14.6
5.................................  5...................         2,229.1            26.5           301.5         2,530.6            23.6            14.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
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 No-New-Standards Case for BIC
----------------------------------------------------------------------------------------------------------------
                                                                        Life-cycle cost savings
                                        Efficiency   -----------------------------------------------------------
                 TSL                       Level          Average LCC savings *       Percent of consumers that
                                                                 (2021$)                 experience net cost
----------------------------------------------------------------------------------------------------------------
1...................................               1                          20.3                          18.7
3,4.................................               2                          57.3                           3.6
2...................................               3                          21.2                          53.4
                                                   4                        -187.9                          94.6
5...................................               5                        -197.4                          94.3
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.


                                                    Table V.10--Average LCC and PBP Results for C-13A
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2021$)
                                                         ---------------------------------------------------------------- Simple payback      Average
                TSL                   Efficiency level                     First year's      Lifetime                          years      lifetime years
                                                          Installed cost  operating cost  operating cost        LCC
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    Baseline............         1,148.0            33.8           295.5         1,443.5  ..............            10.6
1.................................  1...................         1,151.6            30.6           267.2         1,418.7             1.1            10.6
2,3...............................  2...................         1,154.7            28.9           253.0         1,407.7             1.4            10.6
4.................................  3...................         1,192.3            27.3           238.9         1,431.2             6.9            10.6
                                    4...................         1,234.6            25.7           224.9         1,459.5            10.7            10.6
5.................................  5...................         1,301.3            24.6           215.3         1,516.6            16.7            10.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
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 No-New-Standards Case for C-13A
----------------------------------------------------------------------------------------------------------------
                                                                        Life-cycle cost savings
                                        Efficiency   -----------------------------------------------------------
                 TSL                       level          Average LCC savings *       Percent of consumers that
                                                                 (2021$)                 experience net cost
----------------------------------------------------------------------------------------------------------------
1...................................               1                          24.8                           0.3
2,3.................................               2                          35.5                           1.0
4...................................               3                          12.0                          47.5
                                                   4                         -16.3                          74.3
5...................................               5                         -73.4                          90.3
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.


                                                  Table V.12--Average LCC and PBP Results for C-13A-BI
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2021$)
                                                         ---------------------------------------------------------------- Simple payback      Average
                TSL                   Efficiency level                     First year's      Lifetime                          years      lifetime years
                                                          Installed cost  operating cost  operating cost        LCC
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    Baseline............         1,371.7            37.1           327.9         1,699.6  ..............            10.6
1.................................  1...................         1,375.4            33.6           296.5         1,672.0             1.1            10.6
2,3...............................  2...................         1,378.7            31.8           280.8         1,659.6             1.3            10.6
4.................................  3...................         1,418.8            30.0           265.2         1,684.0             6.7            10.6
                                    4...................         1,463.8            28.2           249.5         1,713.3            10.4            10.6

[[Page 19422]]

 
5.................................  5...................         1,534.8            27.1           239.0         1,773.9            16.3            10.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
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.13--Average LCC Savings Relative to the No-New-Standards Case for C-13A-BI
----------------------------------------------------------------------------------------------------------------
                                                                        Life-cycle cost savings
                                        Efficiency   -----------------------------------------------------------
                 TSL                       level          Average LCC Savings *       Percent of consumers that
                                                                 (2021$)                 experience net cost
----------------------------------------------------------------------------------------------------------------
1...................................               1                          27.6                           0.3
2,3.................................               2                          39.6                           0.7
4...................................               3                          15.3                          44.4
                                                   4                         -14.1                          72.0
5...................................               5                         -74.6                          89.7
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.


                                                    Table V.14--Average LCC and PBP Results for C-3A
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2021$)
                                                         ---------------------------------------------------------------- Simple payback      Average
                TSL                   Efficiency level                     First year's      Lifetime                          years      lifetime years
                                                          Installed cost  operating cost  operating cost        LCC
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    Baseline............         1,289.8            34.0           388.9         1,678.7  ..............            14.6
1-4...............................  1...................         1,295.4            30.8           351.7         1,647.1             1.7            14.6
                                    2...................         1,344.7            29.3           334.3         1,678.9            11.5            14.6
                                    3...................         1,510.5            27.7           316.6         1,827.0            35.0            14.6
5.................................  4...................         1,611.2            26.4           300.9         1,912.1            41.9            14.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
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.15--Average LCC Savings Relative to the No-New-Standards Case for C-3A
----------------------------------------------------------------------------------------------------------------
                                                                        Life-cycle cost savings
                                        Efficiency   -----------------------------------------------------------
                 TSL                       level          Average LCC savings *       Percent of consumers that
                                                                 (2021$)                 experience net cost
----------------------------------------------------------------------------------------------------------------
1-4.................................               1                          31.5                           0.0
                                                   2                          -0.3                          63.9
                                                   3                        -148.4                          98.3
5...................................               4                        -233.4                          99.4
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.


                                                   Table V.16--Average LCC and PBP Results for C-3A-BI
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2021$)
                                                         ---------------------------------------------------------------- Simple payback      Average
                TSL                   Efficiency level                     First year's      Lifetime                          years      lifetime years
                                                          Installed cost  operating cost  operating cost        LCC
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    Baseline............         1,760.9            38.9           444.5         2,205.4  ..............            14.6
1-4...............................  1...................         1,766.9            35.2           401.8         2,168.7             1.6            14.6
                                    2...................         1,819.3            33.3           380.5         2,199.8            10.5            14.6
                                    3...................         1,995.8            31.4           359.2         2,355.0            31.6            14.6
5.................................  4...................         2,103.0            30.0           343.1         2,446.1            38.7            14.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
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.


[[Page 19423]]


                Table V.17--Average LCC Savings Relative to the No-New-Standards Case for C-3A-BI
----------------------------------------------------------------------------------------------------------------
                                                                        Life-cycle cost savings
                                        Efficiency   -----------------------------------------------------------
                 TSL                       level          Average LCC savings *       Percent of consumers that
                                                                 (2021$)                 experience net cost
----------------------------------------------------------------------------------------------------------------
1-4.................................               1                          36.7                           0.0
                                                   2                           5.5                          57.8
                                                   3                        -149.6                          97.5
5...................................               4                        -240.7                          98.9
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.

b. Consumer Subgroup Analysis
    In the consumer subgroup analysis, DOE estimated the impact of the 
considered TSLs on senior-only households. DOE did not consider low-
income consumers in this NOPR because MREFs are not products generally 
used by this subgroup, as they typically cost more than comparable 
compact refrigerators, which are able to maintain lower temperatures 
compared to MREFs, and therefore serve a wider range of applications. 
Table V.18 compares the average LCC savings and PBP at each TSL for the 
senior-only consumer subgroup with similar metrics for the entire 
consumer sample for all product classes. In most cases, the average LCC 
savings and PBP for senior-only households at the considered efficiency 
levels are improved (i.e., higher LCC savings and equal or lesser 
payback periods) from the average for all households. Chapter 11 of the 
NOPR TSD presents the complete LCC and PBP results for the subgroup.

        Table V.18--Comparison of LCC Savings and PBP for Senior-Only Consumer Subgroup and All Consumers
----------------------------------------------------------------------------------------------------------------
                                                   Average LCC savings * (2021$)       Simple payback years
                                                 ---------------------------------------------------------------
                       TSL                          Senior-only                     Senior-only
                                                    households    All households    households    All households
----------------------------------------------------------------------------------------------------------------
FCC
    1...........................................            18.4            17.4             2.0             2.0
    2,3.........................................            19.0            17.2             4.8             5.0
    4...........................................            15.1            12.6             6.5             6.8
    5...........................................           -40.5           -45.3            11.1            11.5
FC
    1,2.........................................            26.1            23.5             5.6             5.8
    3...........................................            51.2            47.2             3.6             3.8
    4...........................................            33.4            28.0             7.7             8.0
    5...........................................          -178.1          -178.8            21.7            22.5
BICC
    1...........................................            18.4            17.2             2.5             2.4
    2-4.........................................             1.6             2.9             8.3             7.9
    5...........................................           -94.3           -80.9            14.4            13.8
BIC
    1...........................................            20.4            20.3             6.7             6.4
    3,4.........................................            59.8            57.3             4.2             4.0
    2...........................................            18.8            21.2             8.9             8.6
    5...........................................          -224.5          -197.4            24.6            23.6
C-13A
    1...........................................            26.4            24.8             1.1             1.1
    2,3.........................................            37.9            35.5             1.3             1.4
    4...........................................            14.2            12.0             6.7             6.9
    5...........................................           -72.9           -73.4            16.3            16.7
C-13A-BI
    1...........................................            29.1            27.6             1.1             1.1
    2,3.........................................            41.7            39.6             1.4             1.3
    4...........................................            14.0            15.3             7.0             6.7
    5...........................................           -86.7           -74.6            17.0            16.3
C-3A
    1-4.........................................            33.5            31.5             1.7             1.7
    5...........................................          -237.1          -233.4            40.6            41.9
C-3A-BI
    1-4.........................................            39.5            36.7             1.7             1.6
    5...........................................          -268.9          -240.7            40.1            38.7
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.

c. Rebuttable Presumption Payback
    As discussed in section IV.F.9, EPCA establishes 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's energy 
savings resulting from the standard. In calculating a rebuttable 
presumption payback period for each of the considered TSLs, DOE used 
discrete values, and, as required by EPCA, based the energy use 
calculation on the DOE test procedure for MREFs, with

[[Page 19424]]

adjustment for icemaker adder, as discussed in more detail in section 
III.B of this document. In contrast, the PBPs presented in section 
I.B.a were calculated using distributions that reflect the range of 
energy use in the field.
    Table V.19 presents the rebuttable presumption payback periods for 
the considered TSLs for MREFs. While DOE examined the rebuttable 
presumption criterion, it considered whether the proposed 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), that considers the full range 
of impacts to the consumer, manufacturer, Nation, and environment. The 
results of that analysis serve as the basis for DOE to definitively 
evaluate the economic justification for a potential standard level, 
thereby supporting or rebutting the results of any preliminary 
determination of economic justification.

                                                                       Table V.19--Rebuttable Presumption Payback Periods
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                 Rebuttable payback period (years)
                        Efficiency level                         -------------------------------------------------------------------------------------------------------------------------------
                                                                        FCC             FC             BICC             BIC            C-13A         C-13A-BI          C-3A           C-3A-BI
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1...............................................................             2.0             5.5             2.3             6.2             1.1             1.0             1.7             1.6
2...............................................................             4.8             3.6             5.7             3.9             1.3             1.3            11.1            10.2
3...............................................................             6.6             7.6             7.7             8.3             6.7             6.4            33.8            30.7
4...............................................................             8.7            21.6            10.3            23.2            10.4            10.1            40.4            37.6
5...............................................................            11.2            21.6            13.3            22.8            16.3            15.7  ..............  ..............
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

2. Economic Impacts on Manufacturers

    DOE performed an MIA to estimate the impact of amended energy 
conservation standards on manufacturers of MREFs. The following section 
describes the expected impacts on manufacturers at each considered TSL. 
Chapter 12 of the NOPR TSD explains the analysis in further detail.
a. Industry Cash Flow Analysis Results
    In this section, DOE provides GRIM results from the analysis, which 
examines changes in the industry that would result from a standard. The 
following tables summarize the estimated financial impacts (represented 
by changes in INPV) of potential amended energy conservation standards 
on manufacturers of MREFs, as well as the conversion costs that DOE 
estimates manufacturers of MREFs would incur at each TSL.
    The impact of potential amended energy conservation standards were 
analyzed under two scenarios: (1) the preservation of gross margin 
percentage; and (2) the preservation of operating profit, as discussed 
in section IV.J.2.d of this document. The preservation of gross margin 
percentages applies a ``gross margin percentage'' of 20 percent for 
freestanding compact coolers and 28 percent for all other product 
classes, across all efficiency levels.\60\ This scenario assumes that a 
manufacturer's per-unit dollar profit would increase as MPCs increase 
in the standards cases and represents the upper bound to industry 
profitability under potential new and amended energy conservation 
standards.
---------------------------------------------------------------------------

    \60\ The gross margin percentages of 20 percent and 28 percent 
are based on manufacturer markups of 1.25 and 1.38 percent, 
respectively.
---------------------------------------------------------------------------

    The preservation of operating profit scenario reflects 
manufacturers' concerns about their inability to maintain margins as 
MPCs increase to reach more stringent efficiency levels. In this 
scenario, while manufacturers make the necessary investments required 
to convert their facilities to produce compliant products, operating 
profit does not change in absolute dollars and decreases as a 
percentage of revenue. The preservation of operating profit scenario 
results in the lower (or more severe) bound to impacts of potential 
amended standards on industry.
    Each of the modeled scenarios results in a unique set of cash flows 
and corresponding INPV for each TSL. INPV is the sum of the discounted 
cash flows to the industry from the NOPR publication year through the 
end of the analysis period (2023-2058). The ``change in INPV'' results 
refer to the difference in industry value between the no-new-standards 
case and standards case at each TSL. To provide perspective on the 
short-run cash flow impact, 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 would take effect. This figure 
provides an understanding of the magnitude of the required conversion 
costs relative to the cash flow generated by the industry in the no-
new-standards case.
    Conversion costs are one-time investments for manufacturers to 
bring their manufacturing facilities and product designs into 
compliance with potential amended standards. As described in section 
IV.J.2.c of this document, conversion cost investments occur between 
the year of publication of the final rule and the year by which 
manufacturers must comply with the new standard. The conversion costs 
can have a significant impact on the short-term cash flow on the 
industry and generally result in lower free cash flow in the period 
between the publication of the final rule and the compliance date of 
potential amended standards. Conversion costs are independent of the 
manufacturer markup scenarios and are not presented as a range in this 
analysis.

                                                    Table V.20--Manufacturer Impact Analysis Results for Miscellaneous Refrigeration Products
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                       No-New-
                                                               Unit                Standards Case        TSL 1              TSL 2              TSL 3              TSL 4              TSL 5
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
INPV..........................................  2021$ Million....................           742.0     711.3 to 714.7     695.4 to 706.2     697.3 to 706.6     652.3 to 679.4     356.7 to 458.8
Change in INPV................................  %................................  ..............     (4.1) to (3.7)     (6.3) to (4.8)     (6.0) to (4.8)    (12.1) to (8.4)   (51.9) to (38.2)
Free Cash Flow (2028).........................  2021$ Million....................            55.3               37.1               30.1               31.5                9.5            (169.3)
Change in Free Cash Flow (2028)...............  %................................  ..............             (33.0)             (45.7)             (43.1)             (82.8)            (406.0)

[[Page 19425]]

 
Product Conversion Costs......................  2021$ Million....................  ..............               52.4               66.4               68.8              101.1              364.5
Capital Conversion Costs......................  2021$ Million....................  ..............                1.2                6.2                1.2               25.8              174.5
Total Conversion Costs........................  2021$ Million....................  ..............               53.6               72.6               67.6              126.9              539.0
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
*Parentheses denote negative (-) values.

