[Federal Register Volume 74, Number 167 (Monday, August 31, 2009)]
[Rules and Regulations]
[Pages 44914-44968]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-19392]



[[Page 44913]]

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Part II





Department of Energy





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10 CFR Part 431



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

  Federal Register / Vol. 74, No. 167 / Monday, August 31, 2009 / Rules 
and Regulations  

[[Page 44914]]


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DEPARTMENT OF ENERGY

10 CFR Part 431

[Docket Number EERE-2006-STD-0125]
RIN 1904-AB58


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

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

ACTION: Final rule.

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SUMMARY: The U.S. Department of Energy (DOE) is adopting new energy 
conservation standards for refrigerated bottled or canned beverage 
vending machines. DOE has determined that energy conservation standards 
for these types of equipment would result in significant conservation 
of energy, and are technologically feasible and economically justified.

DATES: The effective date of this rule is October 30, 2009, except that 
the standards in 10 CFR 431.296 are effective August 31, 2011. The 
incorporation by reference of certain publications listed in this rule 
was approved by the Director of the Federal Register on October 30, 
2009.

ADDRESSES: For access to the docket to read background documents, the 
technical support document, transcripts of the public meetings in this 
proceeding, or comments received, visit the U.S. Department of Energy, 
Resource Room of the Building Technologies Program, 950 L'Enfant Plaza, 
SW., 6th Floor, Washington, DC 20024, (202) 586-2945, between 9 a.m. 
and 4 p.m., Monday through Friday, except Federal holidays. Please call 
Brenda Edwards at the above telephone number for additional information 
regarding visiting the Resource Room. (Note: DOE's Freedom of 
Information Reading Room no longer houses rulemaking materials.) You 
may also obtain copies of certain previous rulemaking documents in this 
proceeding (i.e., framework document, advance notice of proposed 
rulemaking, notice of proposed rulemaking), draft analyses, public 
meeting materials, and related test procedure documents from the Office 
of Energy Efficiency and Renewable Energy's Web site at http://www1.eere.energy.gov/buildings/appliance_standards/commercial/beverage_machines.html.

FOR FURTHER INFORMATION CONTACT:
    Charles Llenza, U.S. Department of Energy, Energy Efficiency and 
Renewable Energy, Building Technologies Program, EE-2J, 1000 
Independence Avenue, SW., Washington, DC 20585-0121, (202) 586-2192, 
[email protected].
    Francine Pinto, Esq., U.S. Department of Energy, Office of General 
Counsel, GC-72, 1000 Independence Avenue, SW., Washington, DC 20585-
0121, (202) 586-9507, [email protected].

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Summary of the Final Rule and Its Benefits
    A. The Standard Levels
    B. Benefits to Customers of Beverage Vending Machines
    C. Impact on Manufacturers
    D. National Benefits
II. Introduction
    A. Authority
    B. Background
    1. History of Standards Rulemaking for Beverage Vending Machine 
Equipment
    2. Miscellaneous Rulemaking Issues
III. General Discussion
    A. Test Procedures
    B. Technological Feasibility
    1. General
    2. Maximum Technologically Feasible Levels
    C. Energy Savings
    D. Economic Justification
    1. Specific Criteria
    2. Rebuttable Presumption
IV. Methodology and Discussion of Comments on Methodology
    A. Market and Technology Assessment
    1. Definitions Related to Refrigerated Beverage Vending Machines
    2. Equipment Classes
    B. Screening Analysis
    C. Engineering Analysis
    1. Approach
    2. Analytical Models
    D. Markups To Determine Equipment Price
    E. Energy Use Characterization
    F. Life-Cycle Cost and Payback Period Analyses
    G. Shipments Analysis
    1. Split Incentives
    2. Sustainability of Sales Less Than 100 Thousand Units
    3. Distribution of Equipment Classes and Sizes
    4. Future Sales Decline
    H. National Impact Analysis
    1. Choice of Discount Rate
    2. Discounting of Physical Values
    I. Life-Cycle Cost Subgroup Analysis
    J. Manufacturer Impact Analysis
    K. Utility Impact Analysis
    L. Employment Impact Analysis
    M. Environmental Assessment
    N. Monetizing Carbon Dioxide and Other Emissions Impacts
V. Discussion of Other Comments
    A. Information and Assumptions Used in Analyses
    1. Engineering Analysis
    B. Benefits and Burdens
VI. Analytical Results and Conclusions
    A. Trial Standard Levels
    B. Significance of Energy Savings
    C. Economic Justification
    1. Economic Impact on Commercial Customers
    2. Economic Impact on Manufacturers
    3. National Impact Analysis
    4. Impact on Utility or Performance of Equipment
    5. Impact of Any Lessening of Competition
    6. Need of the Nation To Conserve Energy
    7. Other Factors
    D. Conclusion
    1. Class A Equipment
    2. Class B Equipment
VII. Procedural Issues and Regulatory Review
    A. Review Under Executive Order 12866
    B. Review Under the Regulatory Flexibility Act
    1. Need for and Objectives of the Final Rule
    2. Significant Issues Raised by Public Comments
    3. Description and Estimated Number of Small Entities Regulated
    4. Description and Estimate of Reporting, Recordkeeping, and 
Other Compliance Requirements
    5. Steps DOE Has Taken To Minimize the Economic Impact on Small 
Manufacturers
    C. Review Under the Paperwork Reduction Act
    D. Review Under the National Environmental Policy Act
    E. Review Under Executive Order 13132
    F. Review Under Executive Order 12988
    G. Review Under the Unfunded Mandates Reform Act of 1995
    H. Review Under the Treasury and General Government 
Appropriations Act, 1999
    I. Review Under Executive Order 12630
    J. Review Under the Treasury and General Government 
Appropriations Act, 2001
    K. Review Under Executive Order 13211
    L. Review Under the Information Quality Bulletin for Peer Review
    M. Congressional Notification
VIII. Approval of the Office of the Secretary

I. Summary of the Final Rule and Its Benefits

A. The Standard Levels

    The Energy Policy and Conservation Act, as amended (42 U.S.C. 6295 
et seq.; EPCA), directs the Department of Energy (DOE) to establish 
mandatory energy conservation standards for refrigerated bottled or 
canned beverage vending machines. (42 U.S.C. 6295(v)(1), (2) and (3)) 
These types of equipment are referred to collectively hereafter as 
``beverage vending machines.'' Any such standard must be designed to 
``achieve the maximum improvement in energy efficiency * * * which the 
Secretary determines is technologically feasible and economically 
justified.'' (42 U.S.C. 6295(o)(2)(A) and 6316(e)(1)) Furthermore, the 
new standard must ``result in significant conservation of energy.'' (42 
U.S.C. 6295(o)(3)(B)) The standards in today's final rule, which apply 
to all beverage vending machines, satisfy these requirements. 
Currently, no mandatory Federal energy conservation

[[Page 44915]]

standards exist for the beverage vending machine equipment covered by 
this rulemaking.
    Table I.1 shows the standard levels that DOE is adopting today. 
These standards will apply to all beverage vending machines 
manufactured for sale in the United States, or imported to the United 
States, starting 3 years after publication of the final rule.

        Table I.1--Standard Levels for Beverage Vending Machines
------------------------------------------------------------------------
                                    Proposed standard level ** maximum
       Equipment class *          daily energy  consumption (MDEC) kWh/
                                                 day ***
------------------------------------------------------------------------
A..............................  MDEC = 0.055 x V + 2.56.[dagger]
B..............................  MDEC = 0.073 x V +
                                  3.16.[dagger][dagger]
------------------------------------------------------------------------
* See section IV.A.2 of the NOPR for a discussion of equipment classes.
** ``V'' is the refrigerated volume (ft \3\) of the refrigerated bottled
  or canned beverage vending machine, as measured by the American
  National Standards Institute (ANSI)/Association of Home Appliance
  Manufacturers (AHAM) HRF-1-2004, ``Energy, Performance and Capacity of
  Household Refrigerators, Refrigerator-Freezers and Freezers.'' V is
  the volume of the case, as measured in ARI Standard 1200-2006,
  Appendix C.
*** Kilowatt hours per day.
[dagger] Trial Standard Level (TSL) 6.
[dagger][dagger] TSL 3.

B. Benefits to Customers of Beverage Vending Machines

    Table I.2 indicates the impacts on commercial customers of today's 
standards.

                                            Table I.2--Implications of New Standards for Commercial Customers
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                                                                     Energy
                        Equipment class                           conservation     Total installed   Total installed   Life-cycle cost   Payback period
                                                                    standard           cost  $      cost increase  $     savings  $           years
--------------------------------------------------------------------------------------------------------------------------------------------------------
Class A.......................................................             TSL 6             2,935               233               277               4.1
Class B.......................................................             TSL 3             2,070                86                37               6.8
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The economic impacts on commercial customers (i.e., the average 
life-cycle cost [LCC] savings) are positive for most equipment classes. 
For example, fully cooled (Class A) medium-capacity vending machines--
the most common type currently being sold--have installed prices of 
$2,625 and annual energy costs of $188, respectively at national 
average values. To meet the new standards, DOE estimates that the 
installed prices of such equipment will be $2,864, an increase of $239, 
which will be offset by annual energy savings of approximately $69 and 
an increase in maintenance and repair cost of $13.

C. Impact on Manufacturers

    Using a real corporate discount rate of 7 percent, DOE estimates 
the industry net present value (INPV) of the beverage vending machine 
industry to be $44.1 million for Class A units, and $33.7 million for 
Class B units (both figures in 2008$). For Class A machines, DOE 
expects the impact of today's standards on the INPV of manufacturers of 
beverage vending machines to be a loss of 18.0 to 25.1 percent ($7.9 
million to $11.1 million) for Class A machines and a loss of 1.9 to 3.5 
percent ($0.6 million to $1.2 million) for Class B machines. Based on 
DOE's interviews with manufacturers of beverage vending machines, DOE 
expects minimal plant closings or loss of employment as a result of the 
standards.

