Energy Conservation Program: Energy Conservation Standards for Refrigerated Bottled or Canned Beverage Vending Machines, 33968-34027 [2023-09968]

Download as PDF 33968 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules DEPARTMENT OF ENERGY 10 CFR Part 431 [EERE–2020–BT–STD–0014] RIN 1904–AE68 Energy Conservation Program: Energy Conservation Standards for Refrigerated Bottled or Canned Beverage Vending Machines Office of Energy Efficiency and Renewable Energy, Department of Energy. ACTION: Notice of proposed rulemaking and 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 refrigerated bottled or canned beverage vending machines (BVMs). 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 BVMs, 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 July 24, 2023. Meeting: DOE will hold a public meeting via webinar on Wednesday, June 7, 2023, from 1:00 p.m. to 4:00 p.m. See section VII, ‘‘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 U.S. Department of Justice (DOJ) contact listed in the ADDRESSES section on or before June 26, 2023. ADDRESSES: Interested persons are encouraged to submit comments using the Federal eRulemaking Portal at www.regulations.gov under docket number EERE–2020–BT–STD–0014. Follow the instructions for submitting comments. Alternatively, interested persons may submit comments, identified by docket number EERE– 2020–BT–STD–0014, by any of the following methods: lotter on DSK11XQN23PROD with PROPOSALS2 SUMMARY: VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 Email: BVM2020STD0014@ ee.doe.gov. Include the docket number number EERE–2020–BT–STD–0014 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-0014. 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 DOJ 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 rulemaking. FOR FURTHER INFORMATION CONTACT: Mr. Bryan Berringer, 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. Telephone: (202) 586– 0371. Email: ApplianceStandardsQuestions@ ee.doe.gov. Ms. Sarah Butler, U.S. Department of Energy, Office of the General Counsel, GC–33, 1000 Independence Avenue SW, Washington, DC 20585–0121. Telephone: (202) 586–1777. Email: Sarah.Butler@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 BVMs C. Deviation From Process Rule 1. Framework Document 2. Public Comment Period 3. Amended Test Procedures III. General Discussion A. General Comments B. Scope of Coverage 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. Equipment Classes a. Combination A 2. Technology Options a. Compressors b. Alternative Refrigerants c. Insulation d. Fan Motors e. Evaporators and Condensers E:\FR\FM\25MYP2.SGM 25MYP2 33969 lotter on DSK11XQN23PROD with PROPOSALS2 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules f. Glass Packs g. Payment Mechanisms h. Low Power Modes i. Additional Concerns B. Screening Analysis 1. Screened Out Technologies 2. Remaining Technologies C. Engineering Analysis 1. Efficiency Analysis a. Baseline Energy Use b. Higher Efficiency Levels 2. Cost Analysis 3. Cost-Efficiency Results D. Markups Analysis E. Energy Use Analysis F. Life-Cycle Cost and Payback Period Analysis 1. Equipment Cost 2. Installation Cost 3. Annual Energy Consumption 4. Energy Prices 5. Maintenance and Repair Costs 6. Equipment Lifetime 7. Discount Rates 8. Energy Efficiency Distribution in the NoNew-Standards Case 9. Split Incentives 10. 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 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 VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 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 BVM 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, 13563, and 14094 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. Participation in the Webinar B. Procedure for Submitting Prepared General Statements for Distribution C. Conduct of the Webinar D. Submission of Comments E. Issues on Which DOE Seeks Comment VIII. Approval of the Office of the Secretary proposed rulemaking. (42 U.S.C. 6295(v)) 3 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 3 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 NOPR including new proposed energy conservation standards (proceeding to a final rule, as appropriate). (42 U.S.C. 6295(m)(3)(B)) In accordance with these and other statutory provisions discussed in this document, DOE proposes amended energy conservation standards for BVMs. The proposed standards, which are expressed in maximum daily energy consumption as a function of refrigerated volume, if adopted, would apply to all BVMs listed in Table I.1 manufactured in, or imported into, the United States starting on the date 3 years after the publication of the final rule for this proposed rulemaking. I. Synopsis of the Proposed Rule * V is the representative value of refrigerated volume (ft3) of the BVM model, as calculated pursuant to 10 CFR 429.52(a)(3). 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. These products include BVMs, the subject of this 1 All references to EPCA in this document refer to the statute as amended through the Infrastructure Investment and Jobs Act, Public Law 117–58 (Nov. 15, 2021). 2 For editorial reasons, upon codification in the U.S. Code, Part B was redesignated Part A. PO 00000 Frm 00003 Fmt 4701 Sfmt 4702 TABLE I.1—PROPOSED ENERGY CONSERVATION STANDARDS FOR BVMS Equipment class Class A ...................... Class B ...................... Combination A .......... Combination B .......... Maximum daily energy consumption (kilowatt hours per day) 0.029 0.029 0.048 0.052 × × × × V* V* V* V* + + + + 1.34. 1.21. 1.50. 0.96. 3 Because Congress included BVMs in Part A of Title III of EPCA, the consumer product provisions of Part A (rather than the industrial equipment provisions of Part A–1) apply to BVMs. DOE placed the regulatory requirements specific to BVMs in 10 CFR part 431, ‘‘Energy Efficiency Program for Certain Commercial and Industrial Equipment’’ as a matter of administrative convenience based on their type and will refer to BVMs as ‘‘equipment’’ throughout this document because of their placement in 10 CFR part 431. Despite the placement of BVMs in 10 CFR part 431, the relevant provisions of Title A of EPCA and 10 CFR part 430, which are applicable to all product types specified in Title A of EPCA, are applicable to BVMs. See 74 FR 44914, 44917 (Aug. 31, 2009) and 80 FR 45758, 45759 (Jul. 31, 2015). The regulatory provisions of 10 CFR 430.33 and 430.34 and subparts D and E of 10 CFR part 430 are applicable to BVMs. E:\FR\FM\25MYP2.SGM 25MYP2 33970 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules A. Benefits and Costs to Consumers Table I.2 presents DOE’s evaluation of the economic impacts of the proposed standards on consumers of BVMs, as measured by the average life-cycle cost (LCC) savings and the simple payback period (PBP).4 The PBP is less than the average lifetime of BVMs, which is estimated to be 13.4 years (see section IV.F of this document). TABLE I.2—IMPACTS OF PROPOSED ENERGY CONSERVATION STANDARDS ON CONSUMERS OF REFRIGERATED BOTTLED OR CANNED BEVERAGE VENDING MACHINES Equipment class Average LCC savings * (2021$) Class A ............. Class B ............. Combination A .. Combination B .. (5.52) 206.01 190.03 287.16 Simple payback period (years) 5.7 1.2 1.4 2.2 * The savings represent the average LCC for affected consumers. 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 lotter on DSK11XQN23PROD with PROPOSALS2 The industry net present value (INPV) is the sum of the discounted cash flows to the industry from the base year through the end of the analysis period (2028–2057). Using a real discount rate of 8.5 percent, DOE estimates that the INPV for manufacturers of BVMs in the case without amended standards is $85.5 million in 2021$. Under the proposed standards, the change in INPV is estimated to range from a loss of 2.2 percent to a gain 0.6 percent, which is approximately ¥$1.9 million to $0.5 million. In order to bring equipment into compliance with amended standards, it is estimated that the industry would incur total conversion costs of $1.5 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. 4 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.9 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). VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 C. National Benefits and Costs 5 DOE’s analyses indicate that the proposed energy conservation standards for BVMs would save a significant amount of energy. Relative to the case without amended standards, the lifetime energy savings for BVMs purchased in the 30-year period that begins in the anticipated year of compliance with the amended standards (2028–2057) amount to 0.09 quadrillion British thermal units (Btu or quads).6 This represents a savings of 30 percent relative to the energy use of this equipment in the case without amended standards (referred to as the ‘‘no-new-standards case’’). The cumulative net present value (NPV) of total consumer benefits of the proposed standards for BVMs ranges from $0.09 billion (at a 7-percent discount rate) to $0.25 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 BVMs purchased in 2028–2057. In addition, the proposed standards for BVMs are projected to yield significant environmental benefits. DOE estimates that the proposed standards would result in cumulative emission reductions (over the same period as for energy savings) of 3.0 million metric tons (Mt) 7 of carbon dioxide (CO2), 1.4 thousand tons of sulfur dioxide (SO2), 4.7 thousand tons of nitrogen oxides (NOX), 21 thousand tons of methane (CH4), 0.03 thousand tons of nitrous oxide (N2O), and 0.009 tons of mercury (Hg).8 DOE estimates the value of climate benefits from a reduction in greenhouse gases (GHGs) 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 GHGs (‘‘SC– GHGs’’). DOE used interim SC–GHG 5 All monetary values in this document are expressed in 2021 dollars. 6 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. 7 A metric ton is equivalent to 1.1 short tons. Results for emissions other than CO2 are presented in short tons. 8 DOE calculated emissions reductions relative to the no-new-standards case, which reflects key assumptions in the Annual Energy Outlook 2022 (AEO2022). AEO2022 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 AEO2022 assumptions that effect air pollutant emissions. PO 00000 Frm 00004 Fmt 4701 Sfmt 4702 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 climate benefits associated with the average SC– GHG at a 3-percent discount rate are estimated to be $0.14 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 sets of SC–GHG estimates. DOE estimated the monetary health benefits of SO2 and NOX emissions reductions using benefit per ton estimates from the scientific literature, as discussed in section IV.L of this document. DOE estimated the present value of the health benefits would be $0.10 billion using a 7-percent discount rate and $0.27 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 monetized benefits and costs expected to result from the proposed standards for BVMs. There are other important unquantified effects, including certain unquantified climate benefits, unquantified public health benefits from the reduction of toxic air pollutants and other emissions, unquantified energy security benefits, and distributional effects, among others. The monetization of climate and health benefits that have been quantified is explained in section IV.L of this document. 9 To monetize the benefits of reducing GHG emissions this analysis uses the interim estimates presented in the Technical Support Document: Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates Under Executive Order 13990 published in February 2021 by the IWG. (‘‘February 2021 SC–GHG TSD’’). www.whitehouse.gov/wpcontent/uploads/2021/02/ TechnicalSupportDocument_ SocialCostofCarbonMethaneNitrousOxide.pdf. 10 DOE estimates the economic value of these emissions reductions resulting from the considered TSLs for the purpose of complying with the requirements of E.O. 12866. E:\FR\FM\25MYP2.SGM 25MYP2 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules TABLE I.3—SUMMARY OF MONETIZED BENEFITS AND COSTS OF PROPOSED ENERGY CONSERVATION STANDARDS FOR REFRIGERATED BOTTLED OR CANNED BVMS [TSL 4] Billion ($2021) 3% discount rate Consumer Operating Cost Savings ............................................ Climate Benefits * ......................... Health Benefits ** .......................... Total Benefits † ............................. Consumer Incremental Product Costs ‡ ....................................... Net Benefits ........................... 0.33 0.14 0.27 0.75 0.08 0.66 7% discount rate Consumer Operating Cost Savings ............................................ Climate Benefits * (3% discount rate) ........................................... Health Benefits ** .......................... Total Benefits† .............................. Consumer Incremental Product Costs‡ ....................................... Net Benefits ........................... 0.14 0.14 0.10 0.38 0.05 0.33 Note: This table presents the costs and benefits associated with BVMs shipped in 2028–2057. These results include benefits to consumers which accrue after 2057 from the products shipped in 2028–2057. * 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; however, DOE emphasizes the importance and value of considering the benefits calculated using all four sets of SC–GHG estimates. To monetize the benefits of reducing GHG emissions, this analysis uses the interim estimates presented in the Technical Support Document: Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates Under Executive Order 13990 published in February 2021 by the IWG. ** 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 DOE does not have a single central SC–GHG point estimate. DOE emphasizes the importance and value of considering the benefits calculated using all four sets of SC–GHG estimates. ‡ Costs include incremental equipment costs as well as installation costs. 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 cost savings are domestic private U.S. consumer 33971 monetary savings that occur as a result of purchasing the covered equipment and are measured for the lifetime of BVMs shipped in 2028–2057. The benefits associated with reduced emissions achieved as a result of the proposed standards are also calculated based on the lifetime of BVMs shipped in 2028–2057. Total benefits for both the 3-percent and 7-percent cases are presented using the average GHG social costs with a 3-percent discount rate. Estimates of SC–GHG values are presented for all four discount rates in section V.B.6 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 $5.8 million per year in increased equipment costs, while the estimated annual benefits are $16 million in reduced equipment operating costs, $8.5 million in climate benefits, and $12 million in health benefits. In this case. The net benefit would amount to $30 million per year. Using a 3-percent discount rate for all benefits and costs, the estimated cost of the proposed standards is $4.9 million per year in increased equipment costs, while the estimated annual benefits are $20 million in reduced operating costs, $8.5 million in climate benefits, and $16 million in health benefits. In this case, the net benefit would amount to $39 million per year. TABLE I.4—ANNUALIZED BENEFITS AND COSTS OF PROPOSED ENERGY CONSERVATION STANDARDS FOR BEVERAGE VENDING MACHINES [TSL 4] Million 2021$/year Primary estimate Low net benefits estimate High net benefits estimate lotter on DSK11XQN23PROD with PROPOSALS2 3% discount rate Consumer Operating Cost Savings ........................................................................... Climate Benefits * ....................................................................................................... Health Benefits ** ....................................................................................................... Total Benefits † .......................................................................................................... Consumer Incremental Product Costs ‡ .................................................................... 11 To convert the time-series of costs and benefits into annualized values, DOE calculated a present value in 2021, the year used for discounting the NPV of total consumer costs and savings. For the VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 20 8.5 16 44 4.9 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 2021. Using the PO 00000 Frm 00005 Fmt 4701 Sfmt 4702 19 8.5 16 44 5.2 20 8.5 17 45 4.9 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\25MYP2.SGM 25MYP2 33972 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules TABLE I.4—ANNUALIZED BENEFITS AND COSTS OF PROPOSED ENERGY CONSERVATION STANDARDS FOR BEVERAGE VENDING MACHINES—Continued [TSL 4] Million 2021$/year Primary estimate Net Benefits ........................................................................................................ Low net benefits estimate High net benefits estimate 39 38 40 Consumer Operating Cost Savings ........................................................................... Climate Benefits * (3% discount rate) ........................................................................ Health Benefits ** ....................................................................................................... Total Benefits † .......................................................................................................... Consumer Incremental Product Costs ‡ .................................................................... 16 8.5 12 36 5.8 15 8.5 12 35 6.0 16 8.5 12 36 5.7 Net Benefits ........................................................................................................ 30 29 31 7% discount rate Note: This table presents the costs and benefits associated with BVMs shipped in 2028–2057. These results include benefits to consumers which accrue after 2057 from the products shipped in 2028–2057. 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 sections IV.F.1 and 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; however, DOE emphasizes the importance and value of considering the benefits calculated using all four sets of SC–GHG estimates. To monetize the benefits of reducing GHG emissions, this analysis uses the interim estimates presented in the Technical Support Document: Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates Under Executive Order 13990 published in February 2021 by the IWG. ** 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 benefits for both the 3-percent and 7-percent cases are presented using the average SC–GHG with 3-percent discount rate. ‡ Costs include incremental equipment costs as well as installation costs. lotter on DSK11XQN23PROD with PROPOSALS2 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, equipment achieving these standard levels is already commercially available for all product classes covered by this proposal. As for economic justification, 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 BVMs is $5.8 million per year in increased equipment costs, while the estimated annual benefits are $16 million in reduced equipment operating costs, $8.5 million in climate benefits, and $12 million in health benefits. The net benefit amounts to $30 million per year. VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 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 standards are projected to result in estimated national energy savings of 0.09 quad full-fuel-cycle (FFC), the equivalent of the primary annual energy use of 2.4 million homes. In addition, they are projected to reduce CO2 emissions by 3.0 Mt. Based on these findings, 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 these tentative conclusions is 12 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). PO 00000 Frm 00006 Fmt 4701 Sfmt 4702 contained in the remainder of this document and the accompanying technical support document (TSD). DOE also considered more stringent energy efficiency levels (ELs) 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 BVMs. A. Authority EPCA authorizes DOE to regulate the energy efficiency of a number of E:\FR\FM\25MYP2.SGM 25MYP2 lotter on DSK11XQN23PROD with PROPOSALS2 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules consumer products and certain industrial equipment. (42 U.S.C. 6291– 6317) Title III, Part B of EPCA established the Energy Conservation Program for Consumer Products Other Than Automobiles. These products include BVM equipment, the subject of this document. (42 U.S.C. 6295(v)) EPCA directed DOE to prescribe energy conservation standards for BVMs not later than 4 years after August 8, 2005. (42 U.S.C 6295(v)(1)) 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)) 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. VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 (42 U.S.C. 6295(s)) The DOE test procedures for BVMs appear at title 10 of the Code of Federal Regulations (CFR) part 431, subpart Q, appendix B. DOE must follow specific statutory criteria for prescribing new or amended standards for covered products, including BVMs. 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 42 U.S.C. 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 BVMs, 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 of Energy (‘‘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 PO 00000 Frm 00007 Fmt 4701 Sfmt 4702 33973 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 that 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 E:\FR\FM\25MYP2.SGM 25MYP2 33974 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules reviewed the operating modes available for BVM equipment and determined that this equipment does not have operating modes that meet the definition of standby mode or off mode, as established at 42 U.S.C. 6295(gg)(3). Specifically, BVM equipment is typically always providing at least one main function—refrigeration. (42 U.S.C. 6295(gg)(1)(A)) DOE recognizes that in a unique equipment design, the low power mode includes disabling the refrigeration system, while for other equipment the low power mode controls only elevate the thermostat set point. Because low power modes still include some amount of refrigeration for most equipment, DOE believes that such a mode does not constitute a ‘‘standby mode,’’ as defined by EPCA, for BVM equipment. Therefore, DOE believes that BVM equipment does not operate under standby and off mode conditions as defined in EPCA, and that the energy use of BVM equipment would be captured in any standard established for active mode energy use. This NOPR does not specifically address standby and off mode energy consumption for this equipment. B. Background 1. Current Standards In the final rule published on January 8, 2016, DOE prescribed the current energy conservation standards for BVM equipment manufactured on and after January 8, 2019 (‘‘January 2016 Final Rule’’). 81 FR 1028. These standards are set forth in DOE’s regulations at 10 CFR 431.296(b) and are repeated in Table II.1. TABLE II.1—FEDERAL ENERGY CONSERVATION STANDARDS FOR REFRIGERATED BOTTLED OR CANNED BEVERAGE VENDING MACHINES Equipment class Class A ...................... Class B ...................... Combination A .......... Combination B .......... Maximum daily energy consumption (kilowatt hours per day) 0.052 0.052 0.086 0.111 × × × × V† V† V† V† + + + + 2.43. 2.20. 2.66. 2.04. † ‘‘V’’ is the representative value of refrigerated volume (ft3) of the BVM model, as calculated pursuant to 10 CFR 429.52(a)(3). 2. History of Standards Rulemaking for BVMs On June 10, 2020, DOE published a request for information (‘‘June 2020 RFI’’) that identified various issues on which DOE sought comment to inform its determination of whether the standards need to be amended. 85 FR 35394. On April 26, 2022, DOE published a notice that announced the availability of the preliminary analysis (‘‘April 2022 Preliminary Analysis’’) it conducted for purposes of evaluating the need for amended energy conservation standards for BVM equipment. 87 FR 24469. In that notification, DOE sought comment on the analytical framework, models, and tools that DOE used to evaluate efficiency levels for BVM equipment, the results of preliminary analyses performed, and the potential energy conservation standard levels derived from these analyses, which DOE presented in the accompanying preliminary TSD (‘‘April 2022 Preliminary TSD’’). On May 23, 2022, DOE held a public webinar in which it presented the methods and analysis in the April 2022 Preliminary Analysis and solicited public comment.13 DOE received comments in response to the April 2022 Preliminary Analysis from the interested parties listed in Table II.2. TABLE II.2—APRIL 2022 PRELIMINARY ANALYSIS WRITTEN COMMENTS Commenter type ASAP, ACEEE ........................ 15 Efficiency Organization. NAMA ...................................... 14 Trade Association. Abbreviation Appliance Standards Awareness Project, American Council for an Energy-Efficient Economy. National Automated Merchandising Association ...................... A parenthetical reference at the end of a comment quotation or paraphrase provides the location of the item in the public record.14 To the extent that interested parties have provided written comments that are substantively consistent with any oral comments provided during the May 2022 public meeting, DOE cites the written comments throughout this document. Any oral comments provided during the webinar that are not substantively addressed by written comments are summarized and cited separately throughout this document. lotter on DSK11XQN23PROD with PROPOSALS2 Comment No. in the docket Commenter(s) C. Deviation from Process Rule In accordance with section 3(a) of 10 CFR part 430, subpart C, appendix A 13 See www.regulations.gov/document/EERE2020-BT-STD-0014-0013 for a PDF version of the transcript. 14 The parenthetical reference provides a reference for information located in the docket of VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 (‘‘Process Rule’’), DOE notes that it is deviating from the provision in the Process Rule regarding the pre-NOPR and NOPR stages for an energy conservation standards rulemaking. 1. Framework Document Section 6(a)(2) of the Process Rule states that if DOE 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. While DOE published a preliminary analysis for this rulemaking (see 87 FR 24469), DOE did not publish DOE’s rulemaking to develop energy conservation standards for BVMs. (Docket No. EERE–2020–BT– STD–0014, which is maintained at www.regulations.gov). The references are arranged PO 00000 Frm 00008 Fmt 4701 Sfmt 4702 a framework document in conjunction with the preliminary analysis. DOE notes, however, that chapter 2 of the preliminary technical support document that accompanied the preliminary analysis—entitled Analytical Framework, Comments from Interested Parties, and DOE Responses—describes the general analytical framework that DOE uses in evaluating and developing potential amended energy conservation standards.15 As such, publication of a separate Framework Document would be largely redundant of previously published documents. 2. Public Comment Period Section 6(f)(2) of the Process Rule specifies that the length of the public as follows: (commenter name, comment docket ID number, page of that document). 15 The preliminary technical support document is available at www.regulations.gov/document/EERE2020-BT-STD-0014-0007. E:\FR\FM\25MYP2.SGM 25MYP2 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules comment period for a NOPR will be not less than 75 calendar days. For this NOPR, DOE has opted instead to provide a 60-day comment period. DOE is opting to deviate from the 75-day comment period because stakeholders have already been afforded multiple opportunities to provide comments on this proposed rulemaking. As noted previously, DOE requested comment on various issues pertaining to this standards proposed rulemaking in the June 2020 RFI and provided stakeholders with a 60-day comment period. 85 FR 35394. Additionally, DOE initially provided a 60-day comment period for stakeholders to provide input on the analyses presented in the April 2022 Preliminary TSD. 87 FR 24469. The analytical assumptions and approaches used for the analyses conducted for this NOPR are similar to those used for the preliminary analysis. Therefore, DOE believes a 60-day comment period is appropriate and will provide interested parties with a meaningful opportunity to comment on the proposed rule. lotter on DSK11XQN23PROD with PROPOSALS2 3. Amended Test Procedures NAMA requested that DOE finish the test procedure rulemaking before the standards rulemaking process begins. (NAMA, No. 14 at p. 16). Section 8(d)(1) of the Process Rule specifies that test procedure rulemakings establishing methodologies used to evaluate proposed energy conservation standards will be finalized prior to publication of a NOPR proposing new or amended energy conservation standards. Additionally, new test procedures and amended test procedures that impact measured energy use or efficiency will be finalized at least 180 days prior to the close of the comment period for (1) a NOPR proposing new or amended energy conservation standards or (2) a notice of proposed determinaton that standards do not need to be amended. In the BVM test procedure final rule issued on April 25, 2023 (April 2023 Test Procedure Final Rule), DOE amended the test procedures for BVMs.16 DOE determined that the amendments adopted will not alter (i.e., will not impact) the measured efficiency of BVMs. Id. As such, the requirement that the amended test procedure be finalized at least 180 days prior to the close of the comment period for this NOPR do not apply. 16 See www1.eere.energy.gov/buildings/ appliance_standards/standards.aspx?productid=29. VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 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. General Comments This section summarizes general comments received from interested parties regarding rulemaking timing and process. NAMA requested that DOE pay considerable attention to the economic impacts of new energy regulations on an industry under pressure due to factors such as the COVID–19 pandemic and the switch from hydrofluorocarbons (HFCs) to lower global warming potential (GWP) chemicals. (NAMA, No. 14 at p. 3) NAMA commented to ask that DOE return to in-person meetings, stating that while electronic meetings provide value, they present challenges to full dialogue on these important subjects. (NAMA, No. 14 at p. 3) NAMA commented that DOE should not discount the time and resources needed to evaluate and respond to all proposed test procedures and energy conservation standards for multiple products proposed over a short period, as is currently the case. (NAMA, No. 14 at p. 16) It noted that when these rulemakings occur simultaneously, as they are now and have in the past, the cumulative burden increases substantially. Id. NAMA commented that it requested an extension to the Cooperative Research and Development Agreement (CRADA) between the NAMA Foundation, DOE, and the Oak Ridge National Laboratory (ORNL) so that the remaining items revolving around energy efficiency gains can be studied, and asked that DOE wait until the CRADA is finished before pursuing a regulation. (NAMA, No. 14 at p. 9) NAMA also commented that in the preliminary analysis TSD, DOE recognizes the existence of the CRADA between NAMA, DOE, and ORNL; however, NAMA stated the status of this CRADA is not current or correct in the TSD. Id. NAMA stated that most of the activities of the 2019–2021 CRADA were directed toward reduction of the risk involved in a possible leak situation if it were ever to occur. Id. NAMA commented that ORNL did extensive testing on leak scenarios and proposed new methods to reduce the risk from such a leak in a public space. Id. NAMA stated that, in nearly all the scenarios PO 00000 Frm 00009 Fmt 4701 Sfmt 4702 33975 tested by ORNL, this involved the use of additional fans to circulate air. Id. NAMA commented that the energy used by additional ventilation is not accounted for in the preliminary analysis TSD and that, according to the proposed DOE test procedure, BVM manufacturers would be penalized to use additional ventilation and thus to reduce the safety risk. Id. DOE has evaluated potential improvements to the energy efficiency of BVMs to support this NOPR through testing, teardowns, manufacturer interviews, market review, and comments submitted by stakeholders. DOE welcomes any additional comments and supporting data, including any additional results of the CRADA, in response to this NOPR. In the April 2023 Test Procedure Final Rule, DOE determined to amend the test procedure to include additional instructions for refrigerant leak mitigation controls.17 DOE specified that for refrigerant leak mitigation controls that are independent from the refrigeration or vending performance of the BVM, such controls must be disconnected, disabled, or otherwise deenergized for the duration of testing. Id. For refrigerant leak mitigation controls that are integrated into the BVM cabinet such that they cannot be de-energized without disabling the refrigeration or vending functions of the BVM or modifying the circuitry, such controls must be placed in an external accessory standby mode, if available, or their lowest energy-consuming state. Id. Section 2.5.1.1 of the preliminary analysis TSD states that DOE acknowledges the ongoing research at ORNL. DOE recognized that leak mitigation technologies are still under development and continues to request comment and data on the use of such technologies and how they may impact BVM energy use. Id. DOE acknowledged that ASHRAE 15–2019, ASHRAE 34– 2019, and UL 541 specified limitations on placing beverage vending machines using propane refrigerant in hallways or corridors and that these industry standards are often adopted as part of local codes. Id. DOE noted that, since the initial publication of the standards, addenda 18 to ASHRAE 15 and 34 have been published to remove the limitations on placing beverage vending machines using propane in hallways or 17 See www1.eere.energy.gov/buildings/ appliance_standards/standards.aspx?productid=29. 18 ASHRAE 15–2019 Addendum C, published August 2020, and ASHRAE 34–2019 Addendum F, published December 2019, specifically address this issue and can be accessed at www.techstreet.com/ ashrae/standards/ashrae15-2019-packaged-w-342019?product_id=2046531. E:\FR\FM\25MYP2.SGM 25MYP2 33976 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules corridors. Id. These addenda specify a maximum charge limit based on the lower flammability limit of a refrigerant. Id. For BVM equipment using propane, the maximum charge limit permitted under the addenda is 114 grams. Id. DOE determined in the preliminary analysis TSD that this charge limit would allow BVM units in all equipment classes and available sizes to transition to propane without restricting installation locations of BVM units for end users. Id. Similarly, DOE states that it has already observed in the market and tested BVM units utilizing flammable refrigerants, specifically R– 290. Id. In this NOPR, DOE has tentatively determined, based on manufacturer interviews, test data, and teardown data, that BVM units in all equipment classes and available sizes can use a R–290 charge of 114 grams or less. DOE has not observed any refrigeration leak mitigation controls that consume additional energy on BVMs using flammable refrigerants and, based on interviews conducted in support of this NOPR, refrigeration leak mitigation controls on BVMs using R– 290 are not required because all BVMs use less than 114 grams of R–290. See chapter 5 of the NOPR TSD for additional discussion. B. Scope of Coverage This NOPR covers equipment that meet the definition of a refrigerated bottled or canned beverage vending machine, as codified at 10 CFR 431.292. A ‘‘refrigerated bottled or canned beverage vending machine’’ is defined as a commercial refrigerator (as defined in 10 CFR 431.62) that cools bottled or canned beverages and dispenses the bottled or canned beverages on payment. 10 CFR 431.292. See section IV.A.1 of this document for discussion of the equipment classes analyzed in this NOPR. lotter on DSK11XQN23PROD with PROPOSALS2 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 BVM equipment are expressed in terms of maximum daily energy consumption as a function of the refrigerated volume of the equipment; see 10 CFR 431.296(b). VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 D. Technological Feasibility E. Energy Savings 1. General 1. Determination of Savings For each trial standard level (TSL), DOE projected energy savings from the application of the TSL to BVMs purchased in the 30-year period that begins in the year of compliance with the proposed standards (2028–2057).19 The savings are measured over the entire lifetime of BVMs 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 BVMs. 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.20 DOE’s approach is based on the calculation of an FFC multiplier for each of the energy types used by covered products or equipment. For more information on FFC energy savings, see section IV.H.1 of this document. NAMA commented that DOE overestimated energy savings over the 30 year analysis period. (NAMA, No. 14 at p. 14) DOE clarifies that the energy savings referenced are FFC energy savings, where the energy usage calculated by NAMA appears to be site energy usage. DOE also clarifies that energy savings are based on 30 years of shipments, but BVMs shipped in year 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 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 BVM equipment, 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 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 BVM equipment 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.b of this document and in chapter 5 of the NOPR TSD. PO 00000 Frm 00010 Fmt 4701 Sfmt 4702 19 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. 20 The FFC metric is discussed in DOE’s statement of policy and notice of policy amendment. 76 FR 51282 (Aug. 18, 2011), as amended at 77 FR 49701 (Aug. 17, 2012). E:\FR\FM\25MYP2.SGM 25MYP2 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules 30 can continue to save energy until they are retired from service. 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.21 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, 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 proposed rulemaking. lotter on DSK11XQN23PROD with PROPOSALS2 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 21 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 13 December 2021 (86 FR 70892). VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 33977 (1) INPV, which values the industry on the basis of expected future cash flows, (2) cash flows by year, (3) changes in revenue and income, and (4) other measures of impact, as appropriate. Second, DOE analyzes and reports the impacts on different types of manufacturers, including impacts on small manufacturers. Third, DOE considers the impact of standards on domestic manufacturer employment and manufacturing capacity, as well as the potential for standards to result in plant closures and loss of capital investment. Finally, DOE takes into account cumulative impacts of various DOE regulations and other regulatory requirements on manufacturers. For individual consumers, measures of economic impact include the changes in LCC and PBP associated with new or amended standards. These measures are discussed further in the following section. For consumers in the aggregate, DOE also calculates the national NPV of the consumer costs and benefits expected to result from particular standards. DOE also evaluates the impacts of potential standards on identifiable subgroups of consumers that may be affected disproportionately by a standard. 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 analyses, 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 analyses is discussed in further detail in section IV.F of this document. b. Savings in Operating Costs Compared to Increase in Price (LCC and PBP) EPCA requires DOE to consider the savings in operating costs throughout the estimated average life of the covered product in the type (or class) compared to any increase in the price of, or in the initial charges for, or maintenance expenses of, the covered product that are likely to result from a standard. (42 U.S.C. 6295(o)(2)(B)(i)(II)) DOE conducts this comparison in its LCC and PBP analyses. 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 d. Lessening of Utility or Performance of Products In establishing product classes and evaluating design options and the impact of potential standard levels, DOE evaluates potential standards that would not lessen the utility or performance of the considered products. (42 U.S.C. 6295(o)(2)(B)(i)(IV)) Based on data available to DOE, the standards proposed in this document would not reduce the utility or performance of the products under consideration in this rulemaking. PO 00000 Frm 00011 Fmt 4701 Sfmt 4702 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 of this document, DOE uses the NIA spreadsheet models to project national energy savings. 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 DOJ provide its determination on this issue. DOE will publish and E:\FR\FM\25MYP2.SGM 25MYP2 33978 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules 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. lotter on DSK11XQN23PROD with PROPOSALS2 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 benefits in the form of reduced emissions of air pollutants and 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 of this document; the estimated emissions impacts are reported in section V.B.6 of this document. DOE also estimates the economic value of emissions reductions resulting from the considered TSLs, as discussed in section IV.L of this document. g. Other Factors 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 VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 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 PBP for consumers. These analyses include, but are not limited to, the 3-year PBP contemplated under the rebuttable presumption test. In addition, DOE routinely conducts an economic analysis that considers the full range of impacts to consumers, manufacturers, the Nation, and the environment, as required under 42 U.S.C. 6295(o)(2)(B)(i). The results of this analysis serve as the basis for DOE’s evaluation of the economic justification for a potential standard level (thereby supporting or rebutting the results of any preliminary determination of economic justification). The rebuttable presumption payback calculation is discussed in section IV.F of this document. IV. Methodology and Discussion of Related Comments This section addresses the analyses DOE has performed for this proposed rulemaking with regard to BVM equipment. Separate subsections 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 proposed rulemaking: www.regulations.gov/docket/EERE2020-BT-STD-0014. For this NOPR analysis, the Energy Information Administration (EIA) Annual Energy Outlook 2022 (AEO2022),22 a widely 22 U.S. Department of Energy–Energy Information Administration. Annual Energy Outlook 2022. PO 00000 Frm 00012 Fmt 4701 Sfmt 4702 known energy projection for the United States, was used for the life-cycle cost, emissions, and utility impact analyses, which was current for the analysis phase. However, near the time of publication of the NOPR, EIA released AEO2023. DOE plans to shift to AEO2023 in the final rule analysis. A preliminary review of the electricity prices in AEO2023 indicates lower electricity prices than AEO2022 in the Reference case. Lower electricity prices could reduce the life-cycle savings and affect the related payback period calculations. DOE will update other variables and data sets in the final rule analysis in addition to use of AEO2023, as well as incorporate feedback from commenters. A. Market and Technology Assessment DOE develops information in the market and technology assessment that provides an overall picture of the market for the equipment concerned, including the purpose of the equipment, the industry structure, manufacturers, market characteristics, and technologies used in the equipment. 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 equipment classes, and (2) technologies or design options that could improve the energy efficiency of BVM equipment. 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. Equipment Classes When evaluating and establishing energy conservation standards, DOE may establish separate standards for a group of covered products (i.e., establish a separate product class) if DOE determines that separate standards are justified based on the type of energy used, or if DOE determines that a product’s capacity or other performance-related feature justifies a different standard. (42 U.S.C. 6295(q)) 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. Id. DOE currently separates BVM equipment into four equipment classes categorized by physical characteristics Washington, DC. Available at https://www.eia.gov/ outlooks/archive/aeo22//. E:\FR\FM\25MYP2.SGM 25MYP2 that affect equipment utility and equipment efficiency: (1) whether 25 percent or more of the surface area on the front side of the BVM is transparent and (2) whether two or more compartments of the BVM are separated by a solid partition that may or may not share a product delivery chute, in which at least one compartment is designed to be refrigerated—as demonstrated by the presence of temperature controls—and at least one compartment is not (i.e., a combination vending machine). The equipment classes are defined as follows: Class A means a refrigerated bottled or canned beverage vending machine that is not a combination vending machine and in which 25 percent or more of the surface area on the front side of the beverage vending machine is transparent. Class B means a refrigerated bottled or canned beverage vending machine that is not considered to be Class A and is not a combination vending machine. Combination A means a combination vending machine where 25 percent or more of the surface area on the front side of the beverage vending machine is transparent. Combination B means a combination vending machine that is not considered to be Combination A. DOE currently sets forth energy conservation standards and relevant definitions for BVM equipment at 10 CFR 431.296 and 10 CFR 431.292, respectively, and the energy conservation standards are repeated in Table II.1. DOE notes that the January 2016 Final Rule and Figure IV.1 do not mention the solid partition that separates two or more compartments in a combination vending machine. The definition of combination vending machine at 10 CFR 431.292 does not limit the size or shape of the solid partition that might separate refrigerated and nonrefrigerated subcompartments. Based on BVM teardowns conducted in support of this NOPR, DOE has initially determined that the solid partition projected to the front surface would constitue a small portion of the overall transparent surface area calculation. DOE has observed solid partitions with a projected front surface area of 0.5 inches of thickness and span the width of the internal compartment resulting in approximately 1.0% of the front surface area. Therefore, in this NOPR, DOE VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 a. Combination A In the January 2016 Final Rule, DOE noted that the optional test protocol to PO 00000 Frm 00013 Fmt 4701 Sfmt 4702 33979 determine the transparency of materials and the relative surface areas of transparent and non-transparent surfaces would be applicable to combination vending machines except that, the external surface areas surrounding the non-refrigerated compartment(s) would not be considered. 81 FR 1027, 1048. That is, all the surfaces that surround and enclose the compartment designed to be refrigerated (as demonstrated by the presence of temperature controls) as well as any surfaces that do not enclose any product-containing compartments (e.g., surfaces surrounding any mechanical equipment or containing the product selection and delivery apparatus) would be considered in the calculation of transparent and nontransparent surface area for a BVM, as shown in Figure IV.1. Id. proposes to clarify that the solid partition would be considered in the calculation of transparent and nontransparent surface area for BVM equipment up to the centerline of the solid partition projected to the front surface for the surfaces that surround and enclose the compartment designed to be refrigerated (as demonstrated by the presence of temperature controls). E:\FR\FM\25MYP2.SGM 25MYP2 EP25MY23.000</GPH> lotter on DSK11XQN23PROD with PROPOSALS2 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules 33980 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules The definition of Combination A requires that ‘‘25 percent or more of the surface area on the front side of the beverage vending machine is transparent.’’ 10 CFR 431.292. Consistent with the January 2016 Final Rule, DOE proposes to revise the definition of Combination A to clarify the exclusion of the external surface areas surrounding the non-refrigerated compartment(s) in the calculation of surface areas of transparent and nontransparent surfaces: Combination A means a combination vending machine where 25 percent or more of the surface area on the front side of the beverage vending machine that surrounds the refrigerated compartment(s) is transparent. DOE requests comment on its proposal to revise the definition of Combination A. 2. Technology Options In the preliminary market analysis and technology assessment, DOE identified 29 technology options that would be expected to improve the efficiency of BVM equipment, as measured by the DOE test procedure and shown in Table IV.1. lotter on DSK11XQN23PROD with PROPOSALS2 TABLE IV.1—TECHNOLOGY OPTIONS FOR REFRIGERATED BOTTLED OR CANNED BEVERAGE VENDING MACHINES IN THE APRIL 2022 PRELIMINARY TSD Insulation: Improved resistivity of insulation (insulation type). Increased insulation thickness. Vacuum insulated panels. Improved Glass Packs: Low-E coatings. Inert gas fill. Vacuum insulated glass. Additional panes. Frame design. Compressor: Improved compressor efficiency. Variable speed compressors. Linear compressors. Evaporator: Increased surface area. Tube and fin enhancements (including microchannel designs). Low pressure differential evaporator. Condenser: Increased surface area. Tube and fin enhancements (including microchannel designs). Microchannel heat exchanger. Fans and Fan Motors: Evaporator fan motors. Evaporator fan blades. Evaporator fan controls. Condenser fan motors. Condenser fan blades. Other Technologies: Lighting. Anti-sweat heater controls. VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 TABLE IV.1—TECHNOLOGY OPTIONS FOR REFRIGERATED BOTTLED OR CANNED BEVERAGE VENDING MACHINES IN THE APRIL 2022 PRELIMINARY TSD—Continued Defrost systems. Expansion valve improvements: Alternative refrigerants. Low power payment mechanisms. Low power states. DOE received several comments in response to the April 2022 Preliminary Analysis regarding the technology options. a. Compressors NAMA commented that, at the present time, variable speed and twospeed compressors are not available for the size range of compressors for most BVMs. (NAMA, No. 14 at p. 24) NAMA commented that when moving from single speed compressors to variable speed compressors, in order to take full advantage of this level of energy efficiency, other components, such as metering devices (i.e., expansion valves and capillary tubes), must be changed. (NAMA, No. 14 at p. 24) NAMA added that a control system will have to be added to monitor the system of the compressor, the cycle, the temperatures, and environmental conditions, and that these changes must be factored into the total cost. Id. NAMA commented that it is necessary for DOE to understand that the refrigeration cycle is only on for 20–25 percent of the time and that any savings must be allocated across the full set of DOE test procedure measurements. Id. NAMA also commented that linear compressors are not available for BVMs and are many years away from concept design. In addition, NAMA commented that several manufacturers of linear compressors appear to have discontinued production. (NAMA, No. 14 at p. 24) DOE has reviewed variable speed compressors available on the market and found that variable speed compressors are offered at the same cooling capacities as single speed compressors currently used in BVMs. All variable speed compressors observed had more than two speeds. In this NOPR, DOE did not assume that additional components other than the variable speed compressor were required to reduce the energy use for the variable speed compressor design option. DOE is aware of refrigerant systems which use a capillary tube and a variable speed compressor which suggests that expansion valve changes are not necessary. Based on feedback PO 00000 Frm 00014 Fmt 4701 Sfmt 4702 received during manufacturer interviews, information collected during BVM teardowns, and market research, DOE has tentatively determined that control systems are already present in BVM equipment. In the NOPR analysis, DOE considered the refrigeration cycle duration in the engineering analysis for the variable speed compressor design option. See chapter 5 of the NOPR TSD for additional details. In the April 2022 Preliminary Analysis, DOE did not screen out linear compressors but did include linear compressors as a ‘‘design option not directly analyzed.’’ DOE included linear compressors as a technology option because compressor manufacturers had begun development on linear compressors for residential refrigerators. However, recent lawsuits and a lack of availability of linear compressors on the market have prevented further development of this technology for BVM equipment; therefore, DOE has tentatively determined that linear compressors meet the screening criterion of ‘‘impacts on product utility or product availability.’’ DOE has screened out linear compressors as a design option for improving the energy efficiency of BVM equipment. See section IV.B.1 of this document and chapter 4 of the NOPR TSD for additional details. b. Alternative Refrigerants NAMA commented that the changes necessary to adopt the lower GWP refrigerants are being made but have not been fully realized in all models of BVMs. (NAMA, No. 14 at p. 4) NAMA commented that DOE’s statement that BVMs currently available on the market have already transitioned to R–290 refrigerant is incorrect. (NAMA, No. 14 at p. 16) NAMA commented that the 114 grams of refrigerant that is allowed for the low GWP refrigerant is 36 grams less than what is allowed in a household or commercial refrigerator, which limits the size of the machine and restricts design options that require additional energy. (NAMA, No. 14 at p. 8) DOE notes that the U.S. Environmental Protection Agency (EPA) proposed refrigerant restrictions pursuant to the American Innovation and Manufacturing Act (‘‘AIM Act’’) 23 23 Under subsection (i) of the AIM Act, entitled ‘‘Technology Transitions,’’ the EPA may by rule restrict the use of hydrofluorocarbons (HFCs) in sectors or subsectors where they are used. A person or entity may also petition EPA to promulgate such a rule. ‘‘H.R.133—116th Congress (2019–2020): Consolidated Appropriations Act, 2021.’’ Congress.gov, Library of Congress, 27 December E:\FR\FM\25MYP2.SGM 25MYP2 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules lotter on DSK11XQN23PROD with PROPOSALS2 affecting BVM equipment in a NOPR published on December 15, 2022 (‘‘December 2022 EPA NOPR’’). 87 FR 76738. Specifically, EPA proposed prohibitions for new vending machines (EPA’s term for this equipment) for the use of HFCs and blends containing HFCs that have a GWP of 150 or greater. 87 FR 76738, 76780. The proposal would prohibit manufacture or import of such vending machines starting January 1, 2025, and would ban sale, distribution, purchase, receive, or export of such vending machines starting January 1, 2026. 87 FR 76740. DOE considered the use of alternative refrigerants that are not prohibited for BVM equipment in the December 2022 EPA NOPR. DOE notes that several manufactuerers currently rate BVM models to both ENERGY STAR 24 and DOE 25 with BVM equipment using R– 290 and that manufacturers indicated in manufacturer interviews that the industry is planning to transition to R– 290. DOE is aware of the 114 gram charge limit for R–290 in BVM equipment located in a public corridor or lobby as specified in Addendum C to ANSI/ ASHRAE Standard 15–2019, ‘‘Safety Standard for Refrigeration Systems’’ and UL 60335–2–89, ‘‘Particular Requirements for Commercial Refrigerating Appliances and Ice-Makers with an Incorporated or Remote Refrigerant Unit or Motor-Compressor.’’ Based on feedback received during manufacturer interviews, information collected during BVM teardowns, and market research, DOE has tentatively determined that the 114 gram charge limit does not restrict the size of the machine nor any technology options considered in this NOPR. DOE has tentatively determined that all BVM equipment can use less than 114 grams of R–290. In response to the December 2022 EPA NOPR, this NOPR reflects the alternative refrigerant design changes made by manufacturers at the baseline levels for BVM equipment, which incorporate a refrigerant conversion to R–290 (i.e., the most efficient refrigerant DOE is currently aware of on the market for BVM equipment), instead of as a 2020, www.congress.gov/bill/116thcongress/housebill/133. 24 See www.energystar.gov/productfinder/ product/certified-vending-machines/results. 25 See www.regulations.doe.gov/certificationdata/CCMS-4-Refrigerated_Bottled_or_Canned_ Beverage_Vending_Machines.html#q=Product_ Group_s%3A%22Refrigerated%20Bottled %20or%20Canned%20Beverage%20Vending %20Machines%22. VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 design option as presented in the April 2022 Preliminary Analysis. See section IV.C.1.a and chapter 5 of the NOPR TSD for additional details. NAMA recommended that this be the last rulemaking to raise the issue of CO2 as a refrigerant, and provided many details on the design differences and challenges in using CO2 as a refrigerant. (NAMA, No. 14 at pp. 24–25) While DOE mentioned CO2 refrigerants in the April 2022 Preliminary TSD as background information on the January 2016 Final Rule, DOE did not consider CO2 refrigerant as a technology option in the April 2022 Preliminary TSD or this NOPR. c. Insulation NAMA commented that the term ‘‘extra insulation’’ is vague, and manufacturers have been using ‘‘extra’’ insulation since the inception of BVMs. (NAMA, No. 14 at p. 21) In the April 2022 Preliminary TSD, DOE provided context that ‘‘extra insulation’’ refers to an extra 1⁄4 inch of insulation thickness. See chapter 5 of the April 2022 Preliminary TSD for additional details. NAMA asserted that in low-volume manufacturing, with multiple variations of size, features, and designs, vacuum panels are not a feasible design option. (NAMA, No. 14 at p. 22) NAMA stated that vacuum panels often leak over time and return very little overall energy savings during the life of the product. Id. NAMA added that vacuum panels are very costly as individual parts, but even more so in tooling costs spread over very small volumes. Id. Vacuum insulated panels (VIPs) may require cabinet redesign and additional tooling costs to properly incorporate VIPs in BVMs without leaks or damage to the panel. DOE has considered the investments required in additional tooling, equipment, and processes for any cabinet redesign in the engineering analysis (sunk cost per unit) and manufacturer impact analysis (capital conversion costs). See chapter 5 and 12 of the NOPR TSD for additional discussion on VIPs. d. Fan Motors NAMA commented that manufacturers changing to R–290 have already incorporated electronically commutated fan motors (ECMs) into their machines and many did this years ago. (NAMA, No. 14 at p. 21) NAMA added that, with the change to R–290, manufacturers of BVMs must utilize ADAC controls and components (sometimes called ‘‘spark-proof’’ motors). Id. NAMA further stated that PO 00000 Frm 00015 Fmt 4701 Sfmt 4702 33981 current designs of permanent split capacitor motors (PSCs) are much more energy efficient than they were 5 or 10 years ago, and that NAMA approximates the energy use of an ECM to be higher than the value provided in the April 2022 Preliminary TSD. Id. DOE considered the requirement for motors to be ‘‘spark-proof’’ for use with the R–290 refrigerant. DOE notes that, based on feedback received during manufacturer interviews, information collected during BVM teardowns, and market research, DOE has tentatively determined that manufacturers currently use shaded pole motors (SPMs), PSCs, and ECMs, although not all motor types are used in each BVM equipment class. Based on feedback from commenters, market research, and additional testing, DOE has tentatively determined to update the fan motor efficiency assumptions in this NOPR. Consistent with commenters, DOE increased the assumed motor efficiency of SPMs and PSCs, and decreased the assumed motor efficiency of ECMs in this NOPR. As noted in the April 2022 Preliminary TSD, DOE is also aware of an additional motor technology that is available for use in BVMs, permanent magnet synchronous (PMS) motors. PMS motor technology has shown the potential for motor efficiency improvement beyond ECMs, as indicated in a 2019 ORNL study comparing PMS motors and ECMs.26 Due to the motor efficiency improvements PMS motors provide in comparison to ECMs, and based on DOE’s updated fan motor efficiency assumptions (i.e., ECM assumed efficiencies in this NOPR are less than the assumed PMS motor efficiencies), DOE has tentatively determined to include PMS motors as a design option for BVMs. See chapter 5 of the NOPR TSD for additional details on fan motors. e. Evaporators and Condensers NAMA commented that true microchannel designs are prone to significant clogging and have been shown to exhibit pin-hole sized leaks, making them inadvisable with a flammable refrigerant. (NAMA, No. 14 at p. 23) DOE acknowledges that microchannel condensers may experience clogging over the lifetime of a unit due to a lack of maintenance by the end user or other factors; however, DOE’s BVM standards 26 Permanent Magnet Synchronous Motors for Commercial Refrigeration: Final Report, available at: info.ornl.gov/sites/publications/Files/ Pub115680.pdf. E:\FR\FM\25MYP2.SGM 25MYP2 33982 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules consider the performance of the unit as measured by the DOE BVM test procedure, which measures the performance of new BVMs. Additionally, tube and fin condensers may also experience clogging over the lifetime of a unit and require proper maintence of the condenser. DOE notes that microchannel heat exchangers are currently used in a variety of applications, including mobile air-conditioning, commercial airconditioning, residential airconditioning, and commercial refrigeration equipment. Although DOE acknowledges that some microchannel condenser designs could have the potential to leak, DOE has observed the use of microchannel condensers with flammable refrigerants in similar applications (e.g., automatic commercial ice makers). Additionally, pin-hole sized leaks are not unique to microchannel heat exchangers. Furthermore, DOE notes that the CRADA was established, in part, to mitigate leak risks and assess potential hazards, including flammability.27 f. Glass Packs NAMA commented that the change from double pane to triple pane glass would require a significant increase in the overall structural design of the machine. (NAMA, No. 14 at p. 22) NAMA noted that the doors would have to increase in size, thickness, and weight, and that the wall structure and frame would have to be increased to accommodate the hanging weight. Id. NAMA added that the overall machine weight would increase, thereby increasing shipping weight and the corresponding transportation costs (and thus the carbon footprint of the machine). Id. DOE observed both double pane and triple pane glass doors in BVM equipment and used the teardown analysis of units containing each door type to inform the NOPR analysis. DOE considered the additional cost related to structural changes when upgrading from double pane to triple pane glass doors. DOE did not receive any data which supported an increase in transporation costs when switching from double pane to triple pane glass doors. See chapter 5 of the NOPR TSD for additional detail. lotter on DSK11XQN23PROD with PROPOSALS2 g. Payment Mechanisms ASAP and ACEEE encouraged DOE to include low-power coin and bill payment mechanisms as a design option in the engineering analysis, as BVMs are 27 See www.energy.gov/eere/buildings/articles/ five-new-cooperative-research-agreements-investefficiency-performance-and. VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 usually shipped with the payment mechanisms, and their energy consumption is captured in the test procedures. (ASAP & ACEEE, No. 15 at p. 1) In the April 2023 Test Procedure Final Rule, DOE determined to maintain the current 0.20 kWh/day adder to account for the energy use of payment mechanisms.28 The available information demonstrates that a wide (and growing) variety of payment systems are currently available on the market; the most common scenario is for the payment mechanism to be specified (and in some cases, provided) by the customer; and the customer may decide whether or not to have the payment mechanism installed by the BVM manufacturer at the time of sale. Id. Therefore, DOE did not consider lowpower payment mechanisms as a design option in this NOPR. See chapter 5 of the NOPR TSD for additional details. h. Low Power Modes NAMA commented that it is unclear from the April 2022 Preliminary TSD exactly what DOE means by ‘‘automatic lighting controls.’’ (NAMA, No. 14 at pp. 19, 20) NAMA added that most of the machines sold today will go into a ‘‘sleep’’ mode after a period of inactivity, which is not the type of proximity control system used in display case products. Id. NAMA further commented that customers do not want a vending machine to go completely to ‘‘sleep,’’ because they want users to see the machine as fully functioning and not dark. Id. NAMA asserted that machines going completely ‘‘dark’’ is a change in utility of the machine and should be accounted for in a different category. The ‘‘automatic lighting control’’ design option is based on the ‘‘accessory low power mode’’ section of the BVM test procedure which allows for 6 hours of operation in the accessory low power mode during the test (i.e., the lowest energy-consuming lighting and control settings that constitute an accessory low power mode). Appendix B to subpart Q of 10 CFR part 431. Therefore, in the preliminary and NOPR analyses, DOE modeled 18 hours of light on time for the automatic lighting control design option and 6 hours of light off time. ‘‘Accessory low power mode’’ is defined as a state in which a beverage vending machine’s lighting and/or other energy-using systems are in low power mode, but that is not a refrigeration low power mode. Functions that may constitute an accessory low power mode 28 See www1.eere.energy.gov/buildings/ appliance_standards/standards.aspx?productid=29. PO 00000 Frm 00016 Fmt 4701 Sfmt 4702 may include, for example, dimming or turning off lights, but does not include adjustment of the refrigeration system to elevate the temperature of the refrigerated compartment(s). Id. DOE notes that there are currently 17 out of 53 Class A and Combination A models certified to DOE’s Compliance Certification Database (CCD) 29 that use accessory low power mode. DOE also notes that manufacturers provide information on their low power mode operation in the unit’s user manual for varying customer demands. NAMA commented that many BVMs can be programmed into an ‘‘energy saver’’ mode based on inactivity or schedule. (NAMA, No. 14 at p. 20) NAMA added that consumers can set the machine to somewhat reduce the refrigeration cycle during nighttime if the location is truly ‘‘shut down’’ for many hours, but that DOE only allows a credit of 3 percent for this feature. Id. NAMA stated that mandating some form of automatic low power mode is different and will be beneficial only if the low power mode period is significantly longer, adding that if it is short, the energy savings will be offset by the additional energy required to bring the product back to the lower temperature. Id. NAMA commented most current customers of BVMs do not want a low power mode that affects the holding temperature or lengthens the pulldown time, and that any change to this could have a direct effect on the utility and performance of the machine and should be avoided. (NAMA, No. 14 at p. 20) DOE acknowledges that there is variability in customer location and activity and that some of the energy savings of the low power mode will be offset by the pulldown period to return to normal operation. As noted in the BVM test procedure NOPR published on August 11, 2014 (2014 BVM test procedure NOPR), DOE understands that refrigeration low power modes are extremely variable in terms of their control strategies and operation and, in addition, may require specific instructions from the manufacturer to precisely modify or adjust the control systems to accommodate the specific provisions of the DOE test procedure. 79 FR 46908, 46924–46925. As noted in BVM test procedure final rule published on July 31, 2015 (2015 BVM test procedure Final Rule), DOE’s estimate of 3 percent energy savings due to the 29 See www.regulations.doe.gov/certificationdata/CCMS-4-Refrigerated_Bottled_or_Canned_ Beverage_Vending_Machines.html#q=Product_ Group_s%3A%22Refrigerated%20Bottled%20or %20Canned%20Beverage%20Vending %20Machines%22. (Accessed February 9, 2023). E:\FR\FM\25MYP2.SGM 25MYP2 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules operation of low power modes is based on the data available and that DOE believes 3-percent is representative of the common types of refrigeration low power modes DOE has observed in the market place. 