    The following cash flow discussion refers to product classes as 
defined in Table I.1 in section I of this document and the efficiency 
levels and design options as detailed in Table IV.1 in section IV.C of 
this document.
    At TSL 1, the standard represents the lowest analyzed efficiency 
level above baseline for all product classes (EL 1). The change in INPV 
is expected to range from -4.1 to -3.7 percent. At this level, free 
cash flow is estimated to decrease by 33.0 percent compared to the no-
new-standards case value of $55.3 million in the year 2028, the year 
before the standards year. Currently, approximately 24 percent of 
domestic MREF shipments meet the efficiencies required at TSL 1.
    At TSL 1, DOE analyzed implementing various design options for the 
range of directly analyzed product classes. These design options could 
include implementing more efficient single-speed compressors, tube and 
fin evaporators and/or condensers, among other technologies. At this 
level, capital conversion costs are minimal since most manufacturers 
can achieve TSL 1 efficiencies with relatively simple component 
changes. Product conversion costs may be necessary for developing, 
qualifying, sourcing, and testing more efficient components. DOE 
estimates capital conversion costs of $1.2 million and product 
conversion costs of $52.4 million. Conversion costs total $53.6 
million.
    At TSL 1, the shipment-weighted average MPC for all MREFs is 
expected to increase by 0.8 percent relative to the no-new-standards 
case shipment-weighted average MPC for all MREFs in 2029. Given the 
relatively small increase in production costs, DOE does not project a 
notable drop in shipments in the year the standard takes effect. In the 
preservation of gross margin percentage scenario, the minor increase in 
cashflow from the higher MSP is slightly outweighed by the $53.6 
million in conversion costs, causing a slightly negative change in INPV 
at TSL 1 under this scenario. Under the preservation of operating 
profit scenario, manufacturers earn the same per-unit operating profit 
as would be earned in the no-new-standards case, but manufacturers do 
not earn additional profit from their investments. In this scenario, 
the manufacturer markup decreases in 2030, the year after the analyzed 
compliance year. This reduction in the manufacturer markup and the 
$53.6 million in conversion costs incurred by manufacturers cause a 
slightly negative change in INPV at TSL 1 under the preservation of 
operating profit scenario.
    At TSL 2, the standard represents efficiency levels consistent with 
Energy Star requirements for coolers and a modest increase in 
efficiency for certain combination cooler product classes. The change 
in INPV is expected to range from -6.3 to -4.8 percent. At this level, 
free cash flow is estimated to decrease by 45.7 percent compared to the 
no-new-standards case value of $55.3 million in the year 2028, the year 
before the standards year. Currently, approximately 11.5 percent of 
domestic MREF shipments meet the efficiencies required at TSL 2.
    The design options DOE analyzed for most product classes include 
implementing similar design options as TSL 1, such as more efficient 
single-speed compressors. For built-in coolers, the analyzed design 
options also include implementing variable-speed compressors and 
increased insulation thickness. For freestanding compact coolers, C-13A 
and C-13A-bi, TSL 2 corresponds to EL 2. For built-in compact coolers 
and built-in coolers, TSL 2 corresponds to EL 3. For the remaining 
product classes, the efficiencies required at TSL 2 are the same as TSL 
1. The increase in conversion costs compared to TSL 1 are largely 
driven by the higher efficiencies required for built-in coolers, which 
account for 3 percent of MREF shipments. For products that do not meet 
this level, increasing insulation thickness would likely mean new 
cabinets, liners, and fixtures as well as new shelf designs. 
Implementing variable-speed compressors could require more advanced 
controls and electronics and new test stations. DOE estimates capital 
conversion costs of $6.2 million and product conversion costs of $66.4 
million. Conversion costs total $72.6 million.
    At TSL 2, the shipment-weighted average MPC for all MREFs is 
expected to increase by 4.2 percent relative to the no-new-standards 
case shipment-weighted average MPC for all MREFs in 2029. Given the 
projected increase in production costs, DOE expects an estimated 4 
percent drop in shipments in the year the standard takes effect 
relative to the no-new-standards case. In the preservation of gross 
margin percentage scenario, the slight increase in cashflow from the 
higher MSP is outweighed by the $72.6 million in conversion costs, 
causing a slightly negative change in INPV at TSL 2 under this 
scenario. Under the preservation of operating profit scenario, the 
manufacturer markup decreases in 2030, the year after the analyzed 
compliance year. This reduction in the manufacturer markup and the 
$72.6 million in conversion costs incurred by manufacturers cause a 
negative change in INPV at TSL 2 under the preservation of operating 
profit scenario.
    At TSL 3, the standard represents an increase in efficiency for 
freestanding and built-in coolers by additional 10 percent as compared 
to TSL 1, while maintaining the same efficiency levels as TSL 2 for 
combination coolers. The change in INPV is expected to range from -6.0 
to -4.8 percent. At this level, free cash flow is estimated to decrease 
by 43.1 percent compared to the no-new-standards case value of $55.3 
million in the year 2028, the year before the standards year. 
Currently, approximately 5.3 percent of domestic MREF shipments meet 
the efficiencies required at TSL 3.
    At this level, DOE analyzed similar design options as TSL 1 and TSL 
2, such as implementing incrementally more efficient single-speed 
compressors. For all product classes except freestanding coolers and 
built-in coolers, the efficiencies required at TSL 3 are the same as 
TSL 2. For freestanding coolers, TSL 3 corresponds to EL 2. For built-
in coolers, TSL 3 reflects a lower efficiency

[[Page 19426]]

level (EL 2) as compared to TSL 2 (EL 3). Industry capital conversion 
costs decrease at TSL 3 as compared to TSL 2 due to the lower 
efficiency level required for built-in coolers. As previously 
discussed, DOE expects manufacturers of built-in coolers would likely 
need to increase insulation thickness at TSL 2 (EL 3) and incorporate 
variable-speed compressors. However, at TSL 3, DOE's engineering 
analysis and manufacturer feedback indicate that manufacturers could 
achieve EL 2 efficiencies for built-in coolers with relatively 
straightforward component swaps versus a larger product redesign 
associated with increasing insulation. DOE estimates capital conversion 
costs of $1.2 million and product conversion costs of $68.8 million. 
Conversion costs total $70.0 million.
    At TSL 3, the shipment-weighted average MPC for all MREFs is 
expected to increase by 3.9 percent relative to the no-new-standards 
case shipment-weighted average MPC for all MREFs in 2029. Given the 
projected increase in production costs, DOE expects an estimated 4 
percent drop in shipments in the year the standard takes effect 
relative to the no-new-standards case. In the preservation of gross 
margin percentage scenario, the slight increase in cashflow from the 
higher MSP is outweighed by the $70.0 million in conversion costs, 
causing a slightly negative change in INPV at TSL 3 under this 
scenario. Under the preservation of operating profit scenario, the 
manufacturer markup decreases in 2030, the year after the analyzed 
compliance year. This reduction in the manufacturer markup and the 
$70.0 million in conversion costs incurred by manufacturers cause a 
slightly negative change in INPV at TSL 3 under the preservation of 
operating profit scenario.
    At TSL 4, the standard reflects an increase in efficiency level for 
the product classes that make up the vast majority of MREF shipments 
(FCC, FC, C-13A). The change in INPV is expected to range from -12.1 to 
-8.4 percent. At this level, free cash flow is estimated to decrease by 
82.8 percent compared to the no-new-standards case value of $55.3 
million in the year 2028, the year before the standards year. 
Currently, approximately 3.4 percent of domestic MREF shipments meet 
the efficiencies required at TSL 4.
    For all product classes except built-in coolers, C-3A and C-3A-BI, 
TSL 4 corresponds to EL 3. For built-in coolers, TSL 4 corresponds to 
EL 2. For C-3A-BI, TSL 4 corresponds to EL 1. For C-3A, the 
efficiencies required at TSL 4 are the same as TSL 3 (EL 1). At this 
level, conversion costs are largely driven by the efficiencies required 
for freestanding coolers, which accounts for approximately 12 percent 
of industry shipments. DOE's shipments analysis estimates that no 
freestanding cooler shipments currently meet the efficiencies required 
at TSL 4. All manufacturers would need to update their product 
platforms, which could include increasing insulation thickness and 
implementing variable-speed compressors. Increasing insulation 
thickness would likely result in the loss of interior volume and would 
require redesign of the cabinet as well as the designs and tooling 
associated with the interior of the product, such as the liner, 
shelving, racks, and drawers. DOE estimates capital conversion costs of 
$25.8 million and product conversion costs of $101.1 million. 
Conversion costs total $126.9 million.
    At TSL 4, the shipment-weighted average MPC for all MREFs is 
expected to increase by 10.0 percent relative to the no-new-standards 
case shipment-weighted average MPC for all MREFs in 2029. Given the 
projected increase in production costs, DOE expects an estimated 10 
percent drop in shipments in the year the standard takes effect 
relative to the no-new-standards case. In the preservation of gross 
margin percentage scenario, the increase in cashflow from the higher 
MSP is outweighed by the $126.9 million in conversion costs and the 
drop in annual shipments, causing a negative change in INPV at TSL 4 
under this scenario. Under the preservation of operating profit 
scenario, the manufacturer markup decreases in 2030, the year after the 
analyzed compliance year. This reduction in the manufacturer markup, 
the $126.9 million in conversion costs incurred by manufacturers, and 
the drop in annual shipments cause a negative change in INPV at TSL 4 
under the preservation of operating profit scenario.
    At TSL 5, the standard represents the max-tech efficiency levels 
for all product classes. The change in INPV is expected to range from -
51.9 to -38.2 percent. At this level, free cash flow is estimated to 
decrease by 406.0 percent compared to the no-new-standards case value 
of $55.3 million in the year 2028, the year before the standards year. 
Currently, approximately 2.7 percent of domestic MREF shipments meet 
the efficiencies required at TSL 5.
    DOE's shipments analysis estimates that no shipments meet the 
efficiencies required across all product classes except for built-in 
compact coolers, which account for only 4 percent of industry 
shipments. A max-tech standard would necessitate significant investment 
to redesign nearly all product platforms and incorporate design options 
such as the most efficient variable-speed compressors, triple-pane 
glass, increased foam insulation thickness, and VIP technology. Capital 
conversion costs may be necessary for new tooling for VIP placement as 
well as new testing stations for high-efficiency components. Increasing 
insulation thickness would likely result in the loss of interior volume 
and would require redesign of the cabinet as well as the designs and 
tooling associated with the interior of the product, such as the liner, 
shelving, racks, and drawers. Product conversion costs at max-tech are 
significant as manufacturers work to completely redesign their product 
platforms. For products implementing VIPs, product conversion costs may 
be necessary for prototyping and testing for VIP placement, design, and 
sizing. Manufacturers implementing triple-pane glass may need to 
redesign the door frame and hinges to support the added thickness and 
weight. DOE estimates capital conversion costs of $174.5 million and 
product conversion costs of $364.5 million. Conversion costs total 
$539.0 million.
    At TSL 5, the large conversion costs result in a free cash flow 
dropping below zero in the years before the standards year. The 
negative free cash flow calculation indicates manufacturers may need to 
access cash reserves or outside capital to finance conversion efforts.
    At TSL 5, the shipment-weighted average MPC for all MREFs is 
expected to increase by 32.7 percent relative to the no-new-standards 
case shipment-weighted average MPC for all MREFs in 2029. Given the 
projected increase in production costs, DOE expects an estimated 20 
percent drop in shipments in the year the standard takes effect 
relative to the no-new-standards case. In the preservation of gross 
margin percentage scenario, the increase in cashflow from the higher 
MSP is outweighed by the $539.0 million in conversion costs and drop in 
annual shipments, causing a significant negative change in INPV at TSL 
5 under this scenario. Under the preservation of operating profit 
scenario, the manufacturer markup decreases in 2030, the year after the 
analyzed compliance year. This reduction in the manufacturer markup, 
the $539.0 million in conversion costs incurred by manufacturers, and 
the drop in annual shipments cause a significant decrease in INPV at 
TSL 5 under the preservation of operating profit scenario.

[[Page 19427]]

    DOE seeks comments, information, and data on the capital conversion 
costs and product conversion costs estimated for each TSL.
b. Direct Impacts on Employment
    To quantitatively assess the potential impacts of amended energy 
conservation standards on direct employment in the MREF industry, DOE 
used the GRIM to estimate the domestic labor expenditures and number of 
direct employees in the no-new-standards case and in each of the 
standards cases during the analysis period. DOE calculated these values 
using statistical data from the 2020 ASM,\61\ BLS employee compensation 
data,\62\ results of the engineering analysis, and manufacturer 
interviews.
---------------------------------------------------------------------------

    \61\ U.S. Census Bureau, Annual Survey of Manufactures. 
``Summary Statistics for Industry Groups and Industries in the U.S 
(2020).'' Available at: www.census.gov/data/tables/time-series/econ/asm/2018-2020-asm.html (Last accessed September 22, 2022).
    \62\ U.S. Bureau of Labor Statistics. Employer Costs for 
Employee Compensation. June 16, 2022. Available at: www.bls.gov/news.release/pdf/ecec.pdf (Last accessed September 22, 2022).
---------------------------------------------------------------------------

    Labor expenditures related to product manufacturing depend on the 
labor intensity of the product, the sales volume, and an assumption 
that wages remain fixed in real terms over time. The total labor 
expenditures in each year are calculated by multiplying the total MPCs 
by the labor percentage of MPCs. The total labor expenditures in the 
GRIM were then converted to total production employment levels by 
dividing production labor expenditures by the average fully burdened 
wage multiplied by the average number of hours worked per year per 
production worker. To do this, DOE relied on the ASM inputs: Production 
Workers Annual Wages, Production Workers Annual Hours, Production 
Workers for Pay Period, and Number of Employees. DOE also relied on the 
BLS employee compensation data to determine the fully burdened wage 
ratio. The fully burdened wage ratio factors in paid leave, 
supplemental pay, insurance, retirement and savings, and legally 
required benefits.
    The number of production employees is then multiplied by the U.S. 
labor percentage to convert total production employment to total 
domestic production employment. The U.S. labor percentage represents 
the industry fraction of domestic manufacturing production capacity for 
the covered product. This value is derived from manufacturer 
interviews, product database analysis, and publicly available 
information. DOE estimates that 7.8 percent of MREFs are produced 
domestically.
    The domestic production employees estimate covers production line 
workers, including line supervisors, who are directly involved in 
fabricating and assembling products within the 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 proposed rulemaking.
    Non-production workers account for the remainder of the direct 
employment figure. The non-production employees estimate covers 
domestic workers who are not directly involved in the production 
process, such as sales, engineering, human resources, and management. 
Using the amount of domestic production workers calculated above, non-
production domestic employees are extrapolated by multiplying the ratio 
of non-production workers in the industry compared to production 
employees. DOE assumes that this employee distribution ratio remains 
constant between the no-new-standards case and standards cases.
    Using the GRIM, DOE estimates in the absence of amended energy 
conservation standards there would be 228 domestic workers for MREFs in 
2029. Table V.21 shows the range of the impacts of energy conservation 
standards on U.S. manufacturing employment in the MREF industry. The 
following discussion provides a qualitative evaluation of the range of 
potential impacts presented in Table V.21.

                      Table V.21--Domestic Direct Employment Impacts for Miscellaneous Refrigeration Product Manufacturers in 2029
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              No-new-
                                                          standards case       TSL 1           TSL 2           TSL 3           TSL 4           TSL 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Direct Employment in 2029 (Production Workers + Non-                 228             227             220             220             209             207
 Production Workers)....................................
Potential Changes in Direct Employment Workers in 2029 *  ..............    (201) to (1)    (201) to (8)    (201) to (8)   (201) to (19)   (201) to (21)
--------------------------------------------------------------------------------------------------------------------------------------------------------
*DOE presents a range of potential employment impacts. Numbers in parentheses denote negative values.