D. National Benefits

    DOE estimates that the standards will save approximately 0.159 
quads (quadrillion, or 10 \15\) British thermal units (Btu) of energy 
over 30 years (2012-2042). This is equivalent to all the energy 
consumed by more than 830 thousand American households in a single 
year.
    By 2042, DOE expects energy savings from the standards to eliminate 
the need for approximately 0.118 new 1,000-megawatt (MW) power plants. 
These energy savings will result in cumulative greenhouse gas emission 
reductions of approximately 9.6 million metric tons (Mt) of carbon 
dioxide (CO2), an amount equal to that produced by 
approximately 2.0 million cars every year. Additionally, the standards 
will help alleviate air pollution by resulting in 3.28 kilotons (kt) of 
cumulative nitrogen oxide (NOX) emission reductions and 
between 0 and 0.188 tons of cumulative mercury (Hg) emission reductions 
from 2012-2042. The estimated net present monetary values of these 
emissions reductions (expressed in 2007$) are between $5.5 and $266.3 
million for CO2, (expressed in 2007$), $354,000 and $3.6 
million for NOX (expressed in 2007$), and $0 and $1.5 
million for Hg (expressed in 2007$) at a 7-percent discount rate 
(discounted to 2009). At a 3 percent discount rate, the estimated net 
present values of these emissions reductions are between $11.3 and 
$543.5 million (2007$) for CO2, $749,000 and $7.7 million 
(2007$) for NOX, and $0 and $3.2 million (2007$) for Hg.
    The national NPV of the standards is $0.182 billion using a 7 
percent discount rate and $0.476 billion using a 3 percent discount 
rate, cumulative from 2012-2057 in 2008$. This is the estimated total 
value of future savings minus the estimated increased equipment costs, 
discounted to 2009.
    The benefits and costs of today's final rule can also be expressed 
in terms of annualized (2008$) values from 2012-2042. Separate 
estimates of values for Class A and Class B equipment are shown in 
Table I.3 and Table I.4, respectively. In each table, the annualized 
monetary values are the sum of the annualized national economic value 
of operating savings benefits (energy, maintenance and repair), 
expressed in 2008$, plus the monetary values of the benefits of carbon 
dioxide emission reductions, otherwise known as the Social Cost of 
Carbon (SCC) expressed as $19 per metric ton of carbon dioxide, in 
2007$. The $19 value is a central interim value from a recent 
interagency process. The derivation of this value is discussed in 
section VI.C.6. Although summing the value of operating savings to the 
values of CO2 reductions provides a valuable perspective, 
please note the following: (1) The national operating savings are 
domestic U.S. consumer monetary savings found in market transactions 
while the CO2 value is based on a range of estimates of 
imputed marginal social cost of carbon from $1.14 to $55 per metric ton 
(2007$), which are meant to reflect, for the most part, the global 
benefits of carbon dioxide reductions; (2) the national operating 
savings are measured in 2008$ while the CO2 saving are 
measured in 2007$; and (3) the assessments of operating savings and 
CO2 savings are performed with different computer models, 
leading to

[[Page 44916]]

different time frames for analysis. The present value of national 
operating savings is measured for the period 2012-2057 (31 years from 
2012 to 2042 inclusive, plus the lifetime of the longest-lived 
equipment shipped in the 31st year), then converted the annualized 
equivalent for the 31 years. The value of CO2, on the other 
hand is meant to reflect the present value of all future climate 
related impacts, even those beyond 2057.
    Using a 7 percent discount rate for the annualized cost analysis, 
the combined cost of the standards established in today's final rule 
for Class A and Class B beverage vending machines is $24.0 million per 
year in increased equipment and installation costs, while the 
annualized benefits are $41.8 million per year in reduced equipment 
operating costs and $9.0 million in CO2 reductions, for a 
net benefit of $26.8 million per year. Using a 3 percent discount rate, 
the cost of the standards established in today's final rule is $23.1 
million per year in increased equipment and installation costs, while 
the benefits of today's standards are $49.1 million per year in reduced 
operating costs and $10.3 million in CO2 reductions, for a 
net benefit of $36.3 million per year. The separate estimates of values 
for Class A and Class B equipment are shown in Table I.3 and Table I.4 
respectively.

                                             Table I.3--Annualized Benefits and Costs for Class A Equipment
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                               Units
                                  Primary estimate (AEO      Low estimate (low      High estimate (high  -----------------------------------------------
            Category                 reference case)           growth case)            growth case)                               Disc         Period
                                                                                                             Year dollars       (percent)      covered
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annualized Monetized (millions$/ 37.7...................  34.2..................  40.0..................  2008..............             7            31
 year).
                                 44.2...................  39.9..................  46.8..................  2008..............             3            31
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annualized Quantified..........  0.25 CO2 (Mt)..........  0.25 CO2 (Mt).........  0.25 CO2 (Mt).........  NA................             7            31
                                 0.07 NOX (kt)..........  0.07 NOX (kt).........  0.07 NOX (kt).........  NA................             7            31
                                 0.004 Hg (t)...........  0.004 Hg (t)..........  0.004 Hg (t)..........  NA................             7            31
                                 0.26 CO2 (Mt)..........  0.26 CO2 (Mt).........  0.26 CO2 (Mt).........  NA................             3            31
                                 0.039 NOX (kt).........  0.039 NOX (kt)........  0.039 NOX (kt)........  NA................             3            31
                                 0.005 Hg (t)...........  0.005 Hg (t)..........  0.005 Hg (t)..........  NA................             3            31
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 Monetized Value (at $19/     7.9....................  7.9...................  7.9...................  2007..............             7            31
 Metric Ton, millions$/year).
                                 9.0....................  9.0...................  9.0...................  2007..............             3            31
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Monetary Benefits          45.5...................  42.1..................  47.9..................  2008 & 2007.......             7            31
 (millions$/year)*.
                                 53.2...................  48.9..................  55.8..................  2008 & 2007.......             3            31
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Qualitative
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                          Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annualized Monetized (millions$/ 19.6...................  19.6..................  19.6..................  2008..............             7            31
 year).
                                 18.8...................  18.8..................  18.8..................  2008..............             3            31
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Qualitative
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Net Benefits/Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annualized Monetized, including  26.0...................  22.6..................  28.4..................  2008 & 2007.......             7            31
 Carbon Benefits* (million$/
 year).
                                 34.4...................  30.1..................  36.9..................  2008 & 2007.......             3            31
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Qualitative
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Per the above discussion, this represents a simplified estimate that includes both 2007$ and 2008$.


                                             Table I.4--Annualized Benefits and Costs for Class B Equipment
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                               Units
                                  Primary estimate (AEO      Low estimate (low      High estimate (high  -----------------------------------------------
            Category                 reference case)           growth case)            growth case)                               Disc         Period
                                                                                                             Year dollars       (percent)      covered
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annualized Monetized (millions$/ 4.1....................  3.6...................  4.4...................  2008..............             7            31
 year).
                                 4.9....................  4.3...................  5.2...................  2008..............             3            31
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annualized Quantified..........  0.03 CO2 (Mt)..........  0.03 CO2 (Mt).........  0.03 CO2 (Mt).........  NA................             7            31
                                 0.01 NOX (kt)..........  0.01 NOX (kt).........  0.01 NOX (kt).........  NA................             7            31
                                 0.001 Hg (t)...........  0.001 Hg (t)..........  0.001 Hg (t)..........  NA................             7            31
                                 0.04 CO2 (Mt)..........  0.04 CO2 (Mt).........  0.04 CO2 (Mt).........  NA................             3            31
                                 0.012 NOX (kt).........  0.012 NOX (kt)........  0.012 NOX (kt)........  NA................             3            31

[[Page 44917]]

 
                                 0.001 Hg (t)...........  0.001 Hg (t)..........  0.001 Hg (t)..........  NA................             3            31
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 Monetized Value (at $19/     1.1....................  1.1...................  1.1...................  2007..............             7            31
 Metric Ton, millions$/year).
                                 1.3....................  1.3...................  1.3...................  2007..............             3            31
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Monetary Benefits          5.2....................  4.7...................  5.6...................  2008 & 2007.......             7            31
 (millions$/year)*.
                                 6.1....................  5.5...................  6.5...................  2008 & 2007.......             3            31
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Qualitative
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                          Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annualized Monetized (millions$/ 4.4....................  4.4...................  4.4...................  2008..............             7            31
 year).
                                 4.3....................  4.3...................  4.3...................  2008..............             3            31
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Qualitative
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Net Benefits/Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annualized Monetized, including  0.8....................  0.3...................  1.1...................  2008 & 2007.......             7            31
 Carbon Benefits (million$/
 year)*.
                                 1.9....................  1.3...................  2.2...................  2008 & 2007.......             3            31
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Qualitative
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Per the above discussion, this represents a simplified estimate that includes both 2007$ and 2008$.