80 FR 45758, 45786. In the April 2023 Test Procedure Final Rule, DOE maintained the existing test procedure provisions and 3-percent energy credit for refrigeration low power mode.30 In this NOPR, DOE has tentatively determined that 3-percent continues to be representative of the common types of refrigeration low power modes DOE has observed in the marketplace. See chapter 5 of the NOPR TSD for additional details. DOE notes that there are currently 55 out of 107 BVM models certified to DOE’s CCD 31 that use refrigeration low power mode. DOE also notes that manufacturers provide information on their low power mode operation in the unit’s user manual for varying customer demands. i. Additional Concerns NAMA commented that several of the design options shown in the April 2022 Preliminary TSD (larger condensers or evaporators, more insulation, changes to type of glass) would require more space inside the machine, leading to a reduction in the overall capacity of the machine, which should be considered in the TSD. (NAMA, No. 14 at p. 11) In this NOPR, DOE did not consider design options that expanded the size or footprint of BVM equipment (e.g., larger condensers or evaporators, more insulation) because BVM equipment may be used in locations prioritizing smaller equipment footprints and an increase in cabinet sizes may adversely impact the availability of equipment at a given refrigerated volume. DOE assumed, based on feedback received during manufacturer interviews and from equipment teardowns, that the design options which changed the type of glass would not increase the door thickness but may require different frame materials or hinges, which DOE has considered as a cost adder to the design option in this NOPR. See chapter 5 of the NOPR TSD for additional details. NAMA commented that several of the design options (e.g., lower wattage refrigeration systems, vacuum panel insulation, different evaporators or condensers, and lower wattage fan motors) could potentially affect the overall performance of the machine, and therefore should be reviewed in the TSD not only for their energy efficiency but also the ability to maintain the critial design features and performance of these machines. (NAMA, No. 14 at p. 12) In this NOPR, DOE did not consider design options that changed the measured performance as compared with existing BVM equipment. See chapter 5 of the NOPR TSD for additional details. 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 commercially viable, existing prototypes will not be considered further. (2) Practicability to manufacture, install, and service. If it is determined that mass production of a technology in commercial products and reliable installation and servicing of the technology 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. If a technology is determined to have a significant adverse impact on the utility of the product to subgroups of consumers, or 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) Safety of technologies. 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 technology has proprietary protection and represents a unique pathway to achieving a given efficiency level, it will not be considered further, due to the potential for monopolistic concerns. 33983 See sections 6(b)(3) and 7(b) of the Process Rule. 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. DOE did not receive any comments in response to the April 2022 Preliminary Analysis specific to the screening analysis. 1. Screened Out Technologies For BVM equipment, the screening criteria were applied to the technology options to either retain or eliminate each technology for consideration in the engineering analysis. In the April 2022 Preliminary Analysis, DOE did not screen out linear compressors but did include linear compressors as a ‘‘design option not directly analyzed.’’ DOE included linear compressors as a technology option because compressor manufacturers had begun development on linear compressors for residential refrigerators. However, recent lawsuits and a lack of availability of linear compressors on the market have prevented further development of this technology for BVM equipment; therefore, DOE has tentatively determined that linear compressors meet the screening criterion of ‘‘impacts on product utility or product availability.’’ DOE has tentatively determined to screen out linear compressors as a design option for improving the energy efficiency of BVM equipment in this NOPR. See chapter 4 of the NOPR TSD for additional details. 2. Remaining Technologies Through a review of each technology, DOE tentatively concluded 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 technology options in Table IV.2. TABLE IV.2—RETAINED DESIGN OPTIONS FOR BVMS lotter on DSK11XQN23PROD with PROPOSALS2 Insulation Condenser Improved resistivity of insulation (insulation type) ................................... Increased insulation thickness ................................................................. 30 See www1.eere.energy.gov/buildings/ appliance_standards/standards.aspx?productid=29. VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 Increased surface area. Tube and fin enhancements (including microchannel designs). 31 See www.regulations.doe.gov/certificationdata/CCMS-4-Refrigerated_Bottled_or_Canned_ Beverage_Vending_Machines.html#q=Product_ PO 00000 Frm 00017 Fmt 4701 Sfmt 4702 Group_s%3A%22Refrigerated%20Bottled%20or %20Canned%20Beverage%20Vending %20Machines%22. (Accessed February 9, 2023). E:\FR\FM\25MYP2.SGM 25MYP2 33984 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules TABLE IV.2—RETAINED DESIGN OPTIONS FOR BVMS—Continued Vacuum insulated panels ......................................................................... Microchannel heat exchanger. Improved Glass Packs Fans and Fan Motors Low-E coatings ......................................................................................... Inert gas fill ............................................................................................... Vacuum insulated glass ........................................................................... Additional panes ....................................................................................... Frame design ............................................................................................ Evaporator Evaporator Evaporator Condenser Condenser fan fan fan fan fan motors. blades. controls. motors. blades. Compressor Other Technologies Improved compressor efficiency ............................................................... Variable speed compressors .................................................................... .............................................................................................................. Lighting. Anti-sweat heater controls. Defrost systems. Evaporator Expansion valve improvements Increased surface area ............................................................................. Tube and fin enhancements (including microchannel designs) ............... Low pressure differential evaporator ........................................................ DOE has initially determined that these design options are technologically feasible because they are being used or have previously been used in commercially available equipment or working prototypes. DOE also finds that all of the remaining design options meet the other screening criteria (i.e., practicable to manufacture, install, and service and do not result in adverse impacts on consumer utility, product availability, health, or safety, uniquepathway proprietary technologies). For additional details, see chapter 4 of the NOPR TSD. lotter on DSK11XQN23PROD with PROPOSALS2 C. Engineering Analysis The purpose of the engineering analysis is to establish the relationship between the efficiency and cost of BVM equipment. 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 equipment cost at each efficiency level (i.e., the ‘‘cost analysis’’). In determining the performance of higher-efficiency equipment, DOE considers technologies and design option combinations not eliminated by the screening analysis. For each equipment class, DOE estimates the baseline cost, as well as the incremental cost for the equipment 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). VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 Alternative refrigerants. Low power payment mechanisms. Low power states. 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 equipment (i.e., 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 equipment 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 in which the max-tech level exceeds the maximum efficiency level currently available on the market). In this proposed rulemaking, DOE relies on a design option approach, PO 00000 Frm 00018 Fmt 4701 Sfmt 4702 supported with testing and reverse engineering multiple analysis units. DOE generally relied on test data and reverse engineering to inform a range of design options used to reduce energy use. The design options were incrementally added to the baseline configuration and continued through the ‘‘max-tech’’ configuration (i.e., implementing the ‘‘best available’’ combination of available design options). Consistent with the January 2016 Final Rule analysis (see chapter 5 of the January 2016 Final Rule TSD), DOE estimated the performance of design option combinations using an engineering analysis spreadsheet model. This model estimates the daily energy consumption of BVM equipment in kWh/day at various performance levels using a design option approach. The model calculates energy consumption at each performance level separately for each analysis configuration. For Class A and Class B, DOE analyzed machines of different sizes to assess how energy use varies with size via energy testing and reverse engineering. In this NOPR, representative volumes were chosen for each equipment class, based on current market offerings: medium and large for Class A and Class B BVMs, and medium for Combination A and Combination B. These equipment classes and representative unit volumes are listed in Table IV.3. E:\FR\FM\25MYP2.SGM 25MYP2 33985 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules TABLE IV.3—REPRESENTATIVE REFRIGERATED VOLUMES IN THE NOPR Size Class A ..................................................................................... Medium .................................................................................... Large ....................................................................................... Medium .................................................................................... Large ....................................................................................... Medium .................................................................................... Medium .................................................................................... Class B ..................................................................................... Combination A ......................................................................... Combination B ......................................................................... See chapter 5 of the NOPR TSD for additional detail on the different units analyzed. a. Baseline Energy Use lotter on DSK11XQN23PROD with PROPOSALS2 Representative volume (ft3) Equipment class For each 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 equipment class represents the characteristics of 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 this NOPR, DOE considered the current standards for BVM equipment when developing the baseline energy use for each analyzed equipment class. For higher efficiency levels, DOE assessed BVM efficiencies as a percent improvement relative to the baseline. This provides a consistent efficiency comparison across each equipment class. DOE considered the efficiency improvements associated with implementing available design options beyond the baseline to the max-tech efficiency level. In response to the April 2022 Preliminary Analysis, NAMA commented that most of the analysis appears to have been performed prior to 2020, yet the industry has been in the midst of considerable change from 2019 to 2022. (NAMA, No. 14 at p. 3) NAMA commented that current machines on the market today that use low GWP refrigerants and incorporate most of the design options shown in Table 2.3 of the April 2022 Preliminary Analysis should be used together with current costs, and that these should be the baseline machines. (NAMA, No. 14 at p. 6) NAMA added that DOE should acknowledge the costs already incurred by manufacturers in order to meet the goals stated by the Biden Administration to reduce global warming. Id. VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 DOE expects that NAMA is referring to the December 2022 EPA NOPR in its comment regarding the goals stated by the Biden Administration to reduce global warming. As recommended by stakeholders, DOE is considering the cost and impact of the December 2022 EPA NOPR on this NOPR. The proposed date of the proposed GWP limit on BVMs is 2 years earlier than the expected compliance date for any amended BVM standards associated with the proposals in this document. Hence, the proposed refrigerant prohibitions listed in the December 2022 EPA NOPR are assumed to be enacted for the purpose of DOE’s analysis in support of this NOPR. Refrigerants not prohibited from use in BVM equipment in the December 2022 EPA NOPR are presumed to be permitted for use in BVM equipment. As noted in section IV.A.2.b, several manufactuerers currently rate BVM models to both ENERGY STAR 32 and DOE 33 with BVM equipment using R– 290, manufacturers indicated in manufacturer interviews that the industry is planning to transition to R– 290, and DOE has tentatively determined that all BVM equipment can use less than 114 grams of R–290. DOE expects that the use of R–290 generally will improve efficiency as compared with the refrigerants currently in use (e.g., R–134a), which are proposed to be prohibited by the December 2022 EPA NOPR, because R– 290 has higher refrigeration cycle efficiency than the current refrigerants. Thus, DOE expects that the December 2022 EPA NOPR will require redesign that will improve efficiency of BVM equipment. Hence, the baseline levels for BVM equipment in this NOPR reflect the design changes made by manufacturers in response to the December 2022 EPA NOPR, which 32 See www.energystar.gov/productfinder/ product/certified-vending-machines/results. 33 See www.regulations.doe.gov/certificationdata/CCMS-4-Refrigerated_Bottled_or_Canned_ Beverage_Vending_Machines.html#q=Product_ Group_s%3A%22Refrigerated%20Bottled %20or%20Canned%20Beverage%20Vending %20Machines%22. PO 00000 Frm 00019 Fmt 4701 Sfmt 4702 26 35 22 31 11 10 incorporate refrigerant conversion to R– 290. The expected efficiency improvement associated with this refrigerant change varies by class and is presented in Table IV.4. DOE’s analysis considers that these efficiency improvements, equipment costs, and manufacturer investments required to comply with the December 2022 EPA NOPR will be in effect prior to the time of compliance for the proposed amended DOE BVM standards for all BVM equipment classes and sizes. DOE updated its baseline equipment costs to reflect current costs based on feedback received during manufacturer interviews, information collected during BVM teardowns, and market research. TABLE IV.4—PROPOSED DECEMBER 2022 EPA NOPR R–290 ENERGY USE BASELINE Equipment class Class A ..................................... Class B ..................................... Combination A .......................... Combination B .......................... Energy use reduction below DOE standard (%) 12.7 15.1 19.6 14.7 The expected efficiency improvement associated with this refrigerant change is based on R–290 single speed compressors currently available on the market suitable for BVM equipment. In this NOPR, DOE did not consider additional single speed compressor efficiency improvements beyond the baseline because DOE expects that the single speed compressors currently available on the market for refrigerants used to comply with the December 2022 EPA NOPR represent the maximum single speed compressor efficiency achievable for each respective equipment class. NAMA commented that the improved evaporator coils design option seems to be indicating a high fin density and higher pitched coils, but any increase in fin density may increase the fan motor power required and energy E:\FR\FM\25MYP2.SGM 25MYP2 lotter on DSK11XQN23PROD with PROPOSALS2 33986 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules consumption. (NAMA, No. 14 at p. 20) NAMA added that current designs are optimized based on cost versus energy efficiency, and that changes would increase capital costs. Id. In the April 2022 Preliminary Analysis, DOE analyzed ‘‘baseline’’ and ‘‘high efficiency’’ evaporator and condenser design options, consistent with the January 2016 Final Rule. Based on stakeholder comments, interviews with manufacturers, and CoilDesigner simulation, DOE tentatively determined that the ‘‘high efficiency’’ evaporator and condenser design options are representative of current manufacturer designs. Therefore, DOE tentatively determined to analyze the ‘‘high efficiency’’ evaporator and condenser coil as ‘‘baseline’’ in this NOPR and remove the ‘‘high efficiency’’ evaporator and condenser design options in the NOPR. See chapter 5 of the NOPR TSD for additional details. NAMA commented that according to the Process Rule, DOE should not pursue a rulemaking if there were less than 0.30 quad of savings over 30 years, as the last published Process Rule dictates. (NAMA, No. 14 at p. 7) NAMA added that it doesn’t believe there will be greater than 5–10 percent improvement in energy baseline by 2028 to justify the rule. Id. NAMA stated that, including the fact that many of the improvements in the design options have already been incorporated several years ago, the actual improvements it projected to be seen are much less than 10 percent. Id. DOE notes that on December 13, 2021, DOE published a Final Rule which revised the Process Rule NAMA is referring to in its comment,34 and determinations of significance for energy savings are made on a case-bycase basis. 86 FR 70892, 70906. DOE discusses 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 in section V.C.1. DOE requests comments on its proposal to use baseline levels for BVM equipment based upon the design changes made by manufacturers in response to the December 2022 EPA NOPR. DOE further requests comment on its estimates of energy use reduction associated with the design changes made by manufacturers in response to the December 2022 EPA NOPR. 34 See www.regulations.gov/document/EERE2021-BT-STD-0003-0075. VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 b. Higher Efficiency Levels As part of DOE’s analysis, the maximum available efficiency level is the highest efficiency unit currently available on the market. DOE also defines a ‘‘max-tech’’ efficiency level to represent the maximum possible efficiency for a given equipment. After conducting the screening analysis described in section IV.B of this document and chapter 4 of the NOPR TSD, DOE considered the remaining design options in the engineering analysis to achieve higher efficiency levels. See chapter 5 of the NOPR TSD for additional detail on the design options. NAMA commented that although DOE estimates 25 percent energy savings for improved evaporator coils, their review of design options indicates that this is overstated by a factor of 10. (NAMA, No. 14 at p. 20) DOE expects that NAMA is referring to the total energy use reduction below the baseline at a given efficiency level instead of the energy use reduction for each design option. However, as discussed in section IV.C.1.a of this document, DOE tentatively determined to analyze the ‘‘high efficiency’’ evaporator coil as ‘‘baseline’’ in this NOPR and remove the ‘‘high efficiency’’ evaporator design option in the NOPR. NAMA commented that for moving from single speed compressors to variable speed compressors, the promised energy savings is more in the area of 5–15 percent (depending on the model), rather than the 49 percent estimated in the April 2022 Preliminary Analysis TSD. (NAMA, No. 14 at p. 24) DOE expects that NAMA is referring to the total energy use reduction below the baseline at a given efficiency level instead of the energy use reduction for each design option. In this NOPR, DOE assumed an energy use reduction of 7– 14% for variable speed compressors compared to single speed compressors, depending on the equipment class, which is consistent with NAMA’s estimates. See chapter 5 of the NOPR TSD for additional details. NAMA commented that DOE’s estimate of a 43 percent improvement in energy efficiency with the switch from double pane to triple pane glass is much higher than NAMA’s estimate of 12–15 percent improvement in energy efficiency. (NAMA, No. 14 at p. 22) DOE expects that NAMA is referring to the total energy use reduction below the baseline at a given efficiency level instead of the energy use reduction for each design option. In this NOPR, DOE assumed an energy use reduction of 1– 3% for triple pane glass pack compared PO 00000 Frm 00020 Fmt 4701 Sfmt 4702 to double pane glass pack, depending on the equipment class, which is lower than NAMA’s estimates but is consistent with data collected from teardowns and DOE’s modeling. See chapter 5 of the NOPR TSD for additional details. NAMA commented that when moving from triple pane glass to vacuum insulated glass, the efficiency improvements are in the vicinity of 2– 3 percent gain. (NAMA, No. 14 at p. 24) In this NOPR, DOE assumed an energy use reduction of approximately 1% for vacuum insulated glass compared to triple pane glass pack, which is consistent with NAMA’s estimates. See chapter 5 of the NOPR TSD for additional details. NAMA commented that there is not sufficient space in a BVM to allow for the recommended change to insulation thickness. (NAMA, No. 14 at p. 21) NAMA stated that there is not sufficient space to allow for insulation to equate to a reduction of even 10 percent in energy, much less 31 percent, without impacting utility and performance. Id. DOE expects that NAMA is referring to the total energy use reduction below the baseline at a given efficiency level instead of the energy use reduction for each design option. In this NOPR, DOE did not consider design options that expanded the size or footprint of BVM equipment (e.g., more insulation) because BVM equipment may be used in locations prioritizing smaller equipment footprints and an increase in cabinet sizes may adversely impact the availability of equipment at a given refrigerated volume. See chapter 5 of the NOPR TSD for additional details. NAMA commented that it believes the 0.15 quad savings at max-tech is an inflated value based on errors in the engineering analysis, and asserted that the savings would in fact be considerably lower and no longer significant enough for the changes in regulation to be justified. (NAMA, No. 14 at p. 7) In this NOPR, DOE estimates a combined total of 0.138 quads of FFC energy savings over the analysis period at the max-tech efficiency levels for BVM equipment. DOE has considered feedback from stakeholders, manufacturer interviews, and current market data to update its engineering analysis in this NOPR. See section V for additional details. 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 E:\FR\FM\25MYP2.SGM 25MYP2 lotter on DSK11XQN23PROD with PROPOSALS2 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules of public information, characteristics of the regulated equipment, and the availability and timeliness of purchasing the equipment on the market. The cost approaches are summarized as follows: • Physical teardowns: Under this approach, DOE physically dismantles a commercially available equipment, component-by-component, to develop a detailed bill of materials for the equipment. • Catalog teardowns: In lieu of physically deconstructing a equipment, 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 equipment. • Price surveys: If neither a physical nor catalog teardown is feasible (e.g., 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 teardowns and feedback received from manufacturers during interviews. See chapter 5 of the NOPR TSD for additional details. DOE received several comments in response to the April 2022 Preliminary Analysis regarding the cost analysis. NAMA believes that DOE should factor the unprecedented increase in inflation of basic constituents of the BVM machine and its manufacturing into the costs shown for design options and the economic analysis. (NAMA, No. 14 at p. 10) DOE used current prices when estimating the baseline manufacturer production costs and design option costs. See chapter 5 of the NOPR TSD for additional details. NAMA commented that the analyses in the April 2022 Preliminary TSD do not address the major changes necessary to the machines to utilize the lower GWP refrigerants (e.g., R–290). (NAMA, No. 14 at p. 4) NAMA asserted that for low GWP, flammable A–3 refrigerants to be allowed for use in machines, redesign of the evaporator and condensor system and the use of new compressors and expansion valves would be necessary. Id. Additionally, NAMA noted that all switches, electrical components, motors (including robotic or vend motors), wiring, and connectors must be compliant with ‘‘spark-proof’’ VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 connections to shield against the possibility of a leak of such refrigerant. Id. NAMA commented that neither this level of redesign nor the use of these expensive components was addressed in the April 2022 Preliminary TSD. Id. NAMA commented that the incremental cost given in the DOE chart of $11.28 to switch from an R–134 compressor to an R–290 compressor is inaccurate considering that the compressor is only one of many components that must change if the refrigerant is changed to an A–3 refrigerant. (NAMA, No. 14 at pp. 5, 19) NAMA stated that the increase in the cost of the compressor by itself is more than $40, and from their sample of five manufacturers, the cost of the change from R–134 to R–290 is approximately $200 per machine rather than $11.28 when all the components that must change are factored in. Id. As discussed in section IV.C.1.a of this document, DOE has analyzed R–290 as the baseline refrigerant for this NOPR, and as a result, DOE updated its baseline equipment costs to reflect current costs based on feedback received during manufacturer interviews, information collected during BVM teardowns, and market research, which includes the costs for component changes and additions related to R–290. DOE’s analysis considers that these efficiency improvements, equipment costs, and manufacturer investments required to comply with the December 2022 EPA NOPR will be in effect prior to the time of compliance for the proposed amended DOE BVM standards for all BVM equipment classes and sizes. See chapter 5 of the NOPR TSD for additional details. NAMA commented that for moving from single speed compressors to variable speed compressors, the current data shows cost increases in other product categories much higher than the $103.12 shown, and that early cost estimates are more than $200 per machine. (NAMA, No. 14 at p. 24) NAMA commented that DOE’s estimate of $16.72 per machine for improved evaporator coils is significantly below NAMA’s estimates of the parts alone, and that NAMA’s initial estimate is double this amount and perhaps more when considering capital costs, design, and recertification. (NAMA, No. 14 at p. 20) NAMA commented that DOE’s estimated cost of $32.36 for the extra insulation likely does not factor in the cost of redesigning new tooling to encompass additional insulation. (NAMA, No. 14 at p. 21) NAMA commented that the cost estimate of $15.31 for moving from tube PO 00000 Frm 00021 Fmt 4701 Sfmt 4702 33987 and fin to microchannels is not realistic and is not borne out by discussion with vendors, as this change would require a complete redesign of all parts of the vending machine refrigeration system and would need to include a large associated capital cost. (NAMA, No. 14 at p. 23) NAMA commented that the cost estimates its industry has seen are three to four times the cost of glass mentioned in the April 2022 Preliminary TSD when moving from triple pane glass to vacuum insulated glass. (NAMA, No. 14 at p. 24) NAMA commented that the cost estimate of $72.84 with the switch to multiple panes of glass is about half of the total cost when considering increased structural components at extremely high volumes. (NAMA, No. 14 at p. 22) NAMA stated that because of these factors, most manufacturers would not realize this energy efficiency improvement and would see much higher costs for little or no energy improvement. Id. DOE notes that, as discussed in section IV.C.1.a of this document, DOE did not analyze evaporator improvements or extra insulation as design options. DOE assumed, based on feedback received during manufacturer interviews and from equipment teardowns, that the design options which changed the type of glass may require different frame materials or hinges, which DOE has considered as a cost adder to these design options in this NOPR. DOE updated its baseline and design option costs to reflect current costs based on feedback received during manufacturer interviews, information collected during BVM teardowns, stakeholder comments, and market research. See chapter 5 of the NOPR TSD for additional details. 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 markup by examining the annual Securities and Exchange Commission (SEC) 10–K reports filed by publicly traded manufacturers primarily engaged in equipment manufacturing and whose combined equipment range includes BVM equipment. 3. Cost-Efficiency Results The results of the engineering analysis are reported as cost-efficiency data (or ‘‘curves’’) in the form of daily energy E:\FR\FM\25MYP2.SGM 25MYP2 33988 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules consumption (in kWh) versus MSP (in dollars). DOE developed six curves representing the four equipment classes. The methodology for developing the curves started with determining the energy consumption for baseline equipment and MPCs for this equipment. Above the baseline, design options were implemented until all available technologies were employed (i.e., at a max-tech level). See chapter 5 of the NOPR TSD for additional detail on the engineering analysis and appendix 5B of the NOPR TSD for complete cost-efficiency results. D. Markups Analysis The markups analysis develops appropriate markups (e.g., retailer markups, distributor markups, contractor markups) in the distribution chain and sales taxes to convert the MSP estimates derived in the engineering analysis to consumer prices, which are then used in the LCC and PBP analyses and in the manufacturer impact analysis. At each step in the distribution channel, companies mark up the price of the product to cover business costs and profit margin. For BVMs, the main parties in the distribution chain are manufacturers, wholesalers, and the end users. DOE developed baseline and incremental markups for each actor in the distribution chain. 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.35 DOE relied on economic data from the U.S. Census Bureau to estimate average baseline and incremental markups. Chapter 6 of the NOPR TSD provides details on DOE’s development of markups for BVMs. lotter on DSK11XQN23PROD with PROPOSALS2 E. Energy Use Analysis The purpose of the energy use analysis is to determine the annual energy consumption of BVMs at different efficiencies in representative U.S. commercial and industrial buildings, and to assess the energy 35 Because the projected price of standardscompliant products is typically higher than the price of baseline products, using the same markup for the incremental cost and the baseline cost would result in higher per-unit operating profit. While such an outcome is possible, DOE maintains that in markets that are reasonably competitive, it is unlikely that standards would lead to a sustainable increase in profitability in the long run. VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 savings potential of increased BVM efficiency. For the NOPR analysis, DOE selected seven efficiency levels (ELs) for each equipment class, each characterized as a percentage of rated daily energy consumption from the baseline, up to the max-tech efficiency levels defined for each class in the engineering analysis. Each level with the corresponding percentage of baseline rated energy consumption varies by equipment class and can be found in Chapter 7 of the NOPR TSD. The energy use analysis then estimates the range of energy use of BVMs 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 operating costs that could result from adoption of amended or new standards. The energy use analysis assessed the estimated annual energy consumption of a BVM installed in the field. DOE recognizes that a variety of factors may affect the energy use of a BVM, including ambient conditions, use and stocking profiles, and other factors. However, very limited data exist on field energy consumption of BVMs. DOE estimated that the daily energy consumption produced by the DOE test procedure is representative of the average daily energy consumption of a BVM in an indoor environment. DOE developed a methodology to account for the impact of ambient conditions on the average annual energy consumption. To model the annual energy consumption of each BVM unit, DOE separately estimated the energy use of BVMs located indoors and outdoors to account for the impact of ambient conditions on installed BVM energy use. Chapter 7 of the NOPR TSD provides details on DOE’s energy use analysis for BVMs. In response to the April 2022 Preliminary Analysis, NAMA commented that the energy used by additional ventilation to reduce the risk of a leak in a public space was not accounted for in the April 2022 Preliminary TSD. (NAMA, No. 14 at p. 9) In response to the NAMA comment, DOE notes that the NAMA concern regarding additional ventilation needs is due to the presumed use of hydrocarbon refrigerants. DOE notes that the analysis assumes hydrocarbon refrigerants at all efficiency levels analyzed, including the baseline, and any building energy impact due to additional ventilation requirements in spaces surrounding BVMs is the same at all efficiency levels and does not impact the differential energy consumption between efficiency PO 00000 Frm 00022 Fmt 4701 Sfmt 4702 levels or the subsequent economic calculations. NAMA commented that although DOE has asserted that coin and bill payment systems are typically included with BVMs as shipped, its survey has indicated that this is not uniform and is unique to certain manufacturers and customers. (NAMA, No. 14 at p. 12) NAMA also questioned whether the approximation of 0.2 kWh per day is accurate for the energy consumption of a payment mechanism, although it considers the present solution to be preferable to the significant amount of time it would take testing in laboratories to determine a more accurate approximation resulting in a difference of a fraction of a kWh per day. (NAMA, No. 14 at p. 13) In the April 2023 Test Procedure Final Rule, DOE determined to maintain the current 0.20 kWh/day adder to account for the energy use of payment mechanisms.36 The available information demonstrates that a wide (and growing) variety of payment systems are currently available on the market; the most common scenario is for the payment mechanism to be specified (and in some cases, provided) by the customer; and the customer may decide whether or not to have the payment mechanism installed by the BVM manufacturer at the time of sale. Id. Therefore, DOE did not consider lowpower payment mechanisms as a design option in this NOPR. See chapter 5 of the NOPR TSD for additional details. F. Life-Cycle Cost and Payback Period Analysis DOE conducted LCC and PBP analyses to evaluate the economic impacts on individual consumers of potential energy conservation standards for BVMs. 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 a 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, refurbishment, 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. 36 See www1.eere.energy.gov/buildings/ appliance_standards/standards.aspx?productid=29. E:\FR\FM\25MYP2.SGM 25MYP2 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules • 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 BVMs 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 equipment. For each considered efficiency level in each equipment class, DOE calculated the LCC and PBP for a nationally representative set of consumers. As stated previously, DOE developed consumer samples from the most recent industry reports. For each sample consumer, DOE determined the energy consumption for the BVM and the appropriate energy price. By developing a representative sample of consumers, the analysis captured the variability in energy consumption and energy prices associated with the use of BVMs. 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, refurbishment, and maintenance costs; equipment lifetimes; and discount rates. DOE created distributions of values for equipment 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 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 BVM user samples. For this rulemaking, the Monte Carlo approach is implemented in MS Excel together with the Crystal Ball TM add-on.37 The model calculated the LCC for products at each efficiency level for 10,000 consumers 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 nonew-standards case efficiency distribution. In performing an iteration of the Monte Carlo simulation for a 33989 given consumer, equipment efficiency is chosen based on its probability. If the chosen equipment efficiency is greater than or equal to the efficiency of the standard level under consideration, the LCC calculation reveals that a consumer is not impacted by the standard level. By accounting for consumers who already purchase more efficient equipment, DOE avoids overstating the potential benefits from increasing equipment efficiency. DOE calculated the LCC and PBP for consumers of BVMs as if each were to purchase a new BVM in the expected year of required compliance with new or amended standards. New and amended standards would apply to BVMs manufactured 3 years after the date on which any new or amended standard is published. (42 U.S.C. 6295(v)(3)) At this time, DOE estimates publication of a final rule in 2025. Therefore, for purposes of its analysis, DOE used 2028 as the first year of compliance with any amended standards for BVMs. Table IV.5 summarizes the approach and data DOE used to derive inputs to the LCC and PBP calculations. The subsections that follow provide further discussion. Details of the spreadsheet model, and of all the inputs to the LCC and PBP analyses, are contained in chapter 8 of the NOPR TSD and its appendices. TABLE IV.5—SUMMARY OF INPUTS AND METHODS FOR THE LCC AND PBP ANALYSES* 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 component costs. Installation costs for BVMs are subsumed in the MSP and markup and not modeled as an incremental cost. The total annual energy use varies by equipment class and efficiency level. Based on engineering and energy use analyses. Electricity: Based on EIA’s Form 861 data for 2021. Variability: Energy prices determined for 50 states and the District of Columbia. Based on AEO2022 price projections. Variability: Energy price trends vary by nine census regions. Based on RS Means and United States Bureau of Labor Statistics data. Vary by efficiency level. Average: 13.4 years. Approach involves identifying all possible debt or asset classes that might be used to purchase the considered equipment, or might be affected indirectly. Primary data source was Damodaran Online. 2028. Installation Costs ...................................................................................... Annual Energy Use .................................................................................. Energy Prices ........................................................................................... Energy Price Trends ................................................................................. Repair, Refurbishment and Maintenance Costs ...................................... Product Lifetime ........................................................................................ Discount Rates ......................................................................................... Compliance Date ...................................................................................... lotter on DSK11XQN23PROD with PROPOSALS2 * Not used for PBP calculation. 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. In the April 2022 Preliminary Analysis, DOE requested comment on the overall methodology and results of the LCC and PBP analyses. In response to that request, NAMA made three comments. NAMA stated that DOE should factor the unprecedented increase in inflation into the economic analysis in addition 37 Crystal Ball TM is commercially available software tool to facilitate the creation of these types of models by generating probability distributions and summarizing results within Excel, available at www.oracle.com/technetwork/middleware/ crystalball/overview/ (last accessed July 6, 2018). VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 PO 00000 Frm 00023 Fmt 4701 Sfmt 4702 E:\FR\FM\25MYP2.SGM 25MYP2 lotter on DSK11XQN23PROD with PROPOSALS2 33990 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules to the design option costs. (NAMA No. 14, at p. 10) DOE acknowledges the comment from NAMA and applies the annual implicit price deflators for gross domestic product (GDP) from the U.S. Bureau of Economic Analysis to the LCC and PBP analyses to capture the impact of price changes between the years of available cost data and the analysis year. Equipment and design option costs are developed in the engineering analysis and are incorporated into the LCC and PBP analyses by being reflected in the MPCs. In response to the April 2022 Preliminary Analysis, NAMA commented to request that in the Economic Impact Analysis on the cost of labor, real cases from 2021 and 2022 are used rather than the cost of labor in 2018. (NAMA, No. 14 at p. 11) DOE acknowledges the comment from NAMA and will use the most recent data available for the LCC and PBP analyses. If the most recent data available is from prior to 2021, the annual implicit price deflators for GDP from the U.S. Bureau of Economic Analysis will be used to reflect the costs in the year 2021. NAMA commented that in the April 2022 Preliminary Analysis, the lower efficiency levels resulted in trivial energy savings and the higher efficiency levels showed a large portion of consumers experiencing a net cost in the LCC analysis. (NAMA, No. 14 at p. 15) DOE acknowledges the comment from NAMA and will consider total energy savings and the portion of consumers experiencing net cost when proposing new energy efficiency standards. In response to the April 2022 Preliminary Analysis, NAMA commented that it is only at low efficiency levels where consumers or business owners do not experience a net cost according to DOE’s analysis, and that energy savings at those levels are trivial and do not justify DOE setting new energy efficiency standards for BVMs. (NAMA, No. 14 at p. 15) DOE acknowledges the comment from NAMA and considers the percentage of customers that experience a net benefit ot net cost in addition to energy savings in the economic analysis to determine if the proposed rule is economically justified. 1. Equipment Cost To calculate consumer equipment 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 VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 and higher-efficiency equipment because DOE applies an incremental markup to the increase in MSP associated with higher-efficiency equipment. BVMs are made of many different components. DOE’s research indicates flat future prices for a majority of the components of BVMs. DOE included future price reductions for semiconductor and similar technologies. Semiconductor technology price learning applies to efficiency levels that include design options with higherefficiency evaporator and condenser fan motors (i.e., ECM and permanent magnet synchronous (PMS) motors). Price learning applies to a proportion of the motor cost representing the semiconductor technology. Some variable speed compressors have price learning. Therefore, DOE applied price learning to compressor components in BVM equipment at efficiency levels that included variable speed compressors. 2. Installation Cost Installation costs for BVMs are subsumed in the MSP and markup and not modeled as an incremental cost. DOE found no evidence that installation costs would be impacted with increased efficiency levels. 3. Annual Energy Consumption For each sampled consumer, DOE determined the energy consumption for a BVM at different efficiency levels using the approach described previously in section IV.E of this document. 4. Energy Prices DOE derived electricity prices from the EIA energy price data by sector and by state(EIA Form 861) for average electricity price data for the commercial and industrial sectors. DOE used projections of these electricity prices for commercial and industrial consumers to estimate future energy prices in the LCC and PBP analyses. EIA’s AEO2022 was used as the source of projections for future electricity prices. DOE developed 2021 commercial and industrial retail electricity prices for each state and the District of Columbia based on EIA Form 861. To estimate energy prices in future years, DOE multiplied the 2021 energy prices by the projection of annual average price changes for each of the nine census divisions from the Reference case in AEO2022, which has an end year of 2050.38 To estimate price trends after 2050, the 2041–2050 average was used 38 EIA. Annual Energy Outlook 2022 with Projections to 2050. Washington, DC. Available at www.eia.gov/forecasts/aeo/ (last accessed February 2023). PO 00000 Frm 00024 Fmt 4701 Sfmt 4702 for all years DOE used EIA’s 2018 Commercial Building Energy Consumption Survey 39 (CBECS 2018) to determine the difference in commercial energy prices by building type. DOE applied the ratio of a specific building type’s electricity prices to average commercial electricity prices in the LCC and PBP analyses. DOE’s methodology allows electricity prices to vary by sector, state, region, and building type. In the analysis, variability in electricity prices is chosen to be consistent with the way the consumer economic and energy use characteristics are defined in the LCC analysis. Chapter 8 of the NOPR TSD provides more detail about DOE’s approach to developing energy prices and price trends. 5. Maintenance and Repair Costs Repair costs are associated with repairing or replacing equipment components that have failed in an appliance; maintenance costs are associated with maintaining the operation of the product. Typically, small incremental increases in equipment efficiency entail no, or only minor, changes in repair and maintenance costs compared to baseline efficiency equipment. The repair cost is the cost to the consumer for replacing or repairing BVM components that have failed. For the LCC analysis, repair costs also include refurbishment costs and the cost of replacing BVM components routinely within the lifetime of a BVM. The LCC analysis models compressors, evaporator fan motors and condenser fan motors being repaired or replaced twice in the lifetime of the BVM. The maintenance cost is the cost to the consumer of maintaining equipment operation. Chapter 8 of the NOPR TSD provides more detail about DOE’s maintenance, repair, and refurbishment cost calculations. DOE request comments on the frequency and nature of compressor and motor repairs or replacements in BVMs. 6. Equipment Lifetime For BVMs, DOE used information from various literature sources and input from manufacturers and other interested parties to establish equipment lifetimes for use in the LCC and PBP analyses. This analysis assumes an average lifetime of 13.4 years based on refurbishments of major components occurring twice during the life of the equipment at an interval of 4.5 years. This estimate is based on a 2010 39 www.eia.gov/consumption/commercial/. E:\FR\FM\25MYP2.SGM 25MYP2 33991 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules ENERGY STAR webinar,40 which reported average lifetimes of 12 to 15 years, and data on the distribution of equipment ages in the stock of BVMs in the Pacific Northwest from the Northwest Power and Conservation Council 2007 Regional Technical Forum 41 (RTF), which observed the age of the units in service to be approximately 8 years on average. In response to the April 2022 Preliminary Analysis, NAMA commented that DOE should develop a model showing what impact increasing the retail price of a new BVM has on purchasing refurbished machines and delaying purchases of new machines. (NAMA, No. 14 at p. 13) NAMA pointed out that any sale of a refurbished machine reduces the sales of a new machine designed to the new energy standards, thus increasing the amount of time that the overall impact on the net change to U.S. energy consumption of the United States by vending machines would occur. Id. DOE acknowledges this comment and uses the data available to determine the lifetime assumptions of BVMs in the LCC and PBP analyses. DOE models two refurbishment processes, each adding to the average lifetime of equipment. DOE does not have data available to support how higher MSPs would impact the lifetime of BVMs. DOE uses the latest industry report to determine shipments and amount of annual shipments and sales of new BVMs. 7. Discount Rates The discount rate is the rate at which future expenditures are discounted to establish their present value. In the calculation of LCC, DOE determined the discount rate by estimating the cost of capital for purchasers of BVMs. Most purchasers use both debt and equity capital to fund investments. Therefore, for most purchasers, the discount rate is the weighted-average cost of debt and equity financing, or the weightedaverage cost of capital (WACC), less the expected inflation. To estimate the WACC of BVM purchasers, DOE used a sample of nearly 1,200 companies grouped to be representative of operators of each of the commercial business types (health care, lodging, foodservice, retail, education, food sales, and offices) drawn from a database of 6,177 U.S. companies presented on the Damodaran Online website. This database includes most of the publicly traded companies in the United States. The WACC approach for determining discount rates accounts for the current tax status of individual firms on an overall corporate basis. DOE did not evaluate the marginal effects of increased costs, and, thus, depreciation due to more expensive equipment, on the overall tax status. DOE used the final sample of companies to represent purchasers of BVMs. For each company in the sample, DOE combined company-specific information from the Damodaran Online website, long-term returns on the Standard & Poor’s 500 stock market index from the Damodaran Online website, nominal long-term Federal government bond rates, and long-term inflation to estimate a WACC for each firm in the sample. For most educational buildings and a portion of the office buildings and cafeterias occupied and/or operated by public schools, universities, and State and local government agencies, DOE estimated the cost of capital based on a 40-year geometric mean of an index of long-term tax-exempt municipal bonds (≤20 years). Federal office space was assumed to use the Federal bond rate, derived as the 40-year geometric average of long-term (≤10 years) U.S. government securities. 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). To estimate the energy efficiency distribution of BVMs for 2028, DOE relied on publicly available energy use data. Specifically, the market efficiency distribution was determined separately for each equipment class for which certification information was available in the DOE certification 42 and ENERGY STAR databases.43 The estimated market shares for the no-new-standards case for BVMs are shown in Table IV.6. See chapter 8 of the NOPR TSD for further information on the derivation of the efficiency distributions. TABLE IV.6—EFFICIENCY LEVEL DISTRIBUTION WITHIN EACH EQUIPMENT CLASS IN NO-NEW-STANDARDS CASE FOR BEVERAGE VENDING MACHINES Efficiency level Equipment class 0 (%) lotter on DSK11XQN23PROD with PROPOSALS2 Class A .............................................................................................................................. Class B .............................................................................................................................. Combo A ........................................................................................................................... Combo B ........................................................................................................................... 67 44 47 100 1 (%) 17 44 6 0 2 (%) 3 (%) 0 0 0 0 11 11 24 0 4 (%) 0 0 18 0 5 (%) 6 (%) 0 0 0 0 7 (%) 0 0 6 0 6 0 0 0 The LCC Monte Carlo simulations draw from the efficiency distributions and randomly assign an efficiency to the BVMs purchased by each sample household in the no-new-standards case. The resulting percent shares within the sample match the market shares in the efficiency distributions. DOE understands that, in most cases, the purchasers of BVMs (a bottler or a vending services company) do not pay the energy costs for operation and thus will not directly reap any energy cost savings from more efficient equipment. However, DOE assumes that BVM owners will seek to pass on higher equipment costs to the users who pay the energy costs, if possible. DOE 40 EPA. ‘‘Always Count Your Change, How ENERGY STAR Refrigerated Vending Machines Save Your Facility Money and Energy.’’ 2010. www.energystar.gov/ia/products/vending_ machines/Vending_Machine_Webinar_ Transcript.pdf. 41 Haeri, H., D. Bruchs, D. Korn, S. Shaw, J. Schott. Characterization and Energy Efficiency Opportunities in Vending Machines for the Northwestern US Market. Prepared for Northwest Power and Conservation Council Regional Technical Forum by Quantec, LLC and The Cadmus Group, Inc. Portland, OR. July 24, 2007. 42 See www.regulations.doe.gov/ccms. 43 See www.energystar.gov/productfinder/ product/certified-vending-machines/results. VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 9. Split Incentives PO 00000 Frm 00025 Fmt 4701 Sfmt 4702 E:\FR\FM\25MYP2.SGM 25MYP2 33992 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules lotter on DSK11XQN23PROD with PROPOSALS2 understands that the BVM owner typically has a financial arrangement with the company or institution on whose premises the BVM is located, in which the latter may pay a fee or receive a share of the revenue from the BVM. Thus, DOE expects that BVM owners could modify the arrangement to effectively pass on higher equipment costs. Therefore, DOE’s LCC and PBP analyses uses the perspective that the company or institution on whose premises the BVM is located pays the higher equipment cost and receives the energy cost savings. In response to the April 2022 Preliminary Analysis, NAMA commented that the purchaser of a refrigerated vending machine is typically not the company who will utilize the machine, and that the market explanation given in the April 2022 Preliminary Analysis TSD does not reflect this. (NAMA, No. 14 at p. 7) DOE acknowledges the comment and agrees with NAMA that the purchaser of a BVM is not typically the same entity that utilizes the BVM and receives energy savings. DOE assumes in the LCC analysis that the increased purchase costs of higher-efficiency equipment is passed on to the entity that utilizes the BVM. The perspective of the LCC and PBP analyses is that the entity that utilizes the BVM effectively pays the higher equipment costs and receives the reduction in energy expenses. cost to the consumer of purchasing equipment 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. 10. Payback Period Analysis The PBP is the amount of time (expressed in years) it takes the consumer to recover the additional installed cost of more efficient products, compared to baseline products, through energy cost savings. 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. DOE refers to this as a ‘‘simple PBP’’ because it does not consider changes over time in operating cost savings. The PBP calculation uses the same inputs as the LCC analysis when deriving first-year operating costs. As noted previously, EPCA establishes a rebuttable presumption that a standard is economically justified if the Secretary finds that the additional 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.44 The shipments model takes an accounting approach, tracking market shares of each equipment 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. In the BVM NOPR analysis, DOE modeled shipments of BVMs based on data from Vending Times State of the Industry Reports.45 The industry reports BVM stock trends that were averaged and used to model annual shipments. Chapter 9 of the NOPR TSD includes more details on the BVM shipments analysis. NAMA stated that DOE should consider the impact of major supply chain issues, disruptions, and shortages from the past 24 months as part of the impact of new energy efficiency standard levels. (NAMA, No. 14 at p. 10) In response to the April 2022 Preliminary Analysis, NAMA commented that although they were unable to do a detailed analysis of the percentage of Class A, Class B, Class Combo A, and Class Combo B BVMs against the models, they believe that the percentage of Class A and Class Combo A are under-represented by the DOE assumption. (NAMA, No. 14 at p. 6) DOE recognizes that the industry has been disrupted in recent years; 44 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. 45 Annual Report: State of the Industry 2021 cdn.baseplatform.io/files/base/cygnus/vmw/ document/2022/06/autm_SOI_ NoAds.62b3896290401.pdf. VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 PO 00000 Frm 00026 Fmt 4701 Sfmt 4702 therefore, DOE’s shipment analysis uses data from recent industry reports that reflect the 2020 and 2021 BVM industry and the changes from years prior to 2020. 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.46 (‘‘Consumer’’ in this context refers to consumers of the equipment being regulated.) DOE calculates the NES and NPV for the potential standard levels considered based on projections of annual equipment 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, equipment costs, and NPV of consumer benefits over the lifetime of BVMs sold from 2028 through 2057. 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 equipment 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 equipment 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 equipment with efficiencies greater than the standard. DOE uses a spreadsheet model to calculate the energy savings and the national consumer costs and savings from each TSL. Interested parties can review DOE’s analyses by changing various input quantities within the spreadsheet. The NIA spreadsheet model uses typical values (as opposed to probability distributions) as inputs. Table IV.7 summarizes the inputs and methods DOE used for the NIA analysis for the NOPR and discussion of these inputs and methods follows. See chapter 10 of the NOPR TSD for further details. 46 The NIA accounts for impacts in the 50 states and U.S. territories. E:\FR\FM\25MYP2.SGM 25MYP2 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules 33993 TABLE IV.7—SUMMARY OF INPUTS AND METHODS FOR THE NATIONAL IMPACT ANALYSIS Inputs Method Shipments ................................................................................................. Compliance Date of Standard .................................................................. Efficiency Trends ...................................................................................... Annual shipments from shipments model. 2028. No-new-standards case: Standards cases: Annual weighted-average values are a function of energy use at each TSL. Annual weighted-average values are a function of cost at each TSL. Incorporates projection of future equipment prices based on historical data. Annual weighted-average values as a function of the annual energy consumption per unit and energy prices. Annual values from the LCC analysis that increase with efficiency levels. AEO2022 projections (to 2050) and extrapolation thereafter. A time-series conversion factor based on AEO2022. 3 percent and 7 percent. 2022. Annual Energy Consumption per Unit ...................................................... 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 ............................................................................................. lotter on DSK11XQN23PROD 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 shipmentweighted-average efficiency) for each of the considered equipment classes for the year of anticipated compliance with an amended or new standard. To project the trend in efficiency absent amended standards for BVMs over the entire shipments projection period, DOE assumed that the efficiency distribution will remain the same in future years due to lack of information available to inform a different trend. The approach is further described in chapter 10 of the NOPR TSD. To develop standards case efficiency trends after 2028, DOE applied a ‘‘rollup’’ scenario approach to establish the efficiency distribution for the compliance year. Under the ‘‘roll-up’’ scenario, DOE assumed that (1) equipment efficiencies in the no-newstandards case that do not meet the standard level under consideration will ‘‘roll-up’’ to meet the new standard level, and (2) equipment efficiencies above the standard level under consideration will not be affected. 2. National Energy Savings The national energy savings analysis involves a comparison of national energy consumption of the considered equipment 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 VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 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 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 AEO2022. Cumulative energy savings are the sum of the NES for each year over the timeframe of the analysis. 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 GHGs 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 47 that EIA uses to prepare its AEO. The FFC factors incorporate losses 47 For more information on NEMS, refer to The National Energy Modeling System: An Overview 2009, DOE/EIA–0581(2009), October 2009. Available at https://www.eia.gov/outlooks/aeo/ nems/overview/pdf/0581(2009).pdf (last accessed February 2023). PO 00000 Frm 00027 Fmt 4701 Sfmt 4702 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 10D of the NOPR TSD. In response to the April 2022 Preliminary Analysis, NAMA commented that they believe the national energy savings estimated by DOE as 0.152 quads for CSL 6 are in fact the FFC savings, and that DOE should not be advertising a savings of 0.152 when the data show less. (NAMA, No. 14 at p. 15) DOE acknowledges the comment and understands that FFC savings will be higher than primary savings. Both primary and FFC savings are reported in section V.B.3 of this document. 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-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 BVM price trends based on historical PPI data. DOE applied the same trends to project prices for each product class at each considered efficiency level. PPI data was deflated using implicit GDP E:\FR\FM\25MYP2.SGM 25MYP2 lotter on DSK11XQN23PROD with PROPOSALS2 33994 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules deflators and found to be constant on average. Although prices for overall BVM equipment were found to be constant, DOE developed component price trends for certain design options using historical PPI data for semiconductors and related devices. Efficiency levels that include ECM and PMS motors, and variable speed compressors have price learning applied to the appropriate portion of the MSP. DOE found that prices for semiconductor related components decreased by 5.88 percent annually. DOE’s projection of equipment prices is described in chapter 10 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 BVMs. In addition to the default price trend, DOE considered two product price sensitivity cases: (1) a high price decline case based on PPI data up to 2005 and (2) a low price decline case based on PPI data from 2005 onward. The derivation of these price trends are described in chapter 8 of the NOPR TSD. The energy cost savings are calculated using the estimated electricity savings in each year and the projected price of electricity. To estimate energy prices in future years, DOE multiplied the average regional energy prices by the projection of annual national-average energy price changes in the AEO2022 Reference case, which has an end year of 2050. To estimate price trends after 2050, the 2035–2050 average was used for all years. As part of the NIA, DOE also analyzed scenarios that used inputs from variants of the AEO2022 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 10B 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.48 The discount rates 48 United States Office of Management and Budget. Circular A–4: Regulatory Analysis. September 17, 2003. Section E. Available at georgewbush-whitehouse.archives.gov/omb/ VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 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 identified manufacturing facilities that purchase their own BVMs as a relevant subgroup. These facilities typically have higher discount rates and lower electricity prices than the general population of BVM consumers. These two conditions make it likely that this subgroup will have the lowest LCC savings of any major consumer subgroup. DOE used the LCC and PBP spreadsheet model to estimate the impacts of the considered efficiency levels on this subgroup. Chapter 11 in the NOPR TSD describes the consumer subgroup analysis. J. Manufacturer Impact Analysis 1. Overview DOE performed an MIA to estimate the financial impacts of amended energy conservation standards on manufacturers of BVMs and to estimate the potential impacts of such standards on employment and manufacturing capacity. The MIA has both quantitative and qualitative aspects and includes analyses of 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 memoranda/m03-21.html (last accessed February 2023). PO 00000 Frm 00028 Fmt 4701 Sfmt 4702 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 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 WACC, 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-newstandards case and the various standards cases (TSLs). To capture the uncertainty relating to manufacturer pricing strategies following amended standards, the GRIM estimates a range of possible impacts under different markup scenarios. The qualitative part of the MIA addresses manufacturer characteristics and market trends. Specifically, the MIA considers such factors as a potential standard’s impact on manufacturing capacity, competition within the industry, the cumulative impact of other DOE and non-DOE regulations, and impacts on manufacturer subgroups. The complete MIA is outlined in chapter 12 of the NOPR TSD. DOE conducted the MIA for this rulemaking in three phases. In Phase 1 of the MIA, DOE prepared a profile of the BVM manufacturing industry based on the market and technology assessment, preliminary manufacturer interviews, and publicly available information. This included a top-down analysis of BVM 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 BVM manufacturing industry, including company filings of form 10–K from the SEC,49 corporate annual reports, the 49 U.S. Securities and Exchange Commission. Company Filings. Available at https://www.sec.gov/ edgar/searchedgar/companysearch.html. E:\FR\FM\25MYP2.SGM 25MYP2 lotter on DSK11XQN23PROD with PROPOSALS2 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules U.S. Census Bureau’s Economic Census,50 and reports from Dunn & Bradstreet.51 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 BVMs 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 subgroup impacts. 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. 50 The U.S. Census Bureau. Quarterly Survey of Plant Capacity Utilization. Available at www.census.gov/programs-surveys/qpc/data/ tables.html. 51 The Dun & Bradstreet Hoovers login is available at app.dnbhoovers.com. VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 The small business subgroup is discussed in section VI.B of this document 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, markups, shipments, and industry financial 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 base year of the analysis) and continuing to 2057. DOE calculated INPVs by summing the stream of annual discounted cash flows during this period. For manufacturers of BVMs, DOE used a real discount rate of 8.5 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 information gathered from industry stakeholders during the course of manufacturer interviews. The GRIM results are presented in section V.B.2 of this document. 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. As discussed in section IV.C.1 of this document, DOE conducted a market analysis of currently available models listed in DOE’s CCD to determine which PO 00000 Frm 00029 Fmt 4701 Sfmt 4702 33995 efficiency levels were most representative of the current distribution of BVMs available on the market. DOE determined MPCs using teardowns and feedback received from manufacturers during interviews. See chapter 5 of the NOPR TSD for additional details. DOE seeks comment on the method for estimating manufacturing production costs. See section VII.E of this document for a list of issues on which DOE seeks comment. 