    The direct employment impacts shown in Table V.21 represent the 
potential domestic employment changes that could result following the 
compliance date for the MREF product classes in this proposal. The 
upper bound estimate corresponds to a change in the number of domestic 
workers that would result from amended energy conservation standards if 
manufacturers continue to produce the same scope of covered products 
within the United States after compliance takes effect. The lower bound 
estimate represents the maximum decrease in production workers if 
manufacturing moved to lower labor-cost countries. At lower TSLs, DOE 
believes the likelihood of changes in production location due to 
amended standards are low due to the relatively minor production line 
updates required. However, as amended standards increase in stringency 
and both the complexity and cost of production facility updates 
increases, manufacturers are more likely to revisit their production 
location decisions and/or their make vs. buy decisions.
    Additional detail on the analysis of direct employment can be found 
in chapter 12 of the NOPR TSD. Additionally, the employment impacts 
discussed in this section are independent of the employment impacts 
from the broader U.S. economy, which are documented in chapter 16 of 
the NOPR TSD.
c. Impacts on Manufacturing Capacity
    In interviews, manufacturers noted that the majority of MREFs--
namely freestanding compact coolers--are manufactured in Asia and 
rebranded by home appliance manufacturers. Manufacturers had few 
concerns about

[[Page 19428]]

manufacturing constraints below the max-tech level and the 
implementation of VIPs. However, at max-tech, some manufacturers 
expressed technical uncertainty about industry's ability to meet the 
efficiencies required as few OEMs offer products at max-tech today. For 
example, DOE is not aware of any OEMs that currently offer freestanding 
compact coolers that meet TSL 5 efficiencies. DOE's shipments analysis 
estimates that except for built-in compact coolers, which only accounts 
for 4 percent of MREF shipments, no shipments of other product classes 
meet the max-tech efficiencies.
    Some low-volume domestic and European-based OEMs offer niche or 
high-end MREFs (i.e., built-ins, combination coolers, freestanding 
compact coolers that can be integrated into kitchen cabinetry). In 
interviews, these manufacturers stated that, due to their low volume 
and wide range of product offerings, they could face engineering 
resource constraints should amended standards necessitate a significant 
redesign, such as requiring insulation thickness changes or VIPs (TSL 4 
for freestanding coolers and built-in coolers and TSL 5 for all other 
product classes). These manufacturers further stated that the extent of 
their resource constraints depend, in part, on the outcome of other 
ongoing DOE energy conservation standards rulemakings that impact 
related products, in particular, the potential energy conservation 
standards for refrigerators, refrigerator-freezers, and freezers. 
Pursuant to a consent decree entered on September 20, 2022, DOE has 
agreed to sign and post on DOE's publicly accessible website a 
rulemaking document for refrigerators, refrigerator-freezers, and 
freezers by December 30, 2023, that, when effective, would be DOE's 
final agency action for standards for these products.\63\
---------------------------------------------------------------------------

    \63\ Natural Resources Defense Council, Inc., et al. v Granholm, 
et al, No. 1:20-cv-09127 (S.D.N.Y.), and State of New York, et al. v 
Granholm, et al. No. 1:20-cv-09362 (S.D.N.Y.).
---------------------------------------------------------------------------

    DOE seeks comment on whether manufacturers expect manufacturing 
capacity constraints would limit product availability to consumers in 
the timeframe of the amended standard compliance date (2029).
d. Impacts on Subgroups of Manufacturers
    Using average cost assumptions to develop industry cash flow 
estimates may not capture the differential impacts among subgroups of 
manufacturers. Small manufacturers, niche players, or manufacturers 
exhibiting a cost structure that differs substantially from the 
industry average could be affected disproportionately. DOE investigated 
small businesses as a manufacturer subgroup that could be 
disproportionally impacted by energy conservation standards and could 
merit additional analysis.
    DOE analyzes the impacts on small businesses in a separate analysis 
in section VI.B of this document as part of the Regulatory Flexibility 
Analysis. The manufacturers of the products covered in this rulemaking 
have a primary North American Industry Classification System 
(``NAICS'') code of 335220: ``Major Household Appliance Manufacturing'' 
or a secondary NAICS code of 333415: ``Air-Conditioning and Warm Air 
Heating Equipment and Commercial and Industrial Refrigeration Equipment 
Manufacturing.'' The Small Business Administration (``SBA'') defines a 
small business as a company that has fewer than 1,500 employees and 
fewer than 1,250 employees for NAICS codes 335220 and 333415, 
respectively. DOE used the higher threshold of 1,500 employees to 
identify small business manufacturers. Based on this classification, 
DOE identified two domestic OEMs that qualify as small businesses. For 
a discussion of the impacts on the small business manufacturer 
subgroup, see the Regulatory Flexibility Analysis in section VI.B of 
this document and chapter 12 of the NOPR TSD.
e. Cumulative Regulatory Burden
    One aspect of assessing manufacturer burden involves looking at the 
cumulative impact of multiple DOE standards and the product-specific 
regulatory actions of other Federal agencies that affect the 
manufacturers of a covered product or equipment. While any one 
regulation may not impose a significant burden on manufacturers, the 
combined effects of several existing or impending regulations may have 
serious consequences for some manufacturers, groups of manufacturers, 
or an entire industry. Assessing the impact of a single regulation may 
overlook this cumulative regulatory burden. In addition to energy 
conservation standards, other regulations can significantly affect 
manufacturers' financial operations. Multiple regulations affecting the 
same manufacturer can strain profits and lead companies to abandon 
product lines or markets with lower expected future returns than 
competing products. For these reasons, DOE conducts an analysis of 
cumulative regulatory burden as part of its rulemakings pertaining to 
appliance efficiency.
    For the cumulative regulatory burden analysis, DOE examines 
Federal, product-specific regulations that could affect MREF 
manufacturers that take effect approximately three years before or 
after the 2029 compliance date.

Table V.22--Compliance Dates and Expected Conversion Expenses of Federal Energy Conservation Standards Affecting
                      Miscellaneous Refrigeration Products Original Equipment Manufacturers
----------------------------------------------------------------------------------------------------------------
                                                 Number of                                           Industry
 Federal energy conservation     Number of     OEMs affected      Approx.          Industry         conversion
          standard                OEMs *       from today's      standards     conversion costs   costs/product
                                                  rule **          year          (millions $)    revenue *** (%)
----------------------------------------------------------------------------------------------------------------
Room Air Conditioners                      8               4            2026      $22.8 (2020$)              0.5
 [dagger] 87 FR 20608 (April
 7, 2022)...................
Commercial Water Heating                  14               1            2026       34.6 (2020$)              4.7
 Equipment [dagger] 87 FR
 30610 (May 19, 2022).......
Consumer Furnaces [dagger]                15               1            2029      150.6 (2020$)              1.4
 87 FR 40590 (July 7, 2022).
Consumer Clothes Dryers                   15               5            2027      149.7 (2020$)              1.8
 [dagger] 87 FR 51734
 (August 23, 2022)..........
Microwave Ovens [dagger] 87               18               7            2026       46.1 (2021$)              0.7
 FR 52282 (August 24, 2022).
Consumer Conventional                     34               7            2027      183.4 (2021$)              1.2
 Cooking Products 88 FR 6818
 (February 1, 2023).........
Residential Clothes Washers               19               6            2027      690.8 (2021$)              5.2
 [dagger] 88 FR 13520 (March
 3, 2023)...................
Refrigerators, Refrigerator-              49              19            2027    1,323.6 (2021$)              3.8
 Freezers, and Freezers
 [dagger] 88 FR 12452
 (February 27, 2023)........
----------------------------------------------------------------------------------------------------------------
* This column presents the total number of OEMs identified in the energy conservation standard rule contributing
  to cumulative regulatory burden.
** This column presents the number of OEMs producing MREFs that are also listed as OEMs in the identified energy
  conservation standard contributing to cumulative regulatory burden.

[[Page 19429]]

 
*** This column presents industry conversion costs as a percentage of product revenue during the conversion
  period. Industry conversion costs are the upfront investments manufacturers must make to sell compliant
  products/equipment. The revenue used for this calculation is the revenue from just the covered product/
  equipment associated with each row. The conversion period is the time frame over which conversion costs are
  made and lasts from the publication year of the final rule to the compliance year of the final rule. The
  conversion period typically ranges from 3 to 5 years, depending on the energy conservation standard.
[dagger] These rulemakings are in the proposed rule stage and all values are subject to change until finalized.

    In addition to the rulemakings listed in Table V.29, DOE has 
ongoing rulemakings for other products or equipment that MREF 
manufacturers produce, including but not limited to automatic 
commercial ice makers; \64\ dehumidifiers; \65\ and dishwashers.\66\ If 
DOE proposes or finalizes any energy conservation standards for these 
products or equipment prior to finalizing energy conservation standards 
MREFs, DOE will include the energy conservation standards for these 
other products or equipment as part of the cumulative regulatory burden 
for the MREF final rule.
---------------------------------------------------------------------------

    \64\ www.regulations.gov/docket/EERE-2017-BT-STD-0022.
    \65\ www.regulations.gov/docket/EERE-2019-BT-STD-0043.
    \66\ www.regulations.gov/docket/EERE-2019-BT-STD-0039.
---------------------------------------------------------------------------

    DOE requests information regarding the impact of cumulative 
regulatory burden on manufacturers of MREFs associated with multiple 
DOE standards or product-specific regulatory actions of other Federal 
agencies.
3. National Impact Analysis
    This section presents DOE's estimates of the NES and the NPV of 
consumer benefits that would result from each of the TSLs considered as 
potential amended standards.
a. Significance of Energy Savings
    To estimate the energy savings attributable to potential amended 
standards for MREFs, DOE compared their energy consumption under the 
no-new-standards case to their anticipated energy consumption under 
each TSL. The savings are measured over the entire lifetime of products 
purchased in the 30-year period that begins in the year of anticipated 
compliance with amended standards (2029-2058). Table V.23 presents 
DOE's projections of the NES for each TSL considered for freestanding 
and built-in MREFs. The savings were calculated using the approach 
described in section IV.H.2 of this document.

                 Table V.23--Cumulative National Energy Savings for MREFs; 30 Years of Shipments
                                                   [2029-2058]
----------------------------------------------------------------------------------------------------------------
                                                                                    Combination
                                                          TSL         Coolers         coolers          Total
----------------------------------------------------------------------------------------------------------------
                                                                        (quads)
----------------------------------------------------------------------------------------------------------------
Primary Energy......................................          1             0.07            0.02            0.09
                                                              2             0.15            0.03            0.19
                                                              3             0.17            0.03            0.20
                                                              4             0.25            0.05            0.30
                                                              5             0.46            0.07            0.52
FFC.................................................          1             0.07            0.02            0.10
                                                              2             0.16            0.04            0.19
                                                              3             0.18            0.04            0.21
                                                              4             0.26            0.05            0.31
                                                              5             0.47            0.07            0.54
----------------------------------------------------------------------------------------------------------------

    OMB Circular A-4 \67\ 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 years, 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.\68\ The review timeframe established in EPCA is generally 
not synchronized with the product lifetime, product manufacturing 
cycles, or other factors specific to consumer MREFs. 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.24. The impacts are counted over the lifetime of consumer MREFs 
purchased in 2029-2037.
---------------------------------------------------------------------------

    \67\ U.S. Office of Management and Budget. Circular A-4: 
Regulatory Analysis. September 17, 2003. https://obamawhitehouse.archives.gov/omb/circulars_a004_a-4/ (last accessed 
September 30, 2022).
    \68\ Section 325(m) of EPCA requires DOE to review its standards 
at least once every 6 years, and requires, for certain products, a 
3-year period after any new standard is promulgated before 
compliance is required, except that in no case may any new standards 
be required within 6 years of the compliance date of the previous 
standards. While adding a 6-year review to the 3-year compliance 
period adds up to 9 years, DOE notes that it may undertake reviews 
at any time within the 6-year period and that the 3-year compliance 
date may yield to the 6-year backstop. A 9-year analysis period may 
not be appropriate given the variability that occurs in the timing 
of standards reviews and the fact that for some products, the 
compliance period is 5 years rather than 3 years.

[[Page 19430]]



                 Table V.24--Cumulative National Energy Savings for MREFs; 9 Years of Shipments
                                                   [2029-2037]
----------------------------------------------------------------------------------------------------------------
                                                                                    Combination
                                                          TSL         Coolers         coolers          Total
----------------------------------------------------------------------------------------------------------------
                                                                        (quads)
----------------------------------------------------------------------------------------------------------------
Primary Energy......................................          1             0.02            0.01            0.03
                                                              2             0.04            0.01            0.05
                                                              3             0.05            0.01            0.06
                                                              4             0.07            0.01            0.08
                                                              5             0.12            0.02            0.14
FFC.................................................          1             0.02            0.01            0.03
                                                              2             0.04            0.01            0.05
                                                              3             0.05            0.01            0.06
                                                              4             0.07            0.01            0.09
                                                              5             0.13            0.02            0.15
----------------------------------------------------------------------------------------------------------------

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 TSLs considered for MREFs. In 
accordance with OMB's guidelines on regulatory analysis,\69\ DOE 
calculated NPV using both a 7-percent and a 3-percent real discount 
rate. Table V.25 shows the consumer NPV results with impacts counted 
over the lifetime of products purchased in 2029-2058.
---------------------------------------------------------------------------

    \69\ U.S. Office of Management and Budget. Circular A-4: 
Regulatory Analysis. September 17, 2003. https://obamawhitehouse.archives.gov/omb/circulars_a004_a-4/ (last accessed 
September 30, 2022).

   Table V.25--Cumulative Net Present Value of Consumer Benefits for MREFs; 30 Years of Shipments (2029-2058)
                                                 [Million $2021]
----------------------------------------------------------------------------------------------------------------
                                                                                    Combination
                                                          TSL         Coolers         coolers          Total
----------------------------------------------------------------------------------------------------------------
3% Discount Rate....................................          1            348.5           143.4           492.0
                                                              2            460.4           207.3           667.6
                                                              3            610.3           207.3           817.5
                                                              4            547.4           143.4           690.9
                                                              5         (1061.9)         (296.0)        (1357.9)
7% Discount Rate....................................          1            127.1            56.3           183.5
                                                              2            126.7            80.8           207.5
                                                              3            189.7            80.8           270.5
                                                              4             97.8            37.6           135.3
                                                              5          (848.7)         (195.3)        (1044.0)
----------------------------------------------------------------------------------------------------------------
Note: Numbers in parentheses denote negative values.

    The NPV results based on the aforementioned 9-year analytical 
period are presented in Table V.26. The impacts are counted over the 
lifetime of products purchased in 2029-2037. 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.26--Cumulative Net Present Value of Consumer Benefits for MREFs; 9 Years of Shipments (2029-2037)
                                                 [Million $2021]
----------------------------------------------------------------------------------------------------------------
                                                                                    Combination
                                                          TSL         Coolers         coolers          Total
----------------------------------------------------------------------------------------------------------------
3% Discount Rate....................................          1            130.2            54.1           184.3
                                                              2            162.7            78.1           240.7
                                                              3            222.1            78.1           300.1
                                                              4            180.0            40.9            220.
                                                              5          (484.1)         (132.2)         (616.3)
7% Discount Rate....................................          1             63.5            28.5            92.0
                                                              2             58.6            40.7            99.4
                                                              3             91.9            40.7           132.7
                                                              4             36.9            12.3            49.1

[[Page 19431]]

 
                                                              5          (465.5)         (108.9)         (574.4)
----------------------------------------------------------------------------------------------------------------

    The previous results reflect the use of a default trend to estimate 
the change in price for consumer MREFs over the analysis period (see 
section IV.H.3 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 NOPR 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
    It is estimated that that amended energy conservation standards for 
MREFs would reduce energy expenditures 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. 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 (2029-2033), 
where these uncertainties are reduced.
    The results suggest that the proposed standards would be 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 NOPR TSD presents detailed 
results regarding anticipated indirect employment impacts.
4. Impact on Utility or Performance of Products
    As discussed in section III.F.1.d of this document, DOE has 
tentatively concluded that the standards proposed in this NOPR would 
not lessen the utility or performance of the MREFs under consideration 
in this rulemaking. Manufacturers of these products currently offer 
units that meet or exceed the proposed standards.
5. Impact of Any Lessening of Competition
    DOE considered any lessening of competition that would be likely to 
result from new or amended standards. As discussed in section III.F.1.e 
of this document, the Attorney General determines the impact, if any, 
of any lessening of competition likely to result from a proposed 
standard, and transmits such determination in writing to the Secretary, 
together with an analysis of the nature and extent of such impact. To 
assist the Attorney General in making this determination, DOE has 
provided DOJ with copies of this NOPR and the accompanying TSD for 
review. DOE will consider DOJ's comments on the proposed rule in 
determining whether to proceed to a final rule. DOE will publish and 
respond to DOJ's comments in that document. DOE invites comment from 
the public regarding the competitive impacts that are likely to result 
from this proposed rule. In addition, stakeholders may also provide 
comments separately to DOJ regarding these potential impacts. See the 
ADDRESSES section for information to send comments to DOJ.
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. Chapter 15 in the NOPR TSD 
presents the estimated impacts on electricity generating capacity, 
relative to the no-new-standards case, for the TSLs that DOE considered 
in this rulemaking.
    Energy conservation resulting from potential energy conservation 
standards for MREFs is expected to yield environmental benefits in the 
form of reduced emissions of certain air pollutants and greenhouse 
gases. Table V.27 provides DOE's estimate of cumulative emissions 
reductions expected to result from the TSLs considered in this 
rulemaking. 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 NOPR TSD.