II. Introduction

A. Authority

    Title III of EPCA sets forth a variety of provisions designed to 
improve energy efficiency. Part A of Title III (42 U.S.C. 6291-6309) 
provides for the Energy Conservation Program for Consumer Products 
Other Than Automobiles. The amendments to EPCA contained in the Energy 
Policy Act of 2005 (EPACT 2005), Public Law 109-58, include new or 
amended energy conservation standards and test procedures for some of 
these products, and direct DOE to undertake rulemakings to promulgate 
such requirements. In particular, section 135(c)(4) of EPACT 2005 
amends EPCA to direct DOE to prescribe energy conservation standards 
for beverage vending machines. (42 U.S.C. 6295(v))
    Because of its placement in Part A of Title III of EPCA, the 
rulemaking for beverage vending machine energy conservation standards 
is bound by the requirements of 42 U.S.C. 6295. However, since beverage 
vending machines are commercial equipment, DOE intends to place the new 
requirements for beverage vending machines in Title 10 of the Code of 
Federal Regulations (CFR), Part 431 (``Energy Efficiency Program for 
Certain Commercial and Industrial Equipment''), which is consistent 
with DOE's previous action to address the EPACT 2005 requirements for 
commercial equipment. The location of the provisions within the CFR 
does not affect either their substance or applicable procedure, so DOE 
is placing them in the appropriate CFR part based on their nature or 
type. DOE will refer to beverage vending machines as ``equipment'' 
throughout the notice because of their placement in 10 CFR part 431. 
DOE publishes today's final rule pursuant to Title III, Part A of EPCA, 
which provides for test procedures, labeling, and energy conservation 
standards for beverage vending machines and certain other equipment. 
The test procedures for beverage vending machines appear at sections 
431.293 and 431.294.
    EPCA provides criteria for prescribing new or amended standards for 
beverage vending machines. As indicated above, any new or amended 
standard for this equipment must be designed to achieve the maximum 
improvement in energy efficiency that is technologically feasible and 
economically justified. (42 U.S.C. 6295(o)(2)) Additionally, EPCA 
provides specific prohibitions on prescribing such standards. DOE may 
not prescribe an amended or new standard for any equipment for which 
DOE has not established a test procedure. (42 U.S.C. 6295(o)(3)) 
Further, DOE may not prescribe an amended or new standard if DOE 
determines by rule that such standard would not result in ``significant 
conservation of energy'' or ``is not technologically feasible or 
economically justified.'' (42 U.S.C. 6295(o)(3)(A) and (B))
    EPCA also provides that in deciding whether such a standard is 
economically justified for equipment such as beverage vending machines, 
DOE must, after receiving comments on the proposed standard, determine 
whether the benefits of the standard exceed its burdens by considering, 
to the greatest extent practicable, the following seven 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 equipment in the type (or class) compared to any 
increase in the price, or in the initial charges for, or maintenance 
expenses of, the equipment likely to result from the imposition of the 
standard;
    3. The total projected amount of energy savings likely to result 
directly from the imposition of the standard;
    4. Any lessening of the utility or the performance of the products 
likely to result from the imposition of the standard;

[[Page 44918]]

    5. The impact of any lessening of competition, as determined in 
writing by the Attorney General, that is likely to result from the 
imposition of the standard;
    6. The need for national energy conservation; and
    7. Other factors the Secretary of Energy (Secretary) considers 
relevant. (42 U.S.C. 6295(o)(2)(B)(i))
    In addition, EPCA, as amended (42 U.S.C. 6295(o)(2)(B)(iii) and 
6316(a)), establishes a rebuttable presumption that any standard for 
covered products is economically justified if the Secretary finds that 
``the additional cost to the consumer of purchasing a product complying 
with an energy conservation standard level will be less than three 
times the value of the energy (and as applicable, water) savings during 
the first year that the consumer will receive as a result of the 
standard, as calculated under the test procedure * * *'' in place for 
that standard.
    EPCA further provides that 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 at the time of 
the Secretary's finding.'' (42 U.S.C. 6295(o)(4) and 6316(e)(1))
    Section 325(q)(1) of EPCA is applicable to promulgating standards 
for most types or classes of equipment, including beverage vending 
machines that have two or more subcategories. (42 U.S.C. 6295(q)(1) and 
42 U.S.C. 6316(e)(1)) Under this provision, DOE must specify a 
different standard level than that which applies generally to such type 
or class of equipment for any group of products ``which have the same 
function or intended use, if * * * products within such group--(A) 
consume a different kind of energy from that consumed by other covered 
products within such type (or class); or (B) have a capacity or other 
performance-related feature which other products within such type (or 
class) do not have and such feature justifies a higher or lower 
standard'' than applies or will apply to the other products. (42 U.S.C. 
6295(q)(1)(A) and (B)) In determining whether a performance-related 
feature justifies such a different standard for a group of products, 
DOE must consider ``such factors as the utility to the consumer of such 
a feature'' and other factors DOE deems appropriate. (42 U.S.C. 
6295(q)(1)) Any rule prescribing such a standard must include an 
explanation of the basis on which DOE established such a higher or 
lower level. (See 42 U.S.C. 6295(q)(2))
    Federal energy conservation standards for commercial equipment 
generally supersede State laws or regulations concerning energy 
conservation testing, labeling, and standards. (42 U.S.C. 6297(a)-(c); 
42 U.S.C. 6316(e)(2)-(3)) DOE can, however, grant waivers of preemption 
for particular State laws or regulations, in accordance with the 
procedures and other provisions of section 327(d) of the Act. (42 
U.S.C. 6297(d); 42 U.S.C. 6316(e)(2)-(3))

B. Background

1. History of Standards Rulemaking for Beverage Vending Machine 
Equipment
    As discussed in the notice of proposed rulemaking (NOPR), 74 FR 
26022 (May 29, 2009) (the May 2009 NOPR), the EPACT 2005 amendments to 
EPCA require that DOE issue energy conservation standards for the 
equipment covered by this rulemaking, which would apply to equipment 
manufactured 3 years after publication of the final rule establishing 
the energy conservation standards. (42 U.S.C. 6295(v)(1), (2) and (3)) 
The energy use of this equipment has not previously been regulated by 
Federal law.
    Section 135(a)(3) of EPACT 2005 also amended section 321 of EPCA, 
in part, by adding definitions for terms relevant to this equipment. 
(42 U.S.C. 6291 (40)) EPCA defines ``refrigerated bottled or canned 
beverage vending machine'' as ``a commercial refrigerator that cools 
bottled or canned beverages and dispenses the bottled or canned 
beverages on payment.'' (42 U.S.C. 6291 (40)) Section 136(a)(3) of 
EPACT 2005 amended section 340 of EPCA, in part, by adding a definition 
for ``commercial refrigerator, freezer, and refrigerator-freezer.''
    During the course of this rulemaking, Congress passed the Energy 
Independence Security Act of 2007 (EISA 2007), which the President 
signed on December 19, 2007 (Pub. L. 110-140). Section 310(3) of EISA 
2007 amended section 325 of EPCA in part by adding subsection 325(gg) 
(42 U.S.C. 6295(gg)). This subsection requires any new or amended 
energy conservation standards adopted after July 1, 2010, to 
incorporate ``standby mode and off mode energy use.'' (42 U.S.C. 
6295(gg)(3)(A)) In the NOPR, DOE stated that because any standards 
associated with this rulemaking are required by August 2009, the energy 
use calculations will not include ``standby mode and off mode energy 
use.'' To include standby mode and off mode energy use requirements for 
this rulemaking would take considerable analytical effort and would 
likely require changes to the test procedure. Given the statutory 
deadline, DOE has decided to address these additional requirements when 
the energy conservation standards for beverage vending machines are 
reviewed in August 2015. At that time, DOE will consider the need for 
possible amendment in accordance with 42 U.S.C. 6295(m). (74 FR 26023)
    DOE commenced this rulemaking on June 28, 2006, by publishing a 
notice of a public meeting and of the availability of its framework 
document for the rulemaking. 71 FR 36715. The framework document 
described the approaches DOE anticipated using and issues to be 
resolved in the rulemaking. DOE held a public meeting in Washington, DC 
on July 11, 2006, to present the contents of the framework document, 
describe the analyses DOE planned to conduct during the rulemaking, 
obtain public comment on these subjects, and facilitate the public's 
involvement in the rulemaking. After the public meeting, DOE also 
allowed the submission of written statements in response to the 
framework document.
    On June 16, 2008, DOE published an advance notice of proposed 
rulemaking (ANOPR) in this proceeding. 73 FR 34094 (the June 2008 
ANOPR). In the June 2008 ANOPR, DOE sought comment on its proposed 
equipment classes for the rulemaking, and on the analytical framework, 
models, and tools that DOE used to analyze the impacts of energy 
conservation standards for beverage vending machines. In conjunction 
with the June 2008 ANOPR, DOE published on its Web site the complete 
ANOPR technical support document (TSD), which included the results of 
DOE's various preliminary analyses in this rulemaking. In the June 2008 
ANOPR, DOE requested oral and written comments on these results and on 
a range of other issues. DOE held a public meeting in Washington, DC, 
on June 26, 2008, to present the methodology and results of the ANOPR 
analyses and to receive oral comments from those who attended. The oral 
and written comments DOE received focused on DOE's assumptions, 
approach, and equipment class breakdown, and were addressed in detail 
in the May 2009 NOPR.
    In the May 2009 NOPR, DOE proposed new energy conservation 
standards for beverage vending machines. 74 FR 26020. In conjunction 
with the May 2009 NOPR, DOE also published on its Web site the complete

[[Page 44919]]

TSD for the proposed rule, which incorporated the final analyses that 
DOE conducted, and contained technical documentation for each step of 
the analysis. The TSD included the engineering analysis spreadsheets, 
the LCC spreadsheet, and the national impact analysis spreadsheet. The 
standards DOE proposed for beverage vending machines are shown in Table 
II.1.

   Table II.1--May 2009 Proposed Standard Levels for Beverage Vending
                                Machines
------------------------------------------------------------------------
                                   Proposed standard level **  maximum
       Equipment class *          daily energy  consumption (MDEC)  kWh/
                                                 day ***
------------------------------------------------------------------------
A..............................  MDEC = 0.055 x V + 2.56.[dagger]
B..............................  MDEC = 0.073 x V +
                                  3.16.[dagger][dagger]
------------------------------------------------------------------------
* See section IV.A.2 of the NOPR (74 FR 26027) for a discussion of
  equipment classes.
** ``V'' is the refrigerated volume (ft\3\) of the refrigerated bottled
  or canned beverage vending machine, as measured by ANSI/AHAM HRF-1-
  2004, ``Energy, Performance and Capacity of Household Refrigerators,
  Refrigerator-Freezers and Freezers.''
*** Kilowatt hours per day.
[dagger] TSL 6.
[dagger][dagger] TSL 3.