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 base year) to 2057 (the end year of the analysis period). See chapter 9 of the NOPR TSD for additional details. 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. To evaluate the level of conversion costs manufacturers would likely incur to comply with amended energy conservation standards, DOE relied on estimates of equipment and tooling from feedback from manufacturer interviews. DOE contractors reached out to all five of the original equipment manufacturers (OEMs) identified in the CCD database, two of which agreed to be interviewed. These two OEMs are manufacturers of Class A, Class B, Combo A, and Combo B equipment. DOE used market share weighted feedback from the interviews E:\FR\FM\25MYP2.SGM 25MYP2 33996 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules lotter on DSK11XQN23PROD with PROPOSALS2 to extrapolate industry-level product conversion costs from the manufacturer feedback. Feedback from manufacturers on capital and product conversion costs allowed DOE to create industry estimates, scaled by market share and model count, in order to model the incremental investment required at different efficiency levels. 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 non-production cost 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 markup 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 markup scenario and (2) a preservation of per-unit operating profit markup scenario. These scenarios lead to different 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’’ markup 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 estimated gross margin percentages of 22 percent for Class A, 17 percent for Class B, 36 percent for Combo A, and 36 percent for Combo B. Manufacturers tend to believe it is optimistic to assume that they would be able to maintain the same gross margin VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 percentage as their production costs increase, particularly for minimally efficient products. Therefore, this scenario represents a high bound to industry profitability under an amended energy conservation standard. Under the preservation of per-unit operating profit markup scenario, DOE modeled a situation in which manufacturers are not able to increase per-unit operating profit in proportion to increases in manufacturer production costs. 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 no-new-standards 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 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. A comparison of industry financial impacts under the two manufacturer markup scenarios is presented in section V.B.2.a of this document. A comparison of industry financial impacts under the two markup scenarios is presented in section V.B.2.a of this document. 3. Manufacturer Interviews DOE interviewed two of the five OEMs identified in the CCD. Participants included manufacturers of Class A, Class B, and Combo B BVMs. In interviews, DOE asked manufacturers to describe their major concerns regarding this proposed rulemaking. 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. Manufacturers raised concerns about the potentially high levels of investment necessary under updated standards, citing high conversion costs associated with increased insulation thickness and VIPs. In particular, these changes would necessitate large investments in tooling and product redesign. Manufacturers also cited concern regarding cost of the potential PO 00000 Frm 00030 Fmt 4701 Sfmt 4702 concurrent refrigerant transition outlined in the recent EPA rulemaking. This transition will require manufacturers to make investments independent of amended DOE standards. Manufacturers also raised concern over the feasibility of further efficiency improvements, citing the incorporation of many DOE design options into baseline equipment. As an example, some of the design options included in the preliminary analysis are already incorporated in baseline models, such as evaporator fan motor controllers and high-efficiency lighting. 4. Discussion of MIA Comments In response to the April 2022 Preliminary Analysis, NAMA commented that the 6-year ‘‘lock-in’’ provision in the statutory structure is designed to give manufacturers time to generate sufficient cash flow to recoup any necessary investments and financial costs/returns, and that when there are multiple regulations on the same product within the 6-year lock-in period (such as refrigerant transition, a new test procedure on payment systems, and new energy efficiency regulations), the second regulation violates the recoupment assumption inherent in the first one. (NAMA, No. 14 at p. 16–17) EPCA 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)) Although DOE considers cumulative regulatory burden in its analysis, DOE does not have the authority to delay review of its regulations in accordance with EPCA due to regulations issued by other Federal agencies. NAMA stated that the existing GRIM model does not consider this situation, and that it produces an increase in value from the early write-off of any past investment. Id. NAMA noted that the GRIM accelerates depreciation (a noncash item) due to the early write-off of past investment, by lowering tax cash costs, and that the simplest way to resolve this is to do a consolidated analysis for multiple regulations starting from the time of the first regulation. (NAMA, No. 14 at p. 17) NAMA added that although DOE has noted that such an analysis would require counting both the costs/investments and revenues/ profits for both products, this is correct and is a feature, not a deficiency. Id. NAMA commented that DOE should be E:\FR\FM\25MYP2.SGM 25MYP2 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules analyzing and assessing the change in combined industry value for these products, or for the same product multiple times. Id. NAMA stated that if this is not possible, then DOE should incorporate a value reduction factor in the first post-regulation year of the analysis that subtracts the value lost from the remaining years of the previous regulation. Id. NAMA also commented that it urged DOE to incorporate the financial results of the current Cumulative Regulatory Burden analysis directly into the MIA. (NAMA, No. 14 at p. 17) NAMA suggested doing this by adding the combined costs of complying with multiple regulations into the product conversion costs in the GRIM model. Id. NAMA commented that an appropriate approach would be to include the costs to manufacturers of responding to and monitoring regulations. Id. NAMA also made a range of comments related to the phase out of certain refrigerants under consideration by the EPA. DOE notes that the costs associated with the refrigerant transition are not a direct result of amended standards, however DOE has considered the implications of these transition costs in its analysis. DOE did not publish a GRIM in the preliminary analysis phase. However, DOE has published a GRIM as part of the NOPR analysis. In that GRIM DOE accounts for the investments manufacturers must make in order to adopt R–290 as a refrigerant for BVMs in 2025. DOE analyzes cumulative regulatory burden pursuant to the Process Rule. Pursuant to the Process Rule, DOE will recognize and consider the overlapping effects on manufacturers of new or revised DOE standards and other Federal regulatory actions affecting the same products or equipment. The results of this analysis can be found in section V.B.2.e of this document. lotter on DSK11XQN23PROD 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 GHGs, 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. VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 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 AEO2022. Power sector emissions of CH4 and N2O from fuel combustion are estimated using Emission Factors for Greenhouse Gas Inventories published by the EPA.52 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 national impact analysis. 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. AEO2022 generally represents current legislation and environmental regulations, including recent government actions, that were in place at the time of preparation of AEO2022, including the emissions control programs discussed in the following paragraphs.53 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 52 Available at www.epa.gov/sites/production/ files/2021-04/documents/emission-factors_ apr2021.pdf. Last accessed July 12, 2021. 53 For further information, see the Assumptions to AEO2022 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 February 15, 2023). PO 00000 Frm 00031 Fmt 4701 Sfmt 4702 33997 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, 2015.54 AEO2022 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 nonHAP acid gas) as an alternative equivalent surrogate standard for acid gas HAP. The same controls are used to reduce HAP and non-HAP acid gas; thus, SO2 emissions 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 54 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). E:\FR\FM\25MYP2.SGM 25MYP2 33998 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules lotter on DSK11XQN23PROD with PROPOSALS2 generation would generally reduce SO2 emissions. DOE estimated SO2 emissions reduction using emissions factors based on AEO2022. 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 a case, NOX emissions would remain near 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 AEO2022 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 AEO2022, 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 (E.O.) 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. To monetize the benefits of reducing GHG emissions, this analysis uses the VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 interim estimates presented in the Technical Support Document: Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates Under Executive Order 13990 published in February 2021 by the IWG. 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 SC–GHGs. That is, SC–GHGs, whether measured using the February 2021 interim estimates presented by the IWG or by another means, did not affect the rule ultimately proposed by DOE. DOE estimated the global social benefits of CO2, CH4, and N2O reductions using SC–GHG values that were based on the interim values presented in the Technical Support Document: 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 1 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 PO 00000 Frm 00032 Fmt 4701 Sfmt 4702 agrees that the interim SC–GHG estimates represent the most appropriate estimate of the SC–GHGs until revised estimates have been developed reflecting the latest, peer-reviewed science. The SC–GHG estimates presented here were developed over many years, using a transparent process, peerreviewed methodologies, the best science available at the time of that process, and input from the public. Specifically, in 2009, the IWG, which included 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.55 and underwent a standard doubleblind peer review process prior to journal publication. In 2015, as part of the response to public comments received for 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 updates to ensure that the estimates continue to reflect the best available science and methodologies. In January 2017, the National Academies released 55 Marten, A.L., E.A. Kopits, C.W. Griffiths, S.C. Newbold, and A. Wolverton. Incremental CH4 and N2O mitigation benefits consistent with the US Government’s SC–CO2 estimates. Climate Policy. 2015. 15(2): pp. 272–298. E:\FR\FM\25MYP2.SGM 25MYP2 lotter on DSK11XQN23PROD with PROPOSALS2 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules 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.56 Shortly thereafter, in March 2017, President Trump issued E.O. 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.’’ (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. 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 GHGs 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 Executive order 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 Executive order 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– 56 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 18:42 May 24, 2023 Jkt 259001 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 United States 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; 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 United States 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 PO 00000 Frm 00033 Fmt 4701 Sfmt 4702 33999 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,57 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 pertaining to this issue. DOE also notes that while OMB Circular A–4, as published in 2003, recommends using 3-percent and 7-percent discount rates as ‘‘default’’ values, Circular A–4 also reminds agencies that ‘‘different 57 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 April 15, 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 April 15, 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 January 18, 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 January 18, 2022.) www.epa.gov/sites/default/files/2016-12/ documents/addendum_to_sc-ghg_tsd_august_ 2016.pdf. E:\FR\FM\25MYP2.SGM 25MYP2 lotter on DSK11XQN23PROD with PROPOSALS2 34000 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules 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-percent discount rate is not appropriate to apply to value the SC–GHGs in the analysis presented 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 the above 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 VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 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 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 were 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.58 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 58 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 www.whitehouse.gov/briefing-room/ blog/2021/02/26/a-return-to-science-evidencebased-estimates-of-the-benefits-of-reducing-climatepollution/. PO 00000 Frm 00034 Fmt 4701 Sfmt 4702 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 integrated assessment models, 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 proposed rule likely underestimate the damages from GHG emissions. DOE concurs with this assessment. DOE’s derivations of the 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 V.B.6 of this document. a. Social Cost of Carbon The SC–CO2 values used for this NOPR were based on the values presented for the IWG’s February 2021 TSD. Table IV.7 shows the updated sets of SC–CO2 estimates from the IWG’s TSD in 5-year increments from 2020 to 2050. The full set of annual values that DOE used is presented in appendix 14A of the NOPR TSD. For purposes of capturing the uncertainties involved in the regulatory impact analysis, DOE has determined it is appropriate to include all four sets of SC–CO2 values, as recommended by the IWG.59 59 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. E:\FR\FM\25MYP2.SGM 25MYP2 34001 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules TABLE IV.8—ANNUAL SC–CO2 VALUES FROM 2021 INTERAGENCY UPDATE, 2020–2050 [2021$ per metric ton CO2] Discount rate and statistic Year 5% Average 2020 2025 2030 2035 2040 2045 2050 ................................................................................................................. ................................................................................................................. ................................................................................................................. ................................................................................................................. ................................................................................................................. ................................................................................................................. ................................................................................................................. For 2051 to 2070, DOE used SC–CO2 estimates published by EPA, adjusted to 2021$.60 These estimates are based on methods, assumptions, and parameters identical to the 2020–2050 estimates published by the IWG (which were based on EPA modeling). DOE multiplied the CO2 emissions reduction estimated for each year by the SC–CO2 value for that year in each of the four cases. DOE adjusted the values to 2021$ using the implicit price deflator for GDP from the Bureau of 3% Average 14 17 19 22 25 28 32 2.5% Average 51 56 62 67 73 79 85 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 based on the values developed for the February 2021 TSD. Table IV.8 shows the updated sets of 3% 95th percentile 76 83 89 96 103 110 116 152 169 187 206 225 242 260 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 14A of the NOPR TSD. To capture the uncertainties involved in the 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.9—ANNUAL SC–CH4 AND SC–N2O VALUES FROM 2021 INTERAGENCY UPDATE, 2020–2050 [2021$ per metric ton] SC–CH4 Discount rate and statistic Year 5% Average 2020 2025 2030 2035 2040 2045 2050 .................................. .................................. .................................. .................................. .................................. .................................. .................................. 3% Average 670 800 940 1,100 1,300 1,500 1,700 2.5% Average 1,500 1,700 2,000 2,200 2,500 2,800 3,100 2,000 2,200 2,500 2,800 3,100 3,500 3,800 Discount rate and statistic 3% 95th Percentile 5% Average 3,900 4,500 5,200 6,000 6,700 7,500 8,200 3% Average 5,800 6,800 7,800 9,000 10,000 12,000 13,000 18,000 21,000 23,000 25,000 28,000 30,000 33,000 2.5% Average 27,000 30,000 33,000 36,000 39,000 42,000 45,000 3% 95th Percentile 48,000 54,000 60,000 67,000 74,000 81,000 88,000 average national values for NOX and SO2 as a function of sector (see appendix 14B of the NOPR TSD). DOE multiplied the site emissions reduction (in tons) in each year by the associated $/ton values, and then discounted each series using discount rates of 3 percent and 7 percent, as appropriate. For the NOPR, DOE estimated the monetized value of NOX and SO2 emissions reductions from electricity generation using the latest benefit per ton estimates for that sector from the EPA’s Benefits Mapping and Analysis Program.61 DOE used EPA’s values for PM2.5-related benefits associated with NOX and SO2 and for ozone-related benefits associated with NOX for 2025, 2030, and 2040, calculated with discount rates of 3 percent and 7 percent. DOE used linear interpolation to define values for the years not given in the 2025 to 2040 period; for years beyond 2040, the values are held constant. DOE combined the EPA benefit per ton estimates with regional information on electricity consumption and emissions to define weighted- 60 See EPA, Revised 2023 and Later Model Year Light-Duty Vehicle GHG Emissions Standards: Regulatory Impact Analysis, Washington, DC, December 2021. Available at: nepis.epa.gov/Exe/ ZyPDF.cgi?Dockey=P1013ORN.pdf (last accessed January 13, 2023). 61 Estimating the Benefit per Ton of Reducing PM2.5 Precursors from 21 Sectors. www.epa.gov/ benmap/estimating-benefit-ton-reducing-pm25precursors-21-sectors. DOE multiplied the CH4 and N2O emissions reduction estimated for each year by the SC–CH4 and SC–N2O estimates for that year in each of the cases. DOE adjusted the values to 2021$ using the implicit price deflator for 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. lotter on DSK11XQN23PROD with PROPOSALS2 SC–N2O 2. Monetization of Other Emissions Impacts VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 PO 00000 Frm 00035 Fmt 4701 Sfmt 4702 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 AEO2022. NEMS produces the AEO E:\FR\FM\25MYP2.SGM 25MYP2 34002 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules are reduced. For more details on the employment impact analysis, see chapter 16 of the NOPR TSD. 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 equipment subject to standards, their suppliers, and related service firms. The MIA addresses those impacts. Indirect employment impacts are changes in national employment that occur due to the shift in expenditures and capital investment caused by the purchase and operation of more efficient appliances. Indirect employment impacts from standards consist of the net jobs created or eliminated in the national economy, other than in the manufacturing sector being regulated, caused by (1) reduced spending by 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 the Labor Department’s Bureau of Labor Statistics (BLS). BLS regularly publishes its estimates of the number of jobs per million dollars of economic activity in different sectors of the economy, as well as the jobs created elsewhere in the economy by this same economic activity. Data from BLS indicate that expenditures in the utility sector generally create fewer jobs (both directly and indirectly) than expenditures in other sectors of the economy.62 There are many reasons for these differences, including wage differences and the fact that the utility sector is more capital-intensive and less labor-intensive than other sectors. Energy conservation standards have the effect of reducing consumer utility bills. Because reduced consumer expenditures for energy likely lead to increased expenditures in other sectors of the economy, the general effect of efficiency standards is to shift economic activity from a less labor-intensive sector (i.e., the utility sector) to more labor-intensive sectors (e.g., the retail and service sectors). Thus, the BLS data suggest that net national employment may increase due to shifts in economic activity resulting from energy conservation standards. DOE estimated indirect national employment impacts for the standard levels considered in this NOPR using an input/output model of the U.S. economy called Impact of Sector Energy Technologies (ImSET).63 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 that has 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 there are uncertainties involved in projecting long-term 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 overestimate actual job impacts over the long run for this rule. Therefore, DOE used ImSET only to generate results for near-term timeframes, where these uncertainties 62 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 https:// www.bea.gov/sites/default/files/methodologies/ RIMSII_User_Guide.pdf (last accessed February 2023). 63 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. lotter on DSK11XQN23PROD with PROPOSALS2 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 AEO2022 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. VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 PO 00000 Frm 00036 Fmt 4701 Sfmt 4702 V. Analytical Results and Conclusions The following section addresses the results from DOE’s analyses with respect to the considered energy conservation standards for BVMs. It addresses the TSLs examined by DOE, the projected impacts of each of these levels if adopted as energy conservation standards for BVMs, 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 equipment 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 BVMs. DOE developed TSLs that combine efficiency levels for each analyzed equipment class. Table V.1 presents the TSLs and the corresponding efficiency levels that DOE has identified for potential amended energy conservation standards for BVMs. TSL 5 represents the maxtech energy efficiency for all equipment classes. TSL 4 represents the efficiency levels with the maximum NPV at 3 percent. TSL 3 represents the maximum efficiency level with positive NPV at 7 percent and positive average LCC savings for each equipment class. As shown in Table V.1, TSL 3 includes higher efficiency products for Class B, Combo A, and Combo B than TSL 4. The TSL ordering is based on total NES, which is greater in TSL 4 due to Class A representing over half of BVM shipments. TSL 2 represents efficiency levels with maximum LCC savings. TSL 1 represents EL2 for all equipment classes. DOE presents the results for the TSLs in this document, while the results for all efficiency levels that DOE analyzed are in the NOPR TSD. E:\FR\FM\25MYP2.SGM 25MYP2 34003 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules TABLE V.1—TRIAL STANDARD LEVELS FOR BEVERAGE VENDING MACHINES Equipment class TSL 1 Class A ................................................................................. Class B ................................................................................. Combo A .............................................................................. Combo B .............................................................................. Table V.2 presents the TSLs and the corresponding percent reduction below TSL 2 EL2 EL2 EL2 EL2 TSL 3 EL3 EL3 EL3 EL4 TSL 4 EL5 EL5 EL5 EL6 TSL 5 EL6 EL4 EL4 EL5 EL EL EL EL 7 7 7 7 the baseline daily energy consumption for each equipment class. TABLE V.2—TRIAL STANDARD LEVELS FOR BEVERAGE VENDING MACHINES TSL 1 (%) Equipment class Class A .................................................................................................... Class B .................................................................................................... Combo A .................................................................................................. Combo B .................................................................................................. DOE constructed the TSLs for this NOPR to include efficiency levels representative of efficiency levels with similar characteristics (i.e., using similar technologies and/or efficiencies, and having roughly comparable equipment availability). The use of representative efficiency levels provided for greater distinction between the TSLs. While representative efficiency levels were included in the TSLs, DOE considered all efficiency levels as part of its analysis.64 B. Economic Justification and Energy Savings 1. Economic Impacts on Individual Consumers DOE analyzed the economic impacts on BVM consumers by looking at the effects that potential amended standards at each TSL would have on the LCC and PBP analyses. DOE also examined the impacts of potential standards on selected consumer subgroups. These TSL 2 (%) 15 25 20 25 TSL 3 (%) 20 30 25 40 analyses are discussed in the following sections. a. Life-Cycle Cost and Payback Period In general, higher-efficiency equipment affects consumers in two ways: (1) purchase price increases and (2) annual operating costs decrease. Inputs used for calculating the LCC and PBP include total installed costs (i.e., product price plus installation costs) and operating costs (i.e., annual energy use, energy prices, energy price trends, repair costs, and maintenance costs). The LCC calculation also uses product lifetime and a discount rate. Chapter 8 of the NOPR TSD provides detailed information on the LCC and PBP analyses. Table V.3 shows LCC and PBP results by TSL including the shipment weighted average results for each TSL. Table V.4 through Table V.11 show the LCC and PBP results for the TSLs considered for each equipment class. In the first of each pair of tables, the simple payback is measured relative to TSL 4 (%) 30 40 35 50 TSL 5 (%) 37 35 30 45 47.6 59.6 48.9 62.9 the baseline equipment. In the second table, impacts are measured relative to the efficiency distribution in the nonew-standards case in the compliance year (see section IV.F.8 of this document). Because some consumers purchase equipment 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. The analysis results indicate that consumers either benefit or are unaffected by setting standards at TSLs 1 or 2. At TSL 3, 28 percent of the market would experience net costs and at TSL 4, 34 percent of the market for BVMs would experience a net cost. TABLE V.3—AVERAGE LCC SAVINGS RELATIVE TO THE NO-NEW-STANDARDS CASE FOR BEVERAGE VENDING MACHINES Consumers that experience net cost (%) Average LCC savings * (2021$) Equipment class lotter on DSK11XQN23PROD with PROPOSALS2 TSL 1 Class A .................................................................... Class B .................................................................... Combo A ................................................................. Combo B ................................................................. Weighted Average ** ............................................... $150 167 212 214 166 0 0 0 0 0 64 Efficiency levels that were analyzed for this NOPR are discussed in section IV.E of this VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 (6) 206 $203 212 263 326 222 TSL 3 0 0 0 0 0 $99 146 43 94 107 28 17 49 37 28 93 84 ........................ ........................ .............................. .............................. TSL 5 59 2 (695) (199) document. Results by efficiency level are presented in TSD chapters 8, 10, and 12. PO 00000 Frm 00037 Fmt 4701 Consumers that experience net cost (%) Average LCC savings * (2021$) TSL 2 TSL 4 Class A .................................................................... Class B .................................................................... Consumers that experience net cost (%) Average LCC savings * (2021$) Sfmt 4702 E:\FR\FM\25MYP2.SGM 25MYP2 34004 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules TABLE V.3—AVERAGE LCC SAVINGS RELATIVE TO THE NO-NEW-STANDARDS CASE FOR BEVERAGE VENDING MACHINES—Continued Average LCC savings * (2021$) Equipment class Combo A ................................................................. Combo B ................................................................. Weighted Average ** ............................................... Consumers that experience net cost (%) 190 287 97 Consumers that experience net cost (%) Average LCC savings * (2021$) 12 0 34 (851) (239) (532) 99 85 90 Average LCC savings * (2021$) Consumers that experience net cost (%) ........................ ........................ ........................ .............................. .............................. .............................. * LCC savings reflect affected consumers only. ** Weighted by shares of each equipment class in total projected shipments in 2028. TABLE V.4—AVERAGE LCC AND PBP RESULTS FOR BEVERAGE VENDING MACHINES CLASS A Average costs (2021$) TSL Efficiency level First year’s operating cost Installed cost 1 2 3 4 5 ........................ ........................ ........................ ........................ ........................ Baseline ............. 2 ........................ 3 ........................ 5 ........................ 6 ........................ 7 ........................ $3,970 3,979 3,987 4,118 4,228 5,034 Lifetime operating cost $495 477 471 458 450 437 Simple payback (years) LCC $5,621 5,440 5,379 5,328 5,322 5,206 $9,591 9,418 9,366 9,446 9,551 10,240 Average lifetime (years) .............................. 0.5 0.7 4.0 5.7 18.3 13.4 13.4 13.4 13.4 13.4 13.4 TABLE V.5—AVERAGE LCC SAVINGS RELATIVE TO THE NO-NEW-STANDARDS CASE FOR CLASS A Life-cycle cost savings TSL 1 2 3 4 5 Efficiency level ........................................................................................................................... ........................................................................................................................... ........................................................................................................................... ........................................................................................................................... ........................................................................................................................... Average LCC savings * (2021$) 2 3 5 6 7 Percent of consumers that experience net cost (%) $150 203 99 (6) (695) 0 0 28 59 93 * LCC savings reflect affected consumers only. TABLE V.6—AVERAGE LCC AND PBP RESULTS FOR BEVERAGE VENDING MACHINES CLASS B Average costs (2021$) Efficiency level TSL 1 2 3 4 5 ................................................................................................ ................................................................................................ ................................................................................................ ................................................................................................ ................................................................................................ First year’s operating cost Installed cost 0 2 3 5 4 7 $3,178 3,193 3,199 3,294 3,220 3,736 Lifetime operating cost $474 449 444 434 439 414 $5,412 5,160 5,109 5,058 5,071 4,960 LCC $8,590 8,353 8,308 8,351 8,292 8,696 Simple payback (years) .................... 0.6 0.7 2.8 1.2 9.2 Average lifetime (years) 13.4 13.4 13.4 13.4 13.4 13.4 TABLE V.7—AVERAGE LCC SAVINGS RELATIVE TO THE NO-NEW-STANDARDS CASE FOR BEVERAGE VENDING MACHINES CLASS B Life-cycle cost savings lotter on DSK11XQN23PROD with PROPOSALS2 TSL 1 2 3 4 5 Efficiency level ........................................................................................................................... ........................................................................................................................... ........................................................................................................................... ........................................................................................................................... ........................................................................................................................... Average LCC savings * (2021$) 2 3 5 4 7 $167 212 146 206 (199) * LCC savings reflect affected consumers only. VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 PO 00000 Frm 00038 Fmt 4701 Sfmt 4702 E:\FR\FM\25MYP2.SGM 25MYP2 Percent of consumers that experience net cost (%) 0 0 17 2 84 34005 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules TABLE V.8—AVERAGE LCC AND PBP RESULTS FOR BEVERAGE VENDING MACHINES COMBO A Average costs (2021$) Efficiency level TSL First year’s operating cost Installed cost 1 2 3 4 5 0 2 3 5 4 7 .................................................................... .................................................................... .................................................................... .................................................................... .................................................................... $3,990 3,998 4,005 4,145 4,037 5,097 Lifetime operating cost $489 466 460 448 454 432 Simple payback (years) LCC $5,551 5,321 5,264 5,224 5,223 5,175 $9,541 9,319 9,268 9,369 9,260 10,272 ........................ 0.4 0.5 3.8 1.4 19.5 Average lifetime (years) 13.4 13.4 13.4 13.4 13.4 13.4 TABLE V.9—AVERAGE LCC SAVINGS RELATIVE TO THE NO-NEW-STANDARDS CASE FOR BEVERAGE VENDING MACHINES COMBO A Life-cycle cost savings TSL 1 2 3 4 5 Efficiency level ........................................................................................................................... ........................................................................................................................... ........................................................................................................................... ........................................................................................................................... ........................................................................................................................... Average LCC savings * (2021$) 2 3 5 4 7 Percent of consumers that experience net cost (%) 212 263 43 190 (851) 0 0 49 12 99 * LCC savings reflect affected consumers only. TABLE V.10—AVERAGE LCC AND PBP RESULTS FOR BEVERAGE VENDING MACHINES COMBO B Average costs (2021$) Efficiency level TSL 1 2 3 4 5 ................................................................................................ ................................................................................................ ................................................................................................ ................................................................................................ ................................................................................................ First year’s operating cost Installed cost 0 2 4 6 5 7 $3,725 3,735 3,758 3,956 3,814 4,347 Lifetime operating cost $463 441 427 418 423 406 $5,297 5,073 4,939 4,972 4,921 4,914 LCC $9,023 8,809 8,697 8,928 8,736 9,261 Simple payback (years) .................... 0.4 0.9 5.1 2.2 10.9 Average lifetime (years) 13.4 13.4 13.4 13.4 13.4 13.4 TABLE V.11—AVERAGE LCC SAVINGS RELATIVE TO THE NO-NEW-STANDARDS CASE FOR BEVERAGE VENDING MACHINES COMBO B Life-cycle cost savings TSL 1 2 3 4 5 Efficiency level ........................................................................................................................... ........................................................................................................................... ........................................................................................................................... ........................................................................................................................... ........................................................................................................................... Average LCC savings * (2021$) 2 4 6 5 7 $214 326 94 287 (239) Percent of consumers that experience net cost (%) 0 0 37 0 85 * LCC savings reflect affected consumers only. lotter on DSK11XQN23PROD with PROPOSALS2 b. Consumer Subgroup Analysis In the consumer subgroup analysis, DOE estimated the impact of the considered TSLs on manufacturing facilities that purchase their own BVMs due to the lower electricity prices and higher discount rates compared to other BVM consumer building types. DOE VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 identified manufacturing facilities that purchase their own BVMs as a relevant subgroup because these facilities typically have higher discount rates and lower electricity prices than the general population of BVM consumers. These two conditions make it likely that this subgroup will have the lowest LCC savings of any major consumer PO 00000 Frm 00039 Fmt 4701 Sfmt 4702 subgroup. Table V.12 through Table V.15 compare the average LCC savings and PBP at each efficiency level for the consumer subgroup with similar metrics for the entire consumer sample for BVMs. Chapter 11 of the NOPR TSD presents the complete LCC and PBP results for the subgroup analysis. E:\FR\FM\25MYP2.SGM 25MYP2 34006 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules TABLE V.12—COMPARISON OF LCC SAVINGS AND PBP FOR CONSUMER SUBGROUPS AND ALL BUILDINGS; CLASS A Manufacturing Full building sample Average LCC Savings * (2021$) TSL TSL TSL TSL TSL 1 2 3 4 5 ........................................................................................................................................................... ........................................................................................................................................................... ........................................................................................................................................................... ........................................................................................................................................................... ........................................................................................................................................................... $105 141 15 (109) (834) $150 203 99 (6) (695) 0.6 0.9 5.2 7.4 23.7 0.5 0.7 4.0 5.7 18.3 84 84 41 14 0 84 84 67 36 2 0 0 53 81 94 0 0 28 59 93 Payback Period (years) TSL TSL TSL TSL TSL 1 2 3 4 5 ........................................................................................................................................................... ........................................................................................................................................................... ........................................................................................................................................................... ........................................................................................................................................................... ........................................................................................................................................................... Consumers With Net Benefit (%) TSL TSL TSL TSL TSL 1 2 3 4 5 ........................................................................................................................................................... ........................................................................................................................................................... ........................................................................................................................................................... ........................................................................................................................................................... ........................................................................................................................................................... Consumers With Net Cost (%) TSL TSL TSL TSL TSL 1 2 3 4 5 ........................................................................................................................................................... ........................................................................................................................................................... ........................................................................................................................................................... ........................................................................................................................................................... ........................................................................................................................................................... * The savings represent the average LCC for affected consumers. TABLE V.13—COMPARISON OF LCC SAVINGS AND PBP FOR CONSUMER SUBGROUPS AND ALL BUILDINGS; CLASS B Manufacturing Full building sample Average LCC Savings * (2021$) TSL TSL TSL TSL TSL 1 2 3 4 5 ........................................................................................................................................................... ........................................................................................................................................................... ........................................................................................................................................................... ........................................................................................................................................................... ........................................................................................................................................................... $117 147 63 135 (332) $167 212 146 206 (199) 0.8 0.9 3.7 1.5 11.9 0.6 0.7 2.8 1.2 9.2 89 89 69 93 6 89 89 83 98 16 0 0 31 7 94 0 0 17 2 84 Payback Period (years) TSL TSL TSL TSL TSL 1 2 3 4 5 ........................................................................................................................................................... ........................................................................................................................................................... ........................................................................................................................................................... ........................................................................................................................................................... ........................................................................................................................................................... Consumers With Net Benefit (%) lotter on DSK11XQN23PROD with PROPOSALS2 TSL TSL TSL TSL TSL 1 2 3 4 5 ........................................................................................................................................................... ........................................................................................................................................................... ........................................................................................................................................................... ........................................................................................................................................................... ........................................................................................................................................................... Consumers With Net Cost (%) TSL TSL TSL TSL TSL 1 2 3 4 5 ........................................................................................................................................................... ........................................................................................................................................................... ........................................................................................................................................................... ........................................................................................................................................................... ........................................................................................................................................................... * The savings represent the average LCC for affected consumers. VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 PO 00000 Frm 00040 Fmt 4701 Sfmt 4702 E:\FR\FM\25MYP2.SGM 25MYP2 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules 34007 TABLE V.14—COMPARISON OF LCC SAVINGS AND PBP FOR CONSUMER SUBGROUPS AND ALL BUILDINGS; COMBO A Manufacturing Full building sample Average LCC Savings * (2021$) TSL TSL TSL TSL TSL 1 2 3 4 5 ........................................................................................................................................................... ........................................................................................................................................................... ........................................................................................................................................................... ........................................................................................................................................................... ........................................................................................................................................................... $149 184 (25) 120 (953) $212 263 43 190 (851) 0.5 0.7 4.9 1.8 25.3 0.4 0.5 3.8 1.4 19.5 52 52 31 57 0 52 52 45 64 1 0 0 63 19 100 0 0 49 12 99 Payback Period (years) TSL TSL TSL TSL TSL 1 2 3 4 5 ........................................................................................................................................................... ........................................................................................................................................................... ........................................................................................................................................................... ........................................................................................................................................................... ........................................................................................................................................................... Consumers With Net Benefit (%) TSL TSL TSL TSL TSL 1 2 3 4 5 ........................................................................................................................................................... ........................................................................................................................................................... ........................................................................................................................................................... ........................................................................................................................................................... ........................................................................................................................................................... Consumers With Net Cost (%) TSL TSL TSL TSL TSL 1 2 3 4 5 ........................................................................................................................................................... ........................................................................................................................................................... ........................................................................................................................................................... ........................................................................................................................................................... ........................................................................................................................................................... * The savings represent the average LCC for affected consumers. TABLE V.15—COMPARISON OF LCC SAVINGS AND PBP FOR CONSUMER SUBGROUPS AND ALL BUILDINGS; COMBO B Manufacturing Full building sample Average LCC Savings * (2021$) TSL TSL TSL TSL TSL 1 2 3 4 5 ........................................................................................................................................................... ........................................................................................................................................................... ........................................................................................................................................................... ........................................................................................................................................................... ........................................................................................................................................................... $150 224 (25) 174 (387) $214 326 94 287 (239) 0.6 1.2 6.6 2.8 14.2 0.4 0.9 5.1 2.2 10.9 100 100 22 100 3 100 100 63 100 15 0 0 78 0 97 0 0 37 0 85 Payback Period (years) TSL TSL TSL TSL TSL 1 2 3 4 5 ........................................................................................................................................................... ........................................................................................................................................................... ........................................................................................................................................................... ........................................................................................................................................................... ........................................................................................................................................................... Consumers With Net Benefit (%) lotter on DSK11XQN23PROD with PROPOSALS2 TSL TSL TSL TSL TSL 1 2 3 4 5 ........................................................................................................................................................... ........................................................................................................................................................... ........................................................................................................................................................... ........................................................................................................................................................... ........................................................................................................................................................... Consumers With Net Cost (%) TSL TSL TSL TSL TSL 1 2 3 4 5 ........................................................................................................................................................... ........................................................................................................................................................... ........................................................................................................................................................... ........................................................................................................................................................... ........................................................................................................................................................... * The savings represent the average LCC for affected consumers. VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 PO 00000 Frm 00041 Fmt 4701 Sfmt 4702 E:\FR\FM\25MYP2.SGM 25MYP2 34008 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules c. Rebuttable Presumption Payback As discussed in section II.A of this document, EPCA establishes a rebuttable presumption that an energy conservation standard is economically justified if the increased purchase cost for equipment that meets the standard is less than three times the value of the first-year energy savings resulting from the standard. In calculating a rebuttable presumption PBP for each of the considered TSLs, DOE used discrete 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. values, and, as required by EPCA, based the energy use calculation on the DOE test procedure for BVMs. In contrast, the PBPs presented in section V.B.1.a of this document were calculated using distributions that reflect the range of energy use in the field. Table V.16 presents the rebuttable presumption PBPs for the considered TSLs for BVMs. While DOE examined the rebuttable presumption criterion, it considered whether the standard levels considered for the NOPR are TABLE V.16 REBUTTABLE PRESUMPTION PAYBACK PERIODS Median payback period (years) Equipment class TSL 1 Class A .................................................................................................... Class B .................................................................................................... Combo A .................................................................................................. Combo B .................................................................................................. 2. Economic Impacts on Manufacturers DOE performed an MIA to estimate the impact of amended energy conservation standards on manufacturers of BVMs. 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. Table V.17 and Table V.18 summarize the estimated financial impacts (represented by changes in INPV) of potential amended energy conservation standards on manufacturers of BVMs, as well as the conversion costs that DOE estimates manufacturers of BVMs would incur at each TSL. As discussed in section IV.J.2.d of this document, DOE modeled two scenarios to evaluate a range of cash flow impacts TSL 2 0.4 0.6 0.4 0.4 TSL 3 0.5 0.6 0.4 0.5 on the BVM industry: (1) the preservation of gross margin percentage scenario and (2) the preservation of operating profit. Under the preservation of gross margin percentage scenario, DOE applied a single uniform ‘‘gross margin percentage’’ across all efficiency levels. As MPCs increase with efficiency, this scenario implies that the absolute dollar markup will increase. DOE estimated gross margin percentages of 18 percent for Class A, 15 percent for Class B, 26 percent for Combo A, and 26 percent for Combo B.65 This manufacturer markup is the same as the one DOE assumed in the engineering analysis and the no-newstandards case of the GRIM. Because this scenario assumes that a manufacturer’s absolute dollar markup would increase as MPCs increase in the standards cases, it represents the upperbound to industry profitability under potential new energy conservation standards. The preservation of operating profit scenario reflects manufacturers’ TSL 4 2.3 1.2 1.4 2.2 TSL 5 4.0 0.7 0.5 0.9 5.7 4.4 6.5 5.1 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 equipment, operating profit does not change in absolute dollars and decreases as a percentage of revenue. Each of the modeled manufacturer markup scenarios results in a unique set of cash flows and corresponding industry values at each TSL. In the following discussion, the INPV results refer to the difference in industry value between the no-new-standards case and each standards case resulting from the sum of discounted cash flows from 2023 through 2057. To provide perspective on the short-run cash flow impact, DOE includes in the discussion of results a comparison of free cash flow between the no-new-standards case and the standards case at each TSL in the year before new standards are required. TABLE V.17—MANUFACTURER IMPACT ANALYSIS FOR BVMS UNDER THE PRESERVATION OF GROSS MARGIN SCENARIO No-newstandards case Units lotter on DSK11XQN23PROD with PROPOSALS2 INPV ................................................ Change in INPV ............................... Product Conversion Costs ............... Capital Conversion Costs ................ Total Investment Required** ........... 2021$ millions ................................. 2021$ millions ................................. % ..................................................... 2021$ millions ................................. 2021$ millions ................................. 2021$ millions ................................. 85.5 ........................ ........................ ........................ ........................ ........................ Trial standard level* 1 2 85.4 0.0 0.0 0.2 0.0 0.2 3 85.5 0.0 0.0 0.3 0.0 0.3 86.1 0.7 0.8 2.3 0.0 2.5 * Numbers in parentheses indicate a negative number. ** Numbers may not sum exactly due to rounding. 65 This corresponds to manufacturer markups of 1.22 for Class A, 1.17 for Class B, and 1.36 for Combo A and B. VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 PO 00000 Frm 00042 Fmt 4701 Sfmt 4702 E:\FR\FM\25MYP2.SGM 4 25MYP2 5 85.9 0.5 0.6 1.5 0.0 1.5 68.0 (17.5) (20.4) 9.6 26.9 36.5 34009 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules TABLE V.18—MANUFACTURER IMPACT ANALYSIS FOR BVMS UNDER THE PRESERVATION OF OPERATING PROFIT SCENARIO No-newstandards case Units INPV ................................................ Change in INPV ............................... Product Conversion Costs ............... Capital Conversion Costs ................ Total Investment Required** ........... 2021$ millions ................................. 2021$ millions ................................. % ..................................................... 2021$ millions ................................. 2021$ millions ................................. 2021$ millions ................................. 85.5 ........................ ........................ ........................ ........................ ........................ Trial standard level* 1 2 85.3 (0.2) (0.2) 0.2 0.0 0.2 3 85.3 (0.2) (0.2) 0.3 0.0 0.3 4 82.9 (2.5) (3.0) 2.3 0.0 2.5 5 83.6 (1.9) (2.2) 1.5 0.0 1.5 56.3 (29.2) (34.1) 9.6 26.9 36.5 lotter on DSK11XQN23PROD with PROPOSALS2 * Numbers in parentheses indicate a negative number. ** Numbers may not sum exactly due to rounding. At TSL 5, DOE estimates that impacts on INPV would range from ¥$29.2 million to $17.5 million, or a change in INPV of ¥34.1 to ¥20.4 percent. At TSL 5, industry free cash flow is negative $8.6 million, which is a decrease of $15.4 million compared to the no-new-standards case value of $6.8 million in 2027, the year leading up to the proposed standards. Industry conversion costs total $36.5 million. At TSL 5, the shipment-weightedaverage MPC for BVMs increases by 21.4 percent relative to the no-new-standards case shipment-weighted-average MPC for all BVMs in 2030. Under both manufacurer markup scenarios, industry faces a drop in INPV. The reduction in INPV is driven by the high conversion costs. Product conversion costs could reach $9.6 million and capital conversion costs could reach $26.9 million. At this level, DOE expects that all equipment classes would require the use of VIPs for roughly half the cabinet surface area, the best availableefficiency variable-speed compressor, permanent magnet synchronous evaporator and condenser fan motors, microchannel condenser, refrigeration low power mode (per the DOE test procedure), and evaporator fan controls. The adoption of VIPs is the largest driver of conversion costs. Higher product conversion costs after typically needed to implement VIP designs, which are not found in BVMs today, for prototyping and testing for VIP placement, design, and sizing. Additionally, extensive incorporation of VIPs can require significant capital expenditures due to the need for more careful product handling and conveyor and investments in hard tooling for the VIP installation process. In the preservation of gross margin markup scenario, the increase in average MPC and corresponding increase in revenue is outweighed by the $36.5 million in conversion costs, resulting in a negative change in INPV at TSL 5. Under the preservation of operating profit markup scenario, manufacturers earn the same per-unit operating profit VerDate Sep<11>2014 18:42 May 24, 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 21.4 percent shipment-weighted-average MPC increase results in a reduction in the manufacturer markup. This reduction in the manufacturer markup and the $36.5 million in conversion costs incurred by manufacturers cause a negative change in INPV at TSL 5 under the preservation of operating profit markup scenario. At TSL 4, DOE estimates that impacts on INPV would range from ¥$1.9 million to $0.5 million, or a change in INPV of ¥2.2 to 0.6 percent. At TSL 4, industry free cash flow is $6.3 million, which is a decrease of $0.5 million compared to the no-new-standards case value of $6.8 million in 2027, the year leading up to the proposed standards. Industry conversion costs total $1.5 million. At TSL 4, the shipment-weightedaverage MPC for BVMs increases by 5.0 percent relative to the no-new-standards case shipment-weighted-average MPC for all BVMs in 2028. In the preservation of gross margin markup scenario, the increase in cash-flows from increased MSPs outweigh the upfront conversion investments manufacturers make and result in a slightly positive change in INPV at TSL 4. Under the preservation of operating profit markup scenario, manufacturers earn the same per-unit operating profit as would be earned in the no-newstandards case, but manufacturers do not earn additional profit from their investments. In this scenario, the 5.0 percent shipment-weighted-average MPC increase results in a reduction in the manufacturer markup. This reduction in the manufacturer markup and the $1.5 million in conversion costs incurred by manufacturers cause a negative change in INPV at TSL 4 under the preservation of operating profit markup scenario. At TSL 3, DOE estimates that impacts on INPV would range from ¥$3.0 PO 00000 Frm 00043 Fmt 4701 Sfmt 4702 million to $0.7 million, or a change in INPV of ¥3.0 to 0.8 percent. At TSL 3, industry free cash flow is $6.0 million, which is a decrease of $0.8 million compared to the no-new-standards case value of $6.8 million in 2027, the year leading up to the proposed standards. Industry conversion costs total $2.3 million. At TSL 3, the shipment-weightedaverage MPC for BVMs increases by 5.7 percent relative to the no-new-standards case shipment-weighted-average MPC for all BVMs in 2028. In the preservation of gross margin markup scenario, the increase in cash-flows from increased MSPs outweigh the upfront conversion investments manufacturers make and result in a slightly positive change in INPV at TSL 3. Under the preservation of operating profit markup scenario, manufacturers earn the same per-unit operating profit as would be earned in the no-newstandards case, but manufacturers do not earn additional profit from their investments. In this scenario, the 5.7 percent shipment-weighted-average MPC increase results in a reduction in the manufacturer markup after the analyzed compliance year. This reduction in the manufacturer markup and the $2.3 million in conversion costs incurred by manufacturers cause a negative change in INPV at TSL 3 under the preservation of operating profit markup scenario. At TSL 2, DOE estimates that impacts on INPV would range from ¥$0.2 million to $0.0 million, or a change in INPV of ¥0.2 to 0.0 percent. At TSL 2, industry free cash flow is $6.7 million, which is a decrease of $0.1 million compared to the no-new-standards case value of $6.8 million in 2027, the year leading up to the proposed standards. Industry conversion costs total $0.3 million. At TSL 2, the shipment-weightedaverage MPC for BVMs is anticipated to increase by less than 1 percent relative to the no-new-standards case shipmentweighted-average MPC for all BVMs in E:\FR\FM\25MYP2.SGM 25MYP2 34010 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules 2028. In the preservation of gross margin markup scenario, the increase in cash-flows from increased MSPs outweigh the limited conversion investments manufacturers make and result in a slightly positive change in INPV at TSL 2. Under the preservation of operating profit markup scenario, manufacturers earn the same per-unit operating profit as would be earned in the no-newstandards case, but manufacturers do not earn additional profit from their investments. In this scenario, the slight shipment-weighted-average MPC increase results in a reduction in the manufacturer markup after the analyzed compliance year. This reduction in the manufacturer markup and the $0.3 million in conversion costs incurred by manufacturers cause a negative change in INPV at TSL 2 under the preservation of operating profit markup scenario. At TSL 1, DOE estimates that impacts on INPV would range from ¥$0.2 million to $0.0, or a change in INPV of ¥0.2 to 0.0 percent. At TSL 1, industry free cash flow is $6.7 million, which is a decrease of $0.1 million compared to the no-new-standards case value of $6.8 million in 2027, the year leading up to the proposed standards. Industry conversion costs total $0.2 million. At TSL 1, the shipment-weightedaverage MPC for BVMs increases by less than 1 percent relative to the no-newstandards case shipment-weightedaverage MPC for all BVMs in 2028. In the preservation of gross margin markup scenario, the increase in cash-flows from increased MSPs outweigh the mild conversion investments manufacturers make and result in a slightly positive change in INPV at TSL 1. Under the preservation of operating profit markup scenario, manufacturers earn the same per-unit operating profit as would be earned in the no-newstandards case, but manufacturers do not earn additional profit from their investments. In this scenario, the slight shipment-weighted-average MPC increase results in a reduction in the manufacturer markup after the analyzed compliance year. This reduction in the manufacturer markup and the $0.2 million in conversion costs incurred by manufacturers cause a slightly negative change in INPV at TSL 1 under the preservation of operating profit markup scenario. production capacity for the covered product. This value is derived from manufacturer interviews, product database analysis, and publicly available information. DOE estimates that 70 percent of BVMs are produced domestically. The domestic production employees estimate covers production line workers, including line supervisors, who are directly involved in fabricating and assembling equipment 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 equipment covered by this proposed rulemaking. Non-production employees 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. Direct employment is the sum of domestic production employees and non-production employees. Using the GRIM, DOE estimates in the absence of new energy conservation standards there would be 448 domestic employees for BVMs in 2028. Table V.19 shows the range of the impacts of energy conservation standards on U.S. manufacturing employment in the BVMs industry. The following discussion provides a qualitative evaluation of the range of potential impacts presented in Table V.19. b. Direct Impacts on Employment To quantitatively assess the potential impacts of amended energy conservation standards on direct employment in the BVM 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. 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 66 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 67 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 TABLE V.19—DOMESTIC DIRECT EMPLOYMENT IMPACTS FOR BEVERAGE VENDING MACHINE MANUFACTURERS IN 2028 lotter on DSK11XQN23PROD with PROPOSALS2 No-newstandards case Direct Employment in 2028 ......................................... Potential Changes in Direct Employment Workers in 2028 * ........................................................................ TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 468 469 470 465 463 464 ........................ (65) to 1 (65) to 2 (64) to (3) (65) to (5) (64) to (4) * DOE presents a range of potential employment impacts. Numbers in parentheses denote negative values. 66 U.S. Census Bureau, Annual Survey of Manufactures. ‘‘Summary Statistics for Industry Groups and Industries in the U.S (2021).’’ Available VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 at https://www.census.gov/programs-surveys/asm/ data.html (Last accessed February 24, 2023). PO 00000 Frm 00044 Fmt 4701 Sfmt 4702 67 U.S. Bureau of Labor Statistics. Industries at a Glance. Available at https://www.bls.gov/iag/tgs/ iag333.htm. Last accessed February 24, 2023. E:\FR\FM\25MYP2.SGM 25MYP2 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules lotter on DSK11XQN23PROD with PROPOSALS2 The direct employment impacts shown in Table V.19 represent the potential domestic employment changes that could result following the compliance date for the BVM product classes in this proposal. Employment could increase or decrease due to the labor content of the various equipment being manufactured domestically. The upper bound estimate corresponds to an 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 equipment within the United States after compliance takes effect. The lower bound estimate represents the maximum decrease in production workers. In interviews, manufacturers raised concerns that their customers purchasing Class B equipment would shift toward purchasing Class A equipment if the prices of Class B equipment increased and approached the cost of Class A equipment. To establish a lower bound, DOE assumes a loss of direct employment commensurate with a potential loss of Class B shipments. 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 they have experience incorporating many of the design options that DOE considers in its engineering analysis. However, manufacturers noted that a few design options could lead to design and production challenges. In particular, manufacturers raised concerns about microchannel heat exchangers, vacuum insulated glass, and vacuum insulated panels. For microchannel exchangers, manufacturers were dubious about the performance gain from the design option and raised concerns about further performance issues in the field due to fouling of the channels. For vacuum insulated glass, manufacturers noted that prototypes did not provide the expected performance gains and the design option is not incorporated into any models today. For VIPs, manufacturers noted that they did not incorporate the design option into any models today. They noted that VIPs have a negative impact on the flow of foam within panels and reduce the overall rigidity of the cabinet. VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 Manufacturers expected large investment to incorporate VIPs into their product design and to update production lines. With VIPs in particular, manufacturers were concerned about the engineering resources and level of investment required to redesign equipment to meet EPA refrigerant regulations by 2025 and again to meet amended standards in 2028. 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 did not identify any other adversely impacted manufacturer subgroups for this rulemaking based on the results of the industry characterization. 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. 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 equipment. For these reasons, DOE conducts an analysis PO 00000 Frm 00045 Fmt 4701 Sfmt 4702 34011 of cumulative regulatory burden as part of its rulemakings pertaining to appliance efficiency. Some BVM manufacturers also produce commercial refrigeration equipment (CRE). DOE published a CRE ECS preliminary analysis on June of 2022. (87 FR 38296). There is not yet a proposed or finalized amended standard. If DOE proposes or finalizes any energy conservation standards for CRE prior to finalizing amended energy conservation standards for BVMs, DOE will add CRE into its consideration of cumulative regulatory burden for the BVM final rule. DOE notes that there is cumulative regulatory burden due to productspecific, Federal regulation from another agency that occurs within 3 years of the proposed compliance date for an amended standard. The U.S. Environmental Protection Agency (EPA) proposed refrigerant restrictions pursuant to the AIM Act 68 in a NOPR published on December 15, 2022 (‘‘December 2022 EPA NOPR’’). 87 FR 76738. Specifically, EPA proposed prohibitions for new vending machines (EPA’s term for this equipment) for the use of HFCs and blends containing HFCs that have a GWP of 150 or greater. 87 FR 76780. The proposal would prohibit manufacture or import of such vending machines starting January 1, 2025, and would ban sale, distribution, purchase, receive, or export of such vending machines starting January 1, 2026. 87 FR 76740. In the engineering analysis, DOE considered the use of alternative refrigerants that are not prohibited for BVM equipment in the December 2022 EPA NOPR. DOE understands that adapting product lines to meet the current and upcoming refrigerant regulations requires significant development and testing time. In particular, DOE understands that switching from non-flammable to flammable refrigerants (e.g., R–290) requires time and investment to redesign BVM models and upgrade production facilities to accommodate the additional structural and safety precautions required. As discussed in section IV.C.1 of this document, DOE anticipates BVM manufacturers transitioning all models to R–290 to comply with anticipated refrigeration regulations, such as the December 2022 68 Under subsection (i) of the AIM Act, entitled ‘‘Technology Transitions,’’ the EPA may by rule restrict the use of hydrofluorocarbons (HFCs) in sectors or subsectors where they are used. A person or entity may also petition EPA to promulgate such a rule. ‘‘H.R.133—116th Congress (2019–2020): Consolidated Appropriations Act, 2021.’’ Congress.gov, Library of Congress, 27 December 2020, www.congress.gov/bill/116thcongress/housebill/133. E:\FR\FM\25MYP2.SGM 25MYP2 34012 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules EPA NOPR,69 prior to the expected 2028 compliance date of potential energy conservation standards. Therefore, the engineering analysis assumes the use of R–290 compressors as a baseline design option for all equipment classes. See section IV.C.1 of this document for additional information on refrigerant assumptions in the engineering analysis. DOE accounted for the costs associated with redesigning BVMs to make use of flammable refrigerants and upgrading production facilities to accommodate flammable refrigerants in the GRIM under the assumption that three manufacturers of BVMs have yet to make the R–290 transition. These costs are modeled as an impact to industry cashflow. DOE relied on manufacturer feedback in confidential interviews and a report prepared for the EPA 70 to estimate the industry refrigerant transition costs. See section V.B.2.e of this document and chapter 12 of the NOPR TSD for additional discussion on cumulative regulatory burden. DOE requests information regarding the impact of cumulative regulatory burden on manufacturers of BVMs 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 national energy savings 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 BVMs, 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 equipment purchased in the 30-year period that begins in the year of anticipated compliance with amended standards (2028–2057). Table V.20 presents DOE’s projections of the NES for each TSL considered for BVMs. The savings were calculated using the approach described in section IV.H of this document. TABLE V.20—CUMULATIVE NATIONAL ENERGY SAVINGS FOR BEVERAGE VENDING MACHINES; 30 YEARS OF SHIPMENTS [2028–2057] Trial standard level Discount rate 1 2 3 4 5 0.09 0.09 0.13 0.14 quads Primary energy ................................................................................................................................. FFC energy ...................................................................................................................................... OMB Circular A–4 71 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 proposed 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.72 The review timeframe established in EPCA is generally not synchronized with the product lifetime, product manufacturing cycles, or other factors specific to BVMs. Thus, such 0.04 0.04 0.05 0.06 0.08 0.09 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.21. The impacts are counted over the lifetime of BVMs purchased in 2028– 2035. TABLE V.21—CUMULATIVE NATIONAL ENERGY SAVINGS FOR REFRIGERATED BOTTLED OR CANNED BEVERAGE VENDING MACHINES; 9 YEARS OF SHIPMENTS [2028–2035] Trial standard level Discount rate 1 2 3 4 5 0.03 0.03 0.04 0.04 quads lotter on DSK11XQN23PROD with PROPOSALS2 Primary energy ................................................................................................................................. FFC energy ...................................................................................................................................... 69 The proposed rule was published on December 15, 2022. 87 FR 76738. 70 See pp. 5–113 of the ‘‘Global Non-CO 2 Greenhouse Gas Emission Projections & Marginal Abatement Cost Analysis: Methodology Documentation’’ (2019). www.epa.gov/sites/default/ files/2019-09/documents/nonco2_methodology_ report.pdf. 71 U.S. Office of Management and Budget. Circular A–4: Regulatory Analysis. September 17, VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 2003. obamawhitehouse.archives.gov/omb/ circulars_a004_a-4 (last accessed January 2023). 72 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, PO 00000 Frm 00046 Fmt 4701 Sfmt 4702 0.01 0.01 0.02 0.02 0.03 0.03 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. E:\FR\FM\25MYP2.SGM 25MYP2 34013 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules 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 BVMs. In accordance with OMB’s guidelines on regulatory analysis,73 DOE calculated NPV using both a 7-percent and a 3- percent real discount rate. Table V.22 shows the consumer NPV results with impacts counted over the lifetime of products purchased in 2028–2057. TABLE V.22—CUMULATIVE NET PRESENT VALUE OF CONSUMER BENEFITS FOR REFRIGERATED BOTTLED OR CANNED BEVERAGE VENDING MACHINES; 30 YEARS OF SHIPMENTS [2028–2057] Trial standard level Discount rate 1 2 3 4 5 billion 2021$ 3 percent .......................................................................................................................................... 7 percent .......................................................................................................................................... The NPV results based on the aforementioned 9-year analytical period are presented in Table V.23. The impacts are counted over the lifetime of products purchased in 2028–2035. As mentioned previously, such results are presented for informational purposes only and are not indicative of any 0.16 0.07 0.22 0.09 0.23 0.08 0.25 0.09 (0.31) (0.23) change in DOE’s analytical methodology or decision criteria. TABLE V.23—CUMULATIVE NET PRESENT VALUE OF CONSUMER BENEFITS FOR REFRIGERATED BOTTLED OR CANNED BEVERAGE VENDING MACHINES; 9 YEARS OF SHIPMENTS [2028–2035] Trial standard level Discount rate 1 2 3 4 5 billion 2021$ 3 percent .......................................................................................................................................... 7 percent .......................................................................................................................................... The previous results reflect the use of a default trend to estimate the change in price for BVMs over the analysis period (see section IV.H 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. lotter on DSK11XQN23PROD with PROPOSALS2 c. Indirect Impacts on Employment It is estimated that that amended energy conservation standards for BVMs 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 73 U.S. Office of Management and Budget. Circular A–4: Regulatory Analysis. September 17, VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 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 (2028–2032), in which these uncertainties are reduced. The results suggest that the proposed amended 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 IV.C.1.b of this document, DOE has tentatively 0.07 0.04 0.09 0.05 Frm 00047 Fmt 4701 Sfmt 4702 0.07 0.03 (0.17) (0.14) concluded that the standards proposed in this NOPR would not lessen the utility or performance of the BVMs 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 2003. obamawhitehouse.archives.gov/omb/ circulars_a004_a-4 (last accessed February 2023). PO 00000 0.07 0.03 E:\FR\FM\25MYP2.SGM 25MYP2 34014 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules 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. 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 proposed rulemaking. Energy conservation resulting from potential energy conservation standards for BVMs is expected to yield environmental benefits in the form of reduced emissions of certain air pollutants and GHGs. Table V.24 provides DOE’s estimate of cumulative emissions reductions expected to result from the TSLs considered in this proposed rulemaking. The emissions were calculated using the multipliers discussed in section IV.K of this document. DOE reports annual emissions reductions for each TSL in chapter 13 of the NOPR TSD. TABLE V.24—CUMULATIVE EMISSIONS REDUCTION FOR REFRIGERATED BOTTLED OR CANNED BEVERAGE VENDING MACHINES SHIPPED IN 2028–2057 * Trial standard level 1 2 3 4 5 1.26 0.10 0.01 0.63 0.60 0.004 1.73 0.13 0.02 0.86 0.82 0.005 2.65 0.21 0.03 1.32 1.27 0.008 2.83 0.22 0.03 1.41 1.35 0.009 1.26 0.10 0.01 0.63 0.60 0.004 CO2 (million metric tons) ............................................................................................. CH4 (thousand tons) .................................................................................................... N2O (thousand tons) .................................................................................................... NOX (thousand tons) ................................................................................................... SO2 (thousand tons) .................................................................................................... Hg (tons) ...................................................................................................................... 0.10 9.20 0.00 1.47 0.01 0.00001 0.13 12.65 0.00 2.02 0.01 0.00002 0.21 19.42 0.00 3.11 0.01 0.00003 0.22 20.72 0.00 3.32 0.02 0.00003 0.10 9.20 0.00 1.47 0.01 0.00001 CO2 (million metric tons) ............................................................................................. CH4 (thousand tons) .................................................................................................... N2O (thousand tons) .................................................................................................... NOX (thousand tons) ................................................................................................... SO2 (thousand tons) .................................................................................................... Hg (tons) ...................................................................................................................... 1.35 9.29 0.01 2.10 0.61 0.004 1.86 12.78 0.02 2.89 0.83 0.005 2.86 19.63 0.03 4.43 1.28 0.008 3.05 20.93 0.03 4.73 1.36 0.01 1.35 9.29 0.01 2.10 0.61 0.004 Power Sector Emissions CO2 (million metric tons) ............................................................................................. CH4 (thousand tons) .................................................................................................... N2O (thousand tons) .................................................................................................... NOX (thousand tons) ................................................................................................... SO2 (thousand tons) .................................................................................................... Hg (tons) ...................................................................................................................... Upstream Emissions * Negative values refer to an increase in emissions. As part of the analysis for this proposed rulemaking, DOE estimated monetary benefits likely to result from the reduced emissions of CO2 that DOE estimated for each of the considered TSLs for BVMs. Section IV.L of this document discusses the SC–CO2 values that DOE used. Table V.25 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.25—PRESENT VALUE OF CO2 EMISSIONS REDUCTION FOR REFRIGERATED BOTTLED OR CANNED BEVERAGE VENDING MACHINES SHIPPED IN 2028–2057 SC–CO2 Case Discount rate and statistics TSL lotter on DSK11XQN23PROD with PROPOSALS2 5% Average 3% Average 2.5% Average 3% 95th percentile million 2021$ 1 2 3 4 5 ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 PO 00000 Frm 00048 Fmt 4701 Sfmt 4702 12 17 25 27 40 E:\FR\FM\25MYP2.SGM 53 73 112 120 178 25MYP2 83 115 176 188 280 161 222 340 363 541 34015 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules As discussed in section IV.L.2 of this document, DOE estimated the climate benefits likely to result from the reduced emissions of CH4 and N2O that DOE estimated for each of the considered TSLs for BVMs. Table V.26 presents the value of the CH4 emissions reduction at each TSL, and Table V.27 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.26—PRESENT VALUE OF METHANE EMISSIONS REDUCTION FOR REFRIGERATED BOTTLED OR CANNED BEVERAGE VENDING MACHINES SHIPPED IN 2028–2057 SC–CH4 Case Discount rate and statistics TSL 5% Average 3% Average 2.5% Average 3% 95th percentile million 2021$ 1 2 3 4 5 ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... 3 4 7 8 12 10 14 22 23 35 14 19 30 33 50 27 36 57 62 93 TABLE V.27—PRESENT VALUE OF NITROUS OXIDE EMISSIONS REDUCTION FOR REFRIGERATED BOTTLED OR CANNED BEVERAGE VENDING MACHINES SHIPPED IN 2028–2057 SC–N2O Case Discount rate and statistics TSL 5% Average 3% Average 2.5% Average 3% 95th percentile million 2021$ 1 2 3 4 5 ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... ....................................................................................................................... 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 0.04 0.06 0.09 0.10 0.14 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 BVMs. The dollarper-ton values that DOE used are 0.17 0.23 0.36 0.39 0.59 0.26 0.35 0.56 0.61 0.92 0.45 0.61 0.96 1.05 1.58 discussed in section IV.L of this document. Table V.28 presents the present value for NOX emissions reduction for each TSL calculated using 7-percent and 3-percent discount rates, and Table V.29 presents similar results for SO2 emissions reductions. The results in these tables reflect the 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.28—PRESENT VALUE OF NOX EMISSIONS REDUCTION FOR REFRIGERATED BOTTLED OR CANNED BEVERAGE VENDING MACHINES SHIPPED IN 2028–2057 3% Discount rate lotter on DSK11XQN23PROD with PROPOSALS2 TSL 7% Discount rate million 2021$ 1 2 3 4 5 ............................................................................................................................................................................... ............................................................................................................................................................................... ............................................................................................................................................................................... ............................................................................................................................................................................... ............................................................................................................................................................................... VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 PO 00000 Frm 00049 Fmt 4701 Sfmt 4702 E:\FR\FM\25MYP2.SGM 25MYP2 88 121 185 197 294 33 46 70 75 111 34016 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules TABLE V.29—PRESENT VALUE OF SO2 EMISSIONS REDUCTION FOR REFRIGERATED BOTTLED OR CANNED BEVERAGE VENDING MACHINES SHIPPED IN 2028–2057 3% Discount rate TSL 7% Discount rate million 2021$ 1 2 3 4 5 ............................................................................................................................................................................... ............................................................................................................................................................................... ............................................................................................................................................................................... ............................................................................................................................................................................... ............................................................................................................................................................................... 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 direct PM and other co-pollutants may be significant. DOE has not included monetary benefits of the reduction of Hg emissions because the amount of reduction is very small. 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.30 presents the NPV values that result from adding the estimates of the potential economic benefits resulting from reduced GHG, NOX, and 34 47 72 76 114 13 18 28 29 44 SO2 emissions to the NPV of consumer benefits calculated for each TSL considered in this proposed rulemaking. The consumer benefits are domestic U.S. monetary savings that occur as a result of purchasing the covered equipment, and are measured for the lifetime of products shipped in 2028– 2057. 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 BVMs shipped in 2028–2057. TABLE V.30—CONSUMER NPV COMBINED WITH PRESENT VALUE OF CLIMATE BENEFITS AND HEALTH BENEFITS Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 Using 3% discount rate for Consumer NPV and Health Benefits (billion 2021$) 5% average SC–GHG case ................................................. 3% average SC–GHG case ................................................. 2.5% average SC–GHG case .............................................. 3% 95th percentile SC–GHG case ...................................... 0.30 0.35 0.38 0.47 0.41 0.47 0.52 0.65 0.52 0.62 0.70 0.89 0.56 0.66 0.74 0.95 0.15 0.31 0.43 0.74 0.23 0.33 0.41 0.62 (0.02) 0.14 0.26 0.56 Using 7% discount rate for Consumer NPV and Health Benefits (billion 2021$) 5% average SC–GHG case ................................................. 3% average SC–GHG case ................................................. 2.5% average SC–GHG case .............................................. 3% 95th percentile SC–GHG case ...................................... lotter on DSK11XQN23PROD with PROPOSALS2 C. Conclusion When considering new or amended energy conservation standards, the standards that DOE adopts for any type (or class) of covered equipment 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)) VerDate Sep<11>2014 19:08 May 24, 2023 Jkt 259001 0.13 0.18 0.21 0.30 0.18 0.24 0.29 0.41 For this NOPR, DOE considered the impacts of amended standards for BVMs at each TSL, beginning with the maxtech 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 PO 00000 Frm 00050 Fmt 4701 Sfmt 4702 0.21 0.31 0.39 0.58 economic justification. These include the impacts on identifiable subgroups of consumers who may be disproportionately affected by a national standard and impacts on employment. 1. Benefits and Burdens of TSLs Considered for BVM Standards Table V.31 and Table V.32 summarize the quantitative impacts estimated for each TSL for BVMs. The national impacts are measured over the lifetime of BVMs purchased in the 30-year period that begins in the anticipated year of compliance with amended standards (2028–2057). The energy savings, emissions reductions, and value of emissions reductions refer to FFC results. The efficiency levels contained in each TSL are described in section V.A of this document. E:\FR\FM\25MYP2.SGM 25MYP2 34017 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules TABLE V.31—SUMMARY OF ANALYTICAL RESULTS FOR REFRIGERATED BOTTLED OR CANNED BEVERAGE VENDING MACHINE TSLS: NATIONAL IMPACTS Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 Cumulative FFC National Energy Savings Quads ................................................................................... 0.04 0.056 0.086 0.092 0.14 2.9 20 0.03 4.4 1.3 0.008 3.0 21 0.03 4.7 1.4 0.009 4.5 31 0.05 7.1 2.0 0.013 0.33 0.14 0.27 0.75 0.08 0.25 0.66 0.47 0.21 0.41 1.09 0.78 (0.31) 0.31 0.14 0.14 0.10 0.38 0.05 0.09 0.33 0.19 0.21 0.15 0.56 0.42 (0.23) 0.14 Cumulative FFC Emissions Reduction CO2 (million metric tons) ..................................................... CH4 (thousand tons) ............................................................ N2O (thousand tons) ............................................................ NOX (thousand tons) ........................................................... SO2 (thousand tons) ............................................................ Hg (tons) .............................................................................. 1.4 9 0.01 2.1 0.6 0.004 1.9 13 0.02 2.9 0.8 0.005 Present Value of Benefits and Costs (3% discount rate, billion 2021$) Consumer Operating Cost Savings ..................................... Climate Benefits * ................................................................. Health Benefits ** ................................................................. Total Benefits † .................................................................... Consumer Incremental Product Costs ‡ .............................. Consumer Net Benefits ........................................................ Total Net Benefits ................................................................ 0.17 0.06 0.12 0.36 0.01 0.16 0.35 0.24 0.09 0.17 0.49 0.02 0.22 0.47 0.32 0.13 0.26 0.71 0.08 0.23 0.62 Present Value of Benefits and Costs (7% discount rate, billion 2021$) Consumer Operating Cost Savings ..................................... Climate Benefits * ................................................................. Health Benefits ** ................................................................. Total Benefits † .................................................................... Consumer Incremental Product Costs ‡ .............................. Consumer Net Benefits ........................................................ Total Net Benefits ................................................................ 0.07 0.06 0.05 0.18 0.00 0.07 0.18 0.10 0.09 0.06 0.25 0.01 0.09 0.24 0.13 0.13 0.10 0.36 0.05 0.08 0.31 Note: This table presents the costs and benefits associated with automatic commercial ice makers shipped in 2028–2057. These results include benefits to consumers that accrue after 2057 from the products shipped in 2028–2057. * 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; however, DOE emphasizes the importance and value of considering the benefits calculated using all four sets of SC–GHG estimates. To monetize the benefits of reducing GHG emissions, this analysis uses the interim estimates presented in the Technical Support Document: Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates Under Executive Order 13990 published in February 2021 by the IWG. ** 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 DOE does not have a single central SC–GHG point estimate. DOE emphasizes the importance and value of considering the benefits calculated using all four sets of SC–GHG estimates. ‡ Costs include incremental equipment costs. TABLE V.32 SUMMARY OF ANALYTICAL RESULTS FOR REFRIGERATED BOTTLED OR CANNED BEVERAGE VENDING MACHINE TSLS: MANUFACTURER AND CONSUMER IMPACTS Category TSL 1* TSL 2* TSL 3* TSL 4* TSL 5* 85.3 to 85.4 (0.2) to 0 85.3 to 85.5 (0.2) to 0 82.9 to 86.1 (3.0) to 0.8 83.6 to 85.9 (2.2) to 0.6 56.3 to 68.0 (34.1) to (20.4) $150 $167 $212 $214 $166 $203 $212 $263 $310 $220 $99 $117 $89 $37 $98 ($6) $198 $207 $239 $92 ($823) ($280) ($851) ($245) ($625) 0.5 0.6 0.7 0.7 4.0 3.6 5.7 1.4 23.5 10.5 Manufacturer Impacts Industry NPV (million 2021$) (No-new-standards case INPV = 85.5) ........................ Industry NPV (% change) ............................................................................................ lotter on DSK11XQN23PROD with PROPOSALS2 Consumer Average LCC Savings (2021$) Class A ......................................................................................................................... Class B ......................................................................................................................... Combo A ...................................................................................................................... Combo B ...................................................................................................................... Shipment-Weighted-Average* ...................................................................................... Consumer Simple PBP (years) Class A ......................................................................................................................... Class B ......................................................................................................................... VerDate Sep<11>2014 19:08 May 24, 2023 Jkt 259001 PO 00000 Frm 00051 Fmt 4701 Sfmt 4702 E:\FR\FM\25MYP2.SGM 25MYP2 34018 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules TABLE V.32 SUMMARY OF ANALYTICAL RESULTS FOR REFRIGERATED BOTTLED OR CANNED BEVERAGE VENDING MACHINE TSLS: MANUFACTURER AND CONSUMER IMPACTS—Continued Category TSL 1* Combo A ...................................................................................................................... Combo B ...................................................................................................................... Shipment-Weighted-Average * ..................................................................................... TSL 2* 0.4 0.4 0.5 TSL 3* TSL 4* TSL 5* 0.5 0.9 0.7 3.8 5.1 4.0 1.4 2.2 3.8 19.5 10.9 18.5 0% 0 0 0 0 28% 24 41 53 30 59% 4 3 0 33 94% 88 99 85 92 Percent of Consumers that Experience a Net Cost Class A ......................................................................................................................... Class B ......................................................................................................................... Combo A ...................................................................................................................... Combo B ...................................................................................................................... Shipment-Weighted-Average * ..................................................................................... 0% 0 0 0 0 lotter on DSK11XQN23PROD with PROPOSALS2 * Weighted by shares of each product class in total projected shipments in 2028. DOE first considered TSL 5, which represents the max-tech efficiency levels. At this level DOE expects that all equipment classes would represent EL7, which would require VIPs, variablespeed compressors, permanent magnet synchronous evaporator and condenser fan motors, microchannel condensers, refrigeration low power modes (tested in accordance to the DOE test procedure), and evaporator fan controls for all equipment classes. Further, DOE expects that Class A and Combination A machines would require automatic lighting controls (tested in accordance to the DOE test procedure) and vacuum insulated glass doors. TSL 5 would save an estimated 0.14 quads of energy, an amount DOE considers significant. Under TSL 5, the NPV of consumer benefit would be -$0.23 billion using a discount rate of 7 percent, and -$0.31 billion using a discount rate of 3 percent. The cumulative emissions reductions at TSL 5 are 4.5 Mt of CO2, 2.0 thousand tons of SO2, 7.1 thousand tons of NOX, 0.013 tons of Hg, 31 thousand tons of CH4, and 0.05 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 $0.21 billion. The estimated monetary value of the health benefits from reduced SO2 and NOX emissions at TSL 5 is $0.15 billion using a 7-percent discount rate and $0.41 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 $0.14 billion. Using a 3-percent discount rate for all benefits and costs, the estimated total NPV at TSL 5 is $0.31 billion. The estimated total NPV is provided for VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 additional information; however, DOE primarily relies upon the NPV of consumer benefits when determining whether a proposed standard level is economically justified. At TSL 5, the shipment weighted average LCC impact for an affected consumer is a cost of $532. The average LCC impact for Class A is a cost of $695, a cost of $199 for Class B, a cost of $851 for Combo A, and a cost of $239 for Combo B. The average simple payback period is 18.3 years for Class A, 9.2 years for Class B, 19.5 years for Combo A, and 10.9 years for Combo B. The shipment-weighted average simple payback period for all equipment classes is 15.2 years. The fraction of consumers experiencing a net LCC cost is 93 percent for Class A, 84 percent for Class B, 99 percent for Combo A, 85 percent for Combo B. The shipment weighted average fraction of consumers experiencing a net cost is 90 percent across all BVM equipment classes. At TSL 5, the projected change in INPV ranges from a decrease of $29.2 million to a decrease of $17.5 million, which corresponds to decreases of 34.1 percent and 20.4 percent, respectively. DOE estimates that industry must invest $36.5 million to comply with standards set at TSL 5. There are five BVM manufacturers that manufacture equipment covered by this rulemaking. None of the five BVM manufacturers offers models that meet the efficiency level required at TSL 5 for BVMs in any product class. DOE expects manufacturers to adopt vacuum insulated panels at TSL 5. The use of vacuum insulated panels would require manufacturers to redesign their equipment offerings and invest heavily in new cabinet fixtures, significantly increasing conversion costs. The Secretary tentatively concludes that at TSL 5 for BVMs, the benefits of energy savings, emission reductions, and the estimated monetary value of the PO 00000 Frm 00052 Fmt 4701 Sfmt 4702 emissions reductions would be outweighed by the negative NPV of consumer benefits and the economic burden on many consumers, as well as the impacts on manufacturers, including the large conversion costs, profit margin impacts that could result in a large reduction in INPV, and the lack of manufacturers currently offering products meeting the efficiency levels required at this TSL, including most small businesses. A majority of BVM consumers (90 percent) would experience a net cost and the average LCC savings would be negative (-$532). The potential reduction in INPV could be as high as 34.1 percent. Additionally, no BVM manufacturer offers models that meet the efficiency level required at TSL 5 for BVMs covered by this rulemaking. Consequently, the Secretary has tentatively concluded that TSL 5 is not economically justified. DOE then considered TSL 4, which represents EL6 for Class A, EL4 for Class B, EL4 for Combo A, and EL5 for Combo B. At these efficiency levels, DOE expects that all equipment classes would require improved-efficiency evaporator and condenser fan motors (in many cases ECMs or permanent magnet synchronous motors), refrigeration low power modes (tested in accordance to the DOE test procedure), and evaporator fan controls. Further, DOE expects that Class A machines would require automatic lighting controls (tested in accordance to the DOE test procedure), variable-speed compressors, and microchannel condensers; Combination A machines would require automatic lighting controls (tested in accordance to the DOE test procedure); and Combination B machines would require microchannel condensers. TSL 4 would save an estimated 0.09 quads of energy, an amount DOE considers significant. Under TSL 4, the NPV of consumer benefit would be $0.09 billion using a discount rate of 7 percent, and $0.25 E:\FR\FM\25MYP2.SGM 25MYP2 lotter on DSK11XQN23PROD with PROPOSALS2 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules billion using a discount rate of 3 percent. The cumulative emissions reductions at TSL 4 are 3.0 Mt of CO2, 1.4 thousand tons of SO2, 4.7 thousand tons of NOX, 0.009 tons of Hg, 21 thousand tons of CH4, and 0.03 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 $0.14 billion. The estimated monetary value of the health benefits from reduced SO2 and NOX emissions at TSL 4 is $0.10 billion using a 7-percent discount rate and $0.27 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 $0.33 billion. Using a 3-percent discount rate for all benefits and costs, the estimated total NPV at TSL 4 is $0.66 billion. The estimated total NPV is provided for additional information; however, DOE primarily relies upon the NPV of consumer benefits when determining whether a proposed standard level is economically justified. At TSL 4, the shipment weighted average LCC impact is a savings of $97. The average LCC impact for Class A is a cost of $5.52, a savings of $206 for Class B, savings of $190 for Combo A, and savings of $287 for Combo B. The simple payback period is 5.7 years for Class A, 1.2 years for Class B, 1.4 years for Combo A and 2.2 years for combo B. The shipment weighted average simple payback period for all BVMs is 3.7 years. The fraction of consumers experiencing a net LCC cost is 59 percent for Class A, 2 percent for Class B, 12 percent for Combo A and 0 percent for Combo B. The shipment weighted average fraction of consumers experiencing a net LCC cost is 34 percent. At TSL 4, the projected change in INPV ranges from a decrease of $1.9 million to an increase of $0.5 million, which correspond to a decrease of 2.2 percent and an increase of 0.6 percent, respectively. DOE estimates that industry must invest $1.5 million to comply with standards set at TSL 4. None of the 5 BVM manufacturers currently offer models that meet the efficiency level required at TSL 4 for BVMs in any product class. At TSL 5, the primary driver of high conversion costs is the industry’s investment to redesign both products and production lines for the introduction of vacuum insulated panels. TSL 4 does not require VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 the incorporation of vacuum insulated panels, which in turn reduces the need for redesigned models and new cabinet fixtures. This reduces both the level of potential capital investment and the engineering effort required to redesign equipment. At TSL 4, the primary driver of conversion costs is the industry’s investment to redesign products for the incorporation of variable speed compressors, more efficient evaporators and fan motors, and, for PC 1, triple pane glass packs. After considering the analysis and weighing the benefits and burdens, the Secretary has tentatively concluded that at a standard set at TSL 4 for BVMs is economically justified. At this TSL, the average LCC savings for BVM consumers across all equipment classes is positive with 34 percent of consumers negatively impacted. The NPV of consumer benefits is positive at each equipment class at both 3-percent and 7percent discount rates. Further, TSL 4 represents the maximum NPV of consumer benefits out of all TSLs at a 3-percent discount rate. The shipment weighted average LCC impact is a positive savings of $97 at TSL 4, including a cost of $6 for Class A BVMs. This $6 cost represents 0.06 percent of the average LCC for the equipment ($9,551). Further, the LCC calculations are based on equipment to be installed on the compliance year of the proposed rule. However, the costs for higher efficiency PMS fan motors as well as for variable speed compressors which may be incorporated in the manufacture of Class A BVMs at TSL 4 is projected to drop quickly in subsequent years, shifting the small negative LCC for Class A to a positive value quickly and resulting in both consumer LCC benefits and overall net consumer NPV benefits (see discussion of equipment price trends in Chapter 8 of the NOPR TSD). Approximately 7% of the installed cost to the customer for Class A equipment at TSL 4 ($4,228 shown in Table V.4) are expected to be in components which DOE anticipates to experience experiential learning price drops of approximately 5.9% year over year. Thus by year 2 of the rule the expected cost reduction in Class A is approximately $17 at TSL 4. The anticipated market in the no new standards case has approximately 95 percent of the market at EL3 and below and these basecase efficiency equipment would not experience similar component-level experiential learning. Thus DOE predicts an average reduction in the incremental installed cost for Class A equipment by year 2 of the rule of approximately $16.40 over the no- PO 00000 Frm 00053 Fmt 4701 Sfmt 4702 34019 new standards case. Assuming equipment installed in year 2 will have similar energy benefits to equipment installed in year 1 over the no new standards case, the reduction in first cost for equipment installed in year 2 will more than offset the small negative $6 LCC savings shown for year 1 of the rule. DOE recognizes that the fraction of consumers of Class A equipment in the compliance year is negative is more than one-half of the affected customers, but similarly believes that this will change within a short few years into the analysis period for the reasons previously illustrated. Given that Class A NPVs are strongly positive at both 3percent and 7-percent discount rates, DOE has determined that the small LCC cost for Class A in TSL 4 in year one of the analysis period did not outweigh the NPV benefits that would accrue to consumers over the analysis period. Thus, DOE has determined that TSL 4 would be economically justified. The FFC national energy savings are significant and the NPV of consumer benefits is positive using both a 3percent and 7-percent discount rate. Notably, the benefits to consumers vastly 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 40 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 $0.14 billion in climate benefits (associated with the average SC–GHG at a 3-percent discount rate), and $0.27 billion (using a 3-percent discount rate) or $0.10 billion (using a 7-percent discount rate) in health benefits—the rationale becomes stronger still. 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 while TSL 5 would provide for over 50% higher energy savings and significantly greater climate and health benefits from E:\FR\FM\25MYP2.SGM 25MYP2 34020 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules emission reductions than TSL 4, the consumer net benefits at TSL 5 are negative whereas those at TSL 4 are positive. Further both the consumer net benefits and the total net benefits, including the monetized benefits from emission reductions, at TSL 4 exceed those at TSL 5 as well as those of the other TSLs examined by DOE. When comparing TSL 4 to TSL 3, DOE notes that the shipment weighted average LCC savings for TSL 4 is less than at TSL 3 by $10, but the shipment weighted average PBP at TSL 4 of 3.7 years, is lower than TSL 3, at 3.8 years. At TSL 4, the shipment weighted average fraction of customers experiencing a net LCC cost is 34 percent, only slightly greater than the 28 percent estimated for TSL 3. Taken as a whole for the BVM market, the LCC and payback impact on consumers at TSL 3 and TSL 4 are very similar. The consumer net benefits at TSL 4 exceed those of TSL 3 due to the energy savings and the total net benefits including monetized benefits of emission reductions. These additional savings and benefits at TSL 4 are significant. Thus, DOE considers the impacts to be, as a whole, economically justified at TSL 4. Although DOE considered proposed amended standard levels for BVMs by grouping the efficiency levels for each equipment class into TSLs, DOE evaluates all analyzed efficiency levels in its analysis. For all equipment classes except Class A, TSL 4 represents the maximum TSL that results in LCC savings and for these classes less than 5 percent of the consumers experience an LCC cost. For Class A, the average LCC savings was -$6 over the life of the equipment and 59% of consumers experience negative LCC savings. As noted previously however, the average LCC cost is small relative to the lifecycle cost of Class A equipment and the expected reduction in cost of specific components used for Class A at TSL 4 including variable speed compressors and permanent magnet synchronous fan motors is anticipated to change the incremental equipment costs such that the small LCC cost experienced by Class A purchasers in the compliance year will not be experienced in subsequent years. Although DOE acknowledges the negative LCC impacts seen in Class A, given that the weighted average LCC benefits across all classes are positive at TSL 4, DOE has tentatively determined that TSL 4 is economically justified. Therefore, based on the previous considerations, DOE proposes to adopt the energy conservation standards for BVMs at TSL 4. The proposed amended energy conservation standards for BVMs, which are expressed as kWh/ day, are shown in Table V.33. 2. Annualized Benefits and Costs of the Proposed Standards The benefits and costs of the proposed standards can also be expressed in terms of annualized values. The annualized net benefit is (1) the annualized national economic value (expressed in 2021$) 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.34 shows the annualized values for BVMs 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 BVMs is $5.8 million per year in increased equipment costs, while the estimated annual TABLE V.33—PROPOSED AMENDED benefits are $16 million from reduced ENERGY CONSERVATION STANDARDS equipment operating costs, $8.5 million FOR REFRIGERATED BOTTLED OR from GHG reductions, and $12 million CANNED BEVERAGE VENDING MA- from reduced NOX and SO2 emissions. In this case, the net benefit amounts to CHINES $30 million per year. Using a 3-percent discount rate for all Maximum daily Equipment class energy consumption benefits and costs, the estimated cost of kilowatt hours per day the proposed standards for BVMs is $4.9 million per year in increased equipment Class A .................. 0.029 × V* + 1.34 costs, while the estimated annual Class B .................. 0.029 × V* + 1.21 benefits are $20 million in reduced Combination A ....... 0.048 × V* + 1.50 operating costs, $8.5 million from GHG Combination B ....... 0.052 × V* + 0.96 reductions, and $16 million from * V is the representative value of refrigerated reduced NOX and SO2 emissions. In this volume (ft3) of the BVM model, as calculated case, the net benefit amounts to $39 pursuant to 10 CFR 429.52(a)(3). million per year. TABLE V.34—ANNUALIZED BENEFITS AND COSTS OF PROPOSED ENERGY CONSERVATION STANDARDS FOR REFRIGERATED BOTTLED OR CANNED BEVERAGE VENDING MACHINES (TSL 4) Million 2021$/year Primary estimate Low net benefits estimate High net benefits estimate 3% discount rate lotter on DSK11XQN23PROD with PROPOSALS2 Consumer Operating Cost Savings ......................................................... Climate Benefits * ..................................................................................... Health Benefits ** ..................................................................................... Total Benefits † ........................................................................................ Consumer Incremental Product Costs ‡ .................................................. Net Benefits ............................................................................................. 20 8.5 16 44 4.9 39 19 8.5 16 44 5.2 38 20 8.5 17 45 4.9 40 16 8.5 12 36 5.8 15 8.5 12 35 6.0 16 8.5 12 36 5.7 7% discount rate Consumer Operating Cost Savings ......................................................... Climate Benefits * (3% discount rate) ...................................................... Health Benefits ** ..................................................................................... Total Benefits † ........................................................................................ Consumer Incremental Product Costs ‡ .................................................. VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 PO 00000 Frm 00054 Fmt 4701 Sfmt 4702 E:\FR\FM\25MYP2.SGM 25MYP2 34021 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules TABLE V.34—ANNUALIZED BENEFITS AND COSTS OF PROPOSED ENERGY CONSERVATION STANDARDS FOR REFRIGERATED BOTTLED OR CANNED BEVERAGE VENDING MACHINES (TSL 4)—Continued Million 2021$/year Low net benefits estimate Primary estimate Net Benefits ............................................................................................. 30 High net benefits estimate 29 31 Note: This table presents the costs and benefits associated with BVMs shipped in 2028¥2057. These results include benefits to consumers which accrue after 2057 from the products shipped in 2028¥2057. 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 sections IV.F.1 and 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 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 sets of 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. In the absence of further intervening court orders, DOE will revert to its approach prior to the injunction and presents monetized 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 benefits for both the 3-percent and 7-percent cases are presented using the average SC–GHG with 3-percent discount rate, but DOE does not have a single central SC–GHG point estimate. ‡ Costs include incremental equipment costs as well as installation costs. D. Reporting, Certification, and Sampling Plan Manufacturers, including importers, must use product-specific certification templates to certify compliance to DOE. For BVM equipment, the certification template reflects the general certification requirements specified at 10 CFR 429.12 and the product-specific requirements specified at 10 CFR 429.52. DOE is not proposing to amend the product-specific certification requirements for this equipment. VI. Procedural Issues and Regulatory Review lotter on DSK11XQN23PROD with PROPOSALS2 A. Review Under Executive Orders 12866, 13563, and 14094 Executive Order (‘‘E.O.’’) 12866, ‘‘Regulatory Planning and Review,’’ as supplemented and reaffirmed by E.O. 13563, ‘‘Improving Regulation and Regulatory Review,’’ 76 FR 3821 (Jan. 21, 2011) and E.O. 14094, ‘‘Modernizing Regulatory Review,’’ 88 FR 21879 (April 11, 2023), 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 VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 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 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 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 final regulatory action does not constitute a ‘‘significant regulatory action’’ within PO 00000 Frm 00055 Fmt 4701 Sfmt 4702 the scope of section 3(f) of E.O. 12866. Accordingly, this action was not submitted to OIRA for review under E.O. 12866. 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 equipment that is the subject of this proposed rulemaking. For manufacturers of BVMs, 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 E:\FR\FM\25MYP2.SGM 25MYP2 34022 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules 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. Manufacturing of BVMs is classified under NAICS 333310, ‘‘Commercial and Service Industry Machinery Manufacturing.’’ The SBA sets a threshold of 1,000 employees or fewer for an entity to be considered as a small business for this category. lotter on DSK11XQN23PROD with PROPOSALS2 1. Description of Reasons Why Action Is Being Considered DOE is proposing amended energy conservation standards for BVMs. EPCA directed DOE to prescribe energy conservation standards for BVMs not later than 4 years after August 8, 2005. (42 U.S.C. 6295(v)(1)) DOE has completed this proposed rulemaking. 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 proposed rulemaking is in accordance with DOE’s obligations under EPCA. 2. Objectives of, and Legal Basis for, Rule DOE is conducting this proposed rulemaking to fulfill its statutory obligation under EPCA to 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 not later than 6 years after the issuance of any final rule establishing or amending a standard. (42 U.S.C. 6295(m)(1)) DOE must follow specific statutory criteria for prescribing new or amended standards for covered products, including BVMs. Specifically, 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 determines is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A) and 42 U.S.C. 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)(B)) 3. Description on Estimated Number of Small Entities Regulated To estimate the number of companies that could be small business VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 manufacturers of products covered by this proposed rulemaking, DOE conducted a market survey using public information and subscription-based company reports to identify potential small manufacturers. DOE’s research involved DOE’s Compliance Certification Database (CCD),74 California Energy Commission’s Modernized Appliance Efficiency Database System directory,75 individual company websites, and market research tools (e.g., reports from Dun & Bradstreet 76) to create a list of companies that manufacture, produce, import, or assemble the products covered by this rulemaking. DOE also asked stakeholders and industry representatives if they were aware of any other small manufacturers during manufacturer interviews and at DOE public meetings. DOE 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 identified five OEMs of BVMs sold in the United States. Of the five OEMs, DOE identified two small, domestic manufacturers affected by proposed amended standards for BVM equipment. The first small business is an OEM of Class A, Class B, and Combo A equipment. The second small business is an OEM of Class B, Combo A, and Combo B equipment. DOE reached out to these small businesses and invited them to participate in voluntary interviews. DOE also requested information about small businesses and potential impacts on small businesses while interviewing large manufacturers. DOE requests comment on the number of small, domestic OEMs in the industry. 4. Description and Estimate of Compliance Requirements Including Differences in Cost, if Any, for Different Groups of Small Entities The first small business is an OEM that certifies ten basic models of Class A BVMs, two basic models of Class B BVMs, and eight basic models of Combo 74 See www.regulations.doe.gov/certificationdata/CCMS–4-Refrigerated_Bottled_or_Canned_ Beverage_Vending_Machines.html#q=Product_ Group_s%3A%22Refrigerated %20Bottled%20or%20Canned%20Beverage%20 Vending%20Machines%22. (Accessed February 9, 2023). 75 California Energy Commission, Modernized Appliance Efficiency Database System. (Last accessed September 30, 2022.) cacertappliances.energy.ca.gov/Pages/Search/ AdvancedSearch.aspx. 76 The Dun & Bradstreet Hoovers login is available at app.dnbhoovers.com. PO 00000 Frm 00056 Fmt 4701 Sfmt 4702 A BVMs. One of the 20 basic models would meet the proposed amended standards. In total, the company would need to redesign 19 basic models. DOE estimated the first small business would need to invest $800,000 in product conversion costs to redesign all 19 basic models. DOE’s engineering analysis indicates manufacturers would be able to produce compliant products on existing production lines with minimal capital investments. DOE’s estimate of the product conversion costs is based on feedback from manufacturers, which indicated they would need to invest in redesigning Class A, Class B, and Combo A products to incorporate design options such as variable speed compressors, more efficient motors, larger heat exchangers, variable speed compressors, and triple pane glass packs. DOE estimated the cost of this redesign per model, and multiplied that cost by the number of models that would need to be redesigned by the first small business. DOE’s analysis focused on the investments associated with amended standards; investments associated with changes in regulations by other Federal agencies (i.e., refrigerant regulations) are not attributed to amended standards. Based on market research tools, DOE estimated the company’s annual revenue to be $27 million. Taking into account the three-year conversion period, DOE expects conversion costs to be 1.0% of conversion period revenue. The second small business is an OEM that certifies one basic model of Class B BVMs, five basic models of Combo A BVMs, and one basic model of Combo B BVMs. None of the company’s BVM models would meet the proposed amended standards. In total, the company would need to redesign seven basic models. DOE estimated the company would need to invest $100,000 in product conversion costs to redesign all seven basic models. DOE’s estimate of the product conversion costs is based on feedback from manufacturers, which indicated they would need to invest in redesigning Class B, Combo A, and Combo B products to incorporate design options such as variable speed compressors, more efficient motors, larger heat exchangers, and variable speed compressors. DOE estimated the cost of this redesign per model, and multiplied that cost by the number of models that would need to be redesigned by the second small business. DOE’s engineering analysis design options suggest manufacturers would be able to produce compliant products on existing production lines with minimal capital investments. E:\FR\FM\25MYP2.SGM 25MYP2 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules DOE’s analysis focused on the investments associated with amended standards; investments associated with changes in regulations by other Federal agencies (i.e., refrigerant regulations) are not attributed to amended standards. Based on market research tools, DOE estimated the company’s annual revenue to be $72 million. Taking into account the three-year conversion period, DOE expects conversion costs to be 0.1% of conversion period revenue. DOE requests comment on the potential impacts of the proposed standard on small business manufacturing of BVMs, including the extent of model redesign and manufacturing lines changes necessitated by standards. lotter on DSK11XQN23PROD with PROPOSALS2 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 this 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, they would come at the expense of a reduction in energy savings. TSL 1 achieves 56 percent lower energy savings compared to the energy savings at TSL 4. TSL 2 achieves 39 percent lower energy savings compared to the energy savings at TSL 4. TSL 3 achieves 6 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 BVM 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 VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 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 BVM equipment must certify to DOE that their equipment comply with any applicable energy conservation standards. In certifying compliance, manufacturers must test their products according to the DOE test procedures for BVM equipment, 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 BVM equipment. (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. The 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. 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 proposed rulemaking qualifies for categorical exclusion B5.1 because it is a rulemaking that establishes energy conservation standards for consumer PO 00000 Frm 00057 Fmt 4701 Sfmt 4702 34023 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 equipment that is 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 E.O. 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 E:\FR\FM\25MYP2.SGM 25MYP2 34024 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules 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 E.O. 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. lotter on DSK11XQN23PROD with PROPOSALS2 G. Review Under the Unfunded Mandates Reform Act of 1995 Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) requires each Federal agency to assess the effects of Federal regulatory actions on State, local, and Tribal governments and the private sector. Public Law 104–4, 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 energy.gov/sites/prod/files/ gcprod/documents/umra_97.pdf. This rule does not contain a Federal intergovernmental mandate, nor is it expected to require expenditures of $100 million or more in any one year by the private sector. As a result, the VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 analytical requirements of UMRA do not apply. H. Review Under the Treasury and General Government Appropriations Act, 1999 Section 654 of the Treasury and General Government Appropriations Act, 1999 (Pub. L. 105–277) requires Federal agencies to issue a Family Policymaking Assessment for any rule that may affect family well-being. This rule would not have any impact on the autonomy or integrity of the family as an institution. Accordingly, DOE has concluded that it is not necessary to prepare a Family Policymaking Assessment. I. Review Under Executive Order 12630 Pursuant to 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%20 IQA%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 PO 00000 Frm 00058 Fmt 4701 Sfmt 4702 agency that promulgates or is expected to lead to promulgation of a final rule, and that (1) is a significant regulatory action under E.O. 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 BVM equipment, 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 Federal 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.77 Generation of this report involved a 77 The 2007 Energy Conservation Standards Rulemaking Peer Review Report is available at the following website: www.energy.gov/eere/buildings/ downloads/energy-conservation-standardsrulemaking-peer-review-report-0. Last accessed Feb. 13, 2023. E:\FR\FM\25MYP2.SGM 25MYP2 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules 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 DOE’s analyses. DOE is in the process of evaluating the resulting report.78 VII. Public Participation A. Participation in the 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: www.energy.gov/eere/buildings/publicmeetings-and-comment-deadlines. Participants are responsible for ensuring their systems are compatible with the webinar software. lotter on DSK11XQN23PROD with PROPOSALS2 B. Procedure for Submitting Prepared General Statements for Distribution Any person who has an interest in the topics addressed in this proposed rule, or who is representative of a group or class of persons that has an interest in these issues, may request an opportunity to make an oral presentation at the webinar. Such persons may submit a request to ApplianceStandardsQuestions@ ee.doe.gov. Persons who wish to speak should include with their request a computer file in WordPerfect, Microsoft Word, PDF, or text (ASCII) file format that briefly describes the nature of their interest in this proposed rulemaking and the topics they wish to discuss. Such persons should also provide a daytime telephone number where they can be reached. C. Conduct of the Webinar DOE will designate a DOE official to preside at the webinar 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 78 The report is available at www.nationalacademies.org/our-work/review-ofmethods-for-setting-building-and-equipmentperformance-standards. VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 (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 webinar. 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 webinar and until the end of the comment period, interested parties may submit further comments on the proceedings and any aspect of the proposed rulemaking. The webinar will be conducted in an informal, conference style. DOE will conduct a general overview of the topics addressed in this proposed rulemaking, allow time for prepared general statements by participants, and encourage all interested parties to share their views on issues affecting this proposed 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 permit, 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 proposed rulemaking. The official conducting the webinar will accept additional comments or questions from those attending, as time permits. The presiding official will announce any further procedural rules or modification of the above procedures that may be needed for the proper conduct of the webinar. A transcript of the webinar will be included in the docket, which can be viewed as described in the Docket section at the beginning of this document. 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. PO 00000 Frm 00059 Fmt 4701 Sfmt 4702 34025 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 E:\FR\FM\25MYP2.SGM 25MYP2 lotter on DSK11XQN23PROD with PROPOSALS2 34026 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules 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. 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 to BVM2020STD0014@ ee.doe.gov 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. 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). (1) DOE requests comment on its proposal to revise the definition of Combination A. (2) DOE requests comments on its proposal to use baseline levels for BVM equipment based upon the design changes made by manufacturers in response to the December 2022 EPA NOPR. (3) DOE further requests comment on its estimates of energy use reduction associated with the design changes made by manufacturers in response to the December 2022 EPA NOPR. (4) DOE request comments on the frequency and nature of compressor and motor repairs or replacements in BVMs. (5) DOE seeks comment on the method for estimating manufacturing production costs. (6) DOE requests comment on how to address the climate benefits and other non-monetized effects of the proposal. (7) DOE requests information regarding the impact of cumulative regulatory burden on manufacturers of BVMs associated with multiple DOE standards or product-specific regulatory actions of other Federal agencies. (8) DOE requests comment on the number of small, domestic OEMs in the industry. (9) DOE requests comment on the potential impacts of the proposed standard on small business manufacturing of BVMs, including the extent of model redesign and manufacturing lines changes necessitated by standards. Additionally, DOE welcomes comments on other issues relevant to the conduct of this proposed rulemaking that may not specifically be identified in this document. E. Issues on Which DOE Seeks Comment Signing Authority 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: This document of the Department of Energy was signed on May 1, 2023, by Francisco Alejandro Moreno, Acting Assistant Secretary for Energy Efficiency and Renewable Energy, pursuant to VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 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 431 Administrative practice and procedure, Confidential business information, Energy conservation test procedures, Reporting and recordkeeping requirements. PO 00000 Frm 00060 Fmt 4701 Sfmt 4702 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 the legal effect of this document upon publication in the Federal Register. Signed in Washington, DC, on May 5, 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 431 of chapter II, subchapter D, of title 10 of the Code of Federal Regulations, as set forth below: PART 431—ENERGY EFFICIENCY PROGRAM FOR CERTAIN COMMERCIAL AND INDUSTRIAL EQUIPMENT 1. The authority citation for part 431 continues to read as follows: ■ Authority: 42 U.S.C. 6291–6317; 28 U.S.C. 2461 note. 2. Amend § 431.292 by revising the definition of ‘‘Combination A’’ to read as follows: ■ § 431.292 Definitions concerning refrigerated bottled or canned beverage vending machines. * * * * * Combination A means a combination vending machine where 25 percent or more of the surface area on the front side of the beverage vending machine that surrounds the refrigerated compartment(s) is transparent. * * * * * ■ 3. Revise § 431.296 to read as follows: § 431.296 Energy conservation standards and their effective dates. (a) Each refrigerated bottled or canned beverage vending machine manufactured on or after January 8, 2019 and before [date 3 years after date of publication of final rule in the Federal Register], shall have a daily energy consumption (in kilowatt hours per day), when measured in accordance with the DOE test procedure at § 431.294, that does not exceed the following: E:\FR\FM\25MYP2.SGM 25MYP2 34027 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Proposed Rules Equipment class Class A ........................... Class B ........................... Combination A ................ Combination B ................ Maximum daily energy consumption (kilowatt hours per day) 0.052 0.052 0.086 0.111 × × × × V† V† V† V† + + + + 2.43. 2.20. 2.66. 2.04. † ‘‘V’’ is the representative value of refrigerated volume (ft3) of the BVM model, as calculated pursuant to 10 CFR 429.52(a)(3). manufactured on or after [date 3 years after date of publication of final rule in the Federal Register], shall have a daily energy consumption (in kilowatt hours per day), when measured in accordance with the DOE test procedure at § 431.294, that does not exceed the following: lotter on DSK11XQN23PROD with PROPOSALS2 (b) Each refrigerated bottled or canned beverage vending machine VerDate Sep<11>2014 18:42 May 24, 2023 Jkt 259001 PO 00000 Equipment class Class A ........................... Class B ........................... Combination A ................ Combination B ................ Maximum daily energy consumption (kilowatt hours per day) 0.029 0.029 0.048 0.052 × × × × V† V† V† V† + + + + 1.34. 1.21. 1.50. 0.96. † ‘‘V’’ is the representative value of refrigerated volume (ft3) of the BVM model, as calculated pursuant to 10 CFR 429.52(a)(3). [FR Doc. 2023–09968 Filed 5–24–23; 8:45 am] BILLING CODE 6450–01–P Frm 00061 Fmt 4701 Sfmt 9990 E:\FR\FM\25MYP2.SGM 25MYP2