                    Table V.27--Cumulative Emissions Reduction for MREFs Shipped in 2029-2058
----------------------------------------------------------------------------------------------------------------
                                                               Trial standard level
                                 -------------------------------------------------------------------------------
                                         1               2               3               4               5
----------------------------------------------------------------------------------------------------------------
                                             Power Sector Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......             3.0             6.0             6.6             9.7            16.9
CH4 (thousand tons).............             0.2             0.5             0.5             0.8             1.3
N2O (thousand tons).............            0.03            0.07            0.07            0.11            0.19
NOX (thousand tons).............             1.5             3.0             3.3             4.8             8.4
SO2 (thousand tons).............             1.5             3.0             3.2             4.7             8.3
Hg (tons).......................            0.01            0.02            0.02            0.03            0.05
----------------------------------------------------------------------------------------------------------------

[[Page 19432]]

 
                                               Upstream Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......             0.2             0.5             0.5             0.7             1.3
CH4 (thousand tons).............            21.7            43.4            47.5            69.5           121.4
N2O (thousand tons).............            0.00            0.00            0.00            0.00            0.01
NOX (thousand tons).............             3.5             7.0             7.6            11.1            19.4
SO2 (thousand tons).............            0.02            0.03            0.03            0.05            0.09
Hg (tons).......................            0.00            0.00            0.00            0.00            0.00
----------------------------------------------------------------------------------------------------------------
                                               Total FFC Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......             3.3             6.5             7.1            10.4            18.2
CH4 (thousand tons).............            22.0            43.9            48.0            70.3           122.7
N2O (thousand tons).............            0.03            0.07            0.08            0.11            0.19
NOX (thousand tons).............             5.0            10.0            10.9            15.9            27.9
SO2 (thousand tons).............             1.5             3.0             3.3             4.8             8.4
Hg (tons).......................            0.01            0.02            0.02            0.03            0.05
----------------------------------------------------------------------------------------------------------------

    As part of the analysis for this rulemaking, DOE estimated monetary 
benefits likely to result from the reduced emissions of CO2 
that DOE estimated for each of the considered TSLs for MREFs. Section 
IV.L of this document discusses the SC-CO2 values that DOE 
used. Table V.28 presents the value of CO2 emissions 
reduction at each TSL for each of the SC-CO2 cases. The 
time-series of annual values is presented for the proposed TSL in 
chapter 14 of the NOPR TSD.

          Table V.28--Present Monetized Value of CO2 Emissions Reduction for MREFs Shipped in 2029-2058
                                                 [Million 2021$]
----------------------------------------------------------------------------------------------------------------
                                             SC-CO2 Case (Discount rate and statistics)
        TSL        ---------------------------------------------------------------------------------------------
                         5% (Average)            3% (Average)           2.5% (Average)      3% (95th Percentile)
----------------------------------------------------------------------------------------------------------------
            1                     27.4                   121.9                   192.4                  369.7
            2                     54.9                   244.0                   385.2                  740.2
            3                     59.6                   265.3                   418.9                  804.8
            4                     87.1                   387.7                   612.4                 1176.1
            5                    152.1                   677.7                 1,070.6                2,055.8
----------------------------------------------------------------------------------------------------------------

    As discussed in section IV.L.1 of this document, DOE estimated the 
climate benefits likely to result from the reduced emissions of methane 
and N2O that DOE estimated for each of the considered TSLs 
for MREFs. Table V.29 presents the value of the CH4 
emissions reduction at each TSL, and Table V.30 presents the value of 
the N2O emissions reduction at each TSL. The time-series of 
annual values is presented for the proposed TSL in chapter 14 of the 
NOPR TSD.

        Table V.29--Present Monetized Value of Methane Emissions Reduction for MREFs Shipped in 2029-2058
                                                 [Million 2021$]
----------------------------------------------------------------------------------------------------------------
                                             SC-CH4 case (Discount rate and statistics)
        TSL        ---------------------------------------------------------------------------------------------
                         5% (Average)            3% (Average)           2.5% (Average)      3% (95th Percentile)
----------------------------------------------------------------------------------------------------------------
            1                      8.5                    26.5                    37.4                   70.1
            2                     17.1                    53.1                    74.8                  140.4
            3                     18.6                    57.8                    81.5                  152.8
            4                     27.1                    84.6                   119.2                  223.5
            5                     47.4                   147.9                   208.6                  391.0
----------------------------------------------------------------------------------------------------------------


[[Page 19433]]


     Table V.30--Present Monetized Value of Nitrous Oxide Emissions Reduction for MREFs Shipped in 2029-2058
                                                 [Million 2021$]
----------------------------------------------------------------------------------------------------------------
                                             SC-N2O case (Discount rate and statistics)
        TSL        ---------------------------------------------------------------------------------------------
                         5% (Average)            3% (Average)           2.5% (Average)      3% (95th Percentile)
----------------------------------------------------------------------------------------------------------------
            1                      0.1                     0.5                     0.7                    1.2
            2                      0.2                     0.9                     1.4                    2.5
            3                      0.2                     1.0                     1.6                    2.7
            4                      0.4                     1.5                     2.3                    3.9
            5                      0.6                     2.6                     4.0                    6.8
----------------------------------------------------------------------------------------------------------------

    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 
global and U.S. economy continues to evolve rapidly. DOE, together with 
other Federal agencies, will continue to review 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. 
DOE notes that the proposed standards would be economically justified 
even without inclusion of monetized benefits of reduced GHG emissions.
    DOE also estimated the monetary value of the health benefits 
associated with NOX and SO2 emissions reductions 
anticipated to result from the considered TSLs for MREFs. The dollar-
per-ton values that DOE used are discussed in section IV.L of this 
document. Table V.31 presents the present value for NOX 
emissions reduction for each TSL calculated using 7-percent and 3-
percent discount rates, and Table V.32 presents similar results for 
SO2 emissions reductions. The results in these tables 
reflect application of EPA's low dollar-per-ton values, which DOE used 
to be conservative. The time-series of annual values is presented for 
the proposed TSL in chapter 14 of the NOPR TSD.

Table V.31--Present Monetized Value of NOX Emissions Reduction for MREFs
                          Shipped in 2029-2058
                             [Million 2021$]
------------------------------------------------------------------------
         TSL              3% Discount rate          7% Discount rate
------------------------------------------------------------------------
             1                      181.8                      65.7
             2                      363.8                     131.4
             3                      395.8                     142.4
             4                      578.3                     207.5
             5                    1,009.8                     361.4
------------------------------------------------------------------------


Table V.32--Present Monetized Value of SO2 Emissions Reduction for MREFs
                          Shipped in 2029-2058
                             [Million 2021$]
------------------------------------------------------------------------
         TSL              3% Discount rate          7% Discount rate
------------------------------------------------------------------------
             1                       73.7                      27.1
             2                      147.4                      54.1
             3                      160.4                      58.7
             4                      234.2                      85.4
             5                      408.7                     148.6
------------------------------------------------------------------------

    DOE has not considered the monetary benefits of the reduction of Hg 
for this proposed rule. Not all the public health and environmental 
benefits from the reduction of greenhouse gases, NOX, and 
SO2 are captured in the values above, and additional 
unquantified benefits from the reductions of those pollutants as well 
as from the reduction of Hg, direct particulate matter (``PM''), and 
other co-pollutants may be significant. The energy savings from this 
proposal reduces electricity use and therefore reduces the need for 
electricity generation. To the extent that the reduced generation 
includes a reduction in combustion of coal, this rule will also include 
health benefits derived from emission reductions of mercury and 
particulate matter.
7. Other Factors
    The Secretary of Energy, in determining whether a standard is 
economically justified, may consider any other factors that the 
Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)) No 
other factors were considered in this analysis.
8. Summary of Economic Impacts
    Table V.33 presents the NPV values that result from adding the 
estimates of the potential economic benefits resulting from reduced GHG 
and NOX and SO2 emissions to the NPV of consumer 
benefits calculated for each TSL considered in this rulemaking. The 
consumer benefits are domestic U.S. monetary savings that occur as a 
result of purchasing the covered MREFs, and are measured for the 
lifetime of products shipped in 2029-2058. The climate benefits 
associated with reduced GHG emissions resulting from the adopted 
standards are global benefits, and are also calculated based on the 
lifetime of MREFs shipped in 2029-2058.

     Table V.33--Consumer NPV Combined With Present Monetized Value of Climate Benefits and Health Benefits
----------------------------------------------------------------------------------------------------------------
            Category                   TSL 1           TSL 2           TSL 3           TSL 4           TSL 5
----------------------------------------------------------------------------------------------------------------
                      3% Discount rate for Consumer NPV and Health Benefits (billion 2021$)
----------------------------------------------------------------------------------------------------------------
5% Average SC-GHG case..........             0.8             1.3             1.5             1.6             0.3
3% Average SC-GHG case..........             0.9             1.5             1.7             2.0             0.9

[[Page 19434]]

 
2.5% Average SC-GHG case........             1.0             1.6             1.9             2.2             1.3
3% 95th percentile SC-GHG case..             1.2             2.1             2.3             2.9             2.5
----------------------------------------------------------------------------------------------------------------
                      7% Discount rate for Consumer NPV and Health Benefits (billion 2021$)
----------------------------------------------------------------------------------------------------------------
5% Average SC-GHG case..........             0.3             0.5             0.6             0.5            -0.3
3% Average SC-GHG case..........             0.4             0.7             0.8             0.9             0.3
2.5% Average SC-GHG case........             0.5             0.9             1.0             1.2             0.7
3% 95th percentile SC-GHG case..             0.7             1.3             1.4             1.8             1.9
----------------------------------------------------------------------------------------------------------------

C. Conclusion

    When considering new or amended energy conservation standards, the 
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))
    For this NOPR, DOE considered the impacts of amended standards for 
MREFs 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. In addition, as discussed in section V.B.1.b of this 
document, DOE conducted a subgroup analysis for seniors, the results of 
which are comparable to all MREF consumers (see Table V.18.) DOE did 
not consider low-income consumers in this NOPR because MREFs are not 
products generally used by this subgroup, as they typically cost more 
than comparable compact refrigerators, which are able to maintain lower 
temperatures compared to MREFs, and therefore serve a wider range of 
applications.
    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, 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 standard 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 NOPR 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.\70\
---------------------------------------------------------------------------

    \70\ P.C. Reiss and M.W. White. Household Electricity Demand, 
Revisited. Review of Economic Studies. 2005. 72(3): pp. 853-883. 
doi: 10.1111/0034-6527.00354.
---------------------------------------------------------------------------

    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.\71\ 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.
---------------------------------------------------------------------------

    \71\ Sanstad, A.H. Notes on the Economics of Household Energy 
Consumption and Technology Choice. 2010. Lawrence Berkeley National 
Laboratory. www1.eere.energy.gov/buildings/appliance_standards/pdfs/consumer_ee_theory.pdf (last accessed September 22, 2022).
---------------------------------------------------------------------------

1. Benefits and Burdens of TSLs Considered for MREF Standards
    Table V.34 and Table V.35 summarize the quantitative impacts 
estimated for each TSL for MREFs. The national impacts are measured 
over the lifetime

[[Page 19435]]

of MREFs purchased in the 30-year period that begins in the anticipated 
year of compliance with amended standards (2029-2058). The energy 
savings, emissions reductions, and value of emissions reductions refer 
to full-fuel-cycle results. The efficiency levels contained in each TSL 
are described in section I.A of this document.

    Table V.34--Summary of Analytical Results for Miscellaneous Refrigeration Product TSLs: National Impacts
----------------------------------------------------------------------------------------------------------------
            Category                   TSL 1           TSL 2           TSL 3           TSL 4           TSL 5
----------------------------------------------------------------------------------------------------------------
                                     Cumulative FFC National Energy Savings
----------------------------------------------------------------------------------------------------------------
Quads...........................            0.10            0.19            0.21            0.31            0.54
----------------------------------------------------------------------------------------------------------------
                                       Cumulative FFC Emissions Reduction
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......             3.3             6.5             7.1            10.4            18.2
CH4 (thousand tons).............            22.0            43.9            48.0            70.3           122.7
N2O (thousand tons).............            0.03            0.07            0.08            0.11            0.19
NOX (thousand tons).............             5.0            10.0            10.9            15.9            27.9
SO2 (thousand tons).............             1.5             3.0             3.3             4.8             8.4
Hg (tons).......................            0.01            0.02            0.02            0.03            0.05
----------------------------------------------------------------------------------------------------------------
                 Present Monetized Value of Benefits and Costs (3% discount rate, billion 2021$)
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings.             0.6             1.3             1.4             2.0             3.5
Climate Benefits *..............             0.1             0.3             0.3             0.5             0.8
Health Benefits **..............             0.3             0.5             0.6             0.8             1.4
Total Monetized Benefits                     1.0             2.1             2.3             3.3             5.8
 [dagger].......................
Consumer Incremental Product                 0.1             0.6             0.6             1.3             4.9
 Costs..........................
Consumer Net Benefits...........             0.5             0.7             0.8             0.7            -1.4
Total Net Monetized Benefits....             0.9             1.5             1.7             2.0             0.9
----------------------------------------------------------------------------------------------------------------
                 Present Monetized Value of Benefits and Costs (7% discount rate, billion 2021$)
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings.             0.3             0.5             0.6             0.8             1.4
Climate Benefits *..............             0.1             0.3             0.3             0.5             0.8
Health Benefits **..............             0.1             0.2             0.2             0.3             0.5
Total Monetized Benefits                     0.5             1.0             1.1             1.6             2.7
 [dagger].......................
Consumer Incremental Product                 0.1             0.3             0.3             0.7             2.5
 Costs..........................
Consumer Net Benefits...........             0.2             0.2             0.3             0.1            -1.0
                                 -------------------------------------------------------------------------------
    Total Net Monetized Benefits             0.4             0.7             0.8             0.9             0.3
----------------------------------------------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with consumer MREFs shipped in 2029-2058. These
  results include benefits to consumers which accrue after 2058 from the products shipped in 2029-2058.
* Climate benefits are calculated using four different estimates of the SC-CO2, SC-CH4 and SC-N2O. Together,
  these represent the global SC-GHG. For presentational purposes of this table, the climate benefits associated
  with the average SC-GHG at a 3 percent discount rate are shown, but the Department does not have a single
  central SC-GHG point estimate. On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22-30087) granted
  the Federal government's emergency motion for stay pending appeal of the February 11, 2022, preliminary
  injunction issued in Louisiana v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a result of the Fifth Circuit's
  order, the preliminary injunction is no longer in effect, pending resolution of the Federal government's
  appeal of that injunction or a further court order. Among other things, the preliminary injunction enjoined
  the defendants in that case from ``adopting, employing, treating as binding, or relying upon'' the interim
  estimates of the social cost of greenhouse gases--which were issued by the Interagency Working Group on the
  Social Cost of Greenhouse Gases on February 26, 2021--to monetize the benefits of reducing greenhouse gas
  emissions. As reflected in this rule, DOE has reverted to its approach prior to the injunction and presents
  monetized GHG abatement benefits where appropriate and permissible under law.
** Health benefits are calculated using benefit-per-ton values for NOX and SO2. DOE is currently only monetizing
  (for NOX and SO2) PM2.5 precursor health benefits and (for NOX) ozone precursor health benefits, but will
  continue to assess the ability to monetize other effects such as health benefits from reductions in direct
  PM2.5 emissions. The health benefits are presented at real discount rates of 3 and 7 percent. See section IV.L
  of this document for more details.
[dagger] Total and net benefits include consumer, climate, and health benefits. For presentation purposes, total
  and net benefits for both the 3-percent and 7-percent cases are presented using the average SC-GHG with 3-
  percent discount rate, but the Department does not have a single central SC-GHG point estimate. DOE emphasizes
  the importance and value of considering the benefits calculated using all four SC-GHG estimates.