    In the May 2009 NOPR, DOE identified issues on which it was 
particularly interested in receiving comments and views of interested 
parties. These included the magnitude of the estimated decline in INPV 
and what impact this level could have on industry parties including 
small businesses; whether the proposed linear equation used to describe 
the maximum daily energy consumption standards should be based on a 
two-point, three-point, or some other weighting strategy; whether the 
proposed standard risks industry consolidation; how small business 
manufacturers will be affected due to new energy conservation 
standards; the potential compliance costs and other impacts to small 
manufacturers that do not supply the high-volume customers of beverage 
vending machines; the impacts on small manufacturers for possible 
alternatives to the proposed rule; and whether the energy savings and 
related benefits outweigh the costs, including potential manufacturer 
impacts. After the publication of the May 2009 NOPR, DOE received 
written comments on these and other issues. DOE also held a public 
meeting in Washington, DC, on June 17, 2009, to hear oral comments on 
and solicit information relevant to the proposed rule. The May 2009 
NOPR included additional background information on the history of this 
rulemaking. 74 FR 26023.
2. Miscellaneous Rulemaking Issues
a. Type of Standard
    For the ANOPR, DOE received comments from interested parties 
regarding the type of standards it would be developing as part of this 
rulemaking. Some interested parties recommended that DOE set 
prescriptive standards, while others suggested that the choice of 
technologies used to achieve standards should be left to the discretion 
of the manufacturer. (73 FR 34100)
    In response, DOE noted in the ANOPR that EPCA provides that an 
``energy conservation standard'' must be either (A) ``a * * * level of 
energy efficiency'' or ``a * * * quantity of energy use,'' or (B), for 
certain specified equipment, ``a design requirement.'' (42 U.S.C. 
6291(6)) Thus, an ``energy conservation standard'' cannot consist of 
both a design requirement and a level of efficiency or energy use. In 
addition, beverage vending machines are not one of the specified types 
of equipment for which EPCA allows a standard be set with a design 
requirement. (42 U.S.C. 6291(6)(B), 6292(a)) Item (A) above also 
indicates that, under EPCA, a single energy conservation standard 
cannot have measures of both energy efficiency and energy use. 
Furthermore, EPCA specifically requires DOE to base its test procedure 
for this equipment on ANSI/American Society of Heating, Refrigerating 
and Air-Conditioning Engineers (ASHRAE) Standard 32.1-2004, Methods of 
Testing for Rating Vending Machines for Bottled, Canned or Other Sealed 
Beverages. (42 U.S.C. 6293(b)(15)) The test methods in ANSI/ASHRAE 
Standard 32.1-2004 consist of means to measure energy consumption, not 
energy efficiency. (73 FR 34100)
    During the NOPR public meeting, the Appliance Standards Awareness 
Project (ASAP), stated that DOE's previous decisions to not allow 
multi-part standards needs to be revisited, but not as part of this 
rulemaking. Multi-part standards would allow performance standards and 
design requirements to be established. (ASAP, Public Meeting 
Transcript, No. 56 at p. 35) A notation in the form ``ASAP, No. 56 at 
p. 35'' identifies an oral comment that DOE received during the June 
17, 2008, NOPR Public Meeting. This comment was recorded in the public 
meeting transcript in the docket for this rulemaking (Docket No. EERE-
2006-BT-STD-0125). This particular notation refers to a comment (1) 
made during the public meeting by the Appliance Standards Awareness 
Project; (2) recorded in document number 35, which is the public 
meeting transcript filed in the docket of this rulemaking; and (3) 
appearing on page 35 of document number 56. In a written comment co-
signed by Pacific Gas and Electric Company (PG&E), Southern California 
Edison, Southern California Gas Company (SCGC), San Diego Gas and 
Electric (SDGE), ASAP, and the National Resource Defense Council 
(NRDC), hereafter the Joint Comment, signatories urged DOE to include a 
design requirement for factory set controls in today's final rule. 
(Joint Comment, No. 67 at p. 2) For the reasons given above, DOE 
maintains that it does not have authority to develop standards that 
consist of both a design requirement and a level of efficiency or 
energy use. Instead, DOE has developed standards that would require 
that each beverage vending machine be subject to a maximum level of 
energy consumption, and manufacturers could meet these standards with 
their own choice of design methods.
    In response to the NOPR, the University of Southern Maine (USM) 
recommended that DOE establish energy consumption standards that are 
based on beverage vending machines that have no lights, with the 
exception of lighting the coin slots. Or as an alternative, USM 
suggested that the standards be based on a machine that has lights 
controlled by proximity sensors that turn lights on only when 
prospective purchasers are nearby. (USM, No. 52 at p. 1) USM also 
supported setting a design standard that encourages the use of 
refrigerant gases that offer the lowest total life-cycle impacts. (USM, 
No. 52 at p. 1) As stated above, beverage vending machines are not one 
of the specified equipment for which EPCA allows a standard to consist 
of a design requirement. (42 U.S.C. 6291(6)(B), 6292(a))
b. Combination Vending Machines
    Combination vending machines have a refrigerated volume for the 
purpose of cooling and vending ``beverages in a sealed container,'' and 
are therefore covered by this rule. However, beverage vending is not 
their sole function. Combination vending machines also have non-
refrigerated volumes for the purpose of vending other, non-``sealed 
beverage'' merchandise. In the ANOPR, DOE addressed several comments 
from interested parties regarding combination vending machines. 
Specifically, these parties were concerned that regulating vending 
machines that contain both refrigerated and non-refrigerated products 
could result in confusion

[[Page 44920]]

about what this rulemaking covers, or could result in manufacturers 
taking advantage of loopholes to produce equipment that does not meet 
the standards. In response, DOE stated that the language used in EPCA 
to define beverage vending machines is broad enough to include any 
vending machine, including a combination vending machine, as long as 
some portion of that machine cools bottled or canned beverages and 
dispenses them upon payment. (42 U.S.C. 6291 (40)) DOE interprets this 
language to cover any vending machine that can dispense at least one 
type of refrigerated bottled or canned beverage, regardless of the 
other types of vended products (some of which may not be refrigerated). 
73 FR 34105-06.
    At the NOPR public meeting, Dixie-Narco stated that combination 
vending machines were not specifically included in the analysis, which 
focused on glass front and stack-style beverage vending machines, and 
should be studied further. (Dixie-Narco, Public Meeting Transcript, No. 
56 at p. 204) Dixie-Narco asserted that the existing formulas for Class 
A and Class B machines create an energy threshold that cannot be met by 
combination machines. Dixie-Narco explained that with combination 
machines, the entire cabinet is illuminated, but they typically have 
smaller refrigerated volumes compared to other vending machines with 
similar exterior dimensions. Dixie-Narco suggested creating a Class C 
equipment class for zone-cooled glass front vending machines. It 
proposed the following equation: MDEC = 0.073 x V + 3.5. Dixie-Narco 
also stated that it is open to other possible solutions suggested by 
DOE or other concerned parties. (Dixie-Narco, No. 64 at p. 3) Coca-Cola 
stated that combination vending machines may not scale down in 
efficiency because refrigeration components may not be available in 
small sizes. (Coca-Cola, Public Meeting Transcript, No. 56 at p. 210) 
Dixie-Narco noted that combination vending machines are not typically 
purchased by Coca-Cola and PepsiCo, and are manufactured by a group of 
manufacturers different from the beverage vending machine 
manufacturers. Dixie-Narco also stated that shipments for combination 
vending machines are very small. (Dixie-Narco, Public Meeting 
Transcript, No. 56 at pp. 204, 212)
    In the analysis for the proposed rule, DOE did not consider 
combination vending machines as a separate equipment class. Rather, 
they were considered with all other Class A and Class B beverage 
vending machines. However, based on comments received, DOE recognizes 
that the design and manufacture of combination vending machines may be 
challenged by less component availability compared to other beverage 
vending machines. DOE concludes that combination vending machines have 
a distinct utility that limits the energy efficiency improvement 
potential possible for such beverage vending machines. While more 
efficient combination vending machines are technologically feasible, 
DOE does not have the data needed to estimate either the energy 
efficiency improvement potential or the cost of more efficient designs 
of combination vending machines. Furthermore, none of the interested 
parties' comments provided an economic analysis demonstrating that 
efficiency standards for such beverage vending machines would be cost-
justified. Without engineering cost and efficiency data, DOE was not 
able to perform an analysis of the impacts of standards on combination 
vending machines. Thus, DOE is not able to determine whether energy 
conservation standards for combination vending machines are 
economically justified and would result in significant energy savings. 
Based on the above, DOE concludes that combination vending machines are 
a class of beverage vending machines, and, since DOE cannot determine 
whether standards would meet EPCA's statutory criteria, DOE is not 
setting standards for combination vending machines at this time. 
Instead, DOE is reserving standards for combination vending machines. 
EPCA does require that, not later than 6 years after issuance of any 
final rule establishing or amending a standard, the Secretary shall 
publish either a notice of determination that standards for the product 
do not need to be amended or a notice of proposed rulemaking including 
new proposed standards. 42 U.S.C. 6295(m).
    So that interested parties understand what constitutes a 
combination vending machine, DOE is incorporating into today's final 
rule a definition for combination vending machine, and is modifying the 
definitions of Class A and Class B beverage vending machines (see 
section IV.A.2). DOE adopts the following definition for combination 
vending machine: ``Combination vending machine means a refrigerated 
bottled or canned beverage vending machine that also has non-
refrigerated volumes for the purpose of vending other, non-``sealed 
beverage'' merchandise.''
    DOE notes that this definition for combination vending machine 
could be refined if DOE initiates a rulemaking proceeding that 
evaluates energy conservation standards for combination vending 
machines.
c. Installed Base
    USA Technologies stated that it does not believe that significant 
energy savings will be achieved by the standard unless the installed 
base is included. (USA Technologies, Public Meeting Transcript, No. 56 
at p. 16)
    DOE acknowledges that additional energy savings can be obtained by 
regulating the installed base of beverage vending machines. This would 
require existing, used machines to be rebuilt or refurbished to comply 
with the standards. However, in the ANOPR, DOE carefully considered its 
authority to establish energy conservation standards for rebuilt and 
refurbished beverage vending machines and concluded that its authority 
does not extend to rebuilt and refurbished equipment. (73 FR 34106-07)
    As stated in the ANOPR, throughout the history of the energy 
conservation standards program, DOE has not regulated used consumer 
products or commercial equipment that has been refurbished, rebuilt, or 
undergone major repairs, since EPCA only covers new covered equipment 
distributed in commerce. Therefore, for this final rule, DOE maintains 
that rebuilt or refurbished beverage vending machines are not new 
covered equipment under EPCA and, therefore, are not subject to DOE's 
energy conservation standards or test procedures.
d. Rating Conditions
    In the ANOPR, DOE stated that it planned to use a 75 [deg]F/45 RH 
rating condition for all beverage vending machines covered by this 
rulemaking. (73 FR 34102) In a written comment on the NOPR, the 
National Automatic Merchandising Association (NAMA) stated that these 
rating conditions were appropriate. (NAMA, No. 65 at p. 3) Dixie-Narco 
also commented that it supports the 75 [deg]F/45 percent relative 
humidity (RH) rating condition because it is a more realistic 
temperature for measuring energy efficiency compared to the 90 [deg]F/
65 percent RH condition. Therefore, for this final rule, DOE continues 
to use the 75 [deg]F/45 RH rating condition for all beverage vending 
machines covered by this rulemaking.
e. Certification and Enforcement
    Regal Beloit asked how certification and enforcement will be 
conducted for the energy conservation standards that DOE establishes 
for beverage vending machines. (Regal Beloit, No. 59 at p. 1)
    To enforce energy conservation standards, DOE establishes both