Agencies

DEPARTMENT OF ENERGY

[Federal Register Volume 88, Number 101 (Thursday, May 25, 2023)]
[Proposed Rules]
[Pages 33968-34027]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-09968]



[[Page 33967]]

Vol. 88

Thursday,

No. 101

May 25, 2023

Part II





Department of Energy





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





10 CFR Part 431





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

Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / 
Proposed Rules

[[Page 33968]]


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

DEPARTMENT OF ENERGY

10 CFR Part 431

[EERE-2020-BT-STD-0014]
RIN 1904-AE68


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

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

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

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

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 refrigerated 
bottled or canned beverage vending machines (BVMs). 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 BVMs, 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 July 24, 2023.
    Meeting: DOE will hold a public meeting via webinar on Wednesday, 
June 7, 2023, from 1:00 p.m. to 4:00 p.m. See section VII, ``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 U.S. Department of Justice (DOJ) contact 
listed in the ADDRESSES section on or before June 26, 2023.

ADDRESSES: Interested persons are encouraged to submit comments using 
the Federal eRulemaking Portal at www.regulations.gov under docket 
number EERE-2020-BT-STD-0014. Follow the instructions for submitting 
comments. Alternatively, interested persons may submit comments, 
identified by docket number EERE-2020-BT-STD-0014, by any of the 
following methods:
    Email: [email protected]. Include the docket number number 
EERE-2020-BT-STD-0014 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-0014. 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 DOJ 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 
rulemaking.

FOR FURTHER INFORMATION CONTACT: 
    Mr. Bryan Berringer, U.S. Department of Energy, Office of Energy 
Efficiency and Renewable Energy, Building Technologies Office, EE-5B, 
1000 Independence Avenue SW, Washington, DC 20585-0121. Telephone: 
(202) 586-0371. Email: [email protected].
    Ms. Sarah Butler, U.S. Department of Energy, Office of the General 
Counsel, GC-33, 1000 Independence Avenue SW, Washington, DC 20585-0121. 
Telephone: (202) 586-1777. 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 BVMs
    C. Deviation From Process Rule
    1. Framework Document
    2. Public Comment Period
    3. Amended Test Procedures
III. General Discussion
    A. General Comments
    B. Scope of Coverage
    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. Equipment Classes
    a. Combination A
    2. Technology Options
    a. Compressors
    b. Alternative Refrigerants
    c. Insulation
    d. Fan Motors
    e. Evaporators and Condensers

[[Page 33969]]

    f. Glass Packs
    g. Payment Mechanisms
    h. Low Power Modes
    i. Additional Concerns
    B. Screening Analysis
    1. Screened Out Technologies
    2. Remaining Technologies
    C. Engineering Analysis
    1. Efficiency Analysis
    a. Baseline Energy Use
    b. Higher Efficiency Levels
    2. Cost Analysis
    3. Cost-Efficiency Results
    D. Markups Analysis
    E. Energy Use Analysis
    F. Life-Cycle Cost and Payback Period Analysis
    1. Equipment Cost
    2. Installation Cost
    3. Annual Energy Consumption
    4. Energy Prices
    5. Maintenance and Repair Costs
    6. Equipment Lifetime
    7. Discount Rates
    8. Energy Efficiency Distribution in the No-New-Standards Case
    9. Split Incentives
    10. 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
    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 BVM 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, 13563, and 14094
    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. Participation in the Webinar
    B. Procedure for Submitting Prepared General Statements for 
Distribution
    C. Conduct of the Webinar
    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. 
These products include BVMs, the subject of this proposed rulemaking. 
(42 U.S.C. 6295(v)) \3\
---------------------------------------------------------------------------

    \1\ All references to EPCA in this document refer to the statute 
as amended through the Infrastructure Investment and Jobs Act, 
Public Law 117-58 (Nov. 15, 2021).
    \2\ For editorial reasons, upon codification in the U.S. Code, 
Part B was redesignated Part A.
    \3\ Because Congress included BVMs in Part A of Title III of 
EPCA, the consumer product provisions of Part A (rather than the 
industrial equipment provisions of Part A-1) apply to BVMs. DOE 
placed the regulatory requirements specific to BVMs in 10 CFR part 
431, ``Energy Efficiency Program for Certain Commercial and 
Industrial Equipment'' as a matter of administrative convenience 
based on their type and will refer to BVMs as ``equipment'' 
throughout this document because of their placement in 10 CFR part 
431. Despite the placement of BVMs in 10 CFR part 431, the relevant 
provisions of Title A of EPCA and 10 CFR part 430, which are 
applicable to all product types specified in Title A of EPCA, are 
applicable to BVMs. See 74 FR 44914, 44917 (Aug. 31, 2009) and 80 FR 
45758, 45759 (Jul. 31, 2015). The regulatory provisions of 10 CFR 
430.33 and 430.34 and subparts D and E of 10 CFR part 430 are 
applicable to BVMs.
---------------------------------------------------------------------------

    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 3 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 NOPR 
including new proposed energy conservation standards (proceeding to a 
final rule, as appropriate). (42 U.S.C. 6295(m)(3)(B))
    In accordance with these and other statutory provisions discussed 
in this document, DOE proposes amended energy conservation standards 
for BVMs. The proposed standards, which are expressed in maximum daily 
energy consumption as a function of refrigerated volume, if adopted, 
would apply to all BVMs listed in Table I.1 manufactured in, or 
imported into, the United States starting on the date 3 years after the 
publication of the final rule for this proposed rulemaking.

       Table I.1--Proposed Energy Conservation Standards for BVMs
------------------------------------------------------------------------
                                                Maximum daily  energy
              Equipment class               consumption  (kilowatt hours
                                                      per day)
------------------------------------------------------------------------
Class A...................................  0.029 x V * + 1.34.
Class B...................................  0.029 x V * + 1.21.
Combination A.............................  0.048 x V * + 1.50.
Combination B.............................  0.052 x V * + 0.96.
------------------------------------------------------------------------
 * V is the representative value of refrigerated volume (ft\3\) of the
  BVM model, as calculated pursuant to 10 CFR 429.52(a)(3).


[[Page 33970]]

A. Benefits and Costs to Consumers

    Table I.2 presents DOE's evaluation of the economic impacts of the 
proposed standards on consumers of BVMs, as measured by the average 
life-cycle cost (LCC) savings and the simple payback period (PBP).\4\ 
The PBP is less than the average lifetime of BVMs, which is estimated 
to be 13.4 years (see section IV.F of this document).
---------------------------------------------------------------------------

    \4\ 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.9 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 Refrigerated Bottled or Canned Beverage Vending Machines
------------------------------------------------------------------------
                                                                Simple
                                                 Average LCC    payback
                Equipment class                   savings *     period
                                                   (2021$)      (years)
------------------------------------------------------------------------
Class A.......................................        (5.52)         5.7
Class B.......................................        206.01         1.2
Combination A.................................        190.03         1.4
Combination B.................................        287.16         2.2
------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.

    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 to the industry from the base year through the end of the 
analysis period (2028-2057). Using a real discount rate of 8.5 percent, 
DOE estimates that the INPV for manufacturers of BVMs in the case 
without amended standards is $85.5 million in 2021$. Under the proposed 
standards, the change in INPV is estimated to range from a loss of 2.2 
percent to a gain 0.6 percent, which is approximately -$1.9 million to 
$0.5 million. In order to bring equipment into compliance with amended 
standards, it is estimated that the industry would incur total 
conversion costs of $1.5 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 \5\
---------------------------------------------------------------------------

    \5\ All monetary values in this document are expressed in 2021 
dollars.
---------------------------------------------------------------------------

    DOE's analyses indicate that the proposed energy conservation 
standards for BVMs would save a significant amount of energy. Relative 
to the case without amended standards, the lifetime energy savings for 
BVMs purchased in the 30-year period that begins in the anticipated 
year of compliance with the amended standards (2028-2057) amount to 
0.09 quadrillion British thermal units (Btu or quads).\6\ This 
represents a savings of 30 percent relative to the energy use of this 
equipment in the case without amended standards (referred to as the 
``no-new-standards case'').
---------------------------------------------------------------------------

    \6\ 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 BVMs ranges from $0.09 billion (at a 7-
percent discount rate) to $0.25 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 BVMs purchased 
in 2028-2057.
    In addition, the proposed standards for BVMs are projected to yield 
significant environmental benefits. DOE estimates that the proposed 
standards would result in cumulative emission reductions (over the same 
period as for energy savings) of 3.0 million metric tons (Mt) \7\ of 
carbon dioxide (CO2), 1.4 thousand tons of sulfur dioxide 
(SO2), 4.7 thousand tons of nitrogen oxides 
(NOX), 21 thousand tons of methane (CH4), 0.03 
thousand tons of nitrous oxide (N2O), and 0.009 tons of 
mercury (Hg).\8\
---------------------------------------------------------------------------

    \7\ A metric ton is equivalent to 1.1 short tons. Results for 
emissions other than CO2 are presented in short tons.
    \8\ DOE calculated emissions reductions relative to the no-new-
standards case, which reflects key assumptions in the Annual Energy 
Outlook 2022 (AEO2022). AEO2022 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 AEO2022 assumptions that effect air pollutant 
emissions.
---------------------------------------------------------------------------

    DOE estimates the value of climate benefits from a reduction in 
greenhouse gases (GHGs) 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 GHGs 
(``SC-GHGs''). 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 climate benefits 
associated with the average SC-GHG at a 3-percent discount rate are 
estimated to be $0.14 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 sets of SC-GHG 
estimates.
---------------------------------------------------------------------------

    \9\ To monetize the benefits of reducing GHG emissions this 
analysis uses the interim estimates presented in the Technical 
Support Document: Social Cost of Carbon, Methane, and Nitrous Oxide 
Interim Estimates Under Executive Order 13990 published in February 
2021 by the IWG. (``February 2021 SC-GHG TSD''). www.whitehouse.gov/wp-content/uploads/2021/02/TechnicalSupportDocument_SocialCostofCarbonMethaneNitrousOxide.pdf.
---------------------------------------------------------------------------

    DOE estimated the monetary health benefits of SO2 and 
NOX emissions reductions using benefit per ton estimates 
from the scientific literature, as discussed in section IV.L of this 
document. DOE estimated the present value of the health benefits would 
be $0.10 billion using a 7-percent discount rate and $0.27 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 E.O. 12866.
---------------------------------------------------------------------------

    Table I.3 summarizes the monetized benefits and costs expected to 
result from the proposed standards for BVMs. There are other important 
unquantified effects, including certain unquantified climate benefits, 
unquantified public health benefits from the reduction of toxic air 
pollutants and other emissions, unquantified energy security benefits, 
and distributional effects, among others. The monetization of climate 
and health benefits that have been quantified is explained in section 
IV.L of this document.

[[Page 33971]]



  Table I.3--Summary of Monetized Benefits and Costs of Proposed Energy
     Conservation Standards for Refrigerated Bottled or Canned BVMs
                                 [TSL 4]
------------------------------------------------------------------------
                                                                Billion
                                                                ($2021)
------------------------------------------------------------------------
                            3% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings..............................       0.33
Climate Benefits *...........................................       0.14
Health Benefits **...........................................       0.27
Total Benefits [dagger]......................................       0.75
Consumer Incremental Product Costs [Dagger]..................       0.08
                                                              ----------
    Net Benefits.............................................       0.66
------------------------------------------------------------------------
                            7% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings..............................       0.14
Climate Benefits * (3% discount rate)........................       0.14
Health Benefits **...........................................       0.10
Total Benefits[dagger].......................................       0.38
Consumer Incremental Product Costs[Dagger]...................       0.05
                                                              ----------
    Net Benefits.............................................       0.33
------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with BVMs
  shipped in 2028-2057. These results include benefits to consumers
  which accrue after 2057 from the products shipped in 2028-2057.
* 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; however, DOE emphasizes the importance and value of considering
  the benefits calculated using all four sets of SC-GHG estimates. To
  monetize the benefits of reducing GHG emissions, this analysis uses
  the interim estimates presented in the Technical Support Document:
  Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates
  Under Executive Order 13990 published in February 2021 by the IWG.
** 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 DOE does not have a single central SC-GHG point estimate.
  DOE emphasizes the importance and value of considering the benefits
  calculated using all four sets of SC-GHG estimates.
[Dagger] Costs include incremental equipment costs as well as
  installation costs.

    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 2021, 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 2021. 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 cost savings are domestic private U.S. 
consumer monetary savings that occur as a result of purchasing the 
covered equipment and are measured for the lifetime of BVMs shipped in 
2028-2057. The benefits associated with reduced emissions achieved as a 
result of the proposed standards are also calculated based on the 
lifetime of BVMs shipped in 2028-2057. Total benefits for both the 3-
percent and 7-percent cases are presented using the average GHG social 
costs with a 3-percent discount rate. Estimates of SC-GHG values are 
presented for all four discount rates in section V.B.6 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 $5.8 million per year in increased equipment 
costs, while the estimated annual benefits are $16 million in reduced 
equipment operating costs, $8.5 million in climate benefits, and $12 
million in health benefits. In this case. The net benefit would amount 
to $30 million per year.
    Using a 3-percent discount rate for all benefits and costs, the 
estimated cost of the proposed standards is $4.9 million per year in 
increased equipment costs, while the estimated annual benefits are $20 
million in reduced operating costs, $8.5 million in climate benefits, 
and $16 million in health benefits. In this case, the net benefit would 
amount to $39 million per year.

Table I.4--Annualized Benefits and Costs of Proposed Energy Conservation Standards for Beverage Vending Machines
                                                     [TSL 4]
----------------------------------------------------------------------------------------------------------------
                                                                            Million 2021$/year
                                                        --------------------------------------------------------
                                                                             Low net benefits  High net benefits
                                                         Primary  estimate       estimate           estimate
----------------------------------------------------------------------------------------------------------------
                                                3% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings........................                 20                 19                 20
Climate Benefits *.....................................                8.5                8.5                8.5
Health Benefits **.....................................                 16                 16                 17
Total Benefits [dagger]................................                 44                 44                 45
Consumer Incremental Product Costs [Dagger]............                4.9                5.2                4.9
                                                        --------------------------------------------------------

[[Page 33972]]

 
    Net Benefits.......................................                 39                 38                 40
----------------------------------------------------------------------------------------------------------------
                                                7% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings........................                 16                 15                 16
Climate Benefits * (3% discount rate)..................                8.5                8.5                8.5
Health Benefits **.....................................                 12                 12                 12
Total Benefits [dagger]................................                 36                 35                 36
Consumer Incremental Product Costs [Dagger]............                5.8                6.0                5.7
                                                        --------------------------------------------------------
    Net Benefits.......................................                 30                 29                 31
----------------------------------------------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with BVMs shipped in 2028-2057. These results
  include benefits to consumers which accrue after 2057 from the products shipped in 2028-2057. 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 sections IV.F.1 and 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; however, DOE emphasizes the importance and value of considering the
  benefits calculated using all four sets of SC-GHG estimates. To monetize the benefits of reducing GHG
  emissions, this analysis uses the interim estimates presented in the Technical Support Document: Social Cost
  of Carbon, Methane, and Nitrous Oxide Interim Estimates Under Executive Order 13990 published in February 2021
  by the IWG.
** 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 benefits for both the 3-percent and 7-percent cases are presented using the average SC-GHG with 3-
  percent discount rate.
[Dagger] Costs include incremental equipment costs as well as installation costs.

    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, equipment achieving these standard levels is 
already commercially available for all product classes covered by this 
proposal. As for economic justification, 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 BVMs is $5.8 million per year in increased 
equipment costs, while the estimated annual benefits are $16 million in 
reduced equipment operating costs, $8.5 million in climate benefits, 
and $12 million in health benefits. The net benefit amounts to $30 
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\ 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).
---------------------------------------------------------------------------

    As previously mentioned, the standards are projected to result in 
estimated national energy savings of 0.09 quad full-fuel-cycle (FFC), 
the equivalent of the primary annual energy use of 2.4 million homes. 
In addition, they are projected to reduce CO2 emissions by 
3.0 Mt. Based on these findings, 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 these tentative conclusions is contained in 
the remainder of this document and the accompanying technical support 
document (TSD).
    DOE also considered more stringent energy efficiency levels (ELs) 
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 
BVMs.

A. Authority

    EPCA authorizes DOE to regulate the energy efficiency of a number 
of

[[Page 33973]]

consumer products and certain industrial equipment. (42 U.S.C. 6291-
6317) Title III, Part B of EPCA established the Energy Conservation 
Program for Consumer Products Other Than Automobiles. These products 
include BVM equipment, the subject of this document. (42 U.S.C. 
6295(v)) EPCA directed DOE to prescribe energy conservation standards 
for BVMs not later than 4 years after August 8, 2005. (42 U.S.C 
6295(v)(1)) 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))
    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 BVMs appear at title 10 of the Code of Federal 
Regulations (CFR) part 431, subpart Q, appendix B.
    DOE must follow specific statutory criteria for prescribing new or 
amended standards for covered products, including BVMs. 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 42 U.S.C. 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 BVMs, 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 of Energy (``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 
that 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

[[Page 33974]]

reviewed the operating modes available for BVM equipment and determined 
that this equipment does not have operating modes that meet the 
definition of standby mode or off mode, as established at 42 U.S.C. 
6295(gg)(3). Specifically, BVM equipment is typically always providing 
at least one main function--refrigeration. (42 U.S.C. 6295(gg)(1)(A)) 
DOE recognizes that in a unique equipment design, the low power mode 
includes disabling the refrigeration system, while for other equipment 
the low power mode controls only elevate the thermostat set point. 
Because low power modes still include some amount of refrigeration for 
most equipment, DOE believes that such a mode does not constitute a 
``standby mode,'' as defined by EPCA, for BVM equipment. Therefore, DOE 
believes that BVM equipment does not operate under standby and off mode 
conditions as defined in EPCA, and that the energy use of BVM equipment 
would be captured in any standard established for active mode energy 
use. This NOPR does not specifically address standby and off mode 
energy consumption for this equipment.

B. Background

1. Current Standards
    In the final rule published on January 8, 2016, DOE prescribed the 
current energy conservation standards for BVM equipment manufactured on 
and after January 8, 2019 (``January 2016 Final Rule''). 81 FR 1028. 
These standards are set forth in DOE's regulations at 10 CFR 431.296(b) 
and are repeated in Table II.1.

   Table II.1--Federal Energy Conservation Standards for Refrigerated
               Bottled or Canned Beverage Vending Machines
------------------------------------------------------------------------
                                                Maximum daily  energy
              Equipment class               consumption  (kilowatt hours
                                                      per day)
------------------------------------------------------------------------
Class A...................................  0.052 x V [dagger] + 2.43.
Class B...................................  0.052 x V [dagger] + 2.20.
Combination A.............................  0.086 x V [dagger] + 2.66.
Combination B.............................  0.111 x V [dagger] + 2.04.
------------------------------------------------------------------------
[dagger] ``V'' is the representative value of refrigerated volume (ft3)
  of the BVM model, as calculated pursuant to 10 CFR 429.52(a)(3).

2. History of Standards Rulemaking for BVMs
    On June 10, 2020, DOE published a request for information (``June 
2020 RFI'') that identified various issues on which DOE sought comment 
to inform its determination of whether the standards need to be 
amended. 85 FR 35394.
    On April 26, 2022, DOE published a notice that announced the 
availability of the preliminary analysis (``April 2022 Preliminary 
Analysis'') it conducted for purposes of evaluating the need for 
amended energy conservation standards for BVM equipment. 87 FR 24469. 
In that notification, DOE sought comment on the analytical framework, 
models, and tools that DOE used to evaluate efficiency levels for BVM 
equipment, the results of preliminary analyses performed, and the 
potential energy conservation standard levels derived from these 
analyses, which DOE presented in the accompanying preliminary TSD 
(``April 2022 Preliminary TSD'').
    On May 23, 2022, DOE held a public webinar in which it presented 
the methods and analysis in the April 2022 Preliminary Analysis and 
solicited public comment.\13\
---------------------------------------------------------------------------

    \13\ See www.regulations.gov/document/EERE-2020-BT-STD-0014-0013 
for a PDF version of the transcript.
---------------------------------------------------------------------------

    DOE received comments in response to the April 2022 Preliminary 
Analysis from the interested parties listed in Table II.2.

                          Table II.2--April 2022 Preliminary Analysis Written Comments
----------------------------------------------------------------------------------------------------------------
                                                                      Comment No. in
              Commenter(s)                       Abbreviation           the docket          Commenter type
----------------------------------------------------------------------------------------------------------------
Appliance Standards Awareness Project,    ASAP, ACEEE...............              15  Efficiency Organization.
 American Council for an Energy-
 Efficient Economy.
National Automated Merchandising          NAMA......................              14  Trade Association.
 Association.
----------------------------------------------------------------------------------------------------------------

    A parenthetical reference at the end of a comment quotation or 
paraphrase provides the location of the item in the public record.\14\ 
To the extent that interested parties have provided written comments 
that are substantively consistent with any oral comments provided 
during the May 2022 public meeting, DOE cites the written comments 
throughout this document. Any oral comments provided during the webinar 
that are not substantively addressed by written comments are summarized 
and cited separately throughout this document.
---------------------------------------------------------------------------

    \14\ The parenthetical reference provides a reference for 
information located in the docket of DOE's rulemaking to develop 
energy conservation standards for BVMs. (Docket No. EERE-2020-BT-
STD-0014, which is maintained at www.regulations.gov). The 
references are arranged as follows: (commenter name, comment docket 
ID number, page of that document).
---------------------------------------------------------------------------

C. Deviation from Process Rule

    In accordance with section 3(a) of 10 CFR part 430, subpart C, 
appendix A (``Process Rule''), DOE notes that it is deviating from the 
provision in the Process Rule regarding the pre-NOPR and NOPR stages 
for an energy conservation standards rulemaking.
1. Framework Document
    Section 6(a)(2) of the Process Rule states that if DOE 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. While DOE 
published a preliminary analysis for this rulemaking (see 87 FR 24469), 
DOE did not publish a framework document in conjunction with the 
preliminary analysis. DOE notes, however, that chapter 2 of the 
preliminary technical support document that accompanied the preliminary 
analysis--entitled Analytical Framework, Comments from Interested 
Parties, and DOE Responses--describes the general analytical framework 
that DOE uses in evaluating and developing potential amended energy 
conservation standards.\15\ As such, publication of a separate 
Framework Document would be largely redundant of previously published 
documents.
---------------------------------------------------------------------------

    \15\ The preliminary technical support document is available at 
www.regulations.gov/document/EERE-2020-BT-STD-0014-0007.
---------------------------------------------------------------------------

2. Public Comment Period
    Section 6(f)(2) of the Process Rule specifies that the length of 
the public

[[Page 33975]]

comment period for a NOPR will be not less than 75 calendar days. For 
this NOPR, DOE has opted instead to provide a 60-day comment period. 
DOE is opting to deviate from the 75-day comment period because 
stakeholders have already been afforded multiple opportunities to 
provide comments on this proposed rulemaking. As noted previously, DOE 
requested comment on various issues pertaining to this standards 
proposed rulemaking in the June 2020 RFI and provided stakeholders with 
a 60-day comment period. 85 FR 35394. Additionally, DOE initially 
provided a 60-day comment period for stakeholders to provide input on 
the analyses presented in the April 2022 Preliminary TSD. 87 FR 24469. 
The analytical assumptions and approaches used for the analyses 
conducted for this NOPR are similar to those used for the preliminary 
analysis. Therefore, DOE believes a 60-day comment period is 
appropriate and will provide interested parties with a meaningful 
opportunity to comment on the proposed rule.
3. Amended Test Procedures
    NAMA requested that DOE finish the test procedure rulemaking before 
the standards rulemaking process begins. (NAMA, No. 14 at p. 16).
    Section 8(d)(1) of the Process Rule specifies that test procedure 
rulemakings establishing methodologies used to evaluate proposed energy 
conservation standards will be finalized prior to publication of a NOPR 
proposing new or amended energy conservation standards. Additionally, 
new test procedures and amended test procedures that impact measured 
energy use or efficiency will be finalized at least 180 days prior to 
the close of the comment period for (1) a NOPR proposing new or amended 
energy conservation standards or (2) a notice of proposed determinaton 
that standards do not need to be amended. In the BVM test procedure 
final rule issued on April 25, 2023 (April 2023 Test Procedure Final 
Rule), DOE amended the test procedures for BVMs.\16\ DOE determined 
that the amendments adopted will not alter (i.e., will not impact) the 
measured efficiency of BVMs. Id. As such, the requirement that the 
amended test procedure be finalized at least 180 days prior to the 
close of the comment period for this NOPR do not apply.
---------------------------------------------------------------------------

    \16\ See www1.eere.energy.gov/buildings/appliance_standards/standards.aspx?productid=29.
---------------------------------------------------------------------------

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. General Comments

    This section summarizes general comments received from interested 
parties regarding rulemaking timing and process.
    NAMA requested that DOE pay considerable attention to the economic 
impacts of new energy regulations on an industry under pressure due to 
factors such as the COVID-19 pandemic and the switch from 
hydrofluorocarbons (HFCs) to lower global warming potential (GWP) 
chemicals. (NAMA, No. 14 at p. 3)
    NAMA commented to ask that DOE return to in-person meetings, 
stating that while electronic meetings provide value, they present 
challenges to full dialogue on these important subjects. (NAMA, No. 14 
at p. 3)
    NAMA commented that DOE should not discount the time and resources 
needed to evaluate and respond to all proposed test procedures and 
energy conservation standards for multiple products proposed over a 
short period, as is currently the case. (NAMA, No. 14 at p. 16) It 
noted that when these rulemakings occur simultaneously, as they are now 
and have in the past, the cumulative burden increases substantially. 
Id.
    NAMA commented that it requested an extension to the Cooperative 
Research and Development Agreement (CRADA) between the NAMA Foundation, 
DOE, and the Oak Ridge National Laboratory (ORNL) so that the remaining 
items revolving around energy efficiency gains can be studied, and 
asked that DOE wait until the CRADA is finished before pursuing a 
regulation. (NAMA, No. 14 at p. 9) NAMA also commented that in the 
preliminary analysis TSD, DOE recognizes the existence of the CRADA 
between NAMA, DOE, and ORNL; however, NAMA stated the status of this 
CRADA is not current or correct in the TSD. Id. NAMA stated that most 
of the activities of the 2019-2021 CRADA were directed toward reduction 
of the risk involved in a possible leak situation if it were ever to 
occur. Id. NAMA commented that ORNL did extensive testing on leak 
scenarios and proposed new methods to reduce the risk from such a leak 
in a public space. Id. NAMA stated that, in nearly all the scenarios 
tested by ORNL, this involved the use of additional fans to circulate 
air. Id. NAMA commented that the energy used by additional ventilation 
is not accounted for in the preliminary analysis TSD and that, 
according to the proposed DOE test procedure, BVM manufacturers would 
be penalized to use additional ventilation and thus to reduce the 
safety risk. Id.
    DOE has evaluated potential improvements to the energy efficiency 
of BVMs to support this NOPR through testing, teardowns, manufacturer 
interviews, market review, and comments submitted by stakeholders. DOE 
welcomes any additional comments and supporting data, including any 
additional results of the CRADA, in response to this NOPR.
    In the April 2023 Test Procedure Final Rule, DOE determined to 
amend the test procedure to include additional instructions for 
refrigerant leak mitigation controls.\17\ DOE specified that for 
refrigerant leak mitigation controls that are independent from the 
refrigeration or vending performance of the BVM, such controls must be 
disconnected, disabled, or otherwise de-energized for the duration of 
testing. Id. For refrigerant leak mitigation controls that are 
integrated into the BVM cabinet such that they cannot be de-energized 
without disabling the refrigeration or vending functions of the BVM or 
modifying the circuitry, such controls must be placed in an external 
accessory standby mode, if available, or their lowest energy-consuming 
state. Id.
---------------------------------------------------------------------------

    \17\ See www1.eere.energy.gov/buildings/appliance_standards/standards.aspx?productid=29.
---------------------------------------------------------------------------

    Section 2.5.1.1 of the preliminary analysis TSD states that DOE 
acknowledges the ongoing research at ORNL. DOE recognized that leak 
mitigation technologies are still under development and continues to 
request comment and data on the use of such technologies and how they 
may impact BVM energy use. Id. DOE acknowledged that ASHRAE 15-2019, 
ASHRAE 34-2019, and UL 541 specified limitations on placing beverage 
vending machines using propane refrigerant in hallways or corridors and 
that these industry standards are often adopted as part of local codes. 
Id. DOE noted that, since the initial publication of the standards, 
addenda \18\ to ASHRAE 15 and 34 have been published to remove the 
limitations on placing beverage vending machines using propane in 
hallways or

[[Page 33976]]

corridors. Id. These addenda specify a maximum charge limit based on 
the lower flammability limit of a refrigerant. Id. For BVM equipment 
using propane, the maximum charge limit permitted under the addenda is 
114 grams. Id. DOE determined in the preliminary analysis TSD that this 
charge limit would allow BVM units in all equipment classes and 
available sizes to transition to propane without restricting 
installation locations of BVM units for end users. Id. Similarly, DOE 
states that it has already observed in the market and tested BVM units 
utilizing flammable refrigerants, specifically R-290. Id. In this NOPR, 
DOE has tentatively determined, based on manufacturer interviews, test 
data, and teardown data, that BVM units in all equipment classes and 
available sizes can use a R-290 charge of 114 grams or less. DOE has 
not observed any refrigeration leak mitigation controls that consume 
additional energy on BVMs using flammable refrigerants and, based on 
interviews conducted in support of this NOPR, refrigeration leak 
mitigation controls on BVMs using R-290 are not required because all 
BVMs use less than 114 grams of R-290. See chapter 5 of the NOPR TSD 
for additional discussion.
---------------------------------------------------------------------------

    \18\ ASHRAE 15-2019 Addendum C, published August 2020, and 
ASHRAE 34-2019 Addendum F, published December 2019, specifically 
address this issue and can be accessed at www.techstreet.com/ashrae/standards/ashrae15-2019-packaged-w-34-2019?product_id=2046531.
---------------------------------------------------------------------------

B. Scope of Coverage

    This NOPR covers equipment that meet the definition of a 
refrigerated bottled or canned beverage vending machine, as codified at 
10 CFR 431.292.
    A ``refrigerated bottled or canned beverage vending machine'' is 
defined as a commercial refrigerator (as defined in 10 CFR 431.62) that 
cools bottled or canned beverages and dispenses the bottled or canned 
beverages on payment. 10 CFR 431.292.
    See section IV.A.1 of this document for discussion of the equipment 
classes analyzed in this NOPR.

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 BVM equipment are expressed 
in terms of maximum daily energy consumption as a function of the 
refrigerated volume of the equipment; see 10 CFR 431.296(b).

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 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 BVM equipment, 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 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 BVM 
equipment 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.b of this document 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 the application of the TSL to BVMs purchased in the 30-year period 
that begins in the year of compliance with the proposed standards 
(2028-2057).\19\ The savings are measured over the entire lifetime of 
BVMs 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.
---------------------------------------------------------------------------

    \19\ 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 BVMs. 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.\20\ DOE's approach is based on the calculation of an FFC 
multiplier for each of the energy types used by covered products or 
equipment. For more information on FFC energy savings, see section 
IV.H.1 of this document.
---------------------------------------------------------------------------

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

    NAMA commented that DOE overestimated energy savings over the 30 
year analysis period. (NAMA, No. 14 at p. 14) DOE clarifies that the 
energy savings referenced are FFC energy savings, where the energy 
usage calculated by NAMA appears to be site energy usage. DOE also 
clarifies that energy savings are based on 30 years of shipments, but 
BVMs shipped in year

[[Page 33977]]

30 can continue to save energy until they are retired from service.
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.\21\ 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 case-by-case basis, taking into 
account the significance of cumulative FFC national energy savings, the 
cumulative FFC emissions reductions, 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).
---------------------------------------------------------------------------

    \21\ 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 13 December 2021 (86 FR 70892).
---------------------------------------------------------------------------

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 proposed 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 manufacturer employment and manufacturing capacity, as well as 
the potential for standards to result in plant closures and loss of 
capital investment. Finally, DOE takes into account cumulative impacts 
of various DOE regulations and other regulatory requirements on 
manufacturers.
    For individual consumers, measures of economic impact include the 
changes in LCC and PBP associated with new or amended standards. These 
measures are discussed further in the following section. For consumers 
in the aggregate, DOE also calculates the national NPV of the consumer 
costs and benefits expected to result from particular standards. DOE 
also evaluates the impacts of potential standards on identifiable 
subgroups 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 the estimated average life of the covered product in the 
type (or class) compared to any increase in the price of, or in the 
initial charges for, or maintenance expenses of, the covered product 
that are likely to result from a standard. (42 U.S.C. 
6295(o)(2)(B)(i)(II)) DOE conducts this comparison in its LCC and PBP 
analyses.
    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 analyses, 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 analyses 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 of this document, DOE uses the NIA 
spreadsheet models to project national energy savings.
d. Lessening of Utility or Performance of Products
    In establishing product classes and evaluating design options and 
the impact of potential standard levels, DOE evaluates potential 
standards that would not lessen the utility or performance of the 
considered products. (42 U.S.C. 6295(o)(2)(B)(i)(IV)) Based on data 
available to DOE, the standards 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 DOJ provide its 
determination on this issue. DOE will publish and

[[Page 33978]]

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 benefits in the form of reduced emissions of air 
pollutants and 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 of this document; 
the estimated emissions impacts are reported in section V.B.6 of this 
document. DOE also estimates the economic value of emissions reductions 
resulting from the considered TSLs, as discussed in section IV.L of 
this document.
g. Other Factors
    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 PBP for consumers. 
These analyses include, but are not limited to, the 3-year PBP 
contemplated under the rebuttable presumption test. In addition, DOE 
routinely conducts an economic analysis that considers the full range 
of impacts to consumers, manufacturers, the Nation, and the 
environment, as required under 42 U.S.C. 6295(o)(2)(B)(i). The results 
of this analysis serve as the basis for DOE's evaluation of the 
economic justification for a potential standard level (thereby 
supporting or rebutting the results of any preliminary determination of 
economic justification). The rebuttable presumption payback calculation 
is discussed in section IV.F of this document.

IV. Methodology and Discussion of Related Comments

    This section addresses the analyses DOE has performed for this 
proposed rulemaking with regard to BVM equipment. Separate subsections 
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 proposed rulemaking: 
www.regulations.gov/docket/EERE-2020-BT-STD-0014. For this NOPR 
analysis, the Energy Information Administration (EIA) Annual Energy 
Outlook 2022 (AEO2022),\22\ a widely known energy projection for the 
United States, was used for the life-cycle cost, emissions, and utility 
impact analyses, which was current for the analysis phase. However, 
near the time of publication of the NOPR, EIA released AEO2023. DOE 
plans to shift to AEO2023 in the final rule analysis. A preliminary 
review of the electricity prices in AEO2023 indicates lower electricity 
prices than AEO2022 in the Reference case. Lower electricity prices 
could reduce the life-cycle savings and affect the related payback 
period calculations. DOE will update other variables and data sets in 
the final rule analysis in addition to use of AEO2023, as well as 
incorporate feedback from commenters.
---------------------------------------------------------------------------

    \22\ U.S. Department of Energy-Energy Information 
Administration. Annual Energy Outlook 2022. Washington, DC. 
Available at https://www.eia.gov/outlooks/archive/aeo22//.
---------------------------------------------------------------------------

A. Market and Technology Assessment

    DOE develops information in the market and technology assessment 
that provides an overall picture of the market for the equipment 
concerned, including the purpose of the equipment, the industry 
structure, manufacturers, market characteristics, and technologies used 
in the equipment. 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 equipment classes, and (2) technologies or design 
options that could improve the energy efficiency of BVM equipment. 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. Equipment Classes
    When evaluating and establishing energy conservation standards, DOE 
may establish separate standards for a group of covered products (i.e., 
establish a separate product class) if DOE determines that separate 
standards are justified based on the type of energy used, or if DOE 
determines that a product's capacity or other performance-related 
feature justifies a different standard. (42 U.S.C. 6295(q)) 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. Id.
    DOE currently separates BVM equipment into four equipment classes 
categorized by physical characteristics

[[Page 33979]]

that affect equipment utility and equipment efficiency: (1) whether 25 
percent or more of the surface area on the front side of the BVM is 
transparent and (2) whether two or more compartments of the BVM are 
separated by a solid partition that may or may not share a product 
delivery chute, in which at least one compartment is designed to be 
refrigerated--as demonstrated by the presence of temperature controls--
and at least one compartment is not (i.e., a combination vending 
machine). The equipment classes are defined as follows:
    Class A means a refrigerated bottled or canned beverage vending 
machine that is not a combination vending machine and in which 25 
percent or more of the surface area on the front side of the beverage 
vending machine is transparent.
    Class B means a refrigerated bottled or canned beverage vending 
machine that is not considered to be Class A and is not a combination 
vending machine.
    Combination A means a combination vending machine where 25 percent 
or more of the surface area on the front side of the beverage vending 
machine is transparent.
    Combination B means a combination vending machine that is not 
considered to be Combination A.
    DOE currently sets forth energy conservation standards and relevant 
definitions for BVM equipment at 10 CFR 431.296 and 10 CFR 431.292, 
respectively, and the energy conservation standards are repeated in 
Table II.1.
a. Combination A
    In the January 2016 Final Rule, DOE noted that the optional test 
protocol to determine the transparency of materials and the relative 
surface areas of transparent and non-transparent surfaces would be 
applicable to combination vending machines except that, the external 
surface areas surrounding the non-refrigerated compartment(s) would not 
be considered. 81 FR 1027, 1048. That is, all the surfaces that 
surround and enclose the compartment designed to be refrigerated (as 
demonstrated by the presence of temperature controls) as well as any 
surfaces that do not enclose any product-containing compartments (e.g., 
surfaces surrounding any mechanical equipment or containing the product 
selection and delivery apparatus) would be considered in the 
calculation of transparent and non-transparent surface area for a BVM, 
as shown in Figure IV.1. Id.
[GRAPHIC] [TIFF OMITTED] TP25MY23.000

    DOE notes that the January 2016 Final Rule and Figure IV.1 do not 
mention the solid partition that separates two or more compartments in 
a combination vending machine. The definition of combination vending 
machine at 10 CFR 431.292 does not limit the size or shape of the solid 
partition that might separate refrigerated and non-refrigerated 
subcompartments. Based on BVM teardowns conducted in support of this 
NOPR, DOE has initially determined that the solid partition projected 
to the front surface would constitue a small portion of the overall 
transparent surface area calculation. DOE has observed solid partitions 
with a projected front surface area of 0.5 inches of thickness and span 
the width of the internal compartment resulting in approximately 1.0% 
of the front surface area. Therefore, in this NOPR, DOE proposes to 
clarify that the solid partition would be considered in the calculation 
of transparent and non-transparent surface area for BVM equipment up to 
the centerline of the solid partition projected to the front surface 
for the surfaces that surround and enclose the compartment designed to 
be refrigerated (as demonstrated by the presence of temperature 
controls).

[[Page 33980]]

    The definition of Combination A requires that ``25 percent or more 
of the surface area on the front side of the beverage vending machine 
is transparent.'' 10 CFR 431.292. Consistent with the January 2016 
Final Rule, DOE proposes to revise the definition of Combination A to 
clarify the exclusion of the external surface areas surrounding the 
non-refrigerated compartment(s) in the calculation of surface areas of 
transparent and non-transparent surfaces:
    Combination A means a combination vending machine where 25 percent 
or more of the surface area on the front side of the beverage vending 
machine that surrounds the refrigerated compartment(s) is transparent.
    DOE requests comment on its proposal to revise the definition of 
Combination A.
2. Technology Options
    In the preliminary market analysis and technology assessment, DOE 
identified 29 technology options that would be expected to improve the 
efficiency of BVM equipment, as measured by the DOE test procedure and 
shown in Table IV.1.

    Table IV.1--Technology Options for Refrigerated Bottled or Canned
       Beverage Vending Machines in the April 2022 Preliminary TSD
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
Insulation:
    Improved resistivity of insulation (insulation type).
    Increased insulation thickness.
    Vacuum insulated panels.
Improved Glass Packs:
    Low-E coatings.
    Inert gas fill.
    Vacuum insulated glass.
    Additional panes.
    Frame design.
Compressor:
    Improved compressor efficiency.
    Variable speed compressors.
    Linear compressors.
Evaporator:
    Increased surface area.
    Tube and fin enhancements (including microchannel designs).
    Low pressure differential evaporator.
Condenser:
    Increased surface area.
    Tube and fin enhancements (including microchannel designs).
    Microchannel heat exchanger.
Fans and Fan Motors:
    Evaporator fan motors.
    Evaporator fan blades.
    Evaporator fan controls.
    Condenser fan motors.
    Condenser fan blades.
Other Technologies:
    Lighting.
    Anti-sweat heater controls.
    Defrost systems.
Expansion valve improvements:
    Alternative refrigerants.
    Low power payment mechanisms.
    Low power states.
------------------------------------------------------------------------

    DOE received several comments in response to the April 2022 
Preliminary Analysis regarding the technology options.
a. Compressors
    NAMA commented that, at the present time, variable speed and two-
speed compressors are not available for the size range of compressors 
for most BVMs. (NAMA, No. 14 at p. 24)
    NAMA commented that when moving from single speed compressors to 
variable speed compressors, in order to take full advantage of this 
level of energy efficiency, other components, such as metering devices 
(i.e., expansion valves and capillary tubes), must be changed. (NAMA, 
No. 14 at p. 24) NAMA added that a control system will have to be added 
to monitor the system of the compressor, the cycle, the temperatures, 
and environmental conditions, and that these changes must be factored 
into the total cost. Id. NAMA commented that it is necessary for DOE to 
understand that the refrigeration cycle is only on for 20-25 percent of 
the time and that any savings must be allocated across the full set of 
DOE test procedure measurements. Id.
    NAMA also commented that linear compressors are not available for 
BVMs and are many years away from concept design. In addition, NAMA 
commented that several manufacturers of linear compressors appear to 
have discontinued production. (NAMA, No. 14 at p. 24)
    DOE has reviewed variable speed compressors available on the market 
and found that variable speed compressors are offered at the same 
cooling capacities as single speed compressors currently used in BVMs. 
All variable speed compressors observed had more than two speeds.
    In this NOPR, DOE did not assume that additional components other 
than the variable speed compressor were required to reduce the energy 
use for the variable speed compressor design option. DOE is aware of 
refrigerant systems which use a capillary tube and a variable speed 
compressor which suggests that expansion valve changes are not 
necessary. Based on feedback received during manufacturer interviews, 
information collected during BVM teardowns, and market research, DOE 
has tentatively determined that control systems are already present in 
BVM equipment.
    In the NOPR analysis, DOE considered the refrigeration cycle 
duration in the engineering analysis for the variable speed compressor 
design option. See chapter 5 of the NOPR TSD for additional details.
    In the April 2022 Preliminary Analysis, DOE did not screen out 
linear compressors but did include linear compressors as a ``design 
option not directly analyzed.'' DOE included linear compressors as a 
technology option because compressor manufacturers had begun 
development on linear compressors for residential refrigerators. 
However, recent lawsuits and a lack of availability of linear 
compressors on the market have prevented further development of this 
technology for BVM equipment; therefore, DOE has tentatively determined 
that linear compressors meet the screening criterion of ``impacts on 
product utility or product availability.'' DOE has screened out linear 
compressors as a design option for improving the energy efficiency of 
BVM equipment. See section IV.B.1 of this document and chapter 4 of the 
NOPR TSD for additional details.
b. Alternative Refrigerants
    NAMA commented that the changes necessary to adopt the lower GWP 
refrigerants are being made but have not been fully realized in all 
models of BVMs. (NAMA, No. 14 at p. 4) NAMA commented that DOE's 
statement that BVMs currently available on the market have already 
transitioned to R-290 refrigerant is incorrect. (NAMA, No. 14 at p. 16)
    NAMA commented that the 114 grams of refrigerant that is allowed 
for the low GWP refrigerant is 36 grams less than what is allowed in a 
household or commercial refrigerator, which limits the size of the 
machine and restricts design options that require additional energy. 
(NAMA, No. 14 at p. 8)
    DOE notes that the U.S. Environmental Protection Agency (EPA) 
proposed refrigerant restrictions pursuant to the American Innovation 
and Manufacturing Act (``AIM Act'') \23\

[[Page 33981]]

affecting BVM equipment in a NOPR published on December 15, 2022 
(``December 2022 EPA NOPR''). 87 FR 76738. Specifically, EPA proposed 
prohibitions for new vending machines (EPA's term for this equipment) 
for the use of HFCs and blends containing HFCs that have a GWP of 150 
or greater. 87 FR 76738, 76780. The proposal would prohibit manufacture 
or import of such vending machines starting January 1, 2025, and would 
ban sale, distribution, purchase, receive, or export of such vending 
machines starting January 1, 2026. 87 FR 76740. DOE considered the use 
of alternative refrigerants that are not prohibited for BVM equipment 
in the December 2022 EPA NOPR.
---------------------------------------------------------------------------

    \23\ Under subsection (i) of the AIM Act, entitled ``Technology 
Transitions,'' the EPA may by rule restrict the use of 
hydrofluorocarbons (HFCs) in sectors or subsectors where they are 
used. A person or entity may also petition EPA to promulgate such a 
rule. ``H.R.133--116th Congress (2019-2020): Consolidated 
Appropriations Act, 2021.'' Congress.gov, Library of Congress, 27 
December 2020, www.congress.gov/bill/116thcongress/house-bill/133.
---------------------------------------------------------------------------

    DOE notes that several manufactuerers currently rate BVM models to 
both ENERGY STAR \24\ and DOE \25\ with BVM equipment using R-290 and 
that manufacturers indicated in manufacturer interviews that the 
industry is planning to transition to R-290.
---------------------------------------------------------------------------

    \24\ See www.energystar.gov/productfinder/product/certified-vending-machines/results.
    \25\ See www.regulations.doe.gov/certification-data/CCMS-4-Refrigerated_Bottled_or_Canned_Beverage_Vending_Machines.html#q=Product_Group_s%3A%22Refrigerated%20Bottled%20or%20Canned%20Beverage%20Vending%20Machines%22.
---------------------------------------------------------------------------

    DOE is aware of the 114 gram charge limit for R-290 in BVM 
equipment located in a public corridor or lobby as specified in 
Addendum C to ANSI/ASHRAE Standard 15-2019, ``Safety Standard for 
Refrigeration Systems'' and UL 60335-2-89, ``Particular Requirements 
for Commercial Refrigerating Appliances and Ice-Makers with an 
Incorporated or Remote Refrigerant Unit or Motor-Compressor.'' Based on 
feedback received during manufacturer interviews, information collected 
during BVM teardowns, and market research, DOE has tentatively 
determined that the 114 gram charge limit does not restrict the size of 
the machine nor any technology options considered in this NOPR. DOE has 
tentatively determined that all BVM equipment can use less than 114 
grams of R-290.
    In response to the December 2022 EPA NOPR, this NOPR reflects the 
alternative refrigerant design changes made by manufacturers at the 
baseline levels for BVM equipment, which incorporate a refrigerant 
conversion to R-290 (i.e., the most efficient refrigerant DOE is 
currently aware of on the market for BVM equipment), instead of as a 
design option as presented in the April 2022 Preliminary Analysis.
    See section IV.C.1.a and chapter 5 of the NOPR TSD for additional 
details.
    NAMA recommended that this be the last rulemaking to raise the 
issue of CO2 as a refrigerant, and provided many details on 
the design differences and challenges in using CO2 as a 
refrigerant. (NAMA, No. 14 at pp. 24-25)
    While DOE mentioned CO2 refrigerants in the April 2022 
Preliminary TSD as background information on the January 2016 Final 
Rule, DOE did not consider CO2 refrigerant as a technology 
option in the April 2022 Preliminary TSD or this NOPR.
c. Insulation
    NAMA commented that the term ``extra insulation'' is vague, and 
manufacturers have been using ``extra'' insulation since the inception 
of BVMs. (NAMA, No. 14 at p. 21)
    In the April 2022 Preliminary TSD, DOE provided context that 
``extra insulation'' refers to an extra \1/4\ inch of insulation 
thickness. See chapter 5 of the April 2022 Preliminary TSD for 
additional details.
    NAMA asserted that in low-volume manufacturing, with multiple 
variations of size, features, and designs, vacuum panels are not a 
feasible design option. (NAMA, No. 14 at p. 22) NAMA stated that vacuum 
panels often leak over time and return very little overall energy 
savings during the life of the product. Id. NAMA added that vacuum 
panels are very costly as individual parts, but even more so in tooling 
costs spread over very small volumes. Id.
    Vacuum insulated panels (VIPs) may require cabinet redesign and 
additional tooling costs to properly incorporate VIPs in BVMs without 
leaks or damage to the panel. DOE has considered the investments 
required in additional tooling, equipment, and processes for any 
cabinet redesign in the engineering analysis (sunk cost per unit) and 
manufacturer impact analysis (capital conversion costs). See chapter 5 
and 12 of the NOPR TSD for additional discussion on VIPs.
d. Fan Motors
    NAMA commented that manufacturers changing to R-290 have already 
incorporated electronically commutated fan motors (ECMs) into their 
machines and many did this years ago. (NAMA, No. 14 at p. 21) NAMA 
added that, with the change to R-290, manufacturers of BVMs must 
utilize ADAC controls and components (sometimes called ``spark-proof'' 
motors). Id. NAMA further stated that current designs of permanent 
split capacitor motors (PSCs) are much more energy efficient than they 
were 5 or 10 years ago, and that NAMA approximates the energy use of an 
ECM to be higher than the value provided in the April 2022 Preliminary 
TSD. Id.
    DOE considered the requirement for motors to be ``spark-proof'' for 
use with the R-290 refrigerant. DOE notes that, based on feedback 
received during manufacturer interviews, information collected during 
BVM teardowns, and market research, DOE has tentatively determined that 
manufacturers currently use shaded pole motors (SPMs), PSCs, and ECMs, 
although not all motor types are used in each BVM equipment class.
    Based on feedback from commenters, market research, and additional 
testing, DOE has tentatively determined to update the fan motor 
efficiency assumptions in this NOPR. Consistent with commenters, DOE 
increased the assumed motor efficiency of SPMs and PSCs, and decreased 
the assumed motor efficiency of ECMs in this NOPR.
    As noted in the April 2022 Preliminary TSD, DOE is also aware of an 
additional motor technology that is available for use in BVMs, 
permanent magnet synchronous (PMS) motors. PMS motor technology has 
shown the potential for motor efficiency improvement beyond ECMs, as 
indicated in a 2019 ORNL study comparing PMS motors and ECMs.\26\ Due 
to the motor efficiency improvements PMS motors provide in comparison 
to ECMs, and based on DOE's updated fan motor efficiency assumptions 
(i.e., ECM assumed efficiencies in this NOPR are less than the assumed 
PMS motor efficiencies), DOE has tentatively determined to include PMS 
motors as a design option for BVMs.
---------------------------------------------------------------------------

    \26\ Permanent Magnet Synchronous Motors for Commercial 
Refrigeration: Final Report, available at: info.ornl.gov/sites/publications/Files/Pub115680.pdf.
---------------------------------------------------------------------------

    See chapter 5 of the NOPR TSD for additional details on fan motors.
e. Evaporators and Condensers
    NAMA commented that true microchannel designs are prone to 
significant clogging and have been shown to exhibit pin-hole sized 
leaks, making them inadvisable with a flammable refrigerant. (NAMA, No. 
14 at p. 23)
    DOE acknowledges that microchannel condensers may experience 
clogging over the lifetime of a unit due to a lack of maintenance by 
the end user or other factors; however, DOE's BVM standards

[[Page 33982]]

consider the performance of the unit as measured by the DOE BVM test 
procedure, which measures the performance of new BVMs. Additionally, 
tube and fin condensers may also experience clogging over the lifetime 
of a unit and require proper maintence of the condenser.
    DOE notes that microchannel heat exchangers are currently used in a 
variety of applications, including mobile air-conditioning, commercial 
air-conditioning, residential air-conditioning, and commercial 
refrigeration equipment. Although DOE acknowledges that some 
microchannel condenser designs could have the potential to leak, DOE 
has observed the use of microchannel condensers with flammable 
refrigerants in similar applications (e.g., automatic commercial ice 
makers). Additionally, pin-hole sized leaks are not unique to 
microchannel heat exchangers. Furthermore, DOE notes that the CRADA was 
established, in part, to mitigate leak risks and assess potential 
hazards, including flammability.\27\
---------------------------------------------------------------------------

    \27\ See www.energy.gov/eere/buildings/articles/five-new-cooperative-research-agreements-invest-efficiency-performance-and.
---------------------------------------------------------------------------

f. Glass Packs
    NAMA commented that the change from double pane to triple pane 
glass would require a significant increase in the overall structural 
design of the machine. (NAMA, No. 14 at p. 22) NAMA noted that the 
doors would have to increase in size, thickness, and weight, and that 
the wall structure and frame would have to be increased to accommodate 
the hanging weight. Id. NAMA added that the overall machine weight 
would increase, thereby increasing shipping weight and the 
corresponding transportation costs (and thus the carbon footprint of 
the machine). Id.
    DOE observed both double pane and triple pane glass doors in BVM 
equipment and used the teardown analysis of units containing each door 
type to inform the NOPR analysis. DOE considered the additional cost 
related to structural changes when upgrading from double pane to triple 
pane glass doors. DOE did not receive any data which supported an 
increase in transporation costs when switching from double pane to 
triple pane glass doors. See chapter 5 of the NOPR TSD for additional 
detail.
g. Payment Mechanisms
    ASAP and ACEEE encouraged DOE to include low-power coin and bill 
payment mechanisms as a design option in the engineering analysis, as 
BVMs are usually shipped with the payment mechanisms, and their energy 
consumption is captured in the test procedures. (ASAP & ACEEE, No. 15 
at p. 1)
    In the April 2023 Test Procedure Final Rule, DOE determined to 
maintain the current 0.20 kWh/day adder to account for the energy use 
of payment mechanisms.\28\ The available information demonstrates that 
a wide (and growing) variety of payment systems are currently available 
on the market; the most common scenario is for the payment mechanism to 
be specified (and in some cases, provided) by the customer; and the 
customer may decide whether or not to have the payment mechanism 
installed by the BVM manufacturer at the time of sale. Id. Therefore, 
DOE did not consider low-power payment mechanisms as a design option in 
this NOPR. See chapter 5 of the NOPR TSD for additional details.
---------------------------------------------------------------------------

    \28\ See www1.eere.energy.gov/buildings/appliance_standards/standards.aspx?productid=29.
---------------------------------------------------------------------------

h. Low Power Modes
    NAMA commented that it is unclear from the April 2022 Preliminary 
TSD exactly what DOE means by ``automatic lighting controls.'' (NAMA, 
No. 14 at pp. 19, 20) NAMA added that most of the machines sold today 
will go into a ``sleep'' mode after a period of inactivity, which is 
not the type of proximity control system used in display case products. 
Id. NAMA further commented that customers do not want a vending machine 
to go completely to ``sleep,'' because they want users to see the 
machine as fully functioning and not dark. Id. NAMA asserted that 
machines going completely ``dark'' is a change in utility of the 
machine and should be accounted for in a different category.
    The ``automatic lighting control'' design option is based on the 
``accessory low power mode'' section of the BVM test procedure which 
allows for 6 hours of operation in the accessory low power mode during 
the test (i.e., the lowest energy-consuming lighting and control 
settings that constitute an accessory low power mode). Appendix B to 
subpart Q of 10 CFR part 431. Therefore, in the preliminary and NOPR 
analyses, DOE modeled 18 hours of light on time for the automatic 
lighting control design option and 6 hours of light off time.
    ``Accessory low power mode'' is defined as a state in which a 
beverage vending machine's lighting and/or other energy-using systems 
are in low power mode, but that is not a refrigeration low power mode. 
Functions that may constitute an accessory low power mode may include, 
for example, dimming or turning off lights, but does not include 
adjustment of the refrigeration system to elevate the temperature of 
the refrigerated compartment(s). Id.
    DOE notes that there are currently 17 out of 53 Class A and 
Combination A models certified to DOE's Compliance Certification 
Database (CCD) \29\ that use accessory low power mode. DOE also notes 
that manufacturers provide information on their low power mode 
operation in the unit's user manual for varying customer demands.
---------------------------------------------------------------------------

    \29\ See www.regulations.doe.gov/certification-data/CCMS-4-Refrigerated_Bottled_or_Canned_Beverage_Vending_Machines.html#q=Product_Group_s%3A%22Refrigerated%20Bottled%20or%20Canned%20Beverage%20Vending%20Machines%22. (Accessed February 9, 2023).
---------------------------------------------------------------------------

    NAMA commented that many BVMs can be programmed into an ``energy 
saver'' mode based on inactivity or schedule. (NAMA, No. 14 at p. 20) 
NAMA added that consumers can set the machine to somewhat reduce the 
refrigeration cycle during nighttime if the location is truly ``shut 
down'' for many hours, but that DOE only allows a credit of 3 percent 
for this feature. Id. NAMA stated that mandating some form of automatic 
low power mode is different and will be beneficial only if the low 
power mode period is significantly longer, adding that if it is short, 
the energy savings will be offset by the additional energy required to 
bring the product back to the lower temperature. Id.
    NAMA commented most current customers of BVMs do not want a low 
power mode that affects the holding temperature or lengthens the 
pulldown time, and that any change to this could have a direct effect 
on the utility and performance of the machine and should be avoided. 
(NAMA, No. 14 at p. 20)
    DOE acknowledges that there is variability in customer location and 
activity and that some of the energy savings of the low power mode will 
be offset by the pulldown period to return to normal operation. As 
noted in the BVM test procedure NOPR published on August 11, 2014 (2014 
BVM test procedure NOPR), DOE understands that refrigeration low power 
modes are extremely variable in terms of their control strategies and 
operation and, in addition, may require specific instructions from the 
manufacturer to precisely modify or adjust the control systems to 
accommodate the specific provisions of the DOE test procedure. 79 FR 
46908, 46924-46925. As noted in BVM test procedure final rule published 
on July 31, 2015 (2015 BVM test procedure Final Rule), DOE's estimate 
of 3 percent energy savings due to the

[[Page 33983]]

operation of low power modes is based on the data available and that 
DOE believes 3-percent is representative of the common types of 
refrigeration low power modes DOE has observed in the market place. 80 
FR 45758, 45786. In the April 2023 Test Procedure Final Rule, DOE 
maintained the existing test procedure provisions and 3-percent energy 
credit for refrigeration low power mode.\30\ In this NOPR, DOE has 
tentatively determined that 3-percent continues to be representative of 
the common types of refrigeration low power modes DOE has observed in 
the marketplace. See chapter 5 of the NOPR TSD for additional details.
---------------------------------------------------------------------------

    \30\ See www1.eere.energy.gov/buildings/appliance_standards/standards.aspx?productid=29.
---------------------------------------------------------------------------

    DOE notes that there are currently 55 out of 107 BVM models 
certified to DOE's CCD \31\ that use refrigeration low power mode. DOE 
also notes that manufacturers provide information on their low power 
mode operation in the unit's user manual for varying customer demands.
---------------------------------------------------------------------------

    \31\ See www.regulations.doe.gov/certification-data/CCMS-4-Refrigerated_Bottled_or_Canned_Beverage_Vending_Machines.html#q=Product_Group_s%3A%22Refrigerated%20Bottled%20or%20Canned%20Beverage%20Vending%20Machines%22. (Accessed February 9, 2023).
---------------------------------------------------------------------------

i. Additional Concerns
    NAMA commented that several of the design options shown in the 
April 2022 Preliminary TSD (larger condensers or evaporators, more 
insulation, changes to type of glass) would require more space inside 
the machine, leading to a reduction in the overall capacity of the 
machine, which should be considered in the TSD. (NAMA, No. 14 at p. 11)
    In this NOPR, DOE did not consider design options that expanded the 
size or footprint of BVM equipment (e.g., larger condensers or 
evaporators, more insulation) because BVM equipment may be used in 
locations prioritizing smaller equipment footprints and an increase in 
cabinet sizes may adversely impact the availability of equipment at a 
given refrigerated volume. DOE assumed, based on feedback received 
during manufacturer interviews and from equipment teardowns, that the 
design options which changed the type of glass would not increase the 
door thickness but may require different frame materials or hinges, 
which DOE has considered as a cost adder to the design option in this 
NOPR. See chapter 5 of the NOPR TSD for additional details.
    NAMA commented that several of the design options (e.g., lower 
wattage refrigeration systems, vacuum panel insulation, different 
evaporators or condensers, and lower wattage fan motors) could 
potentially affect the overall performance of the machine, and 
therefore should be reviewed in the TSD not only for their energy 
efficiency but also the ability to maintain the critial design features 
and performance of these machines. (NAMA, No. 14 at p. 12)
    In this NOPR, DOE did not consider design options that changed the 
measured performance as compared with existing BVM equipment. See 
chapter 5 of the NOPR TSD for additional details.