    Table V.35--Summary of Analytical Results for Miscellaneous Refrigeration Products TSLs: Manufacturer and
                                                Consumer Impacts
----------------------------------------------------------------------------------------------------------------
            Category                   TSL 1           TSL 2           TSL 3           TSL 4           TSL 5
----------------------------------------------------------------------------------------------------------------
                                              Manufacturer Impacts
----------------------------------------------------------------------------------------------------------------
Industry NPV (million 2021$) (No- 711.3 to 714.7  695.4 to 706.2  697.3 to 706.6  652.3 to 679.4  356.7 to 458.8
 new-standards case INPV =
 $742.0)........................
Industry NPV (% change).........  (4.1) to (3.7)  (6.3) to (4.8)  (6.0) to (4.8)       (12.1) to       (51.9) to
                                                                                           (8.4)          (38.2)
----------------------------------------------------------------------------------------------------------------
                                      Consumer Average LCC Savings (2021$)
----------------------------------------------------------------------------------------------------------------
FCC.............................            17.4            17.2            17.2            12.6           -45.3

[[Page 19436]]

 
FC..............................            23.5            23.5            47.2            28.0          -178.8
BICC............................            17.2             2.9             2.9             2.9           -80.9
BIC.............................            20.3            21.2            57.3            57.3          -197.4
C-13A...........................            24.8            35.5            35.5            12.0           -73.4
C-13A-BI........................            27.6            39.6            39.6            15.3           -74.6
C-3A............................            31.5            31.5            31.5            31.5          -233.4
C-3A-BI.........................            36.7            36.7            36.7            36.7          -240.7
Shipment-Weighted Average *.....            19.6            20.9            25.0            15.6           -74.0
----------------------------------------------------------------------------------------------------------------
                                          Simple Payback Period (years)
----------------------------------------------------------------------------------------------------------------
FCC.............................             2.0             5.0             5.0             6.8            11.5
FC..............................             5.8             5.8             3.8             8.0            22.5
BICC............................             2.4             7.9             7.9             7.9            13.8
BIC.............................             6.4             8.6             4.0             4.0            23.6
C-13A...........................             1.1             1.4             1.4             6.9            16.7
C-13A-BI........................             1.1             1.3             1.3             6.7            16.3
C-3A............................             1.7             1.7             1.7             1.7            41.9
C-3A-BI.........................             1.6             1.6             1.6             1.6            38.7
Shipment-Weighted Average *.....             2.5             4.7             4.3             6.9            14.4
----------------------------------------------------------------------------------------------------------------
                                       Percent of Consumers with Net Cost
----------------------------------------------------------------------------------------------------------------
FCC.............................             2.8            33.5            33.5            49.5            77.8
FC..............................             8.8             8.8             1.6            45.5            94.5
BICC............................             1.0            15.3            15.3            15.3            22.7
BIC.............................            18.7            53.4             3.6             3.6            94.3
C-13A...........................             0.3             1.0             1.0            47.5            90.3
C-13A-BI........................             0.3             0.7             0.7            44.4            89.7
C-3A............................             0.0             0.0             0.0             0.0            99.4
C-3A-BI.........................             0.0             0.0             0.0            0.03            98.9
Shipment-Weighted Average *.....             3.5            24.7            22.1            45.5            80.8
----------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values. The entry ``N/A'' means not applicable because there is no change in
  the standard at certain TSLs.
* Weighted by shares of each product class in total projected shipments in 2029.

    DOE first considered TSL 5, which represents the max-tech 
efficiency levels. For coolers (i.e., FCC, FC, BICC, and BIC), which 
account for approximately 82 percent of MREF shipments-size, DOE 
expects that products would require use of VIPs, VSCs, and triple-
glazed doors at this TSL. DOE expects that VIPs would be used in the 
products' side walls. In addition, the products would use the best-
available-efficiency variable-speed compressors, forced-convection heat 
exchangers with multi-speed brushless-DC (``BLDC'') fans, and increase 
in cabinet wall thickness as compared to most baseline products. TSL 5 
would save an estimated 0.54 quads of energy, an amount which DOE 
considers significant. Under TSL 5, the NPV of consumer benefit would 
be negative, i.e., -$1.04 billion using a discount rate of 7 percent, 
and -$1.36 billion using a discount rate of 3 percent.
    The cumulative emissions reductions at TSL 5 are 18.2 Mt of 
CO2, 8.4 thousand tons of SO2, 27.9 thousand tons 
of NOX, 0.05 tons of Hg, 123 thousand tons of 
CH4, and 0.19 thousand tons of N2O. The estimated 
monetary value of the climate benefits from reduced GHG emissions 
(associated with the average SC-GHG at a 3-percent discount rate) at 
TSL 5 is $0.8 billion. The estimated monetary value of the health 
benefits from reduced SO2 and NOX emissions at 
TSL 5 is $0.5 billion using a 7-percent discount rate and $1.4 billion 
using a 3-percent discount rate.
    Using a 7-percent discount rate for consumer benefits and costs, 
health benefits from reduced SO2 and NOX 
emissions, and the 3-percent discount rate case for climate benefits 
from reduced GHG emissions, the estimated total NPV at TSL 5 is $0.3 
billion. Using a 3-percent discount rate for all benefits and costs, 
the estimated total NPV at TSL 5 is $0.9 billion. The estimated total 
monetized NPV is provided for additional information, however, 
consistent with the statutory factors and framework for determining 
whether a proposed standard level is economically justified, DOE 
considers a range of quantitative and qualitative benefits and burdens, 
including the costs and cost savings for consumers, impacts to consumer 
subgroups, energy savings, emission reductions, and impacts on 
manufacturers.
    At TSL 5, for the product classes with the largest market share, 
which are FCC, FC, and C-13A and together account for approximately 92 
percent of annual shipments, the LCC savings are all negative (-$45.3, 
-$178.8, and -$73.4, respectively) and their payback periods are 11.5 
years, 22.5, and 16.7 years, respectively, which are all longer than 
their corresponding average lifetimes. For these product classes, the 
fraction of consumers experiencing a net LCC cost is 77.8 percent, 94.5 
percent, and 90.3 percent due to increases in first cost of $180.0, 
$335.6, and $73.4, respectively. Overall, a majority of MREF consumers 
(80.8 percent) would experience a net cost and the average LCC savings 
would be negative for all analyzed product classes.
    At TSL 5, the projected change in INPV ranges from a decrease of 
$385.3 million to a decrease of $283.2 million, which corresponds to 
decreases of 51.9 percent and 38.2 percent, respectively. DOE estimates 
that industry must invest $539.0 million to comply with standards set 
at TSL 5.
    DOE estimates that approximately 2.7 percent of current MREF 
shipments meet the max-tech levels. For FCC, FC,

[[Page 19437]]

and C-13A, which together account for approximately 92 percent of 
annual shipments, DOE estimates that zero shipments currently meet max-
tech efficiencies.
    At TSL 5, manufacturers would likely need to implement all the most 
efficient design options analyzed in the engineering analysis. 
Manufacturers that do not currently offer products that meet TSL 5 
efficiencies would need to develop new product platforms, which would 
require significant investment. Conversion costs are driven by the need 
for changes to cabinet construction, such as increasing foam insulation 
thickness and/or incorporating VIP technology. Increasing insulation 
thickness would likely result in the loss of interior volume and would 
require redesign of the cabinet as well as the designs and tooling 
associated with the interior of the product, such as the liner, 
shelving, racks, and drawers. Incorporating VIPs into MREF designs 
could also require redesign of the cabinet in order to maximize the 
efficiency benefit of this technology. In addition to insulation 
changes, manufacturers may need to implement triple-pane glass, which 
could require implementing reinforced hinges and redesigning the door 
structure.
    At this level, DOE expects an estimated 20-percent drop in 
shipments in the year the standard takes effect, as some consumers may 
forgo purchasing a new MREF due to the increased upfront cost of 
baseline models.
    The Secretary tentatively concludes that at TSL 5 for MREFs, the 
benefits of energy savings, positive NPV of consumer benefits, emission 
reductions, and the estimated monetary value of the emissions 
reductions would be outweighed by the economic burden on many 
consumers, and the impacts on manufacturers, including the significant 
potential reduction in INPV. A majority of MREF consumers (80.8 
percent) would experience a net cost and the average LCC savings would 
be negative. Additionally, manufacturers would need to make significant 
upfront investments to update product platforms. The potential 
reduction in INPV could be as high as 51.9 percent. Consequently, the 
Secretary has tentatively concluded that TSL 5 is not economically 
justified.
    DOE then considered TSL 4, which represents EL 3 for all analyzed 
product classes except for C-3A and C-3A-BI, for which this TSL 
corresponds to EL 1 and BIC, for which this TSL corresponds to EL 2. At 
TSL 4, products of most classes would use high-efficiency single-speed 
compressors with forced-convection evaporators and condensers using 
brushless DC fan motors. Doors would be double-glazed with low-
conductivity gas fill (e.g., argon) and a single low-emissivity glass 
layer. Products would not require use of VIPs, but the FC product class 
would require thicker walls than corresponding baseline products. TSL 4 
would save an estimated 0.31 quads of energy, an amount DOE considers 
significant. Under TSL 4, the NPV of consumer benefit would be $0.14 
billion using a discount rate of 7 percent, and $0.69 billion using a 
discount rate of 3 percent.
    The cumulative emissions reductions at TSL 4 are 10.4 Mt of 
CO2, 4.8 thousand tons of SO2, 15.9 thousand tons 
of NOX, 0.03 tons of Hg, 70.3 thousand tons of 
CH4, and 0.11 thousand tons of N2O. The estimated 
monetary value of the climate benefits from reduced GHG emissions 
(associated with the average SC-GHG at a 3-percent discount rate) at 
TSL 4 is $0.5 billion. The estimated monetary value of the health 
benefits from reduced SO2 and NOX emissions at 
TSL 4 is $0.3 billion using a 7-percent discount rate and $0.8 billion 
using a 3-percent discount rate.
    Using a 7-percent discount rate for consumer benefits and costs, 
health benefits from reduced SO2 and NOX 
emissions, and the 3-percent discount rate case for climate benefits 
from reduced GHG emissions, the estimated total NPV at TSL 4 is $0.9 
billion. Using a 3-percent discount rate for all benefits and costs, 
the estimated total NPV at TSL 4 is $2.0 billion. The estimated total 
monetized NPV is provided for additional information, however, 
consistent with the statutory factors and framework for determining 
whether a proposed standard level is economically justified, DOE 
considers a range of quantitative and qualitative benefits and burdens, 
including the costs and cost savings for consumers, impacts to consumer 
subgroups, energy savings, emission reductions, and impacts on 
manufacturers.
    At TSL 4, for the product classes with the largest market share, 
which are FCC, FC, and C-13A, the LCC savings are $12.6, $28.0, and 
$12.0, respectively, and their payback periods are 6.8 years, 8.0, and 
6.9 years, respectively, which are all shorter than their corresponding 
average lifetimes. For these product classes, the fraction of consumers 
experiencing a net LCC cost is 49.5 percent, 45.5 percent, and 47.5 
percent, and increases in first cost for these classes are $52.9, 
$96.0, and $44.3, respectively. Overall, the LCC savings would be 
positive for all MREF product classes, and more than half of MREF 
consumers would experience a net benefit (51 percent).
    At TSL 4, the projected change in INPV ranges from a decrease of 
$89.8 million to a decrease of $62.7 million, which correspond to 
decreases of 12.1 percent and 8.4 percent, respectively. DOE estimates 
that industry must invest $126.9 million to comply with standards set 
at TSL 4.
    DOE estimates that approximately 3.4 percent of shipments currently 
meet the required efficiencies at TSL 4 as at max-tech. For most 
product classes (i.e., FCC, BICC, BIC, C-13A, C-13A-BI, C-3A, C-3A-BI), 
DOE expects manufacturers could reach the required efficiencies with 
relatively straightforward component swaps, such as implementing 
incrementally more efficient compressors, rather than the full platform 
redesigns required at max-tech. DOE expects that FC manufacturers would 
need to increase foam insulation thickness and incorporate variable-
speed compressor systems at this level. At TSL 4, DOE expects an 
estimated 10-percent drop in shipments in the year the standard takes 
effect, as some consumers may forgo purchasing a new MREF due to the 
increased upfront cost of baseline models.
    After considering the analysis and weighing the benefits and 
burdens, the Secretary has tentatively concluded that at a standard set 
at TSL 4 for MREFs would be economically justified. At this TSL, the 
average LCC savings are positive for all product classes for which an 
amended standard is considered, with a shipment-weighted average of 
$15.60 in consumer savings.
    The FFC national energy savings are significant and the NPV of 
consumer benefits is positive (and represents the maximum value) using 
both a 3-percent and 7-percent discount rate. Notably, the benefits to 
consumers outweigh the cost to manufacturers. At TSL 4, the NPV of 
consumer benefits, even measured at the more conservative discount rate 
of 7 percent is over 1.5 times higher than the maximum estimated 
manufacturers' loss in INPV. The standard levels at TSL 4 are 
economically justified even without weighing the estimated monetary 
value of emissions reductions. When those emissions reductions are 
included--representing $0.5 billion in climate benefits (associated 
with the average SC-GHG at a 3-percent discount rate), and $0.8 billion 
(using a 3-percent discount rate) or $0.3 billion (using a 7-percent 
discount rate) in health benefits--the rationale becomes stronger 
still.

[[Page 19438]]

    As stated, DOE conducts the walk-down analysis to determine the TSL 
that represents the maximum improvement in energy efficiency that is 
technologically feasible and economically justified as required under 
EPCA. The walk-down is not a comparative analysis, as a comparative 
analysis would result in the maximization of net benefits instead of 
energy savings that are technologically feasible and economically 
justified, which would be contrary to the statute. 86 FR 70892, 70908. 
Although DOE has not conducted a comparative analysis to select the 
proposed energy conservation standards, DOE notes that TSL 4 represents 
the option with positive LCC savings ($15.6) for all product classes 
compared to TSL 5 ($-74.0). Further, when comparing the cumulative NPV 
of consumer benefit using a 7% discount rate, TSL 4 ($0.14 billion) has 
a higher benefit value than TSL 5 (-$1.04 billion), while for a 3% 
discount rate, TSL 4 ($0.69 billion) is also higher than TSL 5 (-1.36 
billion), which yields negative NPV in both cases. These additional 
savings and benefits at TSL 4 are significant. DOE considers the 
impacts to be, as a whole, economically justified at TSL 4.
    Although DOE considered proposed amended standard levels for MREFs 
by grouping the efficiency levels for each product class into TSLs, DOE 
evaluates all analyzed efficiency levels in its analysis. For all 
product classes, the proposed standard level represents the maximum 
energy savings that does not result in negative LCC savings. The ELs at 
the proposed standard level result in positive LCC savings for all 
product classes, and reduce the decrease in INPV and conversion costs 
to the point where DOE has tentatively concluded they are economically 
justified, as discussed for TSL 4 in the preceding paragraphs.
    Therefore, based on the previous considerations, DOE proposes to 
adopt the energy conservation standards for MREFs at TSL 4. The 
proposed amended energy conservation standards for MREFs, which are 
expressed in kWh/yr, are shown in Table V.36.