[[Page 44921]]

generally applicable regulations that apply to various types of 
products or equipment covered by standards, as well as a limited number 
of product-specific requirements. DOE has not adopted requirements that 
apply to beverage vending machines (an EPACT 2005 addition to the 
program). DOE is developing enforcement regulations for the EPACT 2005 
equipment, which it expects will be based on the existing enforcement 
regulations that require manufacturers to certify compliance with the 
standards by filing two separate documents: (1) A compliance statement 
in which the manufacturer certifies its equipment meets the 
requirements; and (2) a certification report in which the manufacturer 
provides equipment-specific information, such as the model number, 
energy consumption and other model specific information that would 
enable DOE to determine which equipment class and standard the 
equipment is subject to and whether the equipment meets the standard.
    In instances where there are questions whether equipment meets the 
standards, existing regulations require DOE to consult with the 
manufacturer. If DOE remains unsatisfied with the manufacturer's 
explanation for the alleged noncompliance, DOE may test units of the 
allegedly non-complying product or equipment, to determine whether it 
meets the applicable standard. After DOE has completed testing, the 
manufacturer has the option to conduct additional tests for DOE to 
consider. DOE has never had to conduct enforcement testing, as it has 
been able to resolve all issues with manufacturers prior to taking that 
step.
    The beverage vending machine standards will go into effect 3 years 
after the publication of the final rule. DOE anticipates that it will 
have enforcement regulations in place, applicable to beverage vending 
machines, by that time. But if such regulations are not in place when 
the standards go into effect, manufacturers will not be required to 
report to DOE. Moreover, if there is a question regarding compliance 
with the standards, DOE will confer with the manufacturer before 
pursuing enforcement action. A violation of these standards could 
subject a manufacturer to injunctive action or other relief. See 42 
U.S.C. 6302-6305.

III. General Discussion

A. Test Procedures

    On December 8, 2006, DOE published a final rule (the December 2006 
final rule) in the Federal Register that incorporated by reference 
ANSI/ASHRAE Standard 32.1-2004, with two modifications, as the DOE test 
procedure for this equipment. 71 FR 71340, 71375; 10 CFR 431.294. In 
section 6.2 of ANSI/ASHRAE Standard 32.1-2004, Voltage and Frequency, 
the first modification specifies that equipment with dual nameplate 
voltages must be tested at the lower of the two voltages only. 71 FR 
71340, 71355 The second modification specifies that (1) any measurement 
of ``vendible capacity'' of refrigerated bottled or canned beverage 
vending machines must be in accordance with the second paragraph of 
section 5 of ANSI/ASHRAE Standard 32.1-2004, Vending Machine Capacity; 
and (2) any measurement of ``refrigerated volume'' of refrigerated 
bottled or canned beverage vending machines must be in accordance with 
the methodology specified in section 5.2, Total Refrigerated Volume 
(excluding subsections 5.2.2.2 through 5.2.2.4) of ANSI/AHAM HRF-1-
2004, ``Energy, Performance and Capacity of Household Refrigerators, 
Refrigerator-Freezers and Freezers.''
    The current version of ANSI/ASHRAE Standard 32.1-2004 defines 
standard bottled, canned, or other sealed beverage storage capacity; 
establishes uniform methods of testing for determining laboratory 
performance of vending machines for bottled, canned, or other sealed 
beverages; and defines three tests/test conditions, as seen in Table 
III.1.

                      Table III.1--ANSI/ASHRAE Standard 32.1-2004--Standard Test Conditions
----------------------------------------------------------------------------------------------------------------
                                          Energy consumption
     Test and pretest conditions                tests                  Vend test              Recovery test
----------------------------------------------------------------------------------------------------------------
Ambient Temperature..................  Perform twice: At 90     90  2        90  2
                                         2 [deg]F    [deg]F (32.2  1     minus> 1 [deg]C).        minus> 1 [deg]C).
                                        [deg]C) and at 75
                                        [deg]F  2
                                        [deg]F (23.9  1 [deg]C).
Relative Humidity....................  65  5% for   65  5%.....  65  5%.
                                        90  2
                                        [deg]F test and 45
                                         5% for 75
                                         2 [deg]F
                                        test.
Reloaded Product Temperature.........  .......................  90  1        90  1
                                                                 [deg]F (32.2  0.5 [deg]C).      minus> 0.5 [deg]C).
Average Beverage Temperature (for      36  1        40 [deg]F or less (4.4   33-40 [deg]F (0.6-4.4
 test).                                 [deg]F (2.2  0.5 [deg]C)       Temperature.            Temperature.
                                        Throughout Test.
Average Beverage Temperature (for      Not Applicable.........  36  1        36  1
 pretest conditions).                                            [deg]F (2.2  0.6 [deg]C)       minus> 0.6 [deg]C)
                                                                 Pretest Conditions.      Pretest Conditions.
----------------------------------------------------------------------------------------------------------------

    During the NOPR public meeting, ASAP stated that DOE's test 
procedures for beverage vending machines should be revised to capture 
technologies such as variable speed technologies and advanced controls. 
ASAP stated that there are energy savings that are not being achieved 
because the test procedure does not account for these types of 
technologies. (ASAP, Public Meeting Transcript, No. 56 at p. 36) In 
addition, Coca-Cola stated that the DOE test procedure does not 
accurately reflect actual operating conditions, because it does not 
regulate or dictate the control of the operating methods for all the 
powered elements in the equipment. (Coca-Cola, Public Meeting 
Transcript, No. 56 at p. 147) Coca-Cola also stated that lighting 
controls would not save as much energy in real world applications as 
the test procedure indicates, resulting in ``artificially low'' test 
results. (Coca-Cola, No. 63 at p. 1) Coca-Cola commented that very few 
of its vending machines go into applications where they are inactive 
for long periods of time. (Coca-Cola, Public Meeting Transcript, No. 56 
at p. 193) For these reasons, Coca-Cola and NAMA conclude that TSL 6 
for Class A machines is not ``practically feasible.'' (Coca-Cola, No. 
63 at p. 1 and NAMA, No. 65 at p. 3) The Joint Comment recommends that 
the next revision to the current test procedure address; (1) the 
limitations of steady-state testing conditions, (2) the current test 
procedure's insufficient representation of real world conditions, and 
(3) the capture of increased energy use as a result of future, energy 
intensive beverage vending machine features, such as interactive 
displays. (Joint Comment, No. 67 at p. 4) Elstat stated that 
prohibiting the use of standby and off mode power does not support the 
goal of reduced energy consumption in

[[Page 44922]]

beverage vending machines, and recommends that DOE revisit the use of 
energy management controls in 2010, or within one year of the rule 
statutory deadline (Elstat, No. 62 at p. 1) DOE notes, however, that it 
is not prohibiting the use of standby and off mode power consumption, 
but rather is not including standby mode and off mode power consumption 
in its calculation of energy use. As stated in the May 2009 NOPR, DOE 
has decided to address these additional requirements when the energy 
conservation standards for beverage vending machines are reviewed in 
August 2015 (see section II.B.1) and, as described below, must review 
the test procedures by 2013.
    As stated above, DOE's test procedure for refrigerated beverage 
vending machines is based on ANSI/ASHRAE Standard 32.1-2004. Section 
302(a) of EISA 2007 amended section 323 of EPCA, in part, by adding new 
subsection 323(b)(1). (42 U.S.C. 6293(b)(1)) This subsection provides 
that the Secretary shall review test procedures at least once every 7 
years. Therefore, the test procedure for refrigerated beverage vending 
machines must be reviewed by December 8, 2013, to determine whether an 
amendment is necessary. In addition, DOE is aware that ASHRAE, via its 
Standards Project Committee 32.1, is working on an update to ANSI/
ASHRAE Standard 32.1-2004. While specific changes to ASHRAE Standard 
32.1-2004 are unknown at this time, DOE understands that the beverage 
vending machine industry is working closely with ASHRAE to develop an 
update to this test procedure. As part of the 7-year review of the test 
procedures for refrigerated beverage vending machines, DOE will 
consider any updates to ASHRAE Standard 32.1 standard, as well as any 
technologies to reduce energy consumption and/or increase energy 
efficiency and determine whether the test procedure and/or measure of 
energy efficiency warrant revisions.

B. Technological Feasibility

1. General
    As stated above, any standards that DOE establishes for beverage 
vending machines must be technologically feasible. (42 U.S.C. 
6295(o)(2)(A) and (o)(3)(B); 42 U.S.C. 6316(e)(1)) DOE considers a 
design option to be technologically feasible if it is in use by the 
respective industry or if research has progressed to the development of 
a working prototype. ``Technologies incorporated in commercially 
available equipment or in working prototypes will be considered 
technologically feasible.'' 10 CFR part 430, subpart C, appendix A, 
section 4(a)(4)(i).
    This final rule considers the same design options as those 
evaluated in the May 2009 NOPR. (See chapter 4 of the TSD.) All the 
evaluated technologies have been used (or are being used) in 
commercially available products or working prototypes. Therefore, DOE 
has determined that all of the efficiency levels evaluated in this 
notice are technologically feasible.
2. Maximum Technologically Feasible Levels
    As required by EPCA, (42 U.S.C. 6295(p)(2) and 42 U.S.C. 
6316(e)(1)) in developing the May 2009 NOPR, DOE identified the energy 
use levels that would achieve the maximum reductions in energy use that 
are technologically feasible (``max-tech'' levels) for beverage vending 
machines. 74 FR 26025. For today's final rule, the max-tech levels for 
all classes are the levels provided in Table III.2. DOE identified 
these maximum technologically feasible levels for the equipment classes 
analyzed as part of the engineering analysis (chapter 5 of the TSD). 
For both equipment classes, DOE applied the most efficient design 
options available for energy-consuming components.