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 commercially viable, 
existing prototypes will not be considered further.
    (2) Practicability to manufacture, install, and service. If it 
is determined that mass production of a technology in commercial 
products and reliable installation and servicing of the technology 
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. If a technology is determined to 
have a significant adverse impact on the utility of the product to 
subgroups of consumers, or 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) Safety of technologies. 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 technology has 
proprietary protection and represents a unique pathway to achieving 
a given efficiency level, it will not be considered further, due to 
the potential for monopolistic concerns.

    See sections 6(b)(3) and 7(b) of the Process Rule.
    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.
    DOE did not receive any comments in response to the April 2022 
Preliminary Analysis specific to the screening analysis.
1. Screened Out Technologies
    For BVM equipment, the screening criteria were applied to the 
technology options to either retain or eliminate each technology for 
consideration in the engineering analysis.
    In the April 2022 Preliminary Analysis, DOE did not screen out 
linear compressors but did include linear compressors as a ``design 
option not directly analyzed.'' DOE included linear compressors as a 
technology option because compressor manufacturers had begun 
development on linear compressors for residential refrigerators. 
However, recent lawsuits and a lack of availability of linear 
compressors on the market have prevented further development of this 
technology for BVM equipment; therefore, DOE has tentatively determined 
that linear compressors meet the screening criterion of ``impacts on 
product utility or product availability.'' DOE has tentatively 
determined to screen out linear compressors as a design option for 
improving the energy efficiency of BVM equipment in this NOPR. See 
chapter 4 of the NOPR TSD for additional details.
2. Remaining Technologies
    Through a review of each technology, DOE tentatively concluded 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 technology options in Table IV.2.

              Table IV.2--Retained Design Options for BVMs
------------------------------------------------------------------------
 
------------------------------------------------------------------------
               Insulation                           Condenser
------------------------------------------------------------------------
Improved resistivity of insulation       Increased surface area.
 (insulation type).
Increased insulation thickness.........  Tube and fin enhancements
                                          (including microchannel
                                          designs).

[[Page 33984]]

 
Vacuum insulated panels................  Microchannel heat exchanger.
------------------------------------------------------------------------
          Improved Glass Packs                 Fans and Fan Motors
------------------------------------------------------------------------
Low-E coatings.........................  Evaporator fan motors.
Inert gas fill.........................  Evaporator fan blades.
Vacuum insulated glass.................  Evaporator fan controls.
Additional panes.......................  Condenser fan motors.
Frame design...........................  Condenser fan blades.
------------------------------------------------------------------------
               Compressor                       Other Technologies
------------------------------------------------------------------------
Improved compressor efficiency.........  Lighting.
Variable speed compressors.............  Anti-sweat heater controls.
                                         Defrost systems.
------------------------------------------------------------------------
               Evaporator                  Expansion valve improvements
------------------------------------------------------------------------
Increased surface area.................  Alternative refrigerants.
Tube and fin enhancements (including     Low power payment mechanisms.
 microchannel designs).
Low pressure differential evaporator...  Low power states.
------------------------------------------------------------------------

    DOE has initially determined that these design options are 
technologically feasible because they are being used or have previously 
been used in commercially available equipment or working prototypes. 
DOE also finds that all of the remaining design options meet the other 
screening criteria (i.e., practicable to manufacture, install, and 
service and do not result in adverse impacts on consumer utility, 
product availability, health, or safety, unique-pathway proprietary 
technologies). For additional details, see chapter 4 of the NOPR TSD.

C. Engineering Analysis

    The purpose of the engineering analysis is to establish the 
relationship between the efficiency and cost of BVM equipment. 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 equipment cost at each efficiency level (i.e., the 
``cost analysis''). In determining the performance of higher-efficiency 
equipment, DOE considers technologies and design option combinations 
not eliminated by the screening analysis. For each equipment class, DOE 
estimates the baseline cost, as well as the incremental cost for the 
equipment 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 equipment (i.e., 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 equipment 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 in which the 
max-tech level exceeds the maximum efficiency level currently available 
on the market).
    In this proposed rulemaking, DOE relies on a design option 
approach, supported with testing and reverse engineering multiple 
analysis units. DOE generally relied on test data and reverse 
engineering to inform a range of design options used to reduce energy 
use. The design options were incrementally added to the baseline 
configuration and continued through the ``max-tech'' configuration 
(i.e., implementing the ``best available'' combination of available 
design options).
    Consistent with the January 2016 Final Rule analysis (see chapter 5 
of the January 2016 Final Rule TSD), DOE estimated the performance of 
design option combinations using an engineering analysis spreadsheet 
model. This model estimates the daily energy consumption of BVM 
equipment in kWh/day at various performance levels using a design 
option approach. The model calculates energy consumption at each 
performance level separately for each analysis configuration.
    For Class A and Class B, DOE analyzed machines of different sizes 
to assess how energy use varies with size via energy testing and 
reverse engineering. In this NOPR, representative volumes were chosen 
for each equipment class, based on current market offerings: medium and 
large for Class A and Class B BVMs, and medium for Combination A and 
Combination B. These equipment classes and representative unit volumes 
are listed in Table IV.3.

[[Page 33985]]



       Table IV.3--Representative Refrigerated Volumes in the NOPR
------------------------------------------------------------------------
                                                         Representative
         Equipment class                  Size          volume  (ft\3\)
------------------------------------------------------------------------
Class A.........................  Medium.............                 26
                                  Large..............                 35
Class B.........................  Medium.............                 22
                                  Large..............                 31
Combination A...................  Medium.............                 11
Combination B...................  Medium.............                 10
------------------------------------------------------------------------

    See chapter 5 of the NOPR TSD for additional detail on the 
different units analyzed.
a. Baseline Energy Use
    For each 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 equipment class represents the characteristics 
of 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 this NOPR, DOE considered the current standards for BVM 
equipment when developing the baseline energy use for each analyzed 
equipment class. For higher efficiency levels, DOE assessed BVM 
efficiencies as a percent improvement relative to the baseline. This 
provides a consistent efficiency comparison across each equipment 
class. DOE considered the efficiency improvements associated with 
implementing available design options beyond the baseline to the max-
tech efficiency level.
    In response to the April 2022 Preliminary Analysis, NAMA commented 
that most of the analysis appears to have been performed prior to 2020, 
yet the industry has been in the midst of considerable change from 2019 
to 2022. (NAMA, No. 14 at p. 3)
    NAMA commented that current machines on the market today that use 
low GWP refrigerants and incorporate most of the design options shown 
in Table 2.3 of the April 2022 Preliminary Analysis should be used 
together with current costs, and that these should be the baseline 
machines. (NAMA, No. 14 at p. 6) NAMA added that DOE should acknowledge 
the costs already incurred by manufacturers in order to meet the goals 
stated by the Biden Administration to reduce global warming. Id.
    DOE expects that NAMA is referring to the December 2022 EPA NOPR in 
its comment regarding the goals stated by the Biden Administration to 
reduce global warming. As recommended by stakeholders, DOE is 
considering the cost and impact of the December 2022 EPA NOPR on this 
NOPR. The proposed date of the proposed GWP limit on BVMs is 2 years 
earlier than the expected compliance date for any amended BVM standards 
associated with the proposals in this document. Hence, the proposed 
refrigerant prohibitions listed in the December 2022 EPA NOPR are 
assumed to be enacted for the purpose of DOE's analysis in support of 
this NOPR.
    Refrigerants not prohibited from use in BVM equipment in the 
December 2022 EPA NOPR are presumed to be permitted for use in BVM 
equipment. As noted in section IV.A.2.b, several manufactuerers 
currently rate BVM models to both ENERGY STAR \32\ and DOE \33\ with 
BVM equipment using R-290, manufacturers indicated in manufacturer 
interviews that the industry is planning to transition to R-290, and 
DOE has tentatively determined that all BVM equipment can use less than 
114 grams of R-290.
---------------------------------------------------------------------------

    \32\ See www.energystar.gov/productfinder/product/certified-vending-machines/results.
    \33\ See www.regulations.doe.gov/certification-data/CCMS-4-Refrigerated_Bottled_or_Canned_Beverage_Vending_Machines.html#q=Product_Group_s%3A%22Refrigerated%20Bottled%20or%20Canned%20Beverage%20Vending%20Machines%22.
---------------------------------------------------------------------------

    DOE expects that the use of R-290 generally will improve efficiency 
as compared with the refrigerants currently in use (e.g., R-134a), 
which are proposed to be prohibited by the December 2022 EPA NOPR, 
because R-290 has higher refrigeration cycle efficiency than the 
current refrigerants. Thus, DOE expects that the December 2022 EPA NOPR 
will require redesign that will improve efficiency of BVM equipment. 
Hence, the baseline levels for BVM equipment in this NOPR reflect the 
design changes made by manufacturers in response to the December 2022 
EPA NOPR, which incorporate refrigerant conversion to R-290. The 
expected efficiency improvement associated with this refrigerant change 
varies by class and is presented in Table IV.4.
    DOE's analysis considers that these efficiency improvements, 
equipment costs, and manufacturer investments required to comply with 
the December 2022 EPA NOPR will be in effect prior to the time of 
compliance for the proposed amended DOE BVM standards for all BVM 
equipment classes and sizes. DOE updated its baseline equipment costs 
to reflect current costs based on feedback received during manufacturer 
interviews, information collected during BVM teardowns, and market 
research.

  Table IV.4--Proposed December 2022 EPA NOPR R-290 Energy Use Baseline
------------------------------------------------------------------------
                                                              Energy use
                                                              reduction
                      Equipment class                         below DOE
                                                               standard
                                                                 (%)
------------------------------------------------------------------------
Class A....................................................         12.7
Class B....................................................         15.1
Combination A..............................................         19.6
Combination B..............................................         14.7
------------------------------------------------------------------------

    The expected efficiency improvement associated with this 
refrigerant change is based on R-290 single speed compressors currently 
available on the market suitable for BVM equipment. In this NOPR, DOE 
did not consider additional single speed compressor efficiency 
improvements beyond the baseline because DOE expects that the single 
speed compressors currently available on the market for refrigerants 
used to comply with the December 2022 EPA NOPR represent the maximum 
single speed compressor efficiency achievable for each respective 
equipment class.
    NAMA commented that the improved evaporator coils design option 
seems to be indicating a high fin density and higher pitched coils, but 
any increase in fin density may increase the fan motor power required 
and energy

[[Page 33986]]

consumption. (NAMA, No. 14 at p. 20) NAMA added that current designs 
are optimized based on cost versus energy efficiency, and that changes 
would increase capital costs. Id.
    In the April 2022 Preliminary Analysis, DOE analyzed ``baseline'' 
and ``high efficiency'' evaporator and condenser design options, 
consistent with the January 2016 Final Rule. Based on stakeholder 
comments, interviews with manufacturers, and CoilDesigner simulation, 
DOE tentatively determined that the ``high efficiency'' evaporator and 
condenser design options are representative of current manufacturer 
designs. Therefore, DOE tentatively determined to analyze the ``high 
efficiency'' evaporator and condenser coil as ``baseline'' in this NOPR 
and remove the ``high efficiency'' evaporator and condenser design 
options in the NOPR. See chapter 5 of the NOPR TSD for additional 
details.
    NAMA commented that according to the Process Rule, DOE should not 
pursue a rulemaking if there were less than 0.30 quad of savings over 
30 years, as the last published Process Rule dictates. (NAMA, No. 14 at 
p. 7) NAMA added that it doesn't believe there will be greater than 5-
10 percent improvement in energy baseline by 2028 to justify the rule. 
Id. NAMA stated that, including the fact that many of the improvements 
in the design options have already been incorporated several years ago, 
the actual improvements it projected to be seen are much less than 10 
percent. Id.
    DOE notes that on December 13, 2021, DOE published a Final Rule 
which revised the Process Rule NAMA is referring to in its comment,\34\ 
and determinations of significance for energy savings are made on a 
case-by-case basis. 86 FR 70892, 70906. DOE discusses 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 in section V.C.1.
---------------------------------------------------------------------------

    \34\ See www.regulations.gov/document/EERE-2021-BT-STD-0003-0075.
---------------------------------------------------------------------------

    DOE requests comments on its proposal to use baseline levels for 
BVM equipment based upon the design changes made by manufacturers in 
response to the December 2022 EPA NOPR.
    DOE further requests comment on its estimates of energy use 
reduction associated with the design changes made by manufacturers in 
response to the December 2022 EPA NOPR.
b. Higher Efficiency Levels
    As part of DOE's analysis, the maximum available efficiency level 
is the highest efficiency unit currently available on the market. DOE 
also defines a ``max-tech'' efficiency level to represent the maximum 
possible efficiency for a given equipment.
    After conducting the screening analysis described in section IV.B 
of this document and chapter 4 of the NOPR TSD, DOE considered the 
remaining design options in the engineering analysis to achieve higher 
efficiency levels. See chapter 5 of the NOPR TSD for additional detail 
on the design options.
    NAMA commented that although DOE estimates 25 percent energy 
savings for improved evaporator coils, their review of design options 
indicates that this is overstated by a factor of 10. (NAMA, No. 14 at 
p. 20)
    DOE expects that NAMA is referring to the total energy use 
reduction below the baseline at a given efficiency level instead of the 
energy use reduction for each design option. However, as discussed in 
section IV.C.1.a of this document, DOE tentatively determined to 
analyze the ``high efficiency'' evaporator coil as ``baseline'' in this 
NOPR and remove the ``high efficiency'' evaporator design option in the 
NOPR.
    NAMA commented that for moving from single speed compressors to 
variable speed compressors, the promised energy savings is more in the 
area of 5-15 percent (depending on the model), rather than the 49 
percent estimated in the April 2022 Preliminary Analysis TSD. (NAMA, 
No. 14 at p. 24)
    DOE expects that NAMA is referring to the total energy use 
reduction below the baseline at a given efficiency level instead of the 
energy use reduction for each design option. In this NOPR, DOE assumed 
an energy use reduction of 7-14% for variable speed compressors 
compared to single speed compressors, depending on the equipment class, 
which is consistent with NAMA's estimates. See chapter 5 of the NOPR 
TSD for additional details.
    NAMA commented that DOE's estimate of a 43 percent improvement in 
energy efficiency with the switch from double pane to triple pane glass 
is much higher than NAMA's estimate of 12-15 percent improvement in 
energy efficiency. (NAMA, No. 14 at p. 22)
    DOE expects that NAMA is referring to the total energy use 
reduction below the baseline at a given efficiency level instead of the 
energy use reduction for each design option. In this NOPR, DOE assumed 
an energy use reduction of 1-3% for triple pane glass pack compared to 
double pane glass pack, depending on the equipment class, which is 
lower than NAMA's estimates but is consistent with data collected from 
teardowns and DOE's modeling. See chapter 5 of the NOPR TSD for 
additional details.
    NAMA commented that when moving from triple pane glass to vacuum 
insulated glass, the efficiency improvements are in the vicinity of 2-3 
percent gain. (NAMA, No. 14 at p. 24)
    In this NOPR, DOE assumed an energy use reduction of approximately 
1% for vacuum insulated glass compared to triple pane glass pack, which 
is consistent with NAMA's estimates. See chapter 5 of the NOPR TSD for 
additional details.
    NAMA commented that there is not sufficient space in a BVM to allow 
for the recommended change to insulation thickness. (NAMA, No. 14 at p. 
21) NAMA stated that there is not sufficient space to allow for 
insulation to equate to a reduction of even 10 percent in energy, much 
less 31 percent, without impacting utility and performance. Id.
    DOE expects that NAMA is referring to the total energy use 
reduction below the baseline at a given efficiency level instead of the 
energy use reduction for each design option. In this NOPR, DOE did not 
consider design options that expanded the size or footprint of BVM 
equipment (e.g., more insulation) because BVM equipment may be used in 
locations prioritizing smaller equipment footprints and an increase in 
cabinet sizes may adversely impact the availability of equipment at a 
given refrigerated volume. See chapter 5 of the NOPR TSD for additional 
details.
    NAMA commented that it believes the 0.15 quad savings at max-tech 
is an inflated value based on errors in the engineering analysis, and 
asserted that the savings would in fact be considerably lower and no 
longer significant enough for the changes in regulation to be 
justified. (NAMA, No. 14 at p. 7)
    In this NOPR, DOE estimates a combined total of 0.138 quads of FFC 
energy savings over the analysis period at the max-tech efficiency 
levels for BVM equipment. DOE has considered feedback from 
stakeholders, manufacturer interviews, and current market data to 
update its engineering analysis in this NOPR. See section V for 
additional details.
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

[[Page 33987]]

of public information, characteristics of the regulated equipment, and 
the availability and timeliness of purchasing the equipment on the 
market. The cost approaches are summarized as follows:
     Physical teardowns: Under this approach, DOE physically 
dismantles a commercially available equipment, component-by-component, 
to develop a detailed bill of materials for the equipment.
     Catalog teardowns: In lieu of physically deconstructing a 
equipment, 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 equipment.
     Price surveys: If neither a physical nor catalog teardown 
is feasible (e.g., 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 teardowns and 
feedback received from manufacturers during interviews. See chapter 5 
of the NOPR TSD for additional details.
    DOE received several comments in response to the April 2022 
Preliminary Analysis regarding the cost analysis.
    NAMA believes that DOE should factor the unprecedented increase in 
inflation of basic constituents of the BVM machine and its 
manufacturing into the costs shown for design options and the economic 
analysis. (NAMA, No. 14 at p. 10)
    DOE used current prices when estimating the baseline manufacturer 
production costs and design option costs. See chapter 5 of the NOPR TSD 
for additional details.
    NAMA commented that the analyses in the April 2022 Preliminary TSD 
do not address the major changes necessary to the machines to utilize 
the lower GWP refrigerants (e.g., R-290). (NAMA, No. 14 at p. 4) NAMA 
asserted that for low GWP, flammable A-3 refrigerants to be allowed for 
use in machines, redesign of the evaporator and condensor system and 
the use of new compressors and expansion valves would be necessary. Id. 
Additionally, NAMA noted that all switches, electrical components, 
motors (including robotic or vend motors), wiring, and connectors must 
be compliant with ``spark-proof'' connections to shield against the 
possibility of a leak of such refrigerant. Id. NAMA commented that 
neither this level of redesign nor the use of these expensive 
components was addressed in the April 2022 Preliminary TSD. Id.
    NAMA commented that the incremental cost given in the DOE chart of 
$11.28 to switch from an R-134 compressor to an R-290 compressor is 
inaccurate considering that the compressor is only one of many 
components that must change if the refrigerant is changed to an A-3 
refrigerant. (NAMA, No. 14 at pp. 5, 19) NAMA stated that the increase 
in the cost of the compressor by itself is more than $40, and from 
their sample of five manufacturers, the cost of the change from R-134 
to R-290 is approximately $200 per machine rather than $11.28 when all 
the components that must change are factored in. Id.
    As discussed in section IV.C.1.a of this document, DOE has analyzed 
R-290 as the baseline refrigerant for this NOPR, and as a result, DOE 
updated its baseline equipment costs to reflect current costs based on 
feedback received during manufacturer interviews, information collected 
during BVM teardowns, and market research, which includes the costs for 
component changes and additions related to R-290. DOE's analysis 
considers that these efficiency improvements, equipment costs, and 
manufacturer investments required to comply with the December 2022 EPA 
NOPR will be in effect prior to the time of compliance for the proposed 
amended DOE BVM standards for all BVM equipment classes and sizes. See 
chapter 5 of the NOPR TSD for additional details.
    NAMA commented that for moving from single speed compressors to 
variable speed compressors, the current data shows cost increases in 
other product categories much higher than the $103.12 shown, and that 
early cost estimates are more than $200 per machine. (NAMA, No. 14 at 
p. 24)
    NAMA commented that DOE's estimate of $16.72 per machine for 
improved evaporator coils is significantly below NAMA's estimates of 
the parts alone, and that NAMA's initial estimate is double this amount 
and perhaps more when considering capital costs, design, and 
recertification. (NAMA, No. 14 at p. 20)
    NAMA commented that DOE's estimated cost of $32.36 for the extra 
insulation likely does not factor in the cost of redesigning new 
tooling to encompass additional insulation. (NAMA, No. 14 at p. 21)
    NAMA commented that the cost estimate of $15.31 for moving from 
tube and fin to microchannels is not realistic and is not borne out by 
discussion with vendors, as this change would require a complete 
redesign of all parts of the vending machine refrigeration system and 
would need to include a large associated capital cost. (NAMA, No. 14 at 
p. 23)
    NAMA commented that the cost estimates its industry has seen are 
three to four times the cost of glass mentioned in the April 2022 
Preliminary TSD when moving from triple pane glass to vacuum insulated 
glass. (NAMA, No. 14 at p. 24)
    NAMA commented that the cost estimate of $72.84 with the switch to 
multiple panes of glass is about half of the total cost when 
considering increased structural components at extremely high volumes. 
(NAMA, No. 14 at p. 22) NAMA stated that because of these factors, most 
manufacturers would not realize this energy efficiency improvement and 
would see much higher costs for little or no energy improvement. Id.
    DOE notes that, as discussed in section IV.C.1.a of this document, 
DOE did not analyze evaporator improvements or extra insulation as 
design options.
    DOE assumed, based on feedback received during manufacturer 
interviews and from equipment teardowns, that the design options which 
changed the type of glass may require different frame materials or 
hinges, which DOE has considered as a cost adder to these design 
options in this NOPR.
    DOE updated its baseline and design option costs to reflect current 
costs based on feedback received during manufacturer interviews, 
information collected during BVM teardowns, stakeholder comments, and 
market research. See chapter 5 of the NOPR TSD for additional details.
    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 filed by publicly traded 
manufacturers primarily engaged in equipment manufacturing and whose 
combined equipment range includes BVM equipment.
3. Cost-Efficiency Results
    The results of the engineering analysis are reported as cost-
efficiency data (or ``curves'') in the form of daily energy

[[Page 33988]]

consumption (in kWh) versus MSP (in dollars). DOE developed six curves 
representing the four equipment classes. The methodology for developing 
the curves started with determining the energy consumption for baseline 
equipment and MPCs for this equipment. Above the baseline, design 
options were implemented until all available technologies were employed 
(i.e., at a max-tech level). See chapter 5 of the NOPR TSD for 
additional detail on the engineering analysis and appendix 5B of the 
NOPR TSD for complete cost-efficiency results.

D. Markups Analysis

    The markups analysis develops appropriate markups (e.g., retailer 
markups, distributor markups, contractor markups) in the distribution 
chain and sales taxes to convert the MSP estimates derived in the 
engineering analysis to consumer prices, which are then used in the LCC 
and PBP analyses and in the manufacturer impact analysis. At each step 
in the distribution channel, companies mark up the price of the product 
to cover business costs and profit margin.
    For BVMs, the main parties in the distribution chain are 
manufacturers, wholesalers, and the end users.
    DOE developed baseline and incremental markups for each actor in 
the distribution chain. 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.\35\
---------------------------------------------------------------------------

    \35\ Because the projected price of standards-compliant products 
is typically higher than the price of baseline products, using the 
same markup for the incremental cost and the baseline cost would 
result in higher per-unit operating profit. While such an outcome is 
possible, DOE maintains that in markets that are reasonably 
competitive, it is unlikely that standards would lead to a 
sustainable increase in profitability in the long run.
---------------------------------------------------------------------------

    DOE relied on economic data from the U.S. Census Bureau to estimate 
average baseline and incremental markups.
    Chapter 6 of the NOPR TSD provides details on DOE's development of 
markups for BVMs.

E. Energy Use Analysis

    The purpose of the energy use analysis is to determine the annual 
energy consumption of BVMs at different efficiencies in representative 
U.S. commercial and industrial buildings, and to assess the energy 
savings potential of increased BVM efficiency. For the NOPR analysis, 
DOE selected seven efficiency levels (ELs) for each equipment class, 
each characterized as a percentage of rated daily energy consumption 
from the baseline, up to the max-tech efficiency levels defined for 
each class in the engineering analysis. Each level with the 
corresponding percentage of baseline rated energy consumption varies by 
equipment class and can be found in Chapter 7 of the NOPR TSD.
    The energy use analysis then estimates the range of energy use of 
BVMs 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 operating costs that could result from adoption of amended 
or new standards.
    The energy use analysis assessed the estimated annual energy 
consumption of a BVM installed in the field. DOE recognizes that a 
variety of factors may affect the energy use of a BVM, including 
ambient conditions, use and stocking profiles, and other factors. 
However, very limited data exist on field energy consumption of BVMs. 
DOE estimated that the daily energy consumption produced by the DOE 
test procedure is representative of the average daily energy 
consumption of a BVM in an indoor environment. DOE developed a 
methodology to account for the impact of ambient conditions on the 
average annual energy consumption. To model the annual energy 
consumption of each BVM unit, DOE separately estimated the energy use 
of BVMs located indoors and outdoors to account for the impact of 
ambient conditions on installed BVM energy use. Chapter 7 of the NOPR 
TSD provides details on DOE's energy use analysis for BVMs.
    In response to the April 2022 Preliminary Analysis, NAMA commented 
that the energy used by additional ventilation to reduce the risk of a 
leak in a public space was not accounted for in the April 2022 
Preliminary TSD. (NAMA, No. 14 at p. 9)
    In response to the NAMA comment, DOE notes that the NAMA concern 
regarding additional ventilation needs is due to the presumed use of 
hydrocarbon refrigerants. DOE notes that the analysis assumes 
hydrocarbon refrigerants at all efficiency levels analyzed, including 
the baseline, and any building energy impact due to additional 
ventilation requirements in spaces surrounding BVMs is the same at all 
efficiency levels and does not impact the differential energy 
consumption between efficiency levels or the subsequent economic 
calculations.
    NAMA commented that although DOE has asserted that coin and bill 
payment systems are typically included with BVMs as shipped, its survey 
has indicated that this is not uniform and is unique to certain 
manufacturers and customers. (NAMA, No. 14 at p. 12) NAMA also 
questioned whether the approximation of 0.2 kWh per day is accurate for 
the energy consumption of a payment mechanism, although it considers 
the present solution to be preferable to the significant amount of time 
it would take testing in laboratories to determine a more accurate 
approximation resulting in a difference of a fraction of a kWh per day. 
(NAMA, No. 14 at p. 13)
    In the April 2023 Test Procedure Final Rule, DOE determined to 
maintain the current 0.20 kWh/day adder to account for the energy use 
of payment mechanisms.\36\ The available information demonstrates that 
a wide (and growing) variety of payment systems are currently available 
on the market; the most common scenario is for the payment mechanism to 
be specified (and in some cases, provided) by the customer; and the 
customer may decide whether or not to have the payment mechanism 
installed by the BVM manufacturer at the time of sale. Id. Therefore, 
DOE did not consider low-power payment mechanisms as a design option in 
this NOPR. See chapter 5 of the NOPR TSD for additional details.
---------------------------------------------------------------------------

    \36\ See www1.eere.energy.gov/buildings/appliance_standards/standards.aspx?productid=29.
---------------------------------------------------------------------------

F. Life-Cycle Cost and Payback Period Analysis

    DOE conducted LCC and PBP analyses to evaluate the economic impacts 
on individual consumers of potential energy conservation standards for 
BVMs. 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 a 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, refurbishment, 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.

[[Page 33989]]

     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 BVMs 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 equipment.
    For each considered efficiency level in each equipment class, DOE 
calculated the LCC and PBP for a nationally representative set of 
consumers. As stated previously, DOE developed consumer samples from 
the most recent industry reports. For each sample consumer, DOE 
determined the energy consumption for the BVM and the appropriate 
energy price. By developing a representative sample of consumers, the 
analysis captured the variability in energy consumption and energy 
prices associated with the use of BVMs.
    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, 
refurbishment, and maintenance costs; equipment lifetimes; and discount 
rates. DOE created distributions of values for equipment 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 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 BVM user samples. For this 
rulemaking, the Monte Carlo approach is implemented in MS Excel 
together with the Crystal Ball ^TM add-on.\37\ The model 
calculated the LCC for products at each efficiency level for 10,000 
consumers 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, equipment efficiency is chosen based 
on its probability. If the chosen equipment efficiency is greater than 
or equal to the efficiency of the standard level under consideration, 
the LCC calculation reveals that a consumer is not impacted by the 
standard level. By accounting for consumers who already purchase more 
efficient equipment, DOE avoids overstating the potential benefits from 
increasing equipment efficiency.
---------------------------------------------------------------------------

    \37\ Crystal Ball ^TM is commercially available 
software tool to facilitate the creation of these types of models by 
generating probability distributions and summarizing results within 
Excel, available at www.oracle.com/technetwork/middleware/crystalball/overview/ (last accessed July 6, 2018).
---------------------------------------------------------------------------

    DOE calculated the LCC and PBP for consumers of BVMs as if each 
were to purchase a new BVM in the expected year of required compliance 
with new or amended standards. New and amended standards would apply to 
BVMs manufactured 3 years after the date on which any new or amended 
standard is published. (42 U.S.C. 6295(v)(3)) At this time, DOE 
estimates publication of a final rule in 2025. Therefore, for purposes 
of its analysis, DOE used 2028 as the first year of compliance with any 
amended standards for BVMs.
    Table IV.5 summarizes the approach and data DOE used to derive 
inputs to the LCC and PBP calculations. The subsections that follow 
provide further discussion. Details of the spreadsheet model, and of 
all the inputs to the LCC and PBP analyses, are contained in chapter 8 
of the NOPR TSD and its appendices.

 Table IV.5--Summary of Inputs and Methods for the LCC and PBP Analyses*
------------------------------------------------------------------------
                 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
                                          component costs.
Installation Costs.....................  Installation costs for BVMs are
                                          subsumed in the MSP and markup
                                          and not modeled as an
                                          incremental cost.
Annual Energy Use......................  The total annual energy use
                                          varies by equipment class and
                                          efficiency level. Based on
                                          engineering and energy use
                                          analyses.
Energy Prices..........................  Electricity: Based on EIA's
                                          Form 861 data for 2021.
                                         Variability: Energy prices
                                          determined for 50 states and
                                          the District of Columbia.
Energy Price Trends....................  Based on AEO2022 price
                                          projections.
                                         Variability: Energy price
                                          trends vary by nine census
                                          regions.
Repair, Refurbishment and Maintenance    Based on RS Means and United
 Costs.                                   States Bureau of Labor
                                          Statistics data. Vary by
                                          efficiency level.
Product Lifetime.......................  Average: 13.4 years.
Discount Rates.........................  Approach involves identifying
                                          all possible debt or asset
                                          classes that might be used to
                                          purchase the considered
                                          equipment, or might be
                                          affected indirectly. Primary
                                          data source was Damodaran
                                          Online.
Compliance Date........................  2028.
------------------------------------------------------------------------
* Not used for PBP calculation. 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.

    In the April 2022 Preliminary Analysis, DOE requested comment on 
the overall methodology and results of the LCC and PBP analyses. In 
response to that request, NAMA made three comments.
    NAMA stated that DOE should factor the unprecedented increase in 
inflation into the economic analysis in addition

[[Page 33990]]

to the design option costs. (NAMA No. 14, at p. 10)
    DOE acknowledges the comment from NAMA and applies the annual 
implicit price deflators for gross domestic product (GDP) from the U.S. 
Bureau of Economic Analysis to the LCC and PBP analyses to capture the 
impact of price changes between the years of available cost data and 
the analysis year. Equipment and design option costs are developed in 
the engineering analysis and are incorporated into the LCC and PBP 
analyses by being reflected in the MPCs.
    In response to the April 2022 Preliminary Analysis, NAMA commented 
to request that in the Economic Impact Analysis on the cost of labor, 
real cases from 2021 and 2022 are used rather than the cost of labor in 
2018. (NAMA, No. 14 at p. 11)
    DOE acknowledges the comment from NAMA and will use the most recent 
data available for the LCC and PBP analyses. If the most recent data 
available is from prior to 2021, the annual implicit price deflators 
for GDP from the U.S. Bureau of Economic Analysis will be used to 
reflect the costs in the year 2021.
    NAMA commented that in the April 2022 Preliminary Analysis, the 
lower efficiency levels resulted in trivial energy savings and the 
higher efficiency levels showed a large portion of consumers 
experiencing a net cost in the LCC analysis. (NAMA, No. 14 at p. 15)
    DOE acknowledges the comment from NAMA and will consider total 
energy savings and the portion of consumers experiencing net cost when 
proposing new energy efficiency standards.
    In response to the April 2022 Preliminary Analysis, NAMA commented 
that it is only at low efficiency levels where consumers or business 
owners do not experience a net cost according to DOE's analysis, and 
that energy savings at those levels are trivial and do not justify DOE 
setting new energy efficiency standards for BVMs. (NAMA, No. 14 at p. 
15)
    DOE acknowledges the comment from NAMA and considers the percentage 
of customers that experience a net benefit ot net cost in addition to 
energy savings in the economic analysis to determine if the proposed 
rule is economically justified.
1. Equipment Cost
    To calculate consumer equipment 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 equipment because DOE applies 
an incremental markup to the increase in MSP associated with higher-
efficiency equipment.
    BVMs are made of many different components. DOE's research 
indicates flat future prices for a majority of the components of BVMs. 
DOE included future price reductions for semiconductor and similar 
technologies. Semiconductor technology price learning applies to 
efficiency levels that include design options with higher-efficiency 
evaporator and condenser fan motors (i.e., ECM and permanent magnet 
synchronous (PMS) motors). Price learning applies to a proportion of 
the motor cost representing the semiconductor technology. Some variable 
speed compressors have price learning. Therefore, DOE applied price 
learning to compressor components in BVM equipment at efficiency levels 
that included variable speed compressors.
2. Installation Cost
    Installation costs for BVMs are subsumed in the MSP and markup and 
not modeled as an incremental cost. DOE found no evidence that 
installation costs would be impacted with increased efficiency levels.
3. Annual Energy Consumption
    For each sampled consumer, DOE determined the energy consumption 
for a BVM at different efficiency levels using the approach described 
previously in section IV.E of this document.
4. Energy Prices
    DOE derived electricity prices from the EIA energy price data by 
sector and by state(EIA Form 861) for average electricity price data 
for the commercial and industrial sectors. DOE used projections of 
these electricity prices for commercial and industrial consumers to 
estimate future energy prices in the LCC and PBP analyses. EIA's 
AEO2022 was used as the source of projections for future electricity 
prices.
    DOE developed 2021 commercial and industrial retail electricity 
prices for each state and the District of Columbia based on EIA Form 
861. To estimate energy prices in future years, DOE multiplied the 2021 
energy prices by the projection of annual average price changes for 
each of the nine census divisions from the Reference case in AEO2022, 
which has an end year of 2050.\38\ To estimate price trends after 2050, 
the 2041-2050 average was used for all years DOE used EIA's 2018 
Commercial Building Energy Consumption Survey \39\ (CBECS 2018) to 
determine the difference in commercial energy prices by building type. 
DOE applied the ratio of a specific building type's electricity prices 
to average commercial electricity prices in the LCC and PBP analyses.
---------------------------------------------------------------------------

    \38\ EIA. Annual Energy Outlook 2022 with Projections to 2050. 
Washington, DC. Available at www.eia.gov/forecasts/aeo/ (last 
accessed February 2023).
    \39\ www.eia.gov/consumption/commercial/.
---------------------------------------------------------------------------

    DOE's methodology allows electricity prices to vary by sector, 
state, region, and building type. In the analysis, variability in 
electricity prices is chosen to be consistent with the way the consumer 
economic and energy use characteristics are defined in the LCC 
analysis. Chapter 8 of the NOPR TSD provides more detail about DOE's 
approach to developing energy prices and price trends.
5. Maintenance and Repair Costs
    Repair costs are associated with repairing or replacing equipment 
components that have failed in an appliance; maintenance costs are 
associated with maintaining the operation of the product. Typically, 
small incremental increases in equipment efficiency entail no, or only 
minor, changes in repair and maintenance costs compared to baseline 
efficiency equipment. The repair cost is the cost to the consumer for 
replacing or repairing BVM components that have failed. For the LCC 
analysis, repair costs also include refurbishment costs and the cost of 
replacing BVM components routinely within the lifetime of a BVM. The 
LCC analysis models compressors, evaporator fan motors and condenser 
fan motors being repaired or replaced twice in the lifetime of the BVM. 
The maintenance cost is the cost to the consumer of maintaining 
equipment operation. Chapter 8 of the NOPR TSD provides more detail 
about DOE's maintenance, repair, and refurbishment cost calculations.
    DOE request comments on the frequency and nature of compressor and 
motor repairs or replacements in BVMs.
6. Equipment Lifetime
    For BVMs, DOE used information from various literature sources and 
input from manufacturers and other interested parties to establish 
equipment lifetimes for use in the LCC and PBP analyses. This analysis 
assumes an average lifetime of 13.4 years based on refurbishments of 
major components occurring twice during the life of the equipment at an 
interval of 4.5 years. This estimate is based on a 2010

[[Page 33991]]

ENERGY STAR webinar,\40\ which reported average lifetimes of 12 to 15 
years, and data on the distribution of equipment ages in the stock of 
BVMs in the Pacific Northwest from the Northwest Power and Conservation 
Council 2007 Regional Technical Forum \41\ (RTF), which observed the 
age of the units in service to be approximately 8 years on average.
---------------------------------------------------------------------------

    \40\ EPA. ``Always Count Your Change, How ENERGY STAR 
Refrigerated Vending Machines Save Your Facility Money and Energy.'' 
2010. www.energystar.gov/ia/products/vending_machines/Vending_Machine_Webinar_Transcript.pdf.
    \41\ Haeri, H., D. Bruchs, D. Korn, S. Shaw, J. Schott. 
Characterization and Energy Efficiency Opportunities in Vending 
Machines for the Northwestern US Market. Prepared for Northwest 
Power and Conservation Council Regional Technical Forum by Quantec, 
LLC and The Cadmus Group, Inc. Portland, OR. July 24, 2007.
---------------------------------------------------------------------------

    In response to the April 2022 Preliminary Analysis, NAMA commented 
that DOE should develop a model showing what impact increasing the 
retail price of a new BVM has on purchasing refurbished machines and 
delaying purchases of new machines. (NAMA, No. 14 at p. 13) NAMA 
pointed out that any sale of a refurbished machine reduces the sales of 
a new machine designed to the new energy standards, thus increasing the 
amount of time that the overall impact on the net change to U.S. energy 
consumption of the United States by vending machines would occur. Id.
    DOE acknowledges this comment and uses the data available to 
determine the lifetime assumptions of BVMs in the LCC and PBP analyses. 
DOE models two refurbishment processes, each adding to the average 
lifetime of equipment. DOE does not have data available to support how 
higher MSPs would impact the lifetime of BVMs. DOE uses the latest 
industry report to determine shipments and amount of annual shipments 
and sales of new BVMs.
7. Discount Rates
    The discount rate is the rate at which future expenditures are 
discounted to establish their present value. In the calculation of LCC, 
DOE determined the discount rate by estimating the cost of capital for 
purchasers of BVMs. Most purchasers use both debt and equity capital to 
fund investments. Therefore, for most purchasers, the discount rate is 
the weighted-average cost of debt and equity financing, or the 
weighted-average cost of capital (WACC), less the expected inflation.
    To estimate the WACC of BVM purchasers, DOE used a sample of nearly 
1,200 companies grouped to be representative of operators of each of 
the commercial business types (health care, lodging, foodservice, 
retail, education, food sales, and offices) drawn from a database of 
6,177 U.S. companies presented on the Damodaran Online website. This 
database includes most of the publicly traded companies in the United 
States. The WACC approach for determining discount rates accounts for 
the current tax status of individual firms on an overall corporate 
basis. DOE did not evaluate the marginal effects of increased costs, 
and, thus, depreciation due to more expensive equipment, on the overall 
tax status.
    DOE used the final sample of companies to represent purchasers of 
BVMs. For each company in the sample, DOE combined company-specific 
information from the Damodaran Online website, long-term returns on the 
Standard & Poor's 500 stock market index from the Damodaran Online 
website, nominal long-term Federal government bond rates, and long-term 
inflation to estimate a WACC for each firm in the sample.
    For most educational buildings and a portion of the office 
buildings and cafeterias occupied and/or operated by public schools, 
universities, and State and local government agencies, DOE estimated 
the cost of capital based on a 40-year geometric mean of an index of 
long-term tax-exempt municipal bonds (<=20 years). Federal office space 
was assumed to use the Federal bond rate, derived as the 40-year 
geometric average of long-term (<=10 years) U.S. government securities.
    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).
    To estimate the energy efficiency distribution of BVMs for 2028, 
DOE relied on publicly available energy use data. Specifically, the 
market efficiency distribution was determined separately for each 
equipment class for which certification information was available in 
the DOE certification \42\ and ENERGY STAR databases.\43\ The estimated 
market shares for the no-new-standards case for BVMs are shown in Table 
IV.6. See chapter 8 of the NOPR TSD for further information on the 
derivation of the efficiency distributions.
---------------------------------------------------------------------------

    \42\ See www.regulations.doe.gov/ccms.
    \43\ See www.energystar.gov/productfinder/product/certified-vending-machines/results.

   Table IV.6--Efficiency Level Distribution Within Each Equipment Class in No-New-Standards Case for Beverage
                                                Vending Machines
----------------------------------------------------------------------------------------------------------------
                                                                     Efficiency level
             Equipment class             -----------------------------------------------------------------------
                                           0 (%)    1 (%)    2 (%)    3 (%)    4 (%)    5 (%)    6 (%)    7 (%)
----------------------------------------------------------------------------------------------------------------
Class A.................................       67       17        0       11        0        0        0        6
Class B.................................       44       44        0       11        0        0        0        0
Combo A.................................       47        6        0       24       18        0        6        0
Combo B.................................      100        0        0        0        0        0        0        0
----------------------------------------------------------------------------------------------------------------

    The LCC Monte Carlo simulations draw from the efficiency 
distributions and randomly assign an efficiency to the BVMs purchased 
by each sample household in the no-new-standards case. The resulting 
percent shares within the sample match the market shares in the 
efficiency distributions.
9. Split Incentives
    DOE understands that, in most cases, the purchasers of BVMs (a 
bottler or a vending services company) do not pay the energy costs for 
operation and thus will not directly reap any energy cost savings from 
more efficient equipment. However, DOE assumes that BVM owners will 
seek to pass on higher equipment costs to the users who pay the energy 
costs, if possible. DOE

[[Page 33992]]

understands that the BVM owner typically has a financial arrangement 
with the company or institution on whose premises the BVM is located, 
in which the latter may pay a fee or receive a share of the revenue 
from the BVM. Thus, DOE expects that BVM owners could modify the 
arrangement to effectively pass on higher equipment costs. Therefore, 
DOE's LCC and PBP analyses uses the perspective that the company or 
institution on whose premises the BVM is located pays the higher 
equipment cost and receives the energy cost savings.
    In response to the April 2022 Preliminary Analysis, NAMA commented 
that the purchaser of a refrigerated vending machine is typically not 
the company who will utilize the machine, and that the market 
explanation given in the April 2022 Preliminary Analysis TSD does not 
reflect this. (NAMA, No. 14 at p. 7)
    DOE acknowledges the comment and agrees with NAMA that the 
purchaser of a BVM is not typically the same entity that utilizes the 
BVM and receives energy savings. DOE assumes in the LCC analysis that 
the increased purchase costs of higher-efficiency equipment is passed 
on to the entity that utilizes the BVM. The perspective of the LCC and 
PBP analyses is that the entity that utilizes the BVM effectively pays 
the higher equipment costs and receives the reduction in energy 
expenses.
10. Payback Period Analysis
    The PBP is the amount of time (expressed in years) it takes the 
consumer to recover the additional installed cost of more efficient 
products, compared to baseline products, through energy cost savings. 
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. DOE 
refers to this as a ``simple PBP'' because it does not consider changes 
over time in operating cost savings. The PBP calculation uses the same 
inputs as the LCC analysis when deriving first-year operating costs.
    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 equipment 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.\44\ 
The shipments model takes an accounting approach, tracking market 
shares of each equipment 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.
---------------------------------------------------------------------------

    \44\ 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.
---------------------------------------------------------------------------

    In the BVM NOPR analysis, DOE modeled shipments of BVMs based on 
data from Vending Times State of the Industry Reports.\45\ The industry 
reports BVM stock trends that were averaged and used to model annual 
shipments. Chapter 9 of the NOPR TSD includes more details on the BVM 
shipments analysis.
---------------------------------------------------------------------------

    \45\ Annual Report: State of the Industry 2021 
cdn.baseplatform.io/files/base/cygnus/vmw/document/2022/06/
autm_SOI_NoAds.62b3896290401.pdf.
---------------------------------------------------------------------------

    NAMA stated that DOE should consider the impact of major supply 
chain issues, disruptions, and shortages from the past 24 months as 
part of the impact of new energy efficiency standard levels. (NAMA, No. 
14 at p. 10)
    In response to the April 2022 Preliminary Analysis, NAMA commented 
that although they were unable to do a detailed analysis of the 
percentage of Class A, Class B, Class Combo A, and Class Combo B BVMs 
against the models, they believe that the percentage of Class A and 
Class Combo A are under-represented by the DOE assumption. (NAMA, No. 
14 at p. 6)
    DOE recognizes that the industry has been disrupted in recent 
years; therefore, DOE's shipment analysis uses data from recent 
industry reports that reflect the 2020 and 2021 BVM industry and the 
changes from years prior to 2020.

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.\46\ 
(``Consumer'' in this context refers to consumers of the equipment 
being regulated.) DOE calculates the NES and NPV for the potential 
standard levels considered based on projections of annual equipment 
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, 
equipment costs, and NPV of consumer benefits over the lifetime of BVMs 
sold from 2028 through 2057.
---------------------------------------------------------------------------

    \46\ 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 
equipment 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 equipment 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 equipment with efficiencies greater than the standard.
    DOE uses a spreadsheet model to calculate the energy savings and 
the national consumer costs and savings from each TSL. Interested 
parties can review DOE's analyses by changing various input quantities 
within the spreadsheet. The NIA spreadsheet model uses typical values 
(as opposed to probability distributions) as inputs.
    Table IV.7 summarizes the inputs and methods DOE used for the NIA 
analysis for the NOPR and discussion of these inputs and methods 
follows. See chapter 10 of the NOPR TSD for further details.