   Table V.36--Proposed Amended Energy Conservation Standards for MREF
------------------------------------------------------------------------
                                   Equations for maximum energy use (kWh/
          Product class                             yr)
------------------------------------------------------------------------
1. Freestanding compact coolers    5.52AV + 109.1
 (``FCC'').
2. Freestanding coolers (``FC'').  5.52AV + 109.1
3. Built-in compact coolers        5.52AV + 109.1
 (``BICC'').
4. Built-in coolers (``BIC'')....  6.30AV + 124.6
C-3A. Cooler with all-             4.11AV + 117.4
 refrigerator--automatic defrost.
C-3A-BI. Built-in cooler with all- 4.67AV + 133.0
 refrigerator--automatic defrost.
C-5-BI. Built-in cooler with       5.47AV + 196.2 + 28I
 refrigerator-freezer--automatic
 defrost with bottom-mounted
 freezer.
C-9. Cooler with upright freezer   5.58AV + 147.7 + 28I
 with automatic defrost without
 an automatic icemaker.
C-9-BI. Built-in cooler with       6.38AV + 168.8 + 28I
 upright freezer with automatic
 defrost without an automatic
 icemaker.
C-13A. Compact cooler with all-    4.74AV + 155.0
 refrigerator--automatic defrost.
C-13A-BI. Built-in compact cooler  5.22AV + 170.5
 with all-refrigerator--automatic
 defrost.
------------------------------------------------------------------------
AV = Total adjusted volume, expressed in ft\3\, as determined in
  appendix A to subpart B of 10 CFR part 430.
I = 1 for a product with an automatic icemaker and = 0 for a product
  without an automatic icemaker.

2. Annualized Benefits and Costs of the Proposed Standards
    The benefits and costs of the proposed standards can also be 
expressed in terms of annualized values. The annualized net benefit is 
(1) the annualized national economic value (expressed in 2021$) of the 
benefits from operating products that meet the proposed standards 
(consisting primarily of operating cost savings from using less energy, 
minus increases in product purchase costs, and (2) the annualized 
monetary value of the climate and health benefits from emission 
reductions.
    Table V.37 shows the annualized values for MREFs under TSL 4, 
expressed in 2021$. The results under the primary estimate are as 
follows.
    Using a 7-percent discount rate for consumer benefits and costs and 
NOx and SO2 reduction benefits, and a 3-percent discount 
rate case for GHG social costs, the estimated cost of the proposed 
standards for MREFs is $81.2 million per year in increased equipment 
costs, while the estimated annual benefits are $97.6 million from 
reduced equipment operating costs, $28.9 million from GHG reductions, 
and $35.4 million from reduced NOX and SO2 
emissions. In this case, the net benefit amounts to $80.6 million per 
year.
    Using a 3-percent discount rate for all benefits and costs, the 
estimated cost of the proposed standards for MREFs is $81.0 million per 
year in increased equipment costs, while the estimated annual benefits 
are $123.1 million in reduced operating costs, $28.9 million from GHG 
reductions, and $49.5 million from reduced NOX and 
SO2 emissions. In this case, the net benefit amounts to 
$120.4 million per year.

 Table V.37--Annualized Monetized Benefits and Costs of Proposed Energy Conservation Standards for MREFs (TSL 4)
                                              [Million 2021$/year]
----------------------------------------------------------------------------------------------------------------
                                                                                     Low-net-        High-net-
                                                                      Primary        benefits        benefits
                                                                     estimate        estimate        estimate
----------------------------------------------------------------------------------------------------------------
                                                3% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings.................................           123.1           116.3           131.2
Climate Benefits *..............................................            28.9            28.1            29.6
Health Benefits **..............................................            49.5            48.2            50.8
Total Monetized Benefits [dagger]...............................           201.4           192.6           211.6
Consumer Incremental Product Costs [Dagger].....................            81.0            82.3            79.4

[[Page 19439]]

 
Net Monetized Benefits..........................................           120.4           110.3           132.2
----------------------------------------------------------------------------------------------------------------
                                                7% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings.................................            97.6            92.7           103.3
Climate Benefits * (3% discount rate)...........................            28.9            28.1            29.6
Health Benefits **..............................................            35.4            34.6            36.2
Total Monetized Benefits [dagger]...............................           161.9           155.4           169.2
Consumer Incremental Product Costs..............................            81.2            82.4            79.8
Net Monetized Benefits..........................................            80.6            72.9            89.4
----------------------------------------------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with refrigerators, refrigerator-freezers, and
  freezers shipped in 2029-2058. These results include benefits to consumers which accrue after 2056 from the
  products shipped in 2029-2058. The Primary, Low-Net-Benefits, and High Net Benefits Estimates utilize
  projections of energy prices from the AEO2022 Reference case, Low Economic Growth case, and High Economic
  Growth case, respectively. In addition, incremental equipment costs reflect a medium decline rate in the
  Primary Estimate, a low decline rate in the Low-Net-Benefits Estimate, and a high decline rate in the High Net
  Benefits Estimate. The methods used to derive projected price trends are explained in section IV.H.3 of this
  document. Note that the Benefits and Costs may not sum to the Net Benefits due to rounding.
* Climate benefits are calculated using four different estimates of the global SC-GHG (see section IV.L of this
  document). For presentational purposes of this table, the climate benefits associated with the average SC-GHG
  at a 3 percent discount rate are shown, but the Department does not have a single central SC-GHG point
  estimate, and it emphasizes the importance and value of considering the benefits calculated using all four SC-
  GHG estimates. On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22-30087) granted the Federal
  government's emergency motion for stay pending appeal of the February 11, 2022, preliminary injunction issued
  in Louisiana v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a result of the Fifth Circuit's order, the
  preliminary injunction is no longer in effect, pending resolution of the Federal government's appeal of that
  injunction or a further court order. Among other things, the preliminary injunction enjoined the defendants in
  that case from ``adopting, employing, treating as binding, or relying upon'' the interim estimates of the
  social cost of greenhouse gases--which were issued by the Interagency Working Group on the Social Cost of
  Greenhouse Gases on February 26, 2021--to monetize the benefits of reducing greenhouse gas emissions. As
  reflected in this rule, DOE has reverted to its approach prior to the injunction and presents monetized GHG
  abatement benefits where appropriate and permissible under law.
** Health benefits are calculated using benefit-per-ton values for NOX and SO2. DOE is currently only monetizing
  (for SO2 and NOX) PM2.5 precursor health benefits and (for NOX) ozone precursor health benefits, but will
  continue to assess the ability to monetize other effects such as health benefits from reductions in direct
  PM2.5 emissions. The health benefits are presented at real discount rates of 3 and 7 percent. See section IV.L
  of this document for more details.
[dagger] Total benefits for both the 3-percent and 7-percent cases are presented using the average SC-GHG with 3-
  percent discount rate, but the Department does not have a single central SC-GHG point estimate.

D. Reporting, Certification, and Sampling Plan

    Manufacturers, including importers, must use product-specific 
certification templates to certify compliance to DOE. For MREFs, the 
certification template reflects the general certification requirements 
specified at 10 CFR 429.12 and the product-specific requirements 
specified at 10 CFR 429.14. As discussed in the previous paragraphs, 
DOE is not proposing to amend the product-specific certification 
requirements for these products.

VI. Procedural Issues and Regulatory Review

A. Review Under Executive Orders 12866 and 13563

    Executive Order (``E.O.'') 12866, ``Regulatory Planning and 
Review,'' 58 FR 51734 (Oct. 4, 1993) as supplemented and reaffirmed by 
E.O. 13563, ``Improving Regulation and Regulatory Review,'' 76 FR 3821 
(January 21, 2011), requires agencies, to the extent permitted by law, 
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 E.O. 13563 
requires agencies to use the best available techniques to quantify 
anticipated present and future benefits and costs as accurately as 
possible. In its guidance, the Office of Information and Regulatory 
Affairs (``OIRA'') in the Office of Management and Budget (``OMB'') has 
emphasized that such techniques may include identifying changing future 
compliance costs that might result from technological innovation or 
anticipated behavioral changes. For the reasons stated in the preamble, 
this proposed/final regulatory action is consistent with these 
principles.
    Section 6(a) of E.O. 12866 also requires agencies to submit 
``significant regulatory actions'' to OIRA for review. OIRA has 
determined that this proposed regulatory action constitutes a 
``significant regulatory action within the scope of section 3(f)(1)'' 
of E.O. 12866. Accordingly, pursuant to section 6(a)(3)(C) of E.O. 
12866, DOE has provided to OIRA an assessment, including the underlying 
analysis, of benefits and costs anticipated from the proposed 
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

[[Page 19440]]

to the identified potential alternatives. These assessments are 
summarized in this preamble and further detail can be found in the TSD 
for this rulemaking.

B. Review Under the Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires 
preparation of an initial regulatory flexibility analysis (``IRFA'') 
for any rule that by law must be proposed for public comment, unless 
the agency certifies that the rule, if promulgated, will not have a 
significant economic impact on a substantial number of small entities. 
As required by E.O. 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 website (www.energy.gov/gc/office-general-counsel). DOE has 
prepared the following IRFA for the products that are the subject of 
this proposed rulemaking.
    For manufacturers of miscellaneous refrigeration products 
(``MREFs''), the SBA has set a size threshold, which defines those 
entities classified as ``small businesses'' for the purposes of the 
statute. DOE used the SBA's small business size standards to determine 
whether any small entities would be subject to the requirements of the 
rule. (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/document/support--table-size-standards. The manufacturing of the products covered in this 
rulemaking are classified under NAICS code 335220: ``Major Household 
Appliance Manufacturing'' or NAICS code 333415: ``Air-Conditioning and 
Warm Air Heating Equipment and Commercial and Industrial Refrigeration 
Equipment Manufacturing.'' The SBA sets a threshold of 1,500 employees 
or fewer and 1,250 employees or fewer for an entity to be considered as 
a small business for NAICS codes 335220 and 333415, respectively. DOE 
used the higher threshold of 1,500 employees to identify small business 
manufacturers.

1. Description of Reasons Why Action Is Being Considered

    DOE is proposing amended energy conservation standards for MREFs. 
EPCA authorizes DOE to regulate the energy efficiency of a number of 
consumer products and certain industrial equipment. Title III, Part B 
of EPCA established the Energy Conservation Program for Consumer 
Products Other Than Automobiles which, in addition to identifying 
particular consumer products and commercial equipment as covered under 
the statute, permits the Secretary of Energy to classify additional 
types of consumer products as covered products. (42 U.S.C. 6292(a)(20)) 
DOE added MREFs as covered products through a final determination of 
coverage published in the Federal Register on July 18, 2016. 81 FR 
46768. EPCA further provides that, not later than 6 years after the 
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 NOPR including new proposed 
energy conservation standards (proceeding to a final rule, as 
appropriate). (42 U.S.C. 6295(m)(1)) This rulemaking is in accordance 
with DOE's obligations under EPCA.
2. Objectives of, and Legal Basis for, Rule
    EPCA authorizes DOE to regulate the energy efficiency of a number 
of consumer products and certain industrial equipment. Title III, Part 
B of EPCA established the Energy Conservation Program for Consumer 
Products Other Than Automobiles which, in addition to identifying 
particular consumer products and commercial equipment as covered under 
the statute, permits the Secretary of Energy to classify additional 
types of consumer products as covered products. (42 U.S.C. 6292(a)(20)) 
DOE added MREFs as covered products through a final determination of 
coverage published in the Federal Register on July 18, 2016. 81 FR 
46768. MREFs are consumer refrigeration products other than 
refrigerators, refrigerator-freezers, or freezers, which include 
coolers and combination cooler refrigeration products. 10 CFR 430.2. 
MREFs include refrigeration products such as coolers (e.g., wine 
chillers and other specialty products) and combination cooler 
refrigeration products (e.g., wine chillers and other specialty 
compartments combined with a refrigerator, refrigerator-freezers, or 
freezers).
    EPCA further provides that, not later than 6 years after the 
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 NOPR including new proposed 
energy conservation standards (proceeding to a final rule, as 
appropriate). (42 U.S.C. 6295(m)(1)) Not later than three years after 
issuance of a final determination not to amend standards, DOE must 
publish either a notice of determination that standards for the product 
do not need to be amended, or a NOPR including new proposed energy 
conservation standards (proceeding to a final rule, as appropriate). 
(42 U.S.C. 6295(m)(3)(B))
3. Description on Estimated Number of Small Entities Regulated
    DOE reviewed this proposed rule under the provisions of the 
Regulatory Flexibility Act and the procedures and policies published on 
February 19, 2003. 68 FR 7990. DOE conducted a market survey to 
identify potential small manufacturers of MREFs. DOE began its 
assessment by reviewing DOE's CCD,\72\ California Energy Commission's 
Modernized Appliance Efficiency Database System (``MAEDbS''),\73\ 
individual company websites, and prior MREF rulemakings to identify 
manufacturers of the covered product. DOE then consulted publicly 
available data, such as manufacturer websites, manufacturer 
specifications and product literature, import/export logs (e.g., bills 
of lading from Panjiva,\74\) and basic model numbers, to identify 
original equipment manufacturers (``OEMs'') of covered MREFs. DOE 
further relied on public data and subscription-based market research 
tools (e.g., Dun & Bradstreet reports) \75\ to determine company, 
location, headcount, and annual revenue. DOE also asked industry 
representatives if they were aware of any small manufacturers during 
manufacturer interviews. DOE screened out companies that do not offer 
products covered by this rulemaking, do not meet the SBA's definition 
of a ``small business,'' or are foreign-owned and operated.
---------------------------------------------------------------------------

    \72\ U.S. Department of Energy's Compliance Certification 
Database is available at: www.regulations.doe.gov/certification-data/#q=Product_Group_s%3A* (Last accessed May 2, 2022).
    \73\ California Energy Commission's Modernized Appliance 
Efficiency Database System is available at: 
cacertappliances.energy.ca.gov/Pages/ApplianceSearch.aspx (Last 
accessed May 2, 2022).
    \74\ S&P Global. Panjiva Market Intelligence is available at: 
panjiva.com/import-export/United-States (Last accessed May 5, 2022).
    \75\ D&B Hoovers [bond] Company Information [bond] Industry 
Information [bond] Lists, app.dnbhoovers.com/ (Last accessed May 5, 
2022).
---------------------------------------------------------------------------

    DOE initially identified 38 OEMs that sell MREFs in the United 
States. Of the 38 OEMs identified, DOE tentatively