                 Table III.2--Max-Tech Energy Use Levels
------------------------------------------------------------------------
         Equipment class                  Max-tech level kWh/day *
------------------------------------------------------------------------
A................................  MDEC = 0.045 x V + 2.42.
B................................  MDEC = 0.068 x V + 2.63.
------------------------------------------------------------------------
``V'' is the refrigerated volume of the refrigerated bottled or canned
  beverage vending machine, as measured by ANSI/AHAM HRF-1-2004.
* Kilowatt hours per day.

C. Energy Savings

    DOE forecasted energy savings in its national energy savings (NES) 
analysis through the use of a spreadsheet tool discussed in the May 
2009 NOPR. 74 FR 26020, 26039-43, 26057.
    One criterion that governs DOE's adoption of standards for 
refrigerated beverage vending machines is the standard must result in 
``significant conservation of energy.'' (42 U.S.C. 6295(o)(3)(B) and 42 
U.S.C. 6316(e)(1)) While EPCA does not define the term ``significant,'' 
the U.S. Court of Appeals in Natural Resources Defense Council v. 
Herrington 768 F.2d 1355, 1373 (DC Cir. 1985) indicated that Congress 
intended ``significant'' energy savings in this context to be savings 
that were not ``genuinely trivial.'' DOE's estimates of the energy 
savings for energy conservation standards at each of the TSLs in 
today's final rule indicate that the energy savings each would achieve 
are nontrivial. Therefore, DOE considers these savings ``significant'' 
within the meaning of section 325 of EPCA.

D. Economic Justification

1. Specific Criteria
    As noted earlier, EPCA provides seven factors to evaluate in 
determining whether an energy conservation standard for refrigerated 
beverage vending machines is economically justified. (42 U.S.C. 
6295(o)(2)(B)(i) and 42 U.S.C. 6316(e)(1)) The following sections 
discuss how DOE has addressed each of those seven factors in this 
rulemaking.
a. Economic Impact on Commercial Customers and Manufacturers
    DOE considered the economic impact of the new refrigerated beverage 
vending machines standards on commercial customers and manufacturers. 
For customers, DOE measured the economic impact as the change in 
installed cost and life-cycle operating costs, i.e., the LCC. (See 
sections IV.F and VI.C.1.a and chapter 8 of the TSD.) DOE investigated 
the impacts on manufacturers through the manufacturer impact analysis 
(MIA). (See sections IV.J and VI.C.2, and chapter 13 of the TSD.) The 
economic impact on commercial customers and manufacturers is discussed 
in detail in the May 2009 NOPR. 74 FR 26033-38, 26039-26044, 26044-47, 
26050-53, 26053-56, 26063-67.
b. Life-Cycle Costs
    DOE considered life-cycle costs of beverage vending machines, as 
discussed in the May 2009 NOPR. 74 FR at 26033-38, 26050-53
    DOE calculated the sum of the purchase price and the operating 
expense (discounted over the lifetime of the equipment) to estimate the 
range in LCC benefits that commercial customers would expect to achieve 
due to the standards.
c. Energy Savings
    Although significant conservation of energy is a separate statutory 
requirement for imposing an energy conservation standard, EPCA also 
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) and 
42 U.S.C. 6316(e)(1)) As in the May 2009 NOPR (74 FR 26056-57), for 
today's final rule, DOE used the NES spreadsheet results in its 
consideration of total projected

[[Page 44923]]

savings that are directly attributable to the standard levels DOE 
considered.
d. Lessening of Utility or Performance of Equipment
    In selecting today's standard levels, DOE sought to avoid new 
standards for beverage vending machines that would lessen the utility 
or performance of that equipment. (42 U.S.C. 6295(o)(2)(B)(i)(IV) and 
42 U.S.C. 6316(e)(1)); 74 FR 26059. Today's standards do not involve 
changes in design or unusual installation requirements that would 
reduce the utility or performance of the equipment.
e. Impact of Any Lessening of Competition
    DOE considers any lessening of competition likely to result from 
standards. Accordingly, as discussed in the May 2009 NOPR (74 FR 26059, 
26064-65, 26070-71), DOE requested that the Attorney General transmit 
to the Secretary a written determination of the impact (if any) of 
lessening of competition likely to result from today's standard, 
together with an analysis of the nature and extent of such impact. (42 
U.S.C. 6295(o)(2)(B)(i)(V) and (B)(ii) and 42 U.S.C. 6316(e)(1))
    To assist the Attorney General in making such a determination, DOE 
provided the Department of Justice (DOJ) with copies of May 2009 
proposed rule and the NOPR TSD for review. (DOJ, No. 61 at pp. 1-2) The 
Attorney General's response is discussed in section VI.C.5 and is 
reprinted at the end of this rule. For Class A machines, DOJ concluded 
that the proposed TSL 6 could potentially lessen competition. DOJ 
requested that DOE ensure that the standard it adopts for Class A 
beverage vending machines will not require access to intellectual 
property owned by an industry participant, which would place other 
industry participants at a comparative disadvantage. For Class B 
machines, DOJ does not believe the proposed standard would likely lead 
to a lessening of competition. Compliance with a lesser standard does 
not appear to raise similar concerns.
f. Need of the Nation To Conserve Energy
    In considering standards for refrigerated beverage vending 
machines, the Secretary must consider the need of the Nation to 
conserve energy. (42 U.S.C. 6295(o)(2)(B)(i)(VI) and 42 U.S.C. 
6316(e)(1)) The Secretary recognizes that energy conservation benefits 
the Nation in several important ways. The non-monetary benefits of the 
standards are likely to be reflected in improvements to the security 
and reliability of the Nation's energy system. Today's standards will 
also result in environmental benefits. DOE has considered these factors 
in adopting today's standards.
g. Other Factors
    In determining whether a standard is economically justified, EPCA 
directs the Secretary to consider any other factors deemed relevant. 
(42 U.S.C. 6295(o)(2)(B)(i)(VII) and 42 U.S.C. 6316(e)(1)) In adopting 
today's standard, DOE considered LCC impacts on identifiable groups, 
such as customers of different business types who may be 
disproportionately affected by any national energy conservation 
standard. In particular, DOE examined the LCC on businesses with high 
financing costs and low energy prices that may not be able to afford a 
significant increase in the purchase price (``first cost'') of beverage 
vending machines. Some of these customers may retain equipment past its 
useful life. Large increases in first cost could also preclude the 
purchase and use of equipment entirely. DOE identified no factors for 
analysis other than those already considered above.
2. Rebuttable Presumption
    Section 325(o)(2)(B)(iii) of EPCA states that there is a rebuttable 
presumption that an energy conservation standard is economically 
justified if the additional cost to the consumer that meets the 
standard level is less than three times the value of the first-year 
energy (and as applicable, water) savings resulting from the standard, 
as calculated under the applicable DOE test procedure. (42 U.S.C. 
6295(o)(2)(B)(iii) and 42 U.S.C. 6316(e)(1)) DOE's LCC and payback 
period (PBP) analyses generate values that calculate the PBP for 
customers of potential energy conservation standards, which includes, 
but is not limited to, the 3-year PBP contemplated under the rebuttable 
presumption test discussed above. However, DOE routinely conducts a 
full economic analysis that considers the full range of impacts, 
including those to the customer, manufacturer, Nation, and environment, 
as required under 42 U.S.C. 6295(o)(2)(B)(i) and 42 U.S.C. 6316(e)(1). 
The results of this analysis serve as the basis for DOE to evaluate 
definitively the economic justification for a potential standard level 
(thereby supporting or rebutting the results of any preliminary 
determination of economic justification).

IV. Methodology and Discussion of Comments on Methodology

    DOE used several previously developed analytical tools in setting 
today's standard. Each was adapted for this rule. One of these 
analytical tools is a spreadsheet that calculates LCC and PBP. Another 
calculates national energy savings and national NPV. A third tool is 
the Government Regulatory Impact Model (GRIM), the results of which are 
the basis for the MIA, among other methods. In addition, DOE developed 
an approach using the National Energy Modeling System (NEMS) to 
estimate impacts of energy efficiency standards for beverage vending 
machines on electric utilities and the environment. The TSD appendices 
discuss each of these analytical tools in detail. 74 FR 26026-49.
    As a basis for this final rule, DOE has continued to use the 
spreadsheets and approaches explained in the May 2009 NOPR. DOE used 
the same general methodology but has revised some of the assumptions 
and inputs for this final rule in response to comments from interested 
parties. The following paragraphs discuss these revisions.