[[Page 33993]]



    Table IV.7--Summary of Inputs and Methods for the National Impact
                                Analysis
------------------------------------------------------------------------
                 Inputs                               Method
------------------------------------------------------------------------
Shipments..............................  Annual shipments from shipments
                                          model.
Compliance Date of Standard............  2028.
Efficiency Trends......................  No-new-standards case:
                                         Standards cases:
Annual Energy Consumption per Unit.....  Annual weighted-average values
                                          are a function of energy use
                                          at each TSL.
Total Installed Cost per Unit..........  Annual weighted-average values
                                          are a function of cost at each
                                          TSL.
                                         Incorporates projection of
                                          future equipment prices based
                                          on historical data.
Annual Energy Cost per Unit............  Annual weighted-average values
                                          as a function of the annual
                                          energy consumption per unit
                                          and energy prices.
Repair and Maintenance Cost per Unit...  Annual values from the LCC
                                          analysis that increase with
                                          efficiency levels.
Energy Price Trends....................  AEO2022 projections (to 2050)
                                          and extrapolation thereafter.
Energy Site-to-Primary and FFC           A time-series conversion factor
 Conversion.                              based on AEO2022.
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 equipment classes for the year of anticipated compliance 
with an amended or new standard. To project the trend in efficiency 
absent amended standards for BVMs over the entire shipments projection 
period, DOE assumed that the efficiency distribution will remain the 
same in future years due to lack of information available to inform a 
different trend. The approach is further described in chapter 10 of the 
NOPR TSD.
    To develop standards case efficiency trends after 2028, DOE applied 
a ``roll-up'' scenario approach to establish the efficiency 
distribution for the compliance year. Under the ``roll-up'' scenario, 
DOE assumed that (1) equipment efficiencies in the no-new-standards 
case that do not meet the standard level under consideration will 
``roll-up'' to meet the new standard level, and (2) equipment 
efficiencies above the standard level under consideration will not be 
affected.
2. National Energy Savings
    The national energy savings analysis involves a comparison of 
national energy consumption of the considered equipment 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 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 
AEO2022. Cumulative energy savings are the sum of the NES for each year 
over the timeframe of the analysis.
    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 GHGs 
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 \47\ that EIA uses to 
prepare its AEO. 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 10D of the NOPR TSD.
---------------------------------------------------------------------------

    \47\ For more information on NEMS, refer to The National Energy 
Modeling System: An Overview 2009, DOE/EIA-0581(2009), October 2009. 
Available at https://www.eia.gov/outlooks/aeo/nems/overview/pdf/0581(2009).pdf (last accessed February 2023).
---------------------------------------------------------------------------

    In response to the April 2022 Preliminary Analysis, NAMA commented 
that they believe the national energy savings estimated by DOE as 0.152 
quads for CSL 6 are in fact the FFC savings, and that DOE should not be 
advertising a savings of 0.152 when the data show less. (NAMA, No. 14 
at p. 15)
    DOE acknowledges the comment and understands that FFC savings will 
be higher than primary savings. Both primary and FFC savings are 
reported in section V.B.3 of this document.
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 BVM 
price trends based on historical PPI data. DOE applied the same trends 
to project prices for each product class at each considered efficiency 
level. PPI data was deflated using implicit GDP

[[Page 33994]]

deflators and found to be constant on average. Although prices for 
overall BVM equipment were found to be constant, DOE developed 
component price trends for certain design options using historical PPI 
data for semiconductors and related devices. Efficiency levels that 
include ECM and PMS motors, and variable speed compressors have price 
learning applied to the appropriate portion of the MSP. DOE found that 
prices for semiconductor related components decreased by 5.88 percent 
annually. DOE's projection of equipment prices is described in chapter 
10 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 BVMs. In 
addition to the default price trend, DOE considered two product price 
sensitivity cases: (1) a high price decline case based on PPI data up 
to 2005 and (2) a low price decline case based on PPI data from 2005 
onward. The derivation of these price trends are described in chapter 8 
of the NOPR TSD.
    The energy cost savings are calculated using the estimated 
electricity savings in each year and the projected price of 
electricity. To estimate energy prices in future years, DOE multiplied 
the average regional energy prices by the projection of annual 
national-average energy price changes in the AEO2022 Reference case, 
which has an end year of 2050. To estimate price trends after 2050, the 
2035-2050 average was used for all years. As part of the NIA, DOE also 
analyzed scenarios that used inputs from variants of the AEO2022 
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 10B 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.\48\ 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.
---------------------------------------------------------------------------

    \48\ United States Office of Management and Budget. Circular A-
4: Regulatory Analysis. September 17, 2003. Section E. Available at 
georgewbush-whitehouse.archives.gov/omb/memoranda/m03-21.html (last 
accessed February 2023).
---------------------------------------------------------------------------

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 
identified manufacturing facilities that purchase their own BVMs as a 
relevant subgroup. These facilities typically have higher discount 
rates and lower electricity prices than the general population of BVM 
consumers. These two conditions make it likely that this subgroup will 
have the lowest LCC savings of any major consumer subgroup.
    DOE used the LCC and PBP spreadsheet model to estimate the impacts 
of the considered efficiency levels on this subgroup. Chapter 11 in the 
NOPR TSD describes the consumer subgroup analysis.

J. Manufacturer Impact Analysis

1. Overview
    DOE performed an MIA to estimate the financial impacts of amended 
energy conservation standards on manufacturers of BVMs and to estimate 
the potential impacts of such standards on employment and manufacturing 
capacity. The MIA has both quantitative and qualitative aspects and 
includes analyses of 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 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 WACC, 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 (TSLs). To capture the uncertainty relating to manufacturer 
pricing strategies following amended standards, the GRIM estimates a 
range of possible impacts under different markup scenarios.
    The qualitative part of the MIA addresses manufacturer 
characteristics and market trends. Specifically, the MIA considers such 
factors as a potential standard's impact on manufacturing capacity, 
competition within the industry, the cumulative impact of other DOE and 
non-DOE regulations, and impacts on manufacturer subgroups. The 
complete MIA is outlined in chapter 12 of the NOPR TSD.
    DOE conducted the MIA for this rulemaking in three phases. In Phase 
1 of the MIA, DOE prepared a profile of the BVM manufacturing industry 
based on the market and technology assessment, preliminary manufacturer 
interviews, and publicly available information. This included a top-
down analysis of BVM 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 BVM manufacturing industry, including company 
filings of form 10-K from the SEC,\49\ corporate annual reports, the

[[Page 33995]]

U.S. Census Bureau's Economic Census,\50\ and reports from Dunn & 
Bradstreet.\51\
---------------------------------------------------------------------------

    \49\ U.S. Securities and Exchange Commission. Company Filings. 
Available at https://www.sec.gov/edgar/searchedgar/companysearch.html.
    \50\ The U.S. Census Bureau. Quarterly Survey of Plant Capacity 
Utilization. Available at www.census.gov/programs-surveys/qpc/data/tables.html.
    \51\ The Dun & Bradstreet Hoovers login is available at 
app.dnbhoovers.com.
---------------------------------------------------------------------------

    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 BVMs 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 subgroup impacts.
    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 
of this document 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, markups, shipments, and industry 
financial 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 base year of the analysis) and continuing to 
2057. DOE calculated INPVs by summing the stream of annual discounted 
cash flows during this period. For manufacturers of BVMs, DOE used a 
real discount rate of 8.5 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 information gathered from industry stakeholders during 
the course of manufacturer interviews. The GRIM results are presented 
in section V.B.2 of this document. 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.
    As discussed in section IV.C.1 of this document, DOE conducted a 
market analysis of currently available models listed in DOE's CCD to 
determine which efficiency levels were most representative of the 
current distribution of BVMs available on the market. DOE determined 
MPCs using teardowns and feedback received from manufacturers during 
interviews. See chapter 5 of the NOPR TSD for additional details.
    DOE seeks comment on the method for estimating manufacturing 
production costs.
    See section VII.E of this document for a list of issues on which 
DOE seeks comment.
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 base year) to 2057 (the end year of 
the analysis period). See chapter 9 of the NOPR TSD for additional 
details.
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.
    To evaluate the level of conversion costs manufacturers would 
likely incur to comply with amended energy conservation standards, DOE 
relied on estimates of equipment and tooling from feedback from 
manufacturer interviews. DOE contractors reached out to all five of the 
original equipment manufacturers (OEMs) identified in the CCD database, 
two of which agreed to be interviewed. These two OEMs are manufacturers 
of Class A, Class B, Combo A, and Combo B equipment. DOE used market 
share weighted feedback from the interviews

[[Page 33996]]

to extrapolate industry-level product conversion costs from the 
manufacturer feedback.
    Feedback from manufacturers on capital and product conversion costs 
allowed DOE to create industry estimates, scaled by market share and 
model count, in order to model the incremental investment required at 
different efficiency levels.
    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 non-production cost 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 markup 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 markup scenario and (2) a 
preservation of per-unit operating profit markup scenario. These 
scenarios lead to different 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'' markup 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 estimated gross margin percentages of 
22 percent for Class A, 17 percent for Class B, 36 percent for Combo A, 
and 36 percent for Combo B. 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 to industry profitability under an amended energy 
conservation standard.
    Under the preservation of per-unit operating profit markup 
scenario, DOE modeled a situation in which manufacturers are not able 
to increase per-unit operating profit in proportion to increases in 
manufacturer production costs. 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 no-new-standards 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 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. A comparison of industry financial impacts under 
the two manufacturer markup scenarios is presented in section V.B.2.a 
of this document.
    A comparison of industry financial impacts under the two markup 
scenarios is presented in section V.B.2.a of this document.
3. Manufacturer Interviews
    DOE interviewed two of the five OEMs identified in the CCD. 
Participants included manufacturers of Class A, Class B, and Combo B 
BVMs.
    In interviews, DOE asked manufacturers to describe their major 
concerns regarding this proposed rulemaking. 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.
    Manufacturers raised concerns about the potentially high levels of 
investment necessary under updated standards, citing high conversion 
costs associated with increased insulation thickness and VIPs. In 
particular, these changes would necessitate large investments in 
tooling and product redesign.
    Manufacturers also cited concern regarding cost of the potential 
concurrent refrigerant transition outlined in the recent EPA 
rulemaking. This transition will require manufacturers to make 
investments independent of amended DOE standards.
    Manufacturers also raised concern over the feasibility of further 
efficiency improvements, citing the incorporation of many DOE design 
options into baseline equipment. As an example, some of the design 
options included in the preliminary analysis are already incorporated 
in baseline models, such as evaporator fan motor controllers and high-
efficiency lighting.
4. Discussion of MIA Comments
    In response to the April 2022 Preliminary Analysis, NAMA commented 
that the 6-year ``lock-in'' provision in the statutory structure is 
designed to give manufacturers time to generate sufficient cash flow to 
recoup any necessary investments and financial costs/returns, and that 
when there are multiple regulations on the same product within the 6-
year lock-in period (such as refrigerant transition, a new test 
procedure on payment systems, and new energy efficiency regulations), 
the second regulation violates the recoupment assumption inherent in 
the first one. (NAMA, No. 14 at p. 16-17) EPCA 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)) Although DOE 
considers cumulative regulatory burden in its analysis, DOE does not 
have the authority to delay review of its regulations in accordance 
with EPCA due to regulations issued by other Federal agencies.
    NAMA stated that the existing GRIM model does not consider this 
situation, and that it produces an increase in value from the early 
write-off of any past investment. Id. NAMA noted that the GRIM 
accelerates depreciation (a non-cash item) due to the early write-off 
of past investment, by lowering tax cash costs, and that the simplest 
way to resolve this is to do a consolidated analysis for multiple 
regulations starting from the time of the first regulation. (NAMA, No. 
14 at p. 17) NAMA added that although DOE has noted that such an 
analysis would require counting both the costs/investments and 
revenues/profits for both products, this is correct and is a feature, 
not a deficiency. Id. NAMA commented that DOE should be

[[Page 33997]]

analyzing and assessing the change in combined industry value for these 
products, or for the same product multiple times. Id. NAMA stated that 
if this is not possible, then DOE should incorporate a value reduction 
factor in the first post-regulation year of the analysis that subtracts 
the value lost from the remaining years of the previous regulation. Id. 
NAMA also commented that it urged DOE to incorporate the financial 
results of the current Cumulative Regulatory Burden analysis directly 
into the MIA. (NAMA, No. 14 at p. 17) NAMA suggested doing this by 
adding the combined costs of complying with multiple regulations into 
the product conversion costs in the GRIM model. Id. NAMA commented that 
an appropriate approach would be to include the costs to manufacturers 
of responding to and monitoring regulations. Id.
    NAMA also made a range of comments related to the phase out of 
certain refrigerants under consideration by the EPA. DOE notes that the 
costs associated with the refrigerant transition are not a direct 
result of amended standards, however DOE has considered the 
implications of these transition costs in its analysis.
    DOE did not publish a GRIM in the preliminary analysis phase. 
However, DOE has published a GRIM as part of the NOPR analysis. In that 
GRIM DOE accounts for the investments manufacturers must make in order 
to adopt R-290 as a refrigerant for BVMs in 2025.
    DOE analyzes cumulative regulatory burden pursuant to the Process 
Rule. Pursuant to the Process Rule, DOE will recognize and consider the 
overlapping effects on manufacturers of new or revised DOE standards 
and other Federal regulatory actions affecting the same products or 
equipment. The results of this analysis can be found in section V.B.2.e 
of this document.

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 GHGs, 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 AEO2022. Power sector 
emissions of CH4 and N2O from fuel combustion are 
estimated using Emission Factors for Greenhouse Gas Inventories 
published by the EPA.\52\ 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.
---------------------------------------------------------------------------

    \52\ Available at www.epa.gov/sites/production/files/2021-04/documents/emission-factors_apr2021.pdf. Last accessed July 12, 2021.
---------------------------------------------------------------------------

    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 national impact analysis.
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. AEO2022 generally represents current 
legislation and environmental regulations, including recent government 
actions, that were in place at the time of preparation of AEO2022, 
including the emissions control programs discussed in the following 
paragraphs.\53\
---------------------------------------------------------------------------

    \53\ For further information, see the Assumptions to AEO2022 
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 February 15, 2023).
---------------------------------------------------------------------------

    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.\54\ AEO2022 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.
---------------------------------------------------------------------------

    \54\ 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

[[Page 33998]]

generation would generally reduce SO2 emissions. DOE 
estimated SO2 emissions reduction using emissions factors 
based on AEO2022.
    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 a case, 
NOX emissions would remain near 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 AEO2022 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 
AEO2022, 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 (E.O.) 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.
    To monetize the benefits of reducing GHG emissions, this analysis 
uses the interim estimates presented in the Technical Support Document: 
Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates 
Under Executive Order 13990 published in February 2021 by the IWG.
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 SC-GHGs. That is, SC-GHGs, whether measured using the 
February 2021 interim estimates presented by the IWG or by another 
means, did not affect the rule ultimately proposed by DOE.
    DOE estimated the global social benefits of CO2, 
CH4, and N2O reductions using SC-GHG values that 
were based on the interim values presented in the Technical Support 
Document: 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 1 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-GHGs until revised estimates have 
been developed reflecting the latest, peer-reviewed science.
    The SC-GHG estimates presented here were developed over many years, 
using a transparent process, peer-reviewed methodologies, the best 
science available at the time of that process, and input from the 
public. Specifically, in 2009, the IWG, which included 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.\55\ and underwent a standard double-blind peer review 
process prior to journal publication. In 2015, as part of the response 
to public comments received for 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 updates to ensure 
that the estimates continue to reflect the best available science and 
methodologies. In January 2017, the National Academies released

[[Page 33999]]

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.\56\ Shortly thereafter, in March 2017, President 
Trump issued E.O. 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.'' (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.
---------------------------------------------------------------------------

    \55\ Marten, A.L., E.A. Kopits, C.W. Griffiths, S.C. Newbold, 
and A. Wolverton. Incremental CH4 and N2O 
mitigation benefits consistent with the US Government's SC-
CO2 estimates. Climate Policy. 2015. 15(2): pp. 272-298.
    \56\ 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 GHGs 
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 Executive order 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 Executive order 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 United States 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; 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 
United States 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,\57\ and 
recommended that discount rate uncertainty and relevant aspects of 
intergenerational ethical considerations be accounted for in selecting 
future discount rates.
---------------------------------------------------------------------------

    \57\ 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 April 15, 
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 
April 15, 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 January 18, 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 January 
18, 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 
pertaining to this issue. DOE also notes that while OMB Circular A-4, 
as published in 2003, recommends using 3-percent and 7-percent discount 
rates as ``default'' values, Circular A-4 also reminds agencies that 
``different

[[Page 34000]]

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-percent discount 
rate is not appropriate to apply to value the SC-GHGs in the analysis 
presented 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 the above 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 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 were 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.\58\ 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 integrated assessment models, 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 proposed rule likely underestimate the damages from GHG 
emissions. DOE concurs with this assessment.
---------------------------------------------------------------------------

    \58\ 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 
www.whitehouse.gov/briefing-room/blog/2021/02/26/a-return-to-science-evidence-based-estimates-of-the-benefits-of-reducing-climate-pollution/.
---------------------------------------------------------------------------

    DOE's derivations of the 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 V.B.6 of this document.
a. Social Cost of Carbon
    The SC-CO2 values used for this NOPR were based on the 
values presented for the IWG's February 2021 TSD. Table IV.7 shows the 
updated sets of SC-CO2 estimates from the IWG's TSD in 5-
year increments from 2020 to 2050. The full set of annual values that 
DOE used is presented in appendix 14A of the NOPR TSD. For purposes of 
capturing the uncertainties involved in the regulatory impact analysis, 
DOE has determined it is appropriate to include all four sets of SC-
CO2 values, as recommended by the IWG.\59\
---------------------------------------------------------------------------

    \59\ 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 34001]]



                    Table IV.8--Annual SC-CO2 Values From 2021 Interagency Update, 2020-2050
                                           [2021$ 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 SC-CO2 estimates published by 
EPA, adjusted to 2021$.\60\ These estimates are based on methods, 
assumptions, and parameters identical to the 2020-2050 estimates 
published by the IWG (which were based on EPA modeling).
---------------------------------------------------------------------------

    \60\ See EPA, Revised 2023 and Later Model Year Light-Duty 
Vehicle GHG Emissions Standards: Regulatory Impact Analysis, 
Washington, DC, December 2021. Available at: nepis.epa.gov/Exe/ZyPDF.cgi?Dockey=P1013ORN.pdf (last accessed January 13, 2023).
---------------------------------------------------------------------------

    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 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 based on the values developed for the February 2021 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 14A of the NOPR TSD. To capture the uncertainties 
involved in the 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.9--Annual SC-CH4 and SC-N2O Values From 2021 Interagency Update, 2020-2050
                                                                                     [2021$ per metric ton]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                              SC-CH4                                                          SC-N2O
                                                                 -------------------------------------------------------------------------------------------------------------------------------
                                                                                    Discount rate and statistic                                     Discount rate and statistic
                              Year                               -------------------------------------------------------------------------------------------------------------------------------
                                                                                                                      3% 95th                                                         3% 95th
                                                                    5% Average      3% Average     2.5% Average     Percentile      5% Average      3% Average     2.5% Average     Percentile
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2020............................................................             670           1,500           2,000           3,900           5,800          18,000          27,000          48,000
2025............................................................             800           1,700           2,200           4,500           6,800          21,000          30,000          54,000
2030............................................................             940           2,000           2,500           5,200           7,800          23,000          33,000          60,000
2035............................................................           1,100           2,200           2,800           6,000           9,000          25,000          36,000          67,000
2040............................................................           1,300           2,500           3,100           6,700          10,000          28,000          39,000          74,000
2045............................................................           1,500           2,800           3,500           7,500          12,000          30,000          42,000          81,000
2050............................................................           1,700           3,100           3,800           8,200          13,000          33,000          45,000          88,000
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

    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 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 the NOPR, 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.\61\ 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 combined the EPA benefit 
per ton estimates with regional information on electricity consumption 
and emissions to define weighted-average national values for 
NOX and SO2 as a function of sector (see appendix 
14B of the NOPR TSD).
---------------------------------------------------------------------------

    \61\ Estimating the Benefit per Ton of Reducing PM2.5 Precursors 
from 21 Sectors. www.epa.gov/benmap/estimating-benefit-ton-reducing-pm25-precursors-21-sectors.
---------------------------------------------------------------------------

    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 AEO2022. NEMS produces the AEO

[[Page 34002]]

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 AEO2022 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 equipment subject to standards, their 
suppliers, and related service firms. The MIA addresses those impacts. 
Indirect employment impacts are changes in national employment that 
occur due to the shift in expenditures and capital investment caused by 
the purchase and operation of more efficient appliances. Indirect 
employment impacts from standards consist of the net jobs created or 
eliminated in the national economy, other than in the manufacturing 
sector being regulated, caused by (1) reduced spending by 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 the Labor Department's Bureau of 
Labor Statistics (BLS). BLS regularly publishes its estimates of the 
number of jobs per million dollars of economic activity in different 
sectors of the economy, as well as the jobs created elsewhere in the 
economy by this same economic activity. Data from BLS indicate that 
expenditures in the utility sector generally create fewer jobs (both 
directly and indirectly) than expenditures in other sectors of the 
economy.\62\ 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.
---------------------------------------------------------------------------

    \62\ 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 https://www.bea.gov/sites/default/files/methodologies/RIMSII_User_Guide.pdf (last 
accessed February 2023).
---------------------------------------------------------------------------

    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 (ImSET).\63\ 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 that has structural 
coefficients that characterize economic flows among 187 sectors most 
relevant to industrial, commercial, and residential building energy 
use.
---------------------------------------------------------------------------

    \63\ 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 there are uncertainties involved in projecting long-
term 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 overestimate actual job 
impacts over the long run for this rule. Therefore, DOE used ImSET only 
to generate results for near-term timeframes, 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 BVMs. 
It addresses the TSLs examined by DOE, the projected impacts of each of 
these levels if adopted as energy conservation standards for BVMs, 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 equipment 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 BVMs. DOE developed TSLs that combine 
efficiency levels for each analyzed equipment class. Table V.1 presents 
the TSLs and the corresponding efficiency levels that DOE has 
identified for potential amended energy conservation standards for 
BVMs. TSL 5 represents the max-tech energy efficiency for all equipment 
classes. TSL 4 represents the efficiency levels with the maximum NPV at 
3 percent. TSL 3 represents the maximum efficiency level with positive 
NPV at 7 percent and positive average LCC savings for each equipment 
class. As shown in Table V.1, TSL 3 includes higher efficiency products 
for Class B, Combo A, and Combo B than TSL 4. The TSL ordering is based 
on total NES, which is greater in TSL 4 due to Class A representing 
over half of BVM shipments. TSL 2 represents efficiency levels with 
maximum LCC savings. TSL 1 represents EL2 for all equipment classes. 
DOE presents the results for the TSLs in this document, while the 
results for all efficiency levels that DOE analyzed are in the NOPR 
TSD.

[[Page 34003]]



                         Table V.1--Trial Standard Levels for Beverage Vending Machines
----------------------------------------------------------------------------------------------------------------
         Equipment class               TSL 1           TSL 2           TSL 3           TSL 4           TSL 5
----------------------------------------------------------------------------------------------------------------
Class A.........................             EL2             EL3             EL5             EL6            EL 7
Class B.........................             EL2             EL3             EL5             EL4            EL 7
Combo A.........................             EL2             EL3             EL5             EL4            EL 7
Combo B.........................             EL2             EL4             EL6             EL5            EL 7
----------------------------------------------------------------------------------------------------------------

    Table V.2 presents the TSLs and the corresponding percent reduction 
below the baseline daily energy consumption for each equipment class.

                         Table V.2--Trial Standard Levels for Beverage Vending Machines
----------------------------------------------------------------------------------------------------------------
                Equipment class                   TSL 1 (%)    TSL 2 (%)    TSL 3 (%)    TSL 4 (%)    TSL 5 (%)
----------------------------------------------------------------------------------------------------------------
Class A........................................           15           20           30           37         47.6
Class B........................................           25           30           40           35         59.6
Combo A........................................           20           25           35           30         48.9
Combo B........................................           25           40           50           45         62.9
----------------------------------------------------------------------------------------------------------------

    DOE constructed the TSLs for this NOPR to include efficiency levels 
representative of efficiency levels with similar characteristics (i.e., 
using similar technologies and/or efficiencies, and having roughly 
comparable equipment availability). The use of representative 
efficiency levels provided for greater distinction between the TSLs. 
While representative efficiency levels were included in the TSLs, DOE 
considered all efficiency levels as part of its analysis.\64\
---------------------------------------------------------------------------

    \64\ Efficiency levels that were analyzed for this NOPR are 
discussed in section IV.E of this document. Results by efficiency 
level are presented in TSD chapters 8, 10, and 12.
---------------------------------------------------------------------------

B. Economic Justification and Energy Savings

1. Economic Impacts on Individual Consumers
    DOE analyzed the economic impacts on BVM consumers by looking at 
the effects that potential amended standards at each TSL would have on 
the LCC and PBP analyses. 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 equipment affects consumers in two 
ways: (1) purchase price increases and (2) annual operating costs 
decrease. Inputs used for calculating the LCC and PBP include total 
installed costs (i.e., product price plus installation costs) and 
operating costs (i.e., annual energy use, energy prices, energy price 
trends, repair costs, and maintenance costs). The LCC calculation also 
uses product lifetime and a discount rate. Chapter 8 of the NOPR TSD 
provides detailed information on the LCC and PBP analyses.
    Table V.3 shows LCC and PBP results by TSL including the shipment 
weighted average results for each TSL. Table V.4 through Table V.11 
show the LCC and PBP results for the TSLs considered for each equipment 
class. In the first of each pair of tables, the simple payback is 
measured relative to the baseline equipment. 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 equipment 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.
    The analysis results indicate that consumers either benefit or are 
unaffected by setting standards at TSLs 1 or 2. At TSL 3, 28 percent of 
the market would experience net costs and at TSL 4, 34 percent of the 
market for BVMs would experience a net cost.

                           Table V.3--Average LCC Savings Relative to the No-New-Standards Case for Beverage Vending Machines
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                   Average LCC     Consumers that     Average LCC     Consumers that     Average LCC     Consumers that
                Equipment class                     savings *      experience net      savings *      experience net      savings *      experience net
                                                     (2021$)          cost (%)          (2021$)          cost (%)          (2021$)          cost (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               TSL 1
                                                               TSL 2
                                                               TSL 3
--------------------------------------------------------------------------------------------------------------------------------------------------------
Class A........................................            $150                  0            $203                  0             $99                 28
Class B........................................             167                  0             212                  0             146                 17
Combo A........................................             212                  0             263                  0              43                 49
Combo B........................................             214                  0             326                  0              94                 37
Weighted Average **............................             166                  0             222                  0             107                 28
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               TSL 4
                                                               TSL 5
 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Class A........................................             (6)                 59           (695)                 93  ..............  .................
Class B........................................             206                  2           (199)                 84  ..............  .................

[[Page 34004]]

 
Combo A........................................             190                 12           (851)                 99  ..............  .................
Combo B........................................             287                  0           (239)                 85  ..............  .................
Weighted Average **............................              97                 34           (532)                 90  ..............  .................
--------------------------------------------------------------------------------------------------------------------------------------------------------
* LCC savings reflect affected consumers only.
** Weighted by shares of each equipment class in total projected shipments in 2028.


                                      Table V.4--Average LCC and PBP Results for Beverage Vending Machines Class A
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                           Average costs (2021$)
                                                                           ----------------------------------------------------
                                                                                            First                                  Simple      Average
                 TSL                            Efficiency level             Installed      year's      Lifetime                  payback      lifetime
                                                                                cost      operating    operating       LCC        (years)      (years)
                                                                                             cost         cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                      Baseline............................       $3,970         $495       $5,621       $9,591  ...........         13.4
1...................................  2...................................        3,979          477        5,440        9,418          0.5         13.4
2...................................  3...................................        3,987          471        5,379        9,366          0.7         13.4
3...................................  5...................................        4,118          458        5,328        9,446          4.0         13.4
4...................................  6...................................        4,228          450        5,322        9,551          5.7         13.4
5...................................  7...................................        5,034          437        5,206       10,240         18.3         13.4
--------------------------------------------------------------------------------------------------------------------------------------------------------


                Table V.5--Average LCC Savings Relative to the No-New-Standards Case for Class A
----------------------------------------------------------------------------------------------------------------
                                                                                Life-cycle cost savings
                                                                     -------------------------------------------
                         TSL                            Efficiency                          Percent of consumers
                                                           level       Average LCC savings   that experience net
                                                                            * (2021$)             cost (%)
----------------------------------------------------------------------------------------------------------------
1...................................................               2                  $150                     0
2...................................................               3                   203                     0
3...................................................               5                    99                    28
4...................................................               6                   (6)                    59
5...................................................               7                 (695)                    93
----------------------------------------------------------------------------------------------------------------
* LCC savings reflect affected consumers only.


                                      Table V.6--Average LCC and PBP Results for Beverage Vending Machines Class B
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                           Average costs (2021$)
                                                                           ----------------------------------------------------
                                                                Efficiency                  First                                  Simple      Average
                             TSL                                  level      Installed      year's      Lifetime                  payback      lifetime
                                                                                cost      operating    operating       LCC        (years)      (years)
                                                                                             cost         cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                         0       $3,178         $474       $5,412       $8,590  ...........         13.4
1............................................................            2        3,193          449        5,160        8,353          0.6         13.4
2............................................................            3        3,199          444        5,109        8,308          0.7         13.4
3............................................................            5        3,294          434        5,058        8,351          2.8         13.4
4............................................................            4        3,220          439        5,071        8,292          1.2         13.4
5............................................................            7        3,736          414        4,960        8,696          9.2         13.4
--------------------------------------------------------------------------------------------------------------------------------------------------------


   Table V.7--Average LCC Savings Relative to the No-New-Standards Case for Beverage Vending Machines Class B
----------------------------------------------------------------------------------------------------------------
                                                                                Life-cycle cost savings
                                                                     -------------------------------------------
                         TSL                            Efficiency                          Percent of consumers
                                                           level       Average LCC savings   that experience net
                                                                            * (2021$)             cost (%)
----------------------------------------------------------------------------------------------------------------
1...................................................               2                  $167                     0
2...................................................               3                   212                     0
3...................................................               5                   146                    17
4...................................................               4                   206                     2
5...................................................               7                 (199)                    84
----------------------------------------------------------------------------------------------------------------
* LCC savings reflect affected consumers only.


[[Page 34005]]


                                      Table V.8--Average LCC and PBP Results for Beverage Vending Machines Combo A
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2021$)
                                            Efficiency   ---------------------------------------------------------------- Simple payback      Average
                   TSL                         level                       First year's      Lifetime                         (years)        lifetime
                                                          Installed cost  operating cost  operating cost        LCC                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       0          $3,990            $489          $5,551          $9,541  ..............            13.4
1.......................................               2           3,998             466           5,321           9,319             0.4            13.4
2.......................................               3           4,005             460           5,264           9,268             0.5            13.4
3.......................................               5           4,145             448           5,224           9,369             3.8            13.4
4.......................................               4           4,037             454           5,223           9,260             1.4            13.4
5.......................................               7           5,097             432           5,175          10,272            19.5            13.4
--------------------------------------------------------------------------------------------------------------------------------------------------------


   Table V.9--Average LCC Savings Relative to the No-New-Standards Case for Beverage Vending Machines Combo A
----------------------------------------------------------------------------------------------------------------
                                                                                Life-cycle cost savings
                                                                     -------------------------------------------
                         TSL                            Efficiency                          Percent of consumers
                                                           level       Average LCC savings   that experience net
                                                                            * (2021$)             cost (%)
----------------------------------------------------------------------------------------------------------------
1...................................................               2                   212                     0
2...................................................               3                   263                     0
3...................................................               5                    43                    49
4...................................................               4                   190                    12
5...................................................               7                 (851)                    99
----------------------------------------------------------------------------------------------------------------
* LCC savings reflect affected consumers only.


                                      Table V.10--Average LCC and PBP Results for Beverage Vending Machines Combo B
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                           Average costs (2021$)
                                                                           ----------------------------------------------------
                                                                Efficiency                  First                                  Simple      Average
                             TSL                                  level      Installed      year's      Lifetime                  payback      lifetime
                                                                                cost      operating    operating       LCC        (years)      (years)
                                                                                             cost         cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                         0       $3,725         $463       $5,297       $9,023  ...........         13.4
1............................................................            2        3,735          441        5,073        8,809          0.4         13.4
2............................................................            4        3,758          427        4,939        8,697          0.9         13.4
3............................................................            6        3,956          418        4,972        8,928          5.1         13.4
4............................................................            5        3,814          423        4,921        8,736          2.2         13.4
5............................................................            7        4,347          406        4,914        9,261         10.9         13.4
--------------------------------------------------------------------------------------------------------------------------------------------------------


   Table V.11--Average LCC Savings Relative to the No-New-Standards Case for Beverage Vending Machines Combo B
----------------------------------------------------------------------------------------------------------------
                                                                                Life-cycle cost savings
                                                                     -------------------------------------------
                         TSL                            Efficiency                          Percent of consumers
                                                           level       Average LCC savings   that experience net
                                                                            * (2021$)             cost (%)
----------------------------------------------------------------------------------------------------------------
1...................................................               2                  $214                     0
2...................................................               4                   326                     0
3...................................................               6                    94                    37
4...................................................               5                   287                     0
5...................................................               7                 (239)                    85
----------------------------------------------------------------------------------------------------------------
* LCC savings reflect affected consumers only.

b. Consumer Subgroup Analysis
    In the consumer subgroup analysis, DOE estimated the impact of the 
considered TSLs on manufacturing facilities that purchase their own 
BVMs due to the lower electricity prices and higher discount rates 
compared to other BVM consumer building types. DOE identified 
manufacturing facilities that purchase their own BVMs as a relevant 
subgroup because these facilities typically have higher discount rates 
and lower electricity prices than the general population of BVM 
consumers. These two conditions make it likely that this subgroup will 
have the lowest LCC savings of any major consumer subgroup. Table V.12 
through Table V.15 compare the average LCC savings and PBP at each 
efficiency level for the consumer subgroup with similar metrics for the 
entire consumer sample for BVMs. Chapter 11 of the NOPR TSD presents 
the complete LCC and PBP results for the subgroup analysis.

[[Page 34006]]



Table V.12--Comparison of LCC Savings and PBP for Consumer Subgroups and
                         All Buildings; Class A
------------------------------------------------------------------------
                                                         Full building
                                      Manufacturing          sample
------------------------------------------------------------------------
                      Average LCC Savings * (2021$)
------------------------------------------------------------------------
TSL 1.............................               $105               $150
TSL 2.............................                141                203
TSL 3.............................                 15                 99
TSL 4.............................              (109)                (6)
TSL 5.............................              (834)              (695)
------------------------------------------------------------------------
                         Payback Period (years)
------------------------------------------------------------------------
TSL 1.............................                0.6                0.5
TSL 2.............................                0.9                0.7
TSL 3.............................                5.2                4.0
TSL 4.............................                7.4                5.7
TSL 5.............................               23.7               18.3
------------------------------------------------------------------------
                     Consumers With Net Benefit (%)
------------------------------------------------------------------------
TSL 1.............................                 84                 84
TSL 2.............................                 84                 84
TSL 3.............................                 41                 67
TSL 4.............................                 14                 36
TSL 5.............................                  0                  2
------------------------------------------------------------------------
                       Consumers With Net Cost (%)
------------------------------------------------------------------------
TSL 1.............................                  0                  0
TSL 2.............................                  0                  0
TSL 3.............................                 53                 28
TSL 4.............................                 81                 59
TSL 5.............................                 94                 93
------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.


Table V.13--Comparison of LCC Savings and PBP for Consumer Subgroups and
                         All Buildings; Class B
------------------------------------------------------------------------
                                                         Full building
                                      Manufacturing          sample
------------------------------------------------------------------------
                      Average LCC Savings * (2021$)
------------------------------------------------------------------------
TSL 1.............................               $117               $167
TSL 2.............................                147                212
TSL 3.............................                 63                146
TSL 4.............................                135                206
TSL 5.............................              (332)              (199)
------------------------------------------------------------------------
                         Payback Period (years)
------------------------------------------------------------------------
TSL 1.............................                0.8                0.6
TSL 2.............................                0.9                0.7
TSL 3.............................                3.7                2.8
TSL 4.............................                1.5                1.2
TSL 5.............................               11.9                9.2
------------------------------------------------------------------------
                     Consumers With Net Benefit (%)
------------------------------------------------------------------------
TSL 1.............................                 89                 89
TSL 2.............................                 89                 89
TSL 3.............................                 69                 83
TSL 4.............................                 93                 98
TSL 5.............................                  6                 16
------------------------------------------------------------------------
                       Consumers With Net Cost (%)
------------------------------------------------------------------------
TSL 1.............................                  0                  0
TSL 2.............................                  0                  0
TSL 3.............................                 31                 17
TSL 4.............................                  7                  2
TSL 5.............................                 94                 84
------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.


[[Page 34007]]


Table V.14--Comparison of LCC Savings and PBP for Consumer Subgroups and
                         All Buildings; Combo A
------------------------------------------------------------------------
                                                         Full building
                                      Manufacturing          sample
------------------------------------------------------------------------
                      Average LCC Savings * (2021$)
------------------------------------------------------------------------
TSL 1.............................               $149               $212
TSL 2.............................                184                263
TSL 3.............................               (25)                 43
TSL 4.............................                120                190
TSL 5.............................              (953)              (851)
------------------------------------------------------------------------
                         Payback Period (years)
------------------------------------------------------------------------
TSL 1.............................                0.5                0.4
TSL 2.............................                0.7                0.5
TSL 3.............................                4.9                3.8
TSL 4.............................                1.8                1.4
TSL 5.............................               25.3               19.5
------------------------------------------------------------------------
                     Consumers With Net Benefit (%)
------------------------------------------------------------------------
TSL 1.............................                 52                 52
TSL 2.............................                 52                 52
TSL 3.............................                 31                 45
TSL 4.............................                 57                 64
TSL 5.............................                  0                  1
------------------------------------------------------------------------
                       Consumers With Net Cost (%)
------------------------------------------------------------------------
TSL 1.............................                  0                  0
TSL 2.............................                  0                  0
TSL 3.............................                 63                 49
TSL 4.............................                 19                 12
TSL 5.............................                100                 99
------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.


Table V.15--Comparison of LCC Savings and PBP for Consumer Subgroups and
                         All Buildings; Combo B
------------------------------------------------------------------------
                                                         Full building
                                      Manufacturing          sample
------------------------------------------------------------------------
                      Average LCC Savings * (2021$)
------------------------------------------------------------------------
TSL 1.............................               $150               $214
TSL 2.............................                224                326
TSL 3.............................               (25)                 94
TSL 4.............................                174                287
TSL 5.............................              (387)              (239)
------------------------------------------------------------------------
                         Payback Period (years)
------------------------------------------------------------------------
TSL 1.............................                0.6                0.4
TSL 2.............................                1.2                0.9
TSL 3.............................                6.6                5.1
TSL 4.............................                2.8                2.2
TSL 5.............................               14.2               10.9
------------------------------------------------------------------------
                     Consumers With Net Benefit (%)
------------------------------------------------------------------------
TSL 1.............................                100                100
TSL 2.............................                100                100
TSL 3.............................                 22                 63
TSL 4.............................                100                100
TSL 5.............................                  3                 15
------------------------------------------------------------------------
                       Consumers With Net Cost (%)
------------------------------------------------------------------------
TSL 1.............................                  0                  0
TSL 2.............................                  0                  0
TSL 3.............................                 78                 37
TSL 4.............................                  0                  0
TSL 5.............................                 97                 85
------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.


[[Page 34008]]

c. Rebuttable Presumption Payback
    As discussed in section II.A of this document, EPCA establishes a 
rebuttable presumption that an energy conservation standard is 
economically justified if the increased purchase cost for equipment 
that meets the standard is less than three times the value of the 
first-year energy savings resulting from the standard. In calculating a 
rebuttable presumption PBP 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 BVMs. In contrast, the PBPs 
presented in section V.B.1.a of this document were calculated using 
distributions that reflect the range of energy use in the field.
    Table V.16 presents the rebuttable presumption PBPs for the 
considered TSLs for BVMs. While DOE examined the rebuttable presumption 
criterion, it considered whether the standard levels considered for the 
NOPR are economically justified through a more detailed analysis of the 
economic impacts of those levels, pursuant to 42 U.S.C. 
6295(o)(2)(B)(i), 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.16 Rebuttable Presumption Payback Periods
----------------------------------------------------------------------------------------------------------------
                                                                  Median payback period  (years)
                Equipment class                 ----------------------------------------------------------------
                                                    TSL 1        TSL 2        TSL 3        TSL 4        TSL 5
----------------------------------------------------------------------------------------------------------------
Class A........................................          0.4          0.5          2.3          4.0          5.7
Class B........................................          0.6          0.6          1.2          0.7          4.4
Combo A........................................          0.4          0.4          1.4          0.5          6.5
Combo B........................................          0.4          0.5          2.2          0.9          5.1
----------------------------------------------------------------------------------------------------------------

2. Economic Impacts on Manufacturers
    DOE performed an MIA to estimate the impact of amended energy 
conservation standards on manufacturers of BVMs. 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. 
Table V.17 and Table V.18 summarize the estimated financial impacts 
(represented by changes in INPV) of potential amended energy 
conservation standards on manufacturers of BVMs, as well as the 
conversion costs that DOE estimates manufacturers of BVMs would incur 
at each TSL.
    As discussed in section IV.J.2.d of this document, DOE modeled two 
scenarios to evaluate a range of cash flow impacts on the BVM industry: 
(1) the preservation of gross margin percentage scenario and (2) the 
preservation of operating profit. Under the preservation of gross 
margin percentage scenario, DOE applied a single uniform ``gross margin 
percentage'' across all efficiency levels. As MPCs increase with 
efficiency, this scenario implies that the absolute dollar markup will 
increase. DOE estimated gross margin percentages of 18 percent for 
Class A, 15 percent for Class B, 26 percent for Combo A, and 26 percent 
for Combo B.\65\
---------------------------------------------------------------------------

    \65\ This corresponds to manufacturer markups of 1.22 for Class 
A, 1.17 for Class B, and 1.36 for Combo A and B.
---------------------------------------------------------------------------

    This manufacturer markup is the same as the one DOE assumed in the 
engineering analysis and the no-new-standards case of the GRIM. Because 
this scenario assumes that a manufacturer's absolute dollar markup 
would increase as MPCs increase in the standards cases, it represents 
the upper-bound to industry profitability under potential new 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 equipment, operating 
profit does not change in absolute dollars and decreases as a 
percentage of revenue.
    Each of the modeled manufacturer markup scenarios results in a 
unique set of cash flows and corresponding industry values at each TSL. 
In the following discussion, the INPV results refer to the difference 
in industry value between the no-new-standards case and each standards 
case resulting from the sum of discounted cash flows from 2023 through 
2057. To provide perspective on the short-run cash flow impact, DOE 
includes in the discussion of results a comparison of free cash flow 
between the no-new-standards case and the standards case at each TSL in 
the year before new standards are required.

                            Table V.17--Manufacturer Impact Analysis for BVMs Under the Preservation of Gross Margin Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                              Trial standard level*
                                                       Units                 No-new-    ----------------------------------------------------------------
                                                                         standards case       1            2            3            4            5
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV.....................................  2021$ millions..............            85.5         85.4         85.5         86.1         85.9         68.0
Change in INPV...........................  2021$ millions..............  ..............          0.0          0.0          0.7          0.5       (17.5)
                                           %...........................  ..............          0.0          0.0          0.8          0.6       (20.4)
Product Conversion Costs.................  2021$ millions..............  ..............          0.2          0.3          2.3          1.5          9.6
Capital Conversion Costs.................  2021$ millions..............  ..............          0.0          0.0          0.0          0.0         26.9
Total Investment Required**..............  2021$ millions..............  ..............          0.2          0.3          2.5          1.5         36.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Numbers in parentheses indicate a negative number.
** Numbers may not sum exactly due to rounding.


[[Page 34009]]


                          Table V.18--Manufacturer Impact Analysis for BVMs Under the Preservation of Operating Profit Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                              Trial standard level*
                                                       Units                 No-new-    ----------------------------------------------------------------
                                                                         standards case       1            2            3            4            5
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV.....................................  2021$ millions..............            85.5         85.3         85.3         82.9         83.6         56.3
Change in INPV...........................  2021$ millions..............  ..............        (0.2)        (0.2)        (2.5)        (1.9)       (29.2)
                                           %...........................  ..............        (0.2)        (0.2)        (3.0)        (2.2)       (34.1)
Product Conversion Costs.................  2021$ millions..............  ..............          0.2          0.3          2.3          1.5          9.6
Capital Conversion Costs.................  2021$ millions..............  ..............          0.0          0.0          0.0          0.0         26.9
Total Investment Required**..............  2021$ millions..............  ..............          0.2          0.3          2.5          1.5         36.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Numbers in parentheses indicate a negative number.
** Numbers may not sum exactly due to rounding.

    At TSL 5, DOE estimates that impacts on INPV would range from -
$29.2 million to $17.5 million, or a change in INPV of -34.1 to -20.4 
percent. At TSL 5, industry free cash flow is negative $8.6 million, 
which is a decrease of $15.4 million compared to the no-new-standards 
case value of $6.8 million in 2027, the year leading up to the proposed 
standards. Industry conversion costs total $36.5 million.
    At TSL 5, the shipment-weighted-average MPC for BVMs increases by 
21.4 percent relative to the no-new-standards case shipment-weighted-
average MPC for all BVMs in 2030. Under both manufacurer markup 
scenarios, industry faces a drop in INPV. The reduction in INPV is 
driven by the high conversion costs. Product conversion costs could 
reach $9.6 million and capital conversion costs could reach $26.9 
million. At this level, DOE expects that all equipment classes would 
require the use of VIPs for roughly half the cabinet surface area, the 
best available-efficiency variable-speed compressor, permanent magnet 
synchronous evaporator and condenser fan motors, microchannel 
condenser, refrigeration low power mode (per the DOE test procedure), 
and evaporator fan controls. The adoption of VIPs is the largest driver 
of conversion costs. Higher product conversion costs after typically 
needed to implement VIP designs, which are not found in BVMs today, for 
prototyping and testing for VIP placement, design, and sizing. 
Additionally, extensive incorporation of VIPs can require significant 
capital expenditures due to the need for more careful product handling 
and conveyor and investments in hard tooling for the VIP installation 
process. In the preservation of gross margin markup scenario, the 
increase in average MPC and corresponding increase in revenue is 
outweighed by the $36.5 million in conversion costs, resulting in a 
negative change in INPV at TSL 5.
    Under the preservation of operating profit markup 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 21.4 
percent shipment-weighted-average MPC increase results in a reduction 
in the manufacturer markup. This reduction in the manufacturer markup 
and the $36.5 million in conversion costs incurred by manufacturers 
cause a negative change in INPV at TSL 5 under the preservation of 
operating profit markup scenario.
    At TSL 4, DOE estimates that impacts on INPV would range from -$1.9 
million to $0.5 million, or a change in INPV of -2.2 to 0.6 percent. At 
TSL 4, industry free cash flow is $6.3 million, which is a decrease of 
$0.5 million compared to the no-new-standards case value of $6.8 
million in 2027, the year leading up to the proposed standards. 
Industry conversion costs total $1.5 million.
    At TSL 4, the shipment-weighted-average MPC for BVMs increases by 
5.0 percent relative to the no-new-standards case shipment-weighted-
average MPC for all BVMs in 2028. In the preservation of gross margin 
markup scenario, the increase in cash-flows from increased MSPs 
outweigh the upfront conversion investments manufacturers make and 
result in a slightly positive change in INPV at TSL 4.
    Under the preservation of operating profit markup 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 5.0 
percent shipment-weighted-average MPC increase results in a reduction 
in the manufacturer markup. This reduction in the manufacturer markup 
and the $1.5 million in conversion costs incurred by manufacturers 
cause a negative change in INPV at TSL 4 under the preservation of 
operating profit markup scenario.
    At TSL 3, DOE estimates that impacts on INPV would range from -$3.0 
million to $0.7 million, or a change in INPV of -3.0 to 0.8 percent. At 
TSL 3, industry free cash flow is $6.0 million, which is a decrease of 
$0.8 million compared to the no-new-standards case value of $6.8 
million in 2027, the year leading up to the proposed standards. 
Industry conversion costs total $2.3 million.
    At TSL 3, the shipment-weighted-average MPC for BVMs increases by 
5.7 percent relative to the no-new-standards case shipment-weighted-
average MPC for all BVMs in 2028. In the preservation of gross margin 
markup scenario, the increase in cash-flows from increased MSPs 
outweigh the upfront conversion investments manufacturers make and 
result in a slightly positive change in INPV at TSL 3.
    Under the preservation of operating profit markup 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 5.7 
percent shipment-weighted-average MPC increase results in a reduction 
in the manufacturer markup after the analyzed compliance year. This 
reduction in the manufacturer markup and the $2.3 million in conversion 
costs incurred by manufacturers cause a negative change in INPV at TSL 
3 under the preservation of operating profit markup scenario.
    At TSL 2, DOE estimates that impacts on INPV would range from -$0.2 
million to $0.0 million, or a change in INPV of -0.2 to 0.0 percent. At 
TSL 2, industry free cash flow is $6.7 million, which is a decrease of 
$0.1 million compared to the no-new-standards case value of $6.8 
million in 2027, the year leading up to the proposed standards. 
Industry conversion costs total $0.3 million.
    At TSL 2, the shipment-weighted-average MPC for BVMs is anticipated 
to increase by less than 1 percent relative to the no-new-standards 
case shipment-weighted-average MPC for all BVMs in

[[Page 34010]]

2028. In the preservation of gross margin markup scenario, the increase 
in cash-flows from increased MSPs outweigh the limited conversion 
investments manufacturers make and result in a slightly positive change 
in INPV at TSL 2.
    Under the preservation of operating profit markup 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 slight 
shipment-weighted-average MPC increase results in a reduction in the 
manufacturer markup after the analyzed compliance year. This reduction 
in the manufacturer markup and the $0.3 million in conversion costs 
incurred by manufacturers cause a negative change in INPV at TSL 2 
under the preservation of operating profit markup scenario.
    At TSL 1, DOE estimates that impacts on INPV would range from -$0.2 
million to $0.0, or a change in INPV of -0.2 to 0.0 percent. At TSL 1, 
industry free cash flow is $6.7 million, which is a decrease of $0.1 
million compared to the no-new-standards case value of $6.8 million in 
2027, the year leading up to the proposed standards. Industry 
conversion costs total $0.2 million.
    At TSL 1, the shipment-weighted-average MPC for BVMs increases by 
less than 1 percent relative to the no-new-standards case shipment-
weighted-average MPC for all BVMs in 2028. In the preservation of gross 
margin markup scenario, the increase in cash-flows from increased MSPs 
outweigh the mild conversion investments manufacturers make and result 
in a slightly positive change in INPV at TSL 1.
    Under the preservation of operating profit markup 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 slight 
shipment-weighted-average MPC increase results in a reduction in the 
manufacturer markup after the analyzed compliance year. This reduction 
in the manufacturer markup and the $0.2 million in conversion costs 
incurred by manufacturers cause a slightly negative change in INPV at 
TSL 1 under the preservation of operating profit markup scenario.
b. Direct Impacts on Employment
    To quantitatively assess the potential impacts of amended energy 
conservation standards on direct employment in the BVM 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. 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 \66\ 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 \67\ 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.
---------------------------------------------------------------------------

    \66\ U.S. Census Bureau, Annual Survey of Manufactures. 
``Summary Statistics for Industry Groups and Industries in the U.S 
(2021).'' Available at https://www.census.gov/programs-surveys/asm/data.html (Last accessed February 24, 2023).
    \67\ U.S. Bureau of Labor Statistics. Industries at a Glance. 
Available at https://www.bls.gov/iag/tgs/iag333.htm. Last accessed 
February 24, 2023.
---------------------------------------------------------------------------

    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 70 percent of BVMs are produced 
domestically.
    The domestic production employees estimate covers production line 
workers, including line supervisors, who are directly involved in 
fabricating and assembling equipment 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 equipment covered by 
this proposed rulemaking.
    Non-production employees 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.
    Direct employment is the sum of domestic production employees and 
non-production employees. Using the GRIM, DOE estimates in the absence 
of new energy conservation standards there would be 448 domestic 
employees for BVMs in 2028. Table V.19 shows the range of the impacts 
of energy conservation standards on U.S. manufacturing employment in 
the BVMs industry. The following discussion provides a qualitative 
evaluation of the range of potential impacts presented in Table V.19.

        Table V.19--Domestic Direct Employment Impacts for Beverage Vending Machine Manufacturers in 2028
----------------------------------------------------------------------------------------------------------------
                                     No-new-
                                 standards case     TSL 1        TSL 2        TSL 3        TSL 4        TSL 5
----------------------------------------------------------------------------------------------------------------
Direct Employment in 2028......             468          469          470          465          463          464
Potential Changes in Direct      ..............    (65) to 1    (65) to 2  (64) to (3)  (65) to (5)  (64) to (4)
 Employment Workers in 2028 *..
----------------------------------------------------------------------------------------------------------------
* DOE presents a range of potential employment impacts. Numbers in parentheses denote negative values.