[[Page 19441]]

determined that two companies qualify as small businesses and are not 
foreign-owned and operated.
    DOE reached out to both small businesses and invited them to 
participate in voluntary interviews. Neither of the small business 
consented to participate in formal MIA interviews. DOE also requested 
information about small businesses and potential impacts on small 
businesses while interviewing larger manufacturers.
4. Description and Estimate of Compliance Requirements Including 
Differences in Cost, if Any, for Different Groups of Small Entities
    One of the small businesses identified has 14 MREF models certified 
in DOE's CCD. Of those 14 models, nine models are FCC, two are BIC, and 
three are C-13A combination coolers. None of the nine FCC models meet 
the TSL 4 efficiencies. Of the two BIC, one meets the efficiencies 
required at TSL 3. However, the two models have identical dimensions 
and share many components. Given the product similarities and low 
volume of sales, DOE expects the manufacturer would likely discontinue 
the non-compliant model. None of the three C-13A models meet the TSL 4 
efficiencies. To meet the required efficiencies for their FCC models, 
DOE expects the manufacturer would likely need to incorporate 
incrementally more efficient compressors, along with other design 
options. DOE expects these updates to be relatively straight forward 
component swaps. Some product conversion costs would be necessary for 
sourcing, qualifying, and testing more efficient components. To meet 
the efficiencies required for their C-13A models, DOE expects the 
manufacturer would likely need to implement variable-speed compressors, 
along with other design options. Implementing variable-speed 
compressors could require more advanced controls and electronics and 
new test stations. DOE estimated conversion costs for this small 
manufacturer by using product platform estimates to scale-down the 
industry conversion costs. DOE estimates that the small would incur 
minimal capital conversion costs and product conversion costs of 
approximately $1.37 million related to sourcing and testing more 
efficient components and variable-speed compressors to meet proposed 
amended standards. Based on subscription-based market research reports, 
the small business has an annual revenue of approximately $85 million. 
The total conversion costs of $1.37 are approximately 0.3 percent of 
company revenue over the 5-year conversion period.
    Based on a review of publicly available information, the other 
small business primarily sources their MREF products from Asian-based 
OEMs. However, DOE has tentatively determined that they make some MREF 
products in-house at a domestic manufacturing facility. DOE identified 
one FCC model certified in CCD. To meet the required efficiencies, DOE 
expects the manufacturer would likely need to incorporate incrementally 
more efficient compressors, along with other design options. As 
previously discussed, DOE expects these updates to be relatively 
straight forward component swaps. DOE estimated conversion costs for 
this small manufacturer by using product platform estimates to scale-
down the industry conversion costs. DOE estimates that the small 
manufacturer would incur minimal capital conversion costs and 
approximately $420,000 in product conversion costs related to sourcing 
and testing more efficient components to meet proposed amended 
standards. Based on subscription-based market research reports, the 
small business has an annual revenue of approximately $200 million. The 
total conversion costs of approximately $420,000 are less than 1 
percent of the estimated company revenue over the 5-year conversion 
period.
    DOE seeks comments, information, and data on the number of small 
businesses in the industry, the names of those small businesses, and 
their market shares by product class. DOE also requests comment on the 
potential impacts of the proposed standards on small manufacturers.
5. Duplication, Overlap, and Conflict With Other Rules and Regulations
    DOE is not aware of any rules or regulations that duplicate, 
overlap, or conflict with the proposed rule.
6. Significant Alternatives to the Rule
    The discussion in the previous section analyzes impacts on small 
businesses that would result from DOE's proposed rule, represented by 
TSL 4. In reviewing alternatives to the proposed rule, DOE examined 
energy conservation standards set at lower efficiency levels. While TSL 
1, TSL 2, and TSL 3 would reduce the impacts on small business 
manufacturers, it would come at the expense of a reduction in energy 
savings. TSL 1 achieves 69 percent lower energy savings compared to the 
energy savings at TSL 4. TSL 2 achieves 37 percent lower energy savings 
compared to the energy savings at TSL 4. TSL 3 achieves 31 percent 
lower energy savings compared to the energy savings at TSL 4.
    Based on the presented discussion, establishing standards at TSL 4 
balances the benefits of the energy savings at TSL 4 with the potential 
burdens placed on MREF manufacturers, including small business 
manufacturers. Accordingly, DOE does not propose one of the other TSLs 
considered in the analysis, or the other policy alternatives examined 
as part of the regulatory impact analysis and included in chapter 17 of 
the NOPR TSD.
    Additional compliance flexibilities may be available through other 
means. 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. (42 U.S.C. 6295(t)) Additionally, 
manufacturers subject to DOE's energy efficiency standards may apply to 
DOE's Office of Hearings and Appeals for exception relief under certain 
circumstances. Manufacturers should refer to 10 CFR part 430, subpart 
E, and 10 CFR part 1003 for additional details.

C. Review Under the Paperwork Reduction Act

    Manufacturers of miscellaneous refrigeration products 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 
miscellaneous refrigeration products, 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 miscellaneous 
refrigeration products. (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 35 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.

[[Page 19442]]

    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

    DOE is analyzing this proposed regulation in accordance with the 
National Environmental Policy Act of 1969 (``NEPA'') and DOE's NEPA 
implementing regulations (10 CFR part 1021). DOE's regulations include 
a categorical exclusion for rulemakings that establish energy 
conservation standards for consumer products or industrial equipment. 
10 CFR part 1021, subpart D, appendix B5.1. DOE anticipates that this 
rulemaking qualifies for categorical exclusion B5.1 because it is a 
rulemaking that establishes energy conservation standards for consumer 
products or industrial equipment, none of the exceptions identified in 
categorical exclusion B5.1(b) apply, no extraordinary circumstances 
exist that require further environmental analysis, and it otherwise 
meets the requirements for application of a categorical exclusion. See 
10 CFR 1021.410. DOE will complete its NEPA review before issuing the 
final rule.

E. Review Under Executive Order 13132

    E.O. 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 proposed rule and has 
tentatively 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 prescribes Federal preemption of State regulations as to energy 
conservation for the miscellaneous refrigeration products that are the 
subject of this proposed 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 E.O. 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 E.O. 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 proposed rule meets the 
relevant standards of E.O. 12988.

G. Review Under the Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (``UMRA'') 
requires each Federal agency to assess the effects of Federal 
regulatory actions on State, local, and Tribal governments and the 
private sector. Pub. L. 104-4, section 201 (codified at 2 U.S.C. 1531). 
For a proposed regulatory action likely to result in a rule that may 
cause the expenditure by State, local, and Tribal governments, in the 
aggregate, or by the private sector of $100 million or more in any one 
year (adjusted annually for inflation), section 202 of UMRA requires a 
Federal agency to publish a written statement that estimates the 
resulting costs, benefits, and other effects on the national economy. 
(2 U.S.C. 1532(a), (b)) 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 proposed ``significant 
intergovernmental mandate,'' and requires an agency plan for giving 
notice and opportunity for timely input to potentially affected small 
governments before establishing any requirements that might 
significantly or uniquely affect 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 
www.energy.gov/sites/prod/files/gcprod/documents/umra_97.pdf.
    Although this proposed rule does not contain a Federal 
intergovernmental mandate, it may require expenditures of $100 million 
or more in any one year by the private sector. Such expenditures may 
include: (1) investment in research and development and in capital 
expenditures by miscellaneous refrigeration product 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 miscellaneous refrigeration products, 
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 proposed rule. (2 U.S.C. 1532(c)) The content 
requirements of section 202(b) of UMRA relevant to a private sector 
mandate substantially overlap the economic analysis requirements that 
apply under section 325(o) of EPCA and Executive Order 12866. The 
SUPPLEMENTARY INFORMATION section of this NOPR and the TSD for this 
proposed 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 proposed rule unless DOE publishes 
an explanation for doing otherwise, or the selection of such an

[[Page 19443]]

alternative is inconsistent with law. As required by 42 U.S.C. 6295(m) 
this proposed rule would establish amended energy conservation 
standards for miscellaneous refrigeration products that are designed to 
achieve the maximum improvement in energy efficiency that DOE has 
determined to be both technologically feasible and economically 
justified, as required by 6295(o)(2)(A) and 6295(o)(3)(B). A full 
discussion of the alternatives considered by DOE is presented in 
chapter 17 of the TSD for this proposed 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 E.O. 12630, ``Governmental Actions and Interference 
with Constitutionally Protected Property Rights,'' 53 FR 8859 (Mar. 15, 
1988), DOE has determined that this proposed 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). Pursuant to OMB Memorandum M-19-15, Improving 
Implementation of the Information Quality Act (April 24, 2019), DOE 
published updated guidelines which are available at www.energy.gov/sites/prod/files/2019/12/f70/DOE%20Final%20Updated%20IQA%20Guidelines%20Dec%202019.pdf. DOE has 
reviewed this NOPR 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

    E.O. 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 proposed significant energy 
action. A ``significant energy action'' is defined as any action by an 
agency that promulgates or is expected to lead to promulgation of a 
final rule, and that (1) is a significant regulatory action under 
Executive Order 12866, or any successor order; and (2) is likely to 
have a significant adverse effect on the supply, distribution, or use 
of energy, or (3) is designated by the Administrator of OIRA as a 
significant energy action. For any proposed significant energy action, 
the agency must give a detailed statement of any adverse effects on 
energy supply, distribution, or use should the proposal be implemented, 
and of reasonable alternatives to the action and their expected 
benefits on energy supply, distribution, and use.
    DOE has tentatively concluded that this regulatory action, which 
proposes amended energy conservation standards for miscellaneous 
refrigeration products, is not a significant energy action because the 
proposed 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 proposed rule.

L. Information Quality

    On December 16, 2004, OMB, in consultation with the Office of 
Science and Technology Policy (``OSTP''), issued its Final Information 
Quality Bulletin for Peer Review (``the Bulletin''). 70 FR 2664 (Jan. 
14, 2005). The Bulletin establishes that certain scientific information 
shall be peer reviewed by qualified specialists before it is 
disseminated by the Federal Government, including influential 
scientific information related to agency regulatory actions. The 
purpose of the bulletin is to enhance the quality and credibility of 
the Government's scientific information. Under the Bulletin, the energy 
conservation standards rulemaking analyses are ``influential scientific 
information,'' which the Bulletin defines as ``scientific information 
the agency reasonably can determine will have, or does have, a clear 
and substantial impact on important public policies or private sector 
decisions.'' 70 FR 2664, 2667.
    In response to OMB's Bulletin, DOE conducted formal peer reviews of 
the energy conservation standards development process and the analyses 
that are typically used and has prepared a report describing that peer 
review.\76\ 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. 
Because available data, models, and technological understanding have 
changed since 2007, DOE has engaged with the National Academy of 
Sciences to review DOE's analytical methodologies to ascertain whether 
modifications are needed to improve the Department's analyses. DOE is 
in the process of evaluating the resulting report.\77\
---------------------------------------------------------------------------

    \76\ The 2007 ``Energy Conservation Standards Rulemaking Peer 
Review Report'' is available at the following website: energy.gov/eere/buildings/downloads/energy-conservation-standards-rulemaking-peer-review-report-0 (last accessed August 30, 2022).
    \77\ The report is available at www.nationalacademies.org/our-work/review-of-methods-for-setting-building-and-equipment-performance-standards (Last accessed September 22, 2022)
---------------------------------------------------------------------------

VII. Public Participation

A. Attendance at the Public Meeting Webinar

    The time and date of the webinar meeting are listed in the DATES 
section at the beginning of this document. Webinar registration 
information, participant instructions, and information about the 
capabilities available to webinar participants will be published on 
DOE's website at www1.eere.energy.gov/buildings/appliance_standards/standards.aspx?productid=39. Participants are responsible for ensuring 
their systems are compatible with the webinar software.

B. Procedure for Submitting Prepared General Statements for 
Distribution

    Any person who has plans to present a prepared general statement 
may request that copies of his or her statement be made available at 
the public meeting. Such persons may submit requests, along with an 
advance electronic copy of their statement in PDF (preferred), 
Microsoft Word or Excel, WordPerfect, or text (ASCII) file format, to 
the appropriate address

[[Page 19444]]

shown in the ADDRESSES section at the beginning of this document. The 
request and advance copy of statements must be received at least one 
week before the public meeting and are to be emailed. Please include a 
telephone number to enable DOE staff to make follow-up contact, if 
needed.
C. Conduct of the Public Meeting
    DOE will designate a DOE official to preside at the public meeting 
and may also use a professional facilitator to aid discussion. The 
meeting will not be a judicial or evidentiary-type public hearing, but 
DOE will conduct it in accordance with section 336 of EPCA. (42 U.S.C. 
6306) A court reporter will be present to record the proceedings and 
prepare a transcript. DOE reserves the right to schedule the order of 
presentations and to establish the procedures governing the conduct of 
the public meeting. There shall not be discussion of proprietary 
information, costs or prices, market share, or other commercial matters 
regulated by U.S. antitrust laws. After the public meeting, interested 
parties may submit further comments on the proceedings, as well as on 
any aspect of the rulemaking, until the end of the comment period.
    The public meeting will be conducted in an informal, conference 
style. DOE will present a general overview of the topics addressed in 
this rulemaking, allow time for prepared general statements by 
participants, and encourage all interested parties to share their views 
on issues affecting this rulemaking. Each participant will be allowed 
to make a general statement (within time limits determined by DOE), 
before the discussion of specific topics. DOE will allow, as time 
permits, other participants to comment briefly on any general 
statements.
    At the end of all prepared statements on a topic, DOE will permit 
participants to clarify their statements briefly. Participants should 
be prepared to answer questions by DOE and by other participants 
concerning these issues. DOE representatives may also ask questions of 
participants concerning other matters relevant to this rulemaking. The 
official conducting the public meeting will accept additional comments 
or questions from those attending, as time permits. The presiding 
official will announce any further procedural rules or modification of 
the previous procedures that may be needed for the proper conduct of 
the public meeting.
    A transcript of the public meeting will be included in the docket, 
which can be viewed as described in the Docket section at the beginning 
of this document and will be accessible on the DOE website. In 
addition, any person may buy a copy of the transcript from the 
transcribing reporter.
D. Submission of Comments
    DOE will accept comments, data, and information regarding this 
proposed rule before or after the public meeting, but no later than the 
date provided in the DATES section at the beginning of this proposed 
rule. Interested parties may submit comments, data, and other 
information using any of the methods described in the ADDRESSES section 
at the beginning of this document.
    Submitting comments via www.regulations.gov. The 
www.regulations.gov web page will require you to provide your name and 
contact information. Your contact information will be viewable to DOE 
Building Technologies staff only. Your contact information will not be 
publicly viewable except for your first and last names, organization 
name (if any), and submitter representative name (if any). If your 
comment is not processed properly because of technical difficulties, 
DOE will use this information to contact you. If DOE cannot read your 
comment due to technical difficulties and cannot contact you for 
clarification, DOE may not be able to consider your comment.
    However, your contact information will be publicly viewable if you 
include it in the comment itself or in any documents attached to your 
comment. Any information that you do not want to be publicly viewable 
should not be included in your comment, nor in any document attached to 
your comment. Otherwise, persons viewing comments will see only first 
and last names, organization names, correspondence containing comments, 
and any documents submitted with the comments.
    Do not submit to www.regulations.gov information for which 
disclosure is restricted by statute, such as trade secrets and 
commercial or financial information (hereinafter referred to as 
Confidential Business Information (``CBI'')). Comments submitted 
through www.regulations.gov cannot be claimed as CBI. Comments received 
through the website will waive any CBI claims for the information 
submitted. For information on submitting CBI, see the Confidential 
Business Information section.
    DOE processes submissions made through www.regulations.gov before 
posting. Normally, comments will be posted within a few days of being 
submitted. However, if large volumes of comments are being processed 
simultaneously, your comment may not be viewable for up to several 
weeks. Please keep the comment tracking number that www.regulations.gov 
provides after you have successfully uploaded your comment.
    Submitting comments via email, hand delivery/courier, or postal 
mail. Comments and documents submitted via email, hand delivery/
courier, or postal mail also will be posted to www.regulations.gov. If 
you do not want your personal contact information to be publicly 
viewable, do not include it in your comment or any accompanying 
documents. Instead, provide your contact information in a cover letter. 
Include your first and last names, email address, telephone number, and 
optional mailing address. The cover letter will not be publicly 
viewable as long as it does not include any comments.
    Include contact information each time you submit comments, data, 
documents, and other information to DOE. If you submit via postal mail 
or hand delivery/courier, please provide all items on a CD, if 
feasible, in which case it is not necessary to submit printed copies. 
No telefacsimiles (``faxes'') will be accepted.
    Comments, data, and other information submitted to DOE 
electronically should be provided in PDF (preferred), Microsoft Word or 
Excel, WordPerfect, or text (ASCII) file format. Provide documents that 
are not secured, that are written in English, and that are free of any 
defects or viruses. Documents should not contain special characters or 
any form of encryption and, if possible, they should carry the 
electronic signature of the author.
    Campaign form letters. Please submit campaign form letters by the 
originating organization in batches of between 50 to 500 form letters 
per PDF or as one form letter with a list of supporters' names compiled 
into one or more PDFs. This reduces comment processing and posting 
time.
    Confidential Business Information. Pursuant to 10 CFR 1004.11, any 
person submitting information that he or she believes to be 
confidential and exempt by law from public disclosure should submit via 
email two well-marked copies: one copy of the document marked 
``confidential'' including all the information believed to be 
confidential, and one copy of the document marked ``non-confidential'' 
with the information believed to be confidential deleted. DOE will make 
its own determination about the confidential status of the information 
and treat it according to its determination.