A. Market and Technology Assessment

    When beginning an energy conservation standards rulemaking, DOE 
develops information that provides an overall picture of the market for 
the equipment concerned, including the purpose of the equipment, the 
industry structure, and market characteristics. This activity includes 
both quantitative and qualitative assessments based primarily on 
publicly available information. DOE presented its market and technology 
assessment for this rulemaking in the May 2009 NOPR and chapter 3 of 
the NOPR TSD. The assessment included equipment definitions, equipment 
classes, manufacturers, quantities and types of equipment offered for 
sale, retail market trends, and regulatory and non-regulatory programs.
1. Definitions Related to Refrigerated Beverage Vending Machines
a. Definition of Bottled or Canned Beverage
    EPCA defines the term ``refrigerated bottled or canned beverage 
vending machine'' as ``a commercial refrigerator that cools bottled or 
canned beverages and dispenses the bottled or canned beverages on 
payment.'' (42 U.S.C. 6291(40)) Thus, coverage of equipment under EPCA 
as a beverage vending machine, in part, depends on whether it cools and 
dispenses ``bottled beverages'' and/or ``canned beverages.'' DOE

[[Page 44924]]

tentatively decided to consider a broader definition for the terms 
``bottled'' and ``canned'' as they apply to beverage vending machines 
based on comments on the framework document. A bottle or can in this 
broader definition refers to ``a sealed container for beverages,'' so a 
bottled or canned beverage is ``a beverage in a sealed container.'' 
Such a definition would avoid unnecessary complications regarding the 
material composition of the container and eliminate the need to 
determine whether a particular container is a bottle or a can. In the 
ANOPR, DOE sought comment on this broader definition and on whether it 
is consistent with the intent of EPCA. (73 FR 34103) DOE did not 
receive any comments on this and thus proposed in the NOPR that a 
bottled or canned beverage mean ``a beverage in a sealed container.'' 
(74 FR 26027) Because DOE did not receive any comments in response to 
the proposed definition in the May 2009 NOPR, DOE is adopting the 
definition of bottled or canned beverage as proposed, without 
modification.
2. Equipment Classes
    When evaluating and establishing energy conservation standards, DOE 
generally divides covered equipment into equipment classes by the type 
of energy used, capacity, or other performance-related features that 
affect efficiency and factors such as the utility of such feature(s). 
(42 U.S.C. 6295(q)) DOE routinely establishes different energy 
conservation standards for different equipment classes based on these 
criteria.
    Certain characteristics of beverage vending machines have the 
potential to affect their energy use and efficiency. Accordingly, these 
characteristics could be the basis for separate equipment classes for 
these machines. DOE determined that the most significant criterion 
affecting beverage vending machine energy use is the method used to 
cool beverages. In the NOPR, DOE divided covered equipment into two 
equipment classes according to method of refrigeration: Class A and 
Class B. (74 FR 26027)
    The Class A beverage vending machine equipment class comprises 
machines that cool product throughout the entire refrigerated volume of 
the machine. Class A machines generally use ``shelf-style'' vending 
mechanisms and a transparent (glass or polymer) front. Because the 
next-to-be-vended product is visible to the customer and any product 
can be selected by the customer off the shelf, all bottled or canned 
beverage containers are necessarily enclosed within the refrigerated 
volume.
    In Class B beverage vending machines, refrigerated air is directed 
at a fraction (or zone) of the refrigerated volume of the machine. This 
cooling method is used to assure that the next-to-be-vended product 
will be the coolest product in the machine. These machines typically 
have an opaque front and use a ``stack-style'' vending mechanism.
    Therefore, DOE defines Class A and Class B as follows:
     Class A means a refrigerated bottled or canned beverage 
vending machine that is fully cooled, and is not a combination vending 
machine.
     Class B means any refrigerated bottled or canned beverage 
vending machine not considered to be Class A, and is not a combination 
vending machine.
    Because DOE did not receive any comments in response to the 
presentation of equipment classes in the May 2009 NOPR, DOE is adopting 
the equipment classes as proposed, with a modification to address 
combination vending machines as described in section II.B.2.b.

B. Screening Analysis

    The purpose of the screening analysis is to evaluate the technology 
options identified as having the potential to improve the efficiency of 
equipment, to determine which technologies to consider further and 
which to screen out. DOE consulted with industry, technical experts, 
and other interested parties to develop a list of technologies for 
consideration. DOE then applied the following four screening criteria 
to determine which technologies are unsuitable for further 
consideration in the rulemaking:
    1. Technological Feasibility. Technologies incorporated in 
commercial equipment or in working prototypes will be considered 
technologically feasible.
    2. Practicability to Manufacture, Install, and Service. If mass 
production and reliable installation and servicing of a technology in 
commercial equipment could be achieved on the scale necessary to serve 
the relevant market at the time of the effective date of the standard, 
then that technology will be considered practicable to manufacture, 
install, and service.
    3. Adverse Impacts on Equipment Utility or Equipment Availability. 
If a technology is determined to have significant adverse impact on the 
utility of the equipment to significant subgroups of customers, or 
result in the unavailability of any covered equipment type with 
performance characteristics (including reliability), features, sizes, 
capacities, and volumes that are substantially the same as equipment 
generally available in the United States at the time, it will not be 
considered further.
    4. Adverse Impacts on Health or Safety. If it is determined that a 
technology will have significant adverse impacts on health or safety, 
it will not be considered further.

10 CFR part 430, Subpart C, Appendix A at 4(a)(4) and 5(b).

    In the ANOPR market and technology assessment, DOE developed an 
initial list of technologies expected to have the potential to reduce 
the energy consumption of beverage vending machines. In the screening 
analysis, DOE screened out technologies based on the four criteria 
discussed above. The list of remaining technologies became one of the 
key inputs to the engineering analysis. (73 FR 34108-09) For the 
engineering analysis each technology is referred to as a design option.
    After the ANOPR screening analysis, DOE did not receive any 
comments suggesting a change to its list of design options. As a 
result, no changes were made for the NOPR. During the NOPR public 
meeting, multiple manufacturers expressed the ability to meet today's 
standard with the use of lighting controls. (Dixie-Narco, Public 
Meeting Transcript, No. 56 at p. 188 and Royal Vendors, Public Meeting 
Transcript, No. 56 at p. 189) As a result, the signatories of the Joint 
Comment suggest that DOE consider lighting controls as a design option 
for the final rule because, if not considered, ``cost-effective energy-
savings may be forgone.'' (Joint Comment, No. 67 at p. 3)
    DOE disagrees with the Joint Commenters' assessment of lighting 
controls. The Joint Comment infers that a lighting control design 
option meets the screening analysis criteria. According to the 
screening criteria, however, a technology cannot be considered as a 
design option if it has adverse impacts on equipment utility. 10 CFR 
part 430, Subpart C, Appendix A at 4(a)(4) and 5(b) DOEs analysis 
ensures preservation of equipment utility by choosing design options 
that, when implemented, do not lessen utility relative to the 
engineering baseline unit. The energy-savings potential of lighting 
controls is realized when the control system automatically deactivates 
all or a portion of a machine's lighting system. While the lighting 
system is deactivated, the light output of the machine is reduced, 
leaving the machine's contents or signage less visible. If lighting

[[Page 44925]]

controls were a design option in the engineering analysis, this 
reduction would represent a loss in utility relative to the baseline 
unit. Therefore, lighting controls do not meet the screening criteria, 
and DOE will not consider them as a design option in its analysis for 
the final rule.
    In the ANOPR screening analysis, variable-speed compressors were 
eliminated from consideration. For the NOPR analysis, DOE did not 
receive any comments recommending that variable-speed compressors be 
reconsidered. For the final rule analysis, the Joint Comment 
recommended that DOE reconsider this technology, stating that it 
believes variable-speed compressors can provide some energy-use 
reduction, despite the current steady-state conditions that are 
prescribed in ANSI/ASHRAE Standard 32.1-2004 test procedure. The Joint 
Comment asserted that when DOE screened out variable-speed compressors, 
DOE did not consider that beverage vending machine manufacturers 
oversize their compressors to meet purchasers' pull down requirements. 
(Joint Comment, No. 67 at p. 2)
    DOE screened out variable-speed compressors in the ANOPR analysis 
because the resulting energy efficiency ratio of a variable-speed 
compressor operating at steady state, according to the test procedure, 
would not be greater than the energy efficiency ratio of a properly 
sized single-speed compressor. DOE acknowledges that a variable-speed 
compressor operating at steady state may have energy savings compared 
to an oversized single-speed compressor operating at the same 
conditions. However, DOE is unaware of any data that quantifies and 
compares these energy savings specifically for beverage vending 
machines under these conditions. DOE was also unable to determine 
whether variable-speed compressors are a cost-effective design option. 
Due to a lack of any comparative data on the performance of variable 
speed compressors for these applications and evidence of the cost 
effectiveness of variable-speed compressors, DOE did not consider 
variable-speed compressors in its analysis.
    In the framework document, DOE stated that, to the greatest extent 
possible, it would base its analysis on commercially available 
technologies that have not been screened out, including proprietary 
designs. DOE stated that it would consider a proprietary design in the 
subsequent analyses only if it is not a unique path to a given 
efficiency level. If the proprietary design is the only approach 
available to achieve a given efficiency level, then DOE will exclude 
that efficiency level from further analysis.
    During the NOPR public meeting, PepsiCo stated that the use of LED 
lighting in glass front vendors is a proprietary design patented by 
Coca-Cola, which PepsiCo is precluded from using. (PepsiCo, Public 
Meeting Transcript, No. 56 at p. 52) In a written comment, NAMA stated 
similar concerns. (NAMA, No. 65 at p. 3) Coca-Cola stated that there 
are control strategies used in beverage vending machines (e.g., certain 
lighting controls and certain motor controls) that are patented and are 
not widely available for use by all manufacturers. (Coca-Cola, No. 56 
at p. 149 and Coca-Cola, No. 63 at p. 1) Coca-Cola added that TSL 6 for 
Class A machines cannot be achieved without these ``firmware'' control 
strategies. (Coca-Cola, No. 63 at p. 1) According to USA Technologies, 
there are patented, after-market lighting control products widely used 
in the industry. (USA Technologies, Public Meeting Transcript, No. 56 
at p. 200) In addition, Dixie-Narco stated that it is not aware of any 
intellectual property issues that would prevent other manufactures from 
adopting lighting strategies similar to those that it has been using in 
its equipment. (Dixie-Narco, No. 64 at p. 3) ASAP stated that certain 
patented technologies may provide a cost-effective way to achieve a 
certain efficiency level, but they do not preclude a manufacturer from 
achieving the same efficiency level in a different manner. ASAP submits 
that there are historically multiple paths to achieve any given 
efficiency level. (ASAP, Public Meeting Transcript, No. 56 at p. 202)
    DOE recognizes that there are existing patents that involve 
specific screened-in beverage vending machine technologies. For 
example, there is a U.S. patent on a ``Dispensing Apparatus with 
Directional LED Lighting'' (Patent No. U.S. 6,550,269 B2, April 22, 
2003). DOE is not screening out proprietary technologies such as LED 
lighting or certain control strategies, solely because they are 
proprietary. In contrast, DOE is incorporating these technologies into 
its analysis because DOE believes that there are alternate pathways to 
achieve the efficiency levels associated with these technologies. 
Providing LED lighting in a vending machine in a manner other than 
directionally, employing an alternative lighting type, and/or providing 
various other control strategies that are not patented, have the 
potential to result in a vending machine that meets equivalent 
efficiency levels.
    DOE notes that most patents do not convey market power to their 
owners because close substitutes for these inventions exist. Licensors 
will pay no more for patented technologies than the cost advantage they 
provide over the next best alternative pathway to compliance with the 
efficiency standard. Ultimately, the availability of cost-effective 
alternate technology pathways is what limits the ability of the owner 
of a proprietary technology to extract high fees for its use. It is 
DOE's opinion that a standard level which can only be met with a single 
proprietary technology which comes without assurances of open and free 
technology access should be rejected because it carries great risk of 
resulting in an anti-competitive market. This principle has been 
consistently applied in past DOE rulemakings. If standard levels were 
set based on proprietary technologies representing a unique path to 
compliance and not available to all equipment manufacturers, the 
standards-setting process itself would convey great market power 
because there would be no alternative means to satisfy the standard. In 
consideration of these factors, DOE maintains that it can consider 
proprietary designs as long as it is not a unique path to a given 
efficiency level. For the reasons discussed, DOE believes that neither 
directional LED lighting nor lighting controls represent a unique path 
to compliance with TSL 6 for Class A equipment.