[[Page 34011]]

    The direct employment impacts shown in Table V.19 represent the 
potential domestic employment changes that could result following the 
compliance date for the BVM product classes in this proposal. 
Employment could increase or decrease due to the labor content of the 
various equipment being manufactured domestically. The upper bound 
estimate corresponds to an 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 equipment 
within the United States after compliance takes effect. The lower bound 
estimate represents the maximum decrease in production workers. In 
interviews, manufacturers raised concerns that their customers 
purchasing Class B equipment would shift toward purchasing Class A 
equipment if the prices of Class B equipment increased and approached 
the cost of Class A equipment. To establish a lower bound, DOE assumes 
a loss of direct employment commensurate with a potential loss of Class 
B shipments.
    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 they have experience 
incorporating many of the design options that DOE considers in its 
engineering analysis. However, manufacturers noted that a few design 
options could lead to design and production challenges. In particular, 
manufacturers raised concerns about microchannel heat exchangers, 
vacuum insulated glass, and vacuum insulated panels. For microchannel 
exchangers, manufacturers were dubious about the performance gain from 
the design option and raised concerns about further performance issues 
in the field due to fouling of the channels. For vacuum insulated 
glass, manufacturers noted that prototypes did not provide the expected 
performance gains and the design option is not incorporated into any 
models today. For VIPs, manufacturers noted that they did not 
incorporate the design option into any models today. They noted that 
VIPs have a negative impact on the flow of foam within panels and 
reduce the overall rigidity of the cabinet. Manufacturers expected 
large investment to incorporate VIPs into their product design and to 
update production lines. With VIPs in particular, manufacturers were 
concerned about the engineering resources and level of investment 
required to redesign equipment to meet EPA refrigerant regulations by 
2025 and again to meet amended standards in 2028.
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 did not identify any other adversely 
impacted manufacturer subgroups for this rulemaking based on the 
results of the industry characterization.
    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. 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 equipment. For these reasons, DOE conducts an analysis of 
cumulative regulatory burden as part of its rulemakings pertaining to 
appliance efficiency.
    Some BVM manufacturers also produce commercial refrigeration 
equipment (CRE). DOE published a CRE ECS preliminary analysis on June 
of 2022. (87 FR 38296). There is not yet a proposed or finalized 
amended standard. If DOE proposes or finalizes any energy conservation 
standards for CRE prior to finalizing amended energy conservation 
standards for BVMs, DOE will add CRE into its consideration of 
cumulative regulatory burden for the BVM final rule.
    DOE notes that there is cumulative regulatory burden due to 
product-specific, Federal regulation from another agency that occurs 
within 3 years of the proposed compliance date for an amended standard. 
The U.S. Environmental Protection Agency (EPA) proposed refrigerant 
restrictions pursuant to the AIM Act \68\ in a NOPR published on 
December 15, 2022 (``December 2022 EPA NOPR''). 87 FR 76738. 
Specifically, EPA proposed prohibitions for new vending machines (EPA's 
term for this equipment) for the use of HFCs and blends containing HFCs 
that have a GWP of 150 or greater. 87 FR 76780. The proposal would 
prohibit manufacture or import of such vending machines starting 
January 1, 2025, and would ban sale, distribution, purchase, receive, 
or export of such vending machines starting January 1, 2026. 87 FR 
76740. In the engineering analysis, DOE considered the use of 
alternative refrigerants that are not prohibited for BVM equipment in 
the December 2022 EPA NOPR. DOE understands that adapting product lines 
to meet the current and upcoming refrigerant regulations requires 
significant development and testing time. In particular, DOE 
understands that switching from non-flammable to flammable refrigerants 
(e.g., R-290) requires time and investment to redesign BVM models and 
upgrade production facilities to accommodate the additional structural 
and safety precautions required. As discussed in section IV.C.1 of this 
document, DOE anticipates BVM manufacturers transitioning all models to 
R-290 to comply with anticipated refrigeration regulations, such as the 
December 2022

[[Page 34012]]

EPA NOPR,\69\ prior to the expected 2028 compliance date of potential 
energy conservation standards. Therefore, the engineering analysis 
assumes the use of R-290 compressors as a baseline design option for 
all equipment classes. See section IV.C.1 of this document for 
additional information on refrigerant assumptions in the engineering 
analysis. DOE accounted for the costs associated with redesigning BVMs 
to make use of flammable refrigerants and upgrading production 
facilities to accommodate flammable refrigerants in the GRIM under the 
assumption that three manufacturers of BVMs have yet to make the R-290 
transition. These costs are modeled as an impact to industry cashflow. 
DOE relied on manufacturer feedback in confidential interviews and a 
report prepared for the EPA \70\ to estimate the industry refrigerant 
transition costs. See section V.B.2.e of this document and chapter 12 
of the NOPR TSD for additional discussion on cumulative regulatory 
burden.
---------------------------------------------------------------------------

    \68\ Under subsection (i) of the AIM Act, entitled ``Technology 
Transitions,'' the EPA may by rule restrict the use of 
hydrofluorocarbons (HFCs) in sectors or subsectors where they are 
used. A person or entity may also petition EPA to promulgate such a 
rule. ``H.R.133--116th Congress (2019-2020): Consolidated 
Appropriations Act, 2021.'' Congress.gov, Library of Congress, 27 
December 2020, www.congress.gov/bill/116thcongress/house-bill/133.
    \69\ The proposed rule was published on December 15, 2022. 87 FR 
76738.
    \70\ See pp. 5-113 of the ``Global Non-CO2 Greenhouse 
Gas Emission Projections & Marginal Abatement Cost Analysis: 
Methodology Documentation'' (2019). www.epa.gov/sites/default/files/2019-09/documents/nonco2_methodology_report.pdf.
---------------------------------------------------------------------------

    DOE requests information regarding the impact of cumulative 
regulatory burden on manufacturers of BVMs 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 national energy 
savings 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 BVMs, 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 equipment 
purchased in the 30-year period that begins in the year of anticipated 
compliance with amended standards (2028-2057). Table V.20 presents 
DOE's projections of the NES for each TSL considered for BVMs. The 
savings were calculated using the approach described in section IV.H of 
this document.

       Table V.20--Cumulative National Energy Savings for Beverage Vending Machines; 30 Years of Shipments
                                                   [2028-2057]
----------------------------------------------------------------------------------------------------------------
                                                                                 Trial standard level
                           Discount rate                            --------------------------------------------
                                                                        1        2        3        4        5
----------------------------------------------------------------------------------------------------------------
                                                                                        quads
----------------------------------------------------------------------------------------------------------------
Primary energy.....................................................     0.04     0.05     0.08     0.09     0.13
FFC energy.........................................................     0.04     0.06     0.09     0.09     0.14
----------------------------------------------------------------------------------------------------------------

    OMB Circular A-4 \71\ 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 proposed 
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.\72\ The review timeframe established in EPCA is 
generally not synchronized with the product lifetime, product 
manufacturing cycles, or other factors specific to BVMs. 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.21. The impacts are counted over the lifetime of 
BVMs purchased in 2028-2035.
---------------------------------------------------------------------------

    \71\ U.S. Office of Management and Budget. Circular A-4: 
Regulatory Analysis. September 17, 2003. 
obamawhitehouse.archives.gov/omb/circulars_a004_a-4 (last accessed 
January 2023).
    \72\ 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.

 Table V.21--Cumulative National Energy Savings for Refrigerated Bottled or Canned Beverage Vending Machines; 9
                                               Years of Shipments
                                                   [2028-2035]
----------------------------------------------------------------------------------------------------------------
                                                                                 Trial standard level
                           Discount rate                            --------------------------------------------
                                                                        1        2        3        4        5
----------------------------------------------------------------------------------------------------------------
                                                                                        quads
                                                                    --------------------------------------------
Primary energy.....................................................     0.01     0.02     0.03     0.03     0.04
FFC energy.........................................................     0.01     0.02     0.03     0.03     0.04
----------------------------------------------------------------------------------------------------------------


[[Page 34013]]

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 BVMs. In 
accordance with OMB's guidelines on regulatory analysis,\73\ DOE 
calculated NPV using both a 7-percent and a 3-percent real discount 
rate. Table V.22 shows the consumer NPV results with impacts counted 
over the lifetime of products purchased in 2028-2057.
---------------------------------------------------------------------------

    \73\ U.S. Office of Management and Budget. Circular A-4: 
Regulatory Analysis. September 17, 2003. 
obamawhitehouse.archives.gov/omb/circulars_a004_a-4 (last accessed 
February 2023).

    Table V.22--Cumulative Net Present Value of Consumer Benefits for Refrigerated Bottled or Canned Beverage
                                     Vending Machines; 30 Years of Shipments
                                                   [2028-2057]
----------------------------------------------------------------------------------------------------------------
                                                                                 Trial standard level
                           Discount rate                            --------------------------------------------
                                                                        1        2        3        4        5
----------------------------------------------------------------------------------------------------------------
                                                                                    billion 2021$
                                                                    --------------------------------------------
3 percent..........................................................     0.16     0.22     0.23     0.25   (0.31)
7 percent..........................................................     0.07     0.09     0.08     0.09   (0.23)
----------------------------------------------------------------------------------------------------------------

    The NPV results based on the aforementioned 9-year analytical 
period are presented in Table V.23. The impacts are counted over the 
lifetime of products purchased in 2028-2035. 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.23--Cumulative Net Present Value of Consumer Benefits for Refrigerated Bottled or Canned Beverage
                                     Vending Machines; 9 Years of Shipments
                                                   [2028-2035]
----------------------------------------------------------------------------------------------------------------
                                                                                 Trial standard level
                           Discount rate                            --------------------------------------------
                                                                        1        2        3        4        5
----------------------------------------------------------------------------------------------------------------
                                                                                    billion 2021$
                                                                    --------------------------------------------
3 percent..........................................................     0.07     0.09     0.07     0.07   (0.17)
7 percent..........................................................     0.04     0.05     0.03     0.03   (0.14)
----------------------------------------------------------------------------------------------------------------

    The previous results reflect the use of a default trend to estimate 
the change in price for BVMs over the analysis period (see section IV.H 
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 
BVMs 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 (2028-2032), 
in which these uncertainties are reduced.
    The results suggest that the proposed amended 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 IV.C.1.b of this document, DOE has 
tentatively concluded that the standards proposed in this NOPR would 
not lessen the utility or performance of the BVMs 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

[[Page 34014]]

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. 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 proposed rulemaking.
    Energy conservation resulting from potential energy conservation 
standards for BVMs is expected to yield environmental benefits in the 
form of reduced emissions of certain air pollutants and GHGs. Table 
V.24 provides DOE's estimate of cumulative emissions reductions 
expected to result from the TSLs considered in this proposed 
rulemaking. The emissions were calculated using the multipliers 
discussed in section IV.K of this document. DOE reports annual 
emissions reductions for each TSL in chapter 13 of the NOPR TSD.

 Table V.24--Cumulative Emissions Reduction for Refrigerated Bottled or Canned Beverage Vending Machines Shipped
                                                 in 2028-2057 *
----------------------------------------------------------------------------------------------------------------
                                                                            Trial standard level
                                                          ------------------------------------------------------
                                                               1          2          3          4          5
----------------------------------------------------------------------------------------------------------------
                                             Power Sector Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)................................       1.26       1.73       2.65       2.83       1.26
CH4 (thousand tons)......................................       0.10       0.13       0.21       0.22       0.10
N2O (thousand tons)......................................       0.01       0.02       0.03       0.03       0.01
NOX (thousand tons)......................................       0.63       0.86       1.32       1.41       0.63
SO2 (thousand tons)......................................       0.60       0.82       1.27       1.35       0.60
Hg (tons)................................................      0.004      0.005      0.008      0.009      0.004
----------------------------------------------------------------------------------------------------------------
                                               Upstream Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)................................       0.10       0.13       0.21       0.22       0.10
CH4 (thousand tons)......................................       9.20      12.65      19.42      20.72       9.20
N2O (thousand tons)......................................       0.00       0.00       0.00       0.00       0.00
NOX (thousand tons)......................................       1.47       2.02       3.11       3.32       1.47
SO2 (thousand tons)......................................       0.01       0.01       0.01       0.02       0.01
Hg (tons)................................................    0.00001    0.00002    0.00003    0.00003    0.00001
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)................................       1.35       1.86       2.86       3.05       1.35
CH4 (thousand tons)......................................       9.29      12.78      19.63      20.93       9.29
N2O (thousand tons)......................................       0.01       0.02       0.03       0.03       0.01
NOX (thousand tons)......................................       2.10       2.89       4.43       4.73       2.10
SO2 (thousand tons)......................................       0.61       0.83       1.28       1.36       0.61
Hg (tons)................................................      0.004      0.005      0.008       0.01      0.004
----------------------------------------------------------------------------------------------------------------
* Negative values refer to an increase in emissions.

    As part of the analysis for this proposed rulemaking, DOE estimated 
monetary benefits likely to result from the reduced emissions of 
CO2 that DOE estimated for each of the considered TSLs for 
BVMs. Section IV.L of this document discusses the SC-CO2 
values that DOE used. Table V.25 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.25--Present Value of CO2 Emissions Reduction for Refrigerated Bottled or Canned Beverage Vending
                                          Machines Shipped in 2028-2057
----------------------------------------------------------------------------------------------------------------
                                                                            SC-CO2 Case
                                                 ---------------------------------------------------------------
                                                                   Discount rate and statistics
                       TSL                       ---------------------------------------------------------------
                                                                                                      3% 95th
                                                    5% Average      3% Average     2.5% Average     percentile
----------------------------------------------------------------------------------------------------------------
                                                                           million 2021$
                                                 ---------------------------------------------------------------
1...............................................              12              53              83             161
2...............................................              17              73             115             222
3...............................................              25             112             176             340
4...............................................              27             120             188             363
5...............................................              40             178             280             541
----------------------------------------------------------------------------------------------------------------


[[Page 34015]]

    As discussed in section IV.L.2 of this document, DOE estimated the 
climate benefits likely to result from the reduced emissions of 
CH4 and N2O that DOE estimated for each of the 
considered TSLs for BVMs. Table V.26 presents the value of the 
CH4 emissions reduction at each TSL, and Table V.27 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.26--Present Value of Methane Emissions Reduction for Refrigerated Bottled or Canned Beverage Vending
                                          Machines Shipped in 2028-2057
----------------------------------------------------------------------------------------------------------------
                                                                            SC-CH4 Case
                                                 ---------------------------------------------------------------
                                                                   Discount rate and statistics
                       TSL                       ---------------------------------------------------------------
                                                                                                      3% 95th
                                                    5% Average      3% Average     2.5% Average     percentile
----------------------------------------------------------------------------------------------------------------
                                                                           million 2021$
                                                 ---------------------------------------------------------------
1...............................................               3              10              14              27
2...............................................               4              14              19              36
3...............................................               7              22              30              57
4...............................................               8              23              33              62
5...............................................              12              35              50              93
----------------------------------------------------------------------------------------------------------------


   Table V.27--Present Value of Nitrous Oxide Emissions Reduction for Refrigerated Bottled or Canned Beverage
                                      Vending Machines Shipped in 2028-2057
----------------------------------------------------------------------------------------------------------------
                                                                            SC-N2O Case
                                                 ---------------------------------------------------------------
                                                                   Discount rate and statistics
                       TSL                       ---------------------------------------------------------------
                                                                                                      3% 95th
                                                    5% Average      3% Average     2.5% Average     percentile
----------------------------------------------------------------------------------------------------------------
                                                                           million 2021$
                                                 ---------------------------------------------------------------
1...............................................            0.04            0.17            0.26            0.45
2...............................................            0.06            0.23            0.35            0.61
3...............................................            0.09            0.36            0.56            0.96
4...............................................            0.10            0.39            0.61            1.05
5...............................................            0.14            0.59            0.92            1.58
----------------------------------------------------------------------------------------------------------------

    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 BVMs. The dollar-
per-ton values that DOE used are discussed in section IV.L of this 
document. Table V.28 presents the present value for NOX 
emissions reduction for each TSL calculated using 7-percent and 3-
percent discount rates, and Table V.29 presents similar results for 
SO2 emissions reductions. The results in these tables 
reflect the 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.28--Present Value of NOX Emissions Reduction for Refrigerated
    Bottled or Canned Beverage Vending Machines Shipped in 2028-2057
------------------------------------------------------------------------
                                            3% Discount     7% Discount
                   TSL                         rate            rate
------------------------------------------------------------------------
                                                   million 2021$
                                         -------------------------------
1.......................................              88              33
2.......................................             121              46
3.......................................             185              70
4.......................................             197              75
5.......................................             294             111
------------------------------------------------------------------------


[[Page 34016]]


  Table V.29--Present Value of SO2 Emissions Reduction for Refrigerated
    Bottled or Canned Beverage Vending Machines Shipped in 2028-2057
------------------------------------------------------------------------
                                            3% Discount     7% Discount
                   TSL                         rate            rate
------------------------------------------------------------------------
                                                   million 2021$
                                         -------------------------------
1.......................................              34              13
2.......................................              47              18
3.......................................              72              28
4.......................................              76              29
5.......................................             114              44
------------------------------------------------------------------------

    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 
direct PM and other co-pollutants may be significant. DOE has not 
included monetary benefits of the reduction of Hg emissions because the 
amount of reduction is very small.
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.30 presents the NPV values that result from adding the 
estimates of the potential economic benefits resulting from reduced 
GHG, NOX, and SO2 emissions to the NPV of 
consumer benefits calculated for each TSL considered in this proposed 
rulemaking. The consumer benefits are domestic U.S. monetary savings 
that occur as a result of purchasing the covered equipment, and are 
measured for the lifetime of products shipped in 2028-2057. 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 BVMs shipped in 2028-2057.

          Table V.30--Consumer NPV Combined With Present Value of Climate Benefits and Health Benefits
----------------------------------------------------------------------------------------------------------------
            Category                   TSL 1           TSL 2           TSL 3           TSL 4           TSL 5
----------------------------------------------------------------------------------------------------------------
                   Using 3% discount rate for Consumer NPV and Health Benefits (billion 2021$)
----------------------------------------------------------------------------------------------------------------
5% average SC-GHG case..........            0.30            0.41            0.52            0.56            0.15
3% average SC-GHG case..........            0.35            0.47            0.62            0.66            0.31
2.5% average SC-GHG case........            0.38            0.52            0.70            0.74            0.43
3% 95th percentile SC-GHG case..            0.47            0.65            0.89            0.95            0.74
----------------------------------------------------------------------------------------------------------------
                   Using 7% discount rate for Consumer NPV and Health Benefits (billion 2021$)
----------------------------------------------------------------------------------------------------------------
5% average SC-GHG case..........            0.13            0.18            0.21            0.23          (0.02)
3% average SC-GHG case..........            0.18            0.24            0.31            0.33            0.14
2.5% average SC-GHG case........            0.21            0.29            0.39            0.41            0.26
3% 95th percentile SC-GHG case..            0.30            0.41            0.58            0.62            0.56
----------------------------------------------------------------------------------------------------------------

C. Conclusion

    When considering new or amended energy conservation standards, the 
standards that DOE adopts for any type (or class) of covered equipment 
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 
BVMs at each TSL, beginning with the max-tech 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.
1. Benefits and Burdens of TSLs Considered for BVM Standards
    Table V.31 and Table V.32 summarize the quantitative impacts 
estimated for each TSL for BVMs. The national impacts are measured over 
the lifetime of BVMs purchased in the 30-year period that begins in the 
anticipated year of compliance with amended standards (2028-2057). The 
energy savings, emissions reductions, and value of emissions reductions 
refer to FFC results. The efficiency levels contained in each TSL are 
described in section V.A of this document.

[[Page 34017]]



   Table V.31--Summary of Analytical Results for Refrigerated Bottled or Canned Beverage Vending Machine TSLs:
                                                National Impacts
----------------------------------------------------------------------------------------------------------------
            Category                   TSL 1           TSL 2           TSL 3           TSL 4           TSL 5
----------------------------------------------------------------------------------------------------------------
                                     Cumulative FFC National Energy Savings
----------------------------------------------------------------------------------------------------------------
Quads...........................            0.04           0.056           0.086           0.092            0.14
----------------------------------------------------------------------------------------------------------------
                                       Cumulative FFC Emissions Reduction
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......             1.4             1.9             2.9             3.0             4.5
CH4 (thousand tons).............               9              13              20              21              31
N2O (thousand tons).............            0.01            0.02            0.03            0.03            0.05
NOX (thousand tons).............             2.1             2.9             4.4             4.7             7.1
SO2 (thousand tons).............             0.6             0.8             1.3             1.4             2.0
Hg (tons).......................           0.004           0.005           0.008           0.009           0.013
----------------------------------------------------------------------------------------------------------------
                      Present Value of Benefits and Costs (3% discount rate, billion 2021$)
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings.            0.17            0.24            0.32            0.33            0.47
Climate Benefits *..............            0.06            0.09            0.13            0.14            0.21
Health Benefits **..............            0.12            0.17            0.26            0.27            0.41
Total Benefits [dagger].........            0.36            0.49            0.71            0.75            1.09
Consumer Incremental Product                0.01            0.02            0.08            0.08            0.78
 Costs [Dagger].................
Consumer Net Benefits...........            0.16            0.22            0.23            0.25          (0.31)
Total Net Benefits..............            0.35            0.47            0.62            0.66            0.31
----------------------------------------------------------------------------------------------------------------
                      Present Value of Benefits and Costs (7% discount rate, billion 2021$)
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings.            0.07            0.10            0.13            0.14            0.19
Climate Benefits *..............            0.06            0.09            0.13            0.14            0.21
Health Benefits **..............            0.05            0.06            0.10            0.10            0.15
Total Benefits [dagger].........            0.18            0.25            0.36            0.38            0.56
Consumer Incremental Product                0.00            0.01            0.05            0.05            0.42
 Costs [Dagger].................
Consumer Net Benefits...........            0.07            0.09            0.08            0.09          (0.23)
Total Net Benefits..............            0.18            0.24            0.31            0.33            0.14
----------------------------------------------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with automatic commercial ice makers shipped in 2028-
  2057. These results include benefits to consumers that accrue after 2057 from the products shipped in 2028-
  2057.
* 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; however, DOE emphasizes the importance and
  value of considering the benefits calculated using all four sets of SC-GHG estimates. To monetize the benefits
  of reducing GHG emissions, this analysis uses the interim estimates presented in the Technical Support
  Document: Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates Under Executive Order 13990
  published in February 2021 by the IWG.
** 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 DOE does not have a single central SC-GHG point estimate. DOE emphasizes the
  importance and value of considering the benefits calculated using all four sets of SC-GHG estimates.
[Dagger] Costs include incremental equipment costs.


   Table V.32 Summary of Analytical Results for Refrigerated Bottled or Canned Beverage Vending Machine TSLs:
                                        Manufacturer and Consumer Impacts
----------------------------------------------------------------------------------------------------------------
                         Category                            TSL 1*     TSL 2*     TSL 3*     TSL 4*     TSL 5*
----------------------------------------------------------------------------------------------------------------
                                              Manufacturer Impacts
----------------------------------------------------------------------------------------------------------------
Industry NPV (million 2021$) (No-new-standards case INPV     85.3 to    85.3 to    82.9 to    83.6 to    56.3 to
 = 85.5).................................................       85.4       85.5       86.1       85.9       68.0
Industry NPV (% change)..................................   (0.2) to   (0.2) to   (3.0) to   (2.2) to  (34.1) to
                                                                   0          0        0.8        0.6     (20.4)
----------------------------------------------------------------------------------------------------------------
                                      Consumer Average LCC Savings (2021$)
----------------------------------------------------------------------------------------------------------------
Class A..................................................       $150       $203        $99       ($6)     ($823)
Class B..................................................       $167       $212       $117       $198     ($280)
Combo A..................................................       $212       $263        $89       $207     ($851)
Combo B..................................................       $214       $310        $37       $239     ($245)
Shipment-Weighted-Average\*\.............................       $166       $220        $98        $92     ($625)
----------------------------------------------------------------------------------------------------------------
                                           Consumer Simple PBP (years)
----------------------------------------------------------------------------------------------------------------
Class A..................................................        0.5        0.7        4.0        5.7       23.5
Class B..................................................        0.6        0.7        3.6        1.4       10.5

[[Page 34018]]

 
Combo A..................................................        0.4        0.5        3.8        1.4       19.5
Combo B..................................................        0.4        0.9        5.1        2.2       10.9
Shipment-Weighted-Average *..............................        0.5        0.7        4.0        3.8       18.5
----------------------------------------------------------------------------------------------------------------
                                 Percent of Consumers that Experience a Net Cost
----------------------------------------------------------------------------------------------------------------
Class A..................................................         0%         0%        28%        59%        94%
Class B..................................................          0          0         24          4         88
Combo A..................................................          0          0         41          3         99
Combo B..................................................          0          0         53          0         85
Shipment-Weighted-Average *..............................          0          0         30         33         92
----------------------------------------------------------------------------------------------------------------
* Weighted by shares of each product class in total projected shipments in 2028.

    DOE first considered TSL 5, which represents the max-tech 
efficiency levels. At this level DOE expects that all equipment classes 
would represent EL7, which would require VIPs, variable-speed 
compressors, permanent magnet synchronous evaporator and condenser fan 
motors, microchannel condensers, refrigeration low power modes (tested 
in accordance to the DOE test procedure), and evaporator fan controls 
for all equipment classes. Further, DOE expects that Class A and 
Combination A machines would require automatic lighting controls 
(tested in accordance to the DOE test procedure) and vacuum insulated 
glass doors. TSL 5 would save an estimated 0.14 quads of energy, an 
amount DOE considers significant. Under TSL 5, the NPV of consumer 
benefit would be -$0.23 billion using a discount rate of 7 percent, and 
-$0.31 billion using a discount rate of 3 percent.
    The cumulative emissions reductions at TSL 5 are 4.5 Mt of 
CO2, 2.0 thousand tons of SO2, 7.1 thousand tons 
of NOX, 0.013 tons of Hg, 31 thousand tons of 
CH4, and 0.05 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 $0.21 billion. The estimated monetary value of the health 
benefits from reduced SO2 and NOX emissions at 
TSL 5 is $0.15 billion using a 7-percent discount rate and $0.41 
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 $0.14 
billion. Using a 3-percent discount rate for all benefits and costs, 
the estimated total NPV at TSL 5 is $0.31 billion. The estimated total 
NPV is provided for additional information; however, DOE primarily 
relies upon the NPV of consumer benefits when determining whether a 
proposed standard level is economically justified.
    At TSL 5, the shipment weighted average LCC impact for an affected 
consumer is a cost of $532. The average LCC impact for Class A is a 
cost of $695, a cost of $199 for Class B, a cost of $851 for Combo A, 
and a cost of $239 for Combo B. The average simple payback period is 
18.3 years for Class A, 9.2 years for Class B, 19.5 years for Combo A, 
and 10.9 years for Combo B. The shipment-weighted average simple 
payback period for all equipment classes is 15.2 years. The fraction of 
consumers experiencing a net LCC cost is 93 percent for Class A, 84 
percent for Class B, 99 percent for Combo A, 85 percent for Combo B. 
The shipment weighted average fraction of consumers experiencing a net 
cost is 90 percent across all BVM equipment classes.
    At TSL 5, the projected change in INPV ranges from a decrease of 
$29.2 million to a decrease of $17.5 million, which corresponds to 
decreases of 34.1 percent and 20.4 percent, respectively. DOE estimates 
that industry must invest $36.5 million to comply with standards set at 
TSL 5. There are five BVM manufacturers that manufacture equipment 
covered by this rulemaking. None of the five BVM manufacturers offers 
models that meet the efficiency level required at TSL 5 for BVMs in any 
product class. DOE expects manufacturers to adopt vacuum insulated 
panels at TSL 5. The use of vacuum insulated panels would require 
manufacturers to redesign their equipment offerings and invest heavily 
in new cabinet fixtures, significantly increasing conversion costs.
    The Secretary tentatively concludes that at TSL 5 for BVMs, the 
benefits of energy savings, emission reductions, and the estimated 
monetary value of the emissions reductions would be outweighed by the 
negative NPV of consumer benefits and the economic burden on many 
consumers, as well as the impacts on manufacturers, including the large 
conversion costs, profit margin impacts that could result in a large 
reduction in INPV, and the lack of manufacturers currently offering 
products meeting the efficiency levels required at this TSL, including 
most small businesses. A majority of BVM consumers (90 percent) would 
experience a net cost and the average LCC savings would be negative (-
$532). The potential reduction in INPV could be as high as 34.1 
percent. Additionally, no BVM manufacturer offers models that meet the 
efficiency level required at TSL 5 for BVMs covered by this rulemaking. 
Consequently, the Secretary has tentatively concluded that TSL 5 is not 
economically justified.
    DOE then considered TSL 4, which represents EL6 for Class A, EL4 
for Class B, EL4 for Combo A, and EL5 for Combo B. At these efficiency 
levels, DOE expects that all equipment classes would require improved-
efficiency evaporator and condenser fan motors (in many cases ECMs or 
permanent magnet synchronous motors), refrigeration low power modes 
(tested in accordance to the DOE test procedure), and evaporator fan 
controls. Further, DOE expects that Class A machines would require 
automatic lighting controls (tested in accordance to the DOE test 
procedure), variable-speed compressors, and microchannel condensers; 
Combination A machines would require automatic lighting controls 
(tested in accordance to the DOE test procedure); and Combination B 
machines would require microchannel condensers. TSL 4 would save an 
estimated 0.09 quads of energy, an amount DOE considers significant. 
Under TSL 4, the NPV of consumer benefit would be $0.09 billion using a 
discount rate of 7 percent, and $0.25

[[Page 34019]]

billion using a discount rate of 3 percent.
    The cumulative emissions reductions at TSL 4 are 3.0 Mt of 
CO2, 1.4 thousand tons of SO2, 4.7 thousand tons 
of NOX, 0.009 tons of Hg, 21 thousand tons of 
CH4, and 0.03 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 $0.14 billion. The estimated monetary value of the health 
benefits from reduced SO2 and NOX emissions at 
TSL 4 is $0.10 billion using a 7-percent discount rate and $0.27 
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 $0.33 
billion. Using a 3-percent discount rate for all benefits and costs, 
the estimated total NPV at TSL 4 is $0.66 billion. The estimated total 
NPV is provided for additional information; however, DOE primarily 
relies upon the NPV of consumer benefits when determining whether a 
proposed standard level is economically justified.
    At TSL 4, the shipment weighted average LCC impact is a savings of 
$97. The average LCC impact for Class A is a cost of $5.52, a savings 
of $206 for Class B, savings of $190 for Combo A, and savings of $287 
for Combo B. The simple payback period is 5.7 years for Class A, 1.2 
years for Class B, 1.4 years for Combo A and 2.2 years for combo B. The 
shipment weighted average simple payback period for all BVMs is 3.7 
years. The fraction of consumers experiencing a net LCC cost is 59 
percent for Class A, 2 percent for Class B, 12 percent for Combo A and 
0 percent for Combo B. The shipment weighted average fraction of 
consumers experiencing a net LCC cost is 34 percent.
    At TSL 4, the projected change in INPV ranges from a decrease of 
$1.9 million to an increase of $0.5 million, which correspond to a 
decrease of 2.2 percent and an increase of 0.6 percent, respectively. 
DOE estimates that industry must invest $1.5 million to comply with 
standards set at TSL 4. None of the 5 BVM manufacturers currently offer 
models that meet the efficiency level required at TSL 4 for BVMs in any 
product class. At TSL 5, the primary driver of high conversion costs is 
the industry's investment to redesign both products and production 
lines for the introduction of vacuum insulated panels. TSL 4 does not 
require the incorporation of vacuum insulated panels, which in turn 
reduces the need for redesigned models and new cabinet fixtures. This 
reduces both the level of potential capital investment and the 
engineering effort required to redesign equipment. At TSL 4, the 
primary driver of conversion costs is the industry's investment to 
redesign products for the incorporation of variable speed compressors, 
more efficient evaporators and fan motors, and, for PC 1, triple pane 
glass packs.
    After considering the analysis and weighing the benefits and 
burdens, the Secretary has tentatively concluded that at a standard set 
at TSL 4 for BVMs is economically justified. At this TSL, the average 
LCC savings for BVM consumers across all equipment classes is positive 
with 34 percent of consumers negatively impacted. The NPV of consumer 
benefits is positive at each equipment class at both 3-percent and 7-
percent discount rates. Further, TSL 4 represents the maximum NPV of 
consumer benefits out of all TSLs at a 3-percent discount rate. The 
shipment weighted average LCC impact is a positive savings of $97 at 
TSL 4, including a cost of $6 for Class A BVMs. This $6 cost represents 
0.06 percent of the average LCC for the equipment ($9,551). Further, 
the LCC calculations are based on equipment to be installed on the 
compliance year of the proposed rule. However, the costs for higher 
efficiency PMS fan motors as well as for variable speed compressors 
which may be incorporated in the manufacture of Class A BVMs at TSL 4 
is projected to drop quickly in subsequent years, shifting the small 
negative LCC for Class A to a positive value quickly and resulting in 
both consumer LCC benefits and overall net consumer NPV benefits (see 
discussion of equipment price trends in Chapter 8 of the NOPR TSD). 
Approximately 7% of the installed cost to the customer for Class A 
equipment at TSL 4 ($4,228 shown in Table V.4) are expected to be in 
components which DOE anticipates to experience experiential learning 
price drops of approximately 5.9% year over year. Thus by year 2 of the 
rule the expected cost reduction in Class A is approximately $17 at TSL 
4. The anticipated market in the no new standards case has 
approximately 95 percent of the market at EL3 and below and these 
basecase efficiency equipment would not experience similar component-
level experiential learning. Thus DOE predicts an average reduction in 
the incremental installed cost for Class A equipment by year 2 of the 
rule of approximately $16.40 over the no-new standards case. Assuming 
equipment installed in year 2 will have similar energy benefits to 
equipment installed in year 1 over the no new standards case, the 
reduction in first cost for equipment installed in year 2 will more 
than offset the small negative $6 LCC savings shown for year 1 of the 
rule. DOE recognizes that the fraction of consumers of Class A 
equipment in the compliance year is negative is more than one-half of 
the affected customers, but similarly believes that this will change 
within a short few years into the analysis period for the reasons 
previously illustrated. Given that Class A NPVs are strongly positive 
at both 3-percent and 7-percent discount rates, DOE has determined that 
the small LCC cost for Class A in TSL 4 in year one of the analysis 
period did not outweigh the NPV benefits that would accrue to consumers 
over the analysis period. Thus, DOE has determined that TSL 4 would be 
economically justified.
    The FFC national energy savings are significant and the NPV of 
consumer benefits is positive using both a 3-percent and 7-percent 
discount rate. Notably, the benefits to consumers vastly 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 40 
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 $0.14 billion in 
climate benefits (associated with the average SC-GHG at a 3-percent 
discount rate), and $0.27 billion (using a 3-percent discount rate) or 
$0.10 billion (using a 7-percent discount rate) in health benefits--the 
rationale becomes stronger still.
    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 while TSL 5 
would provide for over 50% higher energy savings and significantly 
greater climate and health benefits from

[[Page 34020]]

emission reductions than TSL 4, the consumer net benefits at TSL 5 are 
negative whereas those at TSL 4 are positive. Further both the consumer 
net benefits and the total net benefits, including the monetized 
benefits from emission reductions, at TSL 4 exceed those at TSL 5 as 
well as those of the other TSLs examined by DOE. When comparing TSL 4 
to TSL 3, DOE notes that the shipment weighted average LCC savings for 
TSL 4 is less than at TSL 3 by $10, but the shipment weighted average 
PBP at TSL 4 of 3.7 years, is lower than TSL 3, at 3.8 years. At TSL 4, 
the shipment weighted average fraction of customers experiencing a net 
LCC cost is 34 percent, only slightly greater than the 28 percent 
estimated for TSL 3. Taken as a whole for the BVM market, the LCC and 
payback impact on consumers at TSL 3 and TSL 4 are very similar. The 
consumer net benefits at TSL 4 exceed those of TSL 3 due to the energy 
savings and the total net benefits including monetized benefits of 
emission reductions. These additional savings and benefits at TSL 4 are 
significant. Thus, DOE considers the impacts to be, as a whole, 
economically justified at TSL 4.
    Although DOE considered proposed amended standard levels for BVMs 
by grouping the efficiency levels for each equipment class into TSLs, 
DOE evaluates all analyzed efficiency levels in its analysis. For all 
equipment classes except Class A, TSL 4 represents the maximum TSL that 
results in LCC savings and for these classes less than 5 percent of the 
consumers experience an LCC cost. For Class A, the average LCC savings 
was -$6 over the life of the equipment and 59% of consumers experience 
negative LCC savings. As noted previously however, the average LCC cost 
is small relative to the life-cycle cost of Class A equipment and the 
expected reduction in cost of specific components used for Class A at 
TSL 4 including variable speed compressors and permanent magnet 
synchronous fan motors is anticipated to change the incremental 
equipment costs such that the small LCC cost experienced by Class A 
purchasers in the compliance year will not be experienced in subsequent 
years. Although DOE acknowledges the negative LCC impacts seen in Class 
A, given that the weighted average LCC benefits across all classes are 
positive at TSL 4, DOE has tentatively determined that TSL 4 is 
economically justified.
    Therefore, based on the previous considerations, DOE proposes to 
adopt the energy conservation standards for BVMs at TSL 4. The proposed 
amended energy conservation standards for BVMs, which are expressed as 
kWh/day, are shown in Table V.33.

     Table V.33--Proposed Amended Energy Conservation Standards for
        Refrigerated Bottled or Canned Beverage Vending Machines
------------------------------------------------------------------------
                                                Maximum daily  energy
              Equipment class                consumption  kilowatt hours
                                                       per day
------------------------------------------------------------------------
Class A...................................  0.029 x V* + 1.34
Class B...................................  0.029 x V* + 1.21
Combination A.............................  0.048 x V* + 1.50
Combination B.............................  0.052 x V* + 0.96
------------------------------------------------------------------------
* V is the representative value of refrigerated volume (ft\3\) of the
  BVM model, as calculated pursuant to 10 CFR 429.52(a)(3).

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$) of the 
benefits from operating products that meet the proposed standards 
(consisting primarily of operating cost savings from using less energy, 
minus increases in product purchase costs), and (2) the annualized 
monetary value of the climate and health benefits from emission 
reductions.
    Table V.34 shows the annualized values for BVMs under TSL 4, 
expressed in 2021$. 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 BVMs is $5.8 million per year in increased 
equipment costs, while the estimated annual benefits are $16 million 
from reduced equipment operating costs, $8.5 million from GHG 
reductions, and $12 million from reduced NOX and 
SO2 emissions. In this case, the net benefit amounts to $30 
million per year.
    Using a 3-percent discount rate for all benefits and costs, the 
estimated cost of the proposed standards for BVMs is $4.9 million per 
year in increased equipment costs, while the estimated annual benefits 
are $20 million in reduced operating costs, $8.5 million from GHG 
reductions, and $16 million from reduced NOX and 
SO2 emissions. In this case, the net benefit amounts to $39 
million per year.

 Table V.34--Annualized Benefits and Costs of Proposed Energy Conservation Standards for Refrigerated Bottled or
                                    Canned Beverage Vending Machines (TSL 4)
----------------------------------------------------------------------------------------------------------------
                                                                       Million 2021$/year
                                               -----------------------------------------------------------------
                                                                        Low net benefits      High net benefits
                                                  Primary estimate          estimate              estimate
----------------------------------------------------------------------------------------------------------------
                                                3% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings...............                    20                    19                    20
Climate Benefits *............................                   8.5                   8.5                   8.5
Health Benefits **............................                    16                    16                    17
Total Benefits [dagger].......................                    44                    44                    45
Consumer Incremental Product Costs [Dagger]...                   4.9                   5.2                   4.9
Net Benefits..................................                    39                    38                    40
----------------------------------------------------------------------------------------------------------------
                                                7% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings...............                    16                    15                    16
Climate Benefits * (3% discount rate).........                   8.5                   8.5                   8.5
Health Benefits **............................                    12                    12                    12
Total Benefits [dagger].......................                    36                    35                    36
Consumer Incremental Product Costs [Dagger]...                   5.8                   6.0                   5.7

[[Page 34021]]

 
Net Benefits..................................                    30                    29                    31
----------------------------------------------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with BVMs shipped in 2028-2057. These results
  include benefits to consumers which accrue after 2057 from the products shipped in 2028-2057. 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 sections IV.F.1 and 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 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 sets of 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. In the
  absence of further intervening court orders, DOE will revert to its approach prior to the injunction and
  presents monetized 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 benefits for both the 3-percent and 7-percent cases are presented using the average SC-GHG with 3-
  percent discount rate, but DOE does not have a single central SC-GHG point estimate.
[Dagger] Costs include incremental equipment costs as well as installation costs.

D. Reporting, Certification, and Sampling Plan

    Manufacturers, including importers, must use product-specific 
certification templates to certify compliance to DOE. For BVM 
equipment, the certification template reflects the general 
certification requirements specified at 10 CFR 429.12 and the product-
specific requirements specified at 10 CFR 429.52. DOE is not proposing 
to amend the product-specific certification requirements for this 
equipment.

VI. Procedural Issues and Regulatory Review

A. Review Under Executive Orders 12866, 13563, and 14094

    Executive Order (``E.O.'') 12866, ``Regulatory Planning and 
Review,'' as supplemented and reaffirmed by E.O. 13563, ``Improving 
Regulation and Regulatory Review,'' 76 FR 3821 (Jan. 21, 2011) and E.O. 
14094, ``Modernizing Regulatory Review,'' 88 FR 21879 (April 11, 2023), 
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 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 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 final regulatory action does not constitute a 
``significant regulatory action'' within the scope of section 3(f) of 
E.O. 12866. Accordingly, this action was not submitted to OIRA for 
review under E.O. 12866.

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 equipment that is the subject of 
this proposed rulemaking.
    For manufacturers of BVMs, 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

[[Page 34022]]

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. Manufacturing of BVMs is 
classified under NAICS 333310, ``Commercial and Service Industry 
Machinery Manufacturing.'' The SBA sets a threshold of 1,000 employees 
or fewer for an entity to be considered as a small business for this 
category.
1. Description of Reasons Why Action Is Being Considered
    DOE is proposing amended energy conservation standards for BVMs. 
EPCA directed DOE to prescribe energy conservation standards for BVMs 
not later than 4 years after August 8, 2005. (42 U.S.C. 6295(v)(1)) DOE 
has completed this proposed rulemaking. 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 proposed 
rulemaking is in accordance with DOE's obligations under EPCA.
2. Objectives of, and Legal Basis for, Rule
    DOE is conducting this proposed rulemaking to fulfill its statutory 
obligation under EPCA to 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 not later than 6 
years after the issuance of any final rule establishing or amending a 
standard. (42 U.S.C. 6295(m)(1)) DOE must follow specific statutory 
criteria for prescribing new or amended standards for covered products, 
including BVMs. Specifically, 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 determines is technologically 
feasible and economically justified. (42 U.S.C. 6295(o)(2)(A) and 42 
U.S.C. 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)(B))
3. Description on Estimated Number of Small Entities Regulated
    To estimate the number of companies that could be small business 
manufacturers of products covered by this proposed rulemaking, DOE 
conducted a market survey using public information and subscription-
based company reports to identify potential small manufacturers. DOE's 
research involved DOE's Compliance Certification Database (CCD),\74\ 
California Energy Commission's Modernized Appliance Efficiency Database 
System directory,\75\ individual company websites, and market research 
tools (e.g., reports from Dun & Bradstreet \76\) to create a list of 
companies that manufacture, produce, import, or assemble the products 
covered by this rulemaking. DOE also asked stakeholders and industry 
representatives if they were aware of any other small manufacturers 
during manufacturer interviews and at DOE public meetings. DOE 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.
---------------------------------------------------------------------------

    \74\ See www.regulations.doe.gov/certification-data/CCMS-4-Refrigerated_Bottled_or_Canned_Beverage_Vending_Machines.html#q=Product_Group_s%3A%22Refrigerated%20Bottled%20or%20Canned%20Beverage%20Vending%20Machines%22. (Accessed February 9, 2023).
    \75\ California Energy Commission, Modernized Appliance 
Efficiency Database System. (Last accessed September 30, 2022.) 
cacertappliances.energy.ca.gov/Pages/Search/AdvancedSearch.aspx.
    \76\ The Dun & Bradstreet Hoovers login is available at 
app.dnbhoovers.com.
---------------------------------------------------------------------------

    DOE identified five OEMs of BVMs sold in the United States. Of the 
five OEMs, DOE identified two small, domestic manufacturers affected by 
proposed amended standards for BVM equipment. The first small business 
is an OEM of Class A, Class B, and Combo A equipment. The second small 
business is an OEM of Class B, Combo A, and Combo B equipment.
    DOE reached out to these small businesses and invited them to 
participate in voluntary interviews. DOE also requested information 
about small businesses and potential impacts on small businesses while 
interviewing large manufacturers.
    DOE requests comment on the number of small, domestic OEMs in the 
industry.
4. Description and Estimate of Compliance Requirements Including 
Differences in Cost, if Any, for Different Groups of Small Entities
    The first small business is an OEM that certifies ten basic models 
of Class A BVMs, two basic models of Class B BVMs, and eight basic 
models of Combo A BVMs. One of the 20 basic models would meet the 
proposed amended standards. In total, the company would need to 
redesign 19 basic models.
    DOE estimated the first small business would need to invest 
$800,000 in product conversion costs to redesign all 19 basic models. 
DOE's engineering analysis indicates manufacturers would be able to 
produce compliant products on existing production lines with minimal 
capital investments. DOE's estimate of the product conversion costs is 
based on feedback from manufacturers, which indicated they would need 
to invest in redesigning Class A, Class B, and Combo A products to 
incorporate design options such as variable speed compressors, more 
efficient motors, larger heat exchangers, variable speed compressors, 
and triple pane glass packs. DOE estimated the cost of this redesign 
per model, and multiplied that cost by the number of models that would 
need to be redesigned by the first small business. DOE's analysis 
focused on the investments associated with amended standards; 
investments associated with changes in regulations by other Federal 
agencies (i.e., refrigerant regulations) are not attributed to amended 
standards. Based on market research tools, DOE estimated the company's 
annual revenue to be $27 million. Taking into account the three-year 
conversion period, DOE expects conversion costs to be 1.0% of 
conversion period revenue.
    The second small business is an OEM that certifies one basic model 
of Class B BVMs, five basic models of Combo A BVMs, and one basic model 
of Combo B BVMs. None of the company's BVM models would meet the 
proposed amended standards. In total, the company would need to 
redesign seven basic models.
    DOE estimated the company would need to invest $100,000 in product 
conversion costs to redesign all seven basic models. DOE's estimate of 
the product conversion costs is based on feedback from manufacturers, 
which indicated they would need to invest in redesigning Class B, Combo 
A, and Combo B products to incorporate design options such as variable 
speed compressors, more efficient motors, larger heat exchangers, and 
variable speed compressors. DOE estimated the cost of this redesign per 
model, and multiplied that cost by the number of models that would need 
to be redesigned by the second small business. DOE's engineering 
analysis design options suggest manufacturers would be able to produce 
compliant products on existing production lines with minimal capital 
investments.

[[Page 34023]]

DOE's analysis focused on the investments associated with amended 
standards; investments associated with changes in regulations by other 
Federal agencies (i.e., refrigerant regulations) are not attributed to 
amended standards. Based on market research tools, DOE estimated the 
company's annual revenue to be $72 million. Taking into account the 
three-year conversion period, DOE expects conversion costs to be 0.1% 
of conversion period revenue.
    DOE requests comment on the potential impacts of the proposed 
standard on small business manufacturing of BVMs, including the extent 
of model redesign and manufacturing lines changes necessitated by 
standards.
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 this 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, they would come at the expense of a reduction in energy 
savings. TSL 1 achieves 56 percent lower energy savings compared to the 
energy savings at TSL 4. TSL 2 achieves 39 percent lower energy savings 
compared to the energy savings at TSL 4. TSL 3 achieves 6 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 BVM 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 BVM equipment must certify to DOE that their 
equipment comply with any applicable energy conservation standards. In 
certifying compliance, manufacturers must test their products according 
to the DOE test procedures for BVM equipment, 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 BVM equipment. 
(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. The 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.
    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 
proposed 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 equipment that is 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 E.O. 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

[[Page 34024]]

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 E.O. 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. Public Law 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 energy.gov/sites/prod/files/gcprod/documents/umra_97.pdf.
    This rule does not contain a Federal intergovernmental mandate, nor 
is it expected to require expenditures of $100 million or more in any 
one year by the private sector. As a result, the analytical 
requirements of UMRA do not apply.

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

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

I. Review Under Executive Order 12630

    Pursuant to 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 E.O. 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 BVM equipment, 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 Federal 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.\77\ Generation of this report involved a

[[Page 34025]]

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 DOE's 
analyses. DOE is in the process of evaluating the resulting report.\78\
---------------------------------------------------------------------------

    \77\ The 2007 Energy Conservation Standards Rulemaking Peer 
Review Report is available at the following website: www.energy.gov/eere/buildings/downloads/energy-conservation-standards-rulemaking-peer-review-report-0. Last accessed Feb. 13, 2023.
    \78\ The report is available at www.nationalacademies.org/our-work/review-of-methods-for-setting-building-and-equipment-performance-standards.
---------------------------------------------------------------------------

VII. Public Participation

A. Participation in the 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: www.energy.gov/eere/buildings/public-meetings-and-comment-deadlines. 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 an interest in the topics addressed in this 
proposed rule, or who is representative of a group or class of persons 
that has an interest in these issues, may request an opportunity to 
make an oral presentation at the webinar. Such persons may submit a 
request to [email protected]. Persons who wish to 
speak should include with their request a computer file in WordPerfect, 
Microsoft Word, PDF, or text (ASCII) file format that briefly describes 
the nature of their interest in this proposed rulemaking and the topics 
they wish to discuss. Such persons should also provide a daytime 
telephone number where they can be reached.

C. Conduct of the Webinar

    DOE will designate a DOE official to preside at the webinar 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 webinar. 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 webinar and until the end of the comment 
period, interested parties may submit further comments on the 
proceedings and any aspect of the proposed rulemaking.
    The webinar will be conducted in an informal, conference style. DOE 
will conduct a general overview of the topics addressed in this 
proposed rulemaking, allow time for prepared general statements by 
participants, and encourage all interested parties to share their views 
on issues affecting this proposed 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 permit, 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 proposed 
rulemaking. The official conducting the webinar will accept additional 
comments or questions from those attending, as time permits. The 
presiding official will announce any further procedural rules or 
modification of the above procedures that may be needed for the proper 
conduct of the webinar.
    A transcript of the webinar will be included in the docket, which 
can be viewed as described in the Docket section at the beginning of 
this document. 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

[[Page 34026]]

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. 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 to [email protected] 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.
    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 revise the definition 
of Combination A.
    (2) DOE requests comments on its proposal to use baseline levels 
for BVM equipment based upon the design changes made by manufacturers 
in response to the December 2022 EPA NOPR.
    (3) DOE further requests comment on its estimates of energy use 
reduction associated with the design changes made by manufacturers in 
response to the December 2022 EPA NOPR.
    (4) DOE request comments on the frequency and nature of compressor 
and motor repairs or replacements in BVMs.
    (5) DOE seeks comment on the method for estimating manufacturing 
production costs.
    (6) DOE requests comment on how to address the climate benefits and 
other non-monetized effects of the proposal.
    (7) DOE requests information regarding the impact of cumulative 
regulatory burden on manufacturers of BVMs associated with multiple DOE 
standards or product-specific regulatory actions of other Federal 
agencies.
    (8) DOE requests comment on the number of small, domestic OEMs in 
the industry.
    (9) DOE requests comment on the potential impacts of the proposed 
standard on small business manufacturing of BVMs, including the extent 
of model redesign and manufacturing lines changes necessitated by 
standards.
    Additionally, DOE welcomes comments on other issues relevant to the 
conduct of this proposed 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 431

    Administrative practice and procedure, Confidential business 
information, Energy conservation test procedures, Reporting and 
recordkeeping requirements.

Signing Authority

    This document of the Department of Energy was signed on May 1, 
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 the legal effect of this document upon 
publication in the Federal Register.

    Signed in Washington, DC, on May 5, 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 431 of chapter II, subchapter D, of title 10 of the Code of 
Federal Regulations, as set forth below:

PART 431--ENERGY EFFICIENCY PROGRAM FOR CERTAIN COMMERCIAL AND 
INDUSTRIAL EQUIPMENT

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

    Authority: 42 U.S.C. 6291-6317; 28 U.S.C. 2461 note.

0
2. Amend Sec.  431.292 by revising the definition of ``Combination A'' 
to read as follows:


Sec.  431.292  Definitions concerning refrigerated bottled or canned 
beverage vending machines.

* * * * *
    Combination A means a combination vending machine where 25 percent 
or more of the surface area on the front side of the beverage vending 
machine that surrounds the refrigerated compartment(s) is transparent.
* * * * *
0
3. Revise Sec.  431.296 to read as follows:


Sec.  431.296  Energy conservation standards and their effective dates.

    (a) Each refrigerated bottled or canned beverage vending machine 
manufactured on or after January 8, 2019 and before [date 3 years after 
date of publication of final rule in the Federal Register], shall have 
a daily energy consumption (in kilowatt hours per day), when measured 
in accordance with the DOE test procedure at Sec.  431.294, that does 
not exceed the following:

[[Page 34027]]



------------------------------------------------------------------------
                                                Maximum daily  energy
              Equipment class                consumption (kilowatt hours
                                                      per day)
------------------------------------------------------------------------
Class A...................................  0.052 x V [dagger] + 2.43.
Class B...................................  0.052 x V [dagger] + 2.20.
Combination A.............................  0.086 x V [dagger] + 2.66.
Combination B.............................  0.111 x V [dagger] + 2.04.
------------------------------------------------------------------------
[dagger] ``V'' is the representative value of refrigerated volume
  (ft\3\) of the BVM model, as calculated pursuant to 10 CFR
  429.52(a)(3).

    (b) Each refrigerated bottled or canned beverage vending machine 
manufactured on or after [date 3 years after date of publication of 
final rule in the Federal Register], shall have a daily energy 
consumption (in kilowatt hours per day), when measured in accordance 
with the DOE test procedure at Sec.  431.294, that does not exceed the 
following:

------------------------------------------------------------------------
                                                Maximum daily  energy
              Equipment class                consumption (kilowatt hours
                                                      per day)
------------------------------------------------------------------------
Class A...................................  0.029 x V [dagger] + 1.34.
Class B...................................  0.029 x V [dagger] + 1.21.
Combination A.............................  0.048 x V [dagger] + 1.50.
Combination B.............................  0.052 x V [dagger] + 0.96.
------------------------------------------------------------------------
[dagger] ``V'' is the representative value of refrigerated volume
  (ft\3\) of the BVM model, as calculated pursuant to 10 CFR
  429.52(a)(3).


[FR Doc. 2023-09968 Filed 5-24-23; 8:45 am]
BILLING CODE 6450-01-P

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