[[Page 19445]]

    It is DOE's policy that all comments may be included in the public 
docket, without change and as received, including any personal 
information provided in the comments (except information deemed to be 
exempt from public disclosure).
E. Issues on Which DOE Seeks Comment
    Although DOE welcomes comments on any aspect of this proposal, DOE 
is particularly interested in receiving comments and views of 
interested parties concerning the following issues:
    (1) DOE requests comment on its proposal to amended refrigerator 
and freezer definitions to clarify that products that would otherwise 
be considered a refrigerator or a freezer that also include a cooler 
compartment would be considered a refrigerator or a freezer, unless a 
miscellaneous refrigeration product energy conservation standard is 
applicable for the product.
    (2) DOE invites comment from the public regarding the competitive 
impacts that are likely to result from this proposed rule.
    (3) DOE requests comments on its proposal to consolidate the 
presentation of maximum allowable energy use for products of classes 
that may or may not have an automatic icemaker.
    (4) DOE requests comment on its proposal to establish energy 
conservation standards for combination cooler 5-BI using the analysis 
for combination class 3A as proxy for setting the standard level, based 
on a baseline efficiency equal to 6.08AV + 218 +28*I kWh/yr, where I is 
equal to 0 if the model has no automatic icemaker and equal to 1 if it 
does.
    (5) DOE seeks further comment on any of the technologies screened 
out in this NOPR analysis as they were determined to not meet the 
screening criteria (i.e., practicable to manufacture, install, and 
service and do not result in adverse impacts on consumer utility, 
product availability, health, safety, or use of unique-pathway 
proprietary technologies). DOE also seeks comment on those technologies 
retained for further consideration in the engineering analysis, based 
on the determination that they are technologically feasible and also 
meet the other screening criteria.
    (6) DOE requests any further input from commenters regarding the 
approach for design option selection and implementation for a given 
model, beyond the information DOE has already considered.
    (7) DOE seeks comment on the range of VSC nominal efficiencies and 
the relative overall efficiency gains offered by VSCs when operating at 
reduced compressor speeds along with reduced fan speeds in MREF 
products.
    (8) In interviews, manufacturers noted that the majority of MREFs--
namely freestanding compact coolers--are manufactured in Asia and 
rebranded by home appliance manufacturers. Manufacturers had few 
concerns about manufacturing constraints below the max-tech level and 
the implementation of VIPs. However, at max-tech, some manufacturers 
expressed technical uncertainty about industry's ability to meet the 
efficiencies required as few OEMs offer products at max-tech today. For 
example, DOE is not aware of any OEMs that currently offer freestanding 
compact coolers that meet TSL 5 efficiencies. DOE's shipments analysis 
estimates that except for built-in compact coolers, which only accounts 
for 4 percent of MREF shipments, no shipments of other product classes 
meet the max-tech efficiencies.
    (9) DOE seeks comment on whether manufacturers expect manufacturing 
capacity constraints would limit product availability to consumers in 
the timeframe of the amended standard compliance date (2029).
    (10) DOE requests information regarding the impact of cumulative 
regulatory burden on manufacturers of MREFs associated with multiple 
DOE standards or product-specific regulatory actions of other Federal 
agencies.
    (11) DOE requests comment on the assumption used in developing the 
dealer/retailer markups and welcomes any feedback on the overall markup 
in the wholesaler channel.
    (12) DOE requests comment on its methodology to develop market 
share distributions by adjusted volume in the compliance year for each 
product class with two representative volumes, as well as data to 
further inform these distributions.
    (13) DOE requests comment and data on its price learning 
methodology used to project MREF prices in the future.
    (14) DOE requests comment on its methodology to develop market 
share distributions by efficiency level for each product class for the 
no-new-standards case in the compliance year, as well as data to 
further inform these distributions.
    (15) DOE requests comment and data on the assumptions and 
methodology used to calculate MREF survival probabilities.
    (16) DOE requests comment and data on its efficiency distribution 
assumptions and projection into future years. Specifically, DOE is 
requesting comment and data on the efficiency distribution of non-AHAM 
members, to more accurately derive the efficiency distribution for the 
whole MREF market.
    (17) DOE requests comment on the overall methodology and results of 
the LCC and PBP analyses.
    (18) DOE requests comment on the overall methodology and results of 
the shipments analysis. More specifically, DOE seeks comment and data 
related to the total MREF shipments, market saturation, MREF shipments 
by product class, and non-AHAM-member shipments.
    (19) DOE requests comment on the assumption that the current 
efficiency distribution would remain fixed over the analysis period, 
and data to inform an efficiency trend by product class or overall for 
the MREF market.
    (20) DOE requests comment on the overall methodology and results of 
the consumer subgroup analysis.
    (21) 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.
    Additionally, DOE welcomes comments on other issues relevant to the 
conduct of this rulemaking that may not specifically be identified in 
this document.

VIII. Approval of the Office of the Secretary

    The Secretary of Energy has approved publication of this notice of 
proposed rulemaking and announcement of public meeting.

List of Subjects in 10 CFR Part 430

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

Signing Authority

    This document of the Department of Energy was signed on March 10, 
2023, by Francisco Alejandro Moreno, Acting Assistant Secretary for 
Energy Efficiency and Renewable Energy, pursuant to delegated authority 
from the Secretary of Energy. That document with the original signature 
and date is maintained by DOE. For administrative purposes only, and in 
compliance with requirements of the Office of the Federal Register, the 
undersigned DOE Federal Register Liaison Officer has been authorized to 
sign and submit the document in electronic format for publication, as 
an official document of the Department of Energy. This administrative 
process in no way alters

[[Page 19446]]

the legal effect of this document upon publication in the Federal 
Register.

    Signed in Washington, DC, on March 13, 2023.
Treena V. Garrett,
Federal Register Liaison Officer, U.S. Department of Energy.

    For the reasons set forth in the preamble, DOE proposes to amend 
part 430 of chapter II, subchapter D, of title 10 of the Code of 
Federal Regulations, as set forth below:

PART 430--ENERGY CONSERVATION PROGRAM FOR CONSUMER PRODUCTS

0
1. 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
2. Section 430.2 is amended by revising the definitions of ``Freezer'' 
and ``Refrigerator'' to read as follows:


Sec.  430.2  Definitions.

* * * * *
    Freezer means a cabinet, used with one or more doors, that has a 
source of refrigeration that requires single-phase, alternating current 
electric energy input only and consists of one or more compartments 
where at least one of the compartments is capable of maintaining 
compartment temperatures of 0 [deg]F (-17.8 [deg]C) or below as 
determined according to the provisions in Sec.  429.14(d)(2) of this 
chapter. It does not include any refrigerated cabinet that consists 
solely of an automatic ice maker and an ice storage bin arranged so 
that operation of the automatic icemaker fills the bin to its capacity. 
However, the term does not include:
    (1) Any product that does not include a compressor and condenser 
unit as an integral part of the cabinet assembly; or
    (2) Any miscellaneous refrigeration product that must comply with 
an applicable miscellaneous refrigeration product energy conservation 
standard.
* * * * *
    Refrigerator means a cabinet, used with one or more doors, that has 
a source of refrigeration that requires single-phase, alternating 
current electric energy input only and consists of one or more 
compartments where at least one of the compartments is capable of 
maintaining compartment temperatures above 32 [deg]F (0 [deg]C) and 
below 39 [deg]F (3.9 [deg]C) as determined according to Sec.  
429.14(d)(2) of this chapter. A refrigerator may include a compartment 
capable of maintaining compartment temperatures below 32 [deg]F (0 
[deg]C), but does not provide a separate low temperature compartment 
capable of maintaining compartment temperatures below 8 [deg]F (-13.3 
[deg]C) as determined according to Sec.  429.14(d)(2). However, the 
term does not include:
    (1) Any product that does not include a compressor and condenser 
unit as an integral part of the cabinet assembly;
    (2) A cooler; or
    (3) Any miscellaneous refrigeration product that must comply with 
an applicable miscellaneous refrigeration product energy conservation 
standard.
* * * * *
0
3. Appendix A to subpart B of part 430 is amended by:
0
a. Revising section 5.3(a)(ii); and
0
b. Adding section 5.4.

    The revision and addition read as follows.

Appendix A to Subpart B of Part 430--Uniform Test Method for Measuring 
the Energy Consumption of Refrigerators, Refrigerator-Freezers, and 
Miscellaneous Refrigeration Products

* * * * *

5.3 * * *

    (a) * * *
    (ii) For miscellaneous refrigeration products: To demonstrate 
compliance with the energy conservation standards at 10 CFR 
430.32(aa) applicable to products manufactured on or after October 
28, 2019, but before the compliance date of any amended standards 
published after January 1, 2022, IET, expressed in kilowatt-hours 
per cycle, equals 0.23 for a product with one or more automatic 
icemakers and otherwise equals 0 (zero). To demonstrate compliance 
with any amended standards published after January 1, 2022, IET, 
expressed in kilowatt-hours per cycle, is as defined section 5.9.2.1 
of HRF-1-2019.
* * * * *

5.4 Test Cycle Energy Calculations for Cooler-Freezers

    For cooler-freezers, determine the average per-cycle energy 
consumption consistent with section 5.9.3 of HRF-1-2019. If both 
compartments are at or colder than their standardized temperatures 
for both tests, use the equation in section 5.9.3.1. Otherwise, use 
the approach and equations in section 5.9.3.2, where applicable, the 
``k'' value shall be 0.0.

0
4. Appendix B to subpart B of part 430 is amended by:
0
a. Adding new paragraph (c) in section 5.2;
0
b. Adding new paragraph (d) in section 5.3; and
0
c. Adding section 5.4.

    The additions read as follows.

Appendix B to Subpart B of Part 430--Uniform Test Method for Measuring 
the Energy Consumption of Freezers

* * * * *

5.2 * * *

    (c) When testing freezers with a cooler compartment, refer to 
section 5.2 of appendix A.
* * * * *

5.3 * * *

    (d) Freezers with a cooler compartment: the applicable ``K'' 
value in section 5.8.2 of HRF-1-2019 shall be equal to either 0.7 or 
0.85 as determined by the product's freezer configuration.

5.4 Test Cycle Energy Calculations for Freezer With a Cooler 
Compartment

    Refer to section 5.4 of appendix A.
* * * * *
0
5. Amend Sec.  430.32 by revising paragraph (aa) to read as follows:


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

* * * * *
    (aa) Miscellaneous refrigeration products. The energy standards as 
determined by the equations of the following table(s) shall be rounded 
off to the nearest kWh per year. If the equation calculation is halfway 
between the nearest two kWh per year values, the standard shall be 
rounded up to the higher of these values.
    (1) The following standards remain in effect from October 28, 2019 
until [date 5 years after the publication of the final rule].

------------------------------------------------------------------------
                    Product class                         AEU (kWh/yr)
------------------------------------------------------------------------
1. Freestanding compact..............................     7.88AV + 155.8
2. Freestanding......................................     7.88AV + 155.8
3. Built-in compact..................................     7.88AV + 155.8
4. Built-in..........................................     7.88AV + 155.8
------------------------------------------------------------------------
AV = Total adjusted volume, expressed in ft3, as determined in appendix
  A to subpart B of 10 CFR part 430.


[[Page 19447]]

    The following standards apply to products manufacturer starting on 
[date 5 years after the publication of the final rule].

------------------------------------------------------------------------
                    Product class                         AEU (kWh/yr)
------------------------------------------------------------------------
1. Freestanding compact..............................     5.52AV + 109.1
2. Freestanding......................................     5.52AV + 109.1
3. Built-in compact..................................     5.52AV + 109.1
4. Built-in..........................................     6.30AV + 124.6
------------------------------------------------------------------------
AV = Total adjusted volume, expressed in ft3, as determined in appendix
  A to subpart B of 10 CFR part 430.

    (2) The following standards remain in effect from October 28, 2019 
until [date 5 years after the publication of the final rule].

------------------------------------------------------------------------
                    Product class                         AEU (kWh/yr)
------------------------------------------------------------------------
C-3A. Cooler with all-refrigerator--automatic defrost     4.57AV + 130.4
C-3A-BI. Built-in cooler with all-refrigerator--          5.19AV + 147.8
 automatic defrost...................................
C-9. Cooler with upright freezer with automatic           5.58AV + 147.7
 defrost without an automatic icemaker...............
C-9-BI. Built-in cooler with upright freezer with         6.38AV + 168.8
 automatic defrost without an automatic icemaker.....
C-9I. Cooler with upright freezer with automatic          5.58AV + 231.7
 defrost with an automatic icemaker..................
C-9I-BI. Built-in cooler with upright freezer with        6.38AV + 252.8
 automatic defrost with an automatic icemaker........
C-13A. Compact cooler with all-refrigerator--             5.93AV + 193.7
 automatic defrost...................................
C-13A-BI. Built-in compact cooler with all-               6.52AV + 213.1
 refrigerator--automatic defrost.....................
------------------------------------------------------------------------
AV = Total adjusted volume, expressed in ft3, as determined in appendix
  A to subpart B of 10 CFR part 430.

    The following standards apply to products manufacturer starting on 
[date 5 years after the publication of the final rule].

------------------------------------------------------------------------
                    Product class                         AEU (kWh/yr)
------------------------------------------------------------------------
C-3A. Cooler with all-refrigerator--automatic defrost     4.11AV + 117.4
C-3A-BI. Built-in cooler with all-refrigerator--          4.67AV + 133.0
 automatic defrost...................................
C-5-BI. Built-in cooler with refrigerator-freezer       5.47AV + 196.2 +
 with automatic defrost with bottom-mounted freezer..                28I
C-9. Cooler with upright freezer with automatic         5.58AV + 147.7 +
 defrost without an automatic icemaker...............                28I
C-9-BI. Built-in cooler with upright freezer with       6.38AV + 168.8 +
 automatic defrost without an automatic icemaker.....                28I
C-13A. Compact cooler with all-refrigerator--             4.74AV + 155.0
 automatic defrost...................................
C-13A-BI. Built-in compact cooler with all-               5.22AV + 170.5
 refrigerator--automatic defrost.....................
------------------------------------------------------------------------
AV = Total adjusted volume, expressed in ft3, as determined in appendix
  A to subpart B of 10 CFR part 430. I = 1 for a product with an
  automatic icemaker and = 0 for a product without an automatic
  icemaker.

[FR Doc. 2023-05363 Filed 3-30-23; 8:45 am]
 BILLING CODE 6450-01-P

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