C. Engineering Analysis

    The engineering analysis develops cost-efficiency relationships to 
show the manufacturing costs of achieving increased energy efficiency. 
As discussed in the May 2009 NOPR, DOE used the design-option approach, 
involving consultation with outside experts, review of publicly 
available cost and performance information, and modeling of equipment 
cost and energy consumption. 74 FR 26027-26030. Chapter 5 of the NOPR 
TSD contains a detailed discussion of the engineering analysis 
methodology.
1. Approach
    In this rulemaking, DOE is adopting a design-option approach, which 
calculates the incremental costs of increased efficiency. Efficiency 
increases are modeled by implementing specific energy saving 
technologies, referred to as design options, to a baseline model. Using 
the design-option approach, cost-efficiency relationship estimates are 
based on manufacturer or component supplier data or derived from 
engineering computer simulation

[[Page 44926]]

models. Chapter 5 of the TSD contains a detailed description of the 
equipment classes analyzed and analytical models used to conduct the 
design-option approach based beverage vending machine engineering 
analysis.
2. Analytical Models
a. Cost Model
    DOE used a cost model to estimate the core case cost of beverage 
vending machines. The core case cost is the cost of all non-energy-
consuming components, such as the structure, walls, doors, shelving, 
and fascia. This model was adapted from a cost model developed for 
DOE's rulemaking on commercial refrigeration equipment (refer to http://www1.eere.energy.gov/buildings/appliance_standards/commercial/refrigeration_equipment.html for further detail on and validation of 
the commercial refrigeration equipment cost model). The approach for 
commercial refrigeration equipment involved disassembling a self-
contained refrigerator, analyzing the materials and manufacturing 
processes for each component, and developing a parametric spreadsheet 
to model the cost to fabricate (or purchase) each component and the 
cost of assembly. Because of the similarities in manufacturing 
processes between self-contained commercial refrigeration equipment and 
beverage vending machines, DOE was able to adapt the commercial 
refrigeration equipment cost model for use in this rule. This 
adaptation involved maintaining many of the assumptions about materials 
and manufacturing processes but modifying the dimensions and types of 
components specific to beverage vending machines. To confirm the 
accuracy of the cost model, DOE obtained input from interested parties 
on beverage vending machine production cost estimates and on other 
assumptions DOE used in the model. Chapter 5 of the TSD provides 
details of the cost model.
b. Energy Consumption Model
    The energy consumption model estimates the daily energy consumption 
(DEC) of beverage vending machines at various performance levels using 
the previously discussed design-option approach. The model is specific 
to the categories of equipment covered under this rulemaking, but is 
sufficiently generalized to model the energy consumption of both 
covered equipment classes. For a given equipment class, the model 
estimates the DEC for the baseline design and the energy consumption of 
several levels of performance above the baseline design. DOE uses the 
model to calculate each performance level separately. For the NOPR, DOE 
made updates to the energy consumption model by altering Class A can 
capacities (or vendible capacities) and verifying Class B can 
capacities. For both classes, DOE modified exterior case dimensions, 
which resulted in changes in infiltration loads, refrigerated volumes, 
and exterior wall areas. These alterations and their effects are 
detailed in chapter 5 of the TSD. DOE did not receive any comments in 
response to these changes. Therefore, DOE maintained these revised 
calculation methodologies for the final rule. DOE did, however, receive 
a comment regarding the energy consumption model DEC results. Royal 
Vendors and NAMA commented that, without lighting, a Class B machine 
will always consume less energy than a similarly equipped Class A 
machine due to differences in their thermodynamic properties. Royal 
Vendors cites the divergence from this expected outcome at TSL 4 as the 
origin of their skepticism for DOE's Class A analysis. (Royal Vendors, 
No. 60 at pp. 1 and 2; NAMA, No. 65 at pp. 3 and 4)
    DOE's analysis results and selected TSLs adequately reflect the 
thermodynamic differences between Class A and Class B machines. DOE 
agrees that a Class B machine stripped of electricity consuming 
components that are not essential to the refrigeration system (i.e., 
lighting) will consume less energy than a similarly equipped Class A 
machine. As described in chapter 5 of the final rule TSD, the 
engineering analysis' DEC results are modeled as the sum of the 
component electricity consumption and compressor electricity 
consumption. The physical and thermodynamic equipment differences 
described by Royal affect the total refrigeration load, which is 
factored into the compressor electricity consumption in DOE's energy 
consumption model. When comparing compressor electricity consumption 
results between a Class A and Class B machine with the same volume, the 
Class B machine compressor consumes less electricity at all engineering 
efficiency levels. The divergence in DEC described by Royal Vendors at 
higher TSLs occurs because the modeled Class A and Class B machines 
being compared are no longer ``similarly equipped.'' Different design 
options are implemented for each machine class at each TSL, and each 
design option has unique energy savings potential. For instance, at TSL 
4 for Class A machines, LED lighting is implemented which has an 
incremental component energy savings of 0.89 kWh/day. At TSL 4 for 
Class B machines, an electronically commutated motor (ECM) condenser 
fan motor is implemented which has an incremental component energy 
savings of 0.05 kWh/day. These incremental component energy savings 
manifest themselves as reductions in the component electricity 
consumption addend of the DEC. The greater energy savings potential of 
some Class A design options results in component electricity 
consumption reductions significant enough to drive the overall DEC of 
Class A machines below that of Class B machines. See chapter 5 of the 
TSD for a detailed explanation of the engineering analysis energy 
consumption model.
    Based on public comments, DOE proposed to use refrigerated volume 
instead of vendible capacity as the normalization metric for setting 
standards for beverage vending machines in the NOPR. (74 FR 26029) 
Following the NOPR, NAMA commented that volume was an appropriate 
normalization metric, rather than the number of cans. (NAMA, No. 65 at 
p. 3) Therefore, DOE will continue to use refrigerated volume as the 
normalization metric in the standard.

D. Markups To Determine Equipment Price

    In the May 2009 NOPR, DOE explained how it developed the 
distribution channel markups used. 74 FR 26036. DOE did not receive 
comments on these markups; however, it updated the distribution channel 
markups by including 2009 sales tax data as well as the markups for 
refrigerated beverage vending machines wholesalers using 2009 financial 
data. DOE used these markups, along with sales taxes, installation 
costs, and manufacturer selling prices (MSPs) developed in the 
engineering analysis, to arrive at the final installed equipment prices 
for baseline and higher efficiency refrigerated beverage vending 
machines. As explained in the May 2009 NOPR (74 FR 26036), DOE defined 
three distribution channels for refrigerated beverage vending machines 
to describe how the equipment passes from the manufacturer to the 
customer. DOE retained the same distribution channel market shares 
described in the May 2009 NOPR.
    The new overall baseline and incremental markups for sales within 
each distribution channel are shown in Table IV.1 and Table IV.2. 
Chapter 6 of the TSD provides additional details on markups.

[[Page 44927]]



            Table IV.1--Overall Average Baseline Markups by Distribution Channel Including Sales Tax
----------------------------------------------------------------------------------------------------------------
                                                            Manufacturer       Wholesaler/      Overall weighted
                    Markup category                            direct          distributor          average
----------------------------------------------------------------------------------------------------------------
Markup.................................................              1.000              1.460              1.069
Sales tax..............................................              1.071              1.071              1.071
Overall markup.........................................              1.071              1.564              1.145
----------------------------------------------------------------------------------------------------------------


           Table IV.2--Overall Average Incremental Markups by Distribution Channel Including Sales Tax
----------------------------------------------------------------------------------------------------------------
                                                            Manufacturer       Wholesaler/      Overall weighted
                    Markup category                            direct          distributor          average
----------------------------------------------------------------------------------------------------------------
Markup.................................................              1.000              1.200              1.030
Sales tax..............................................              1.071              1.071              1.071
Overall markup.........................................              1.071              1.285              1.103
----------------------------------------------------------------------------------------------------------------

E. Energy Use Characterization

    The energy use characterization estimates the annual energy 
consumption of beverage vending machines. This estimate is used in the 
subsequent LCC and PBP analyses (chapter 8 of the TSD) and NIA (chapter 
11 of the TSD). DOE estimated the energy use for machines in the two 
equipment classes examined (74 FR 26027) in the engineering analysis 
(chapter 5 of the TSD) based on the DOE test procedure. DOE 
incorporated ANSI/ASHRAE Standard 32.1-2004 by reference with two 
modifications as the DOE test procedure for the beverage vending 
machines. 71 FR 71340, 71375 (Dec. 8, 2006); 10 CFR 431.294. DOE 
assumed all Class A machines to be installed indoors and subject to a 
constant air temperature of 75 [deg]F and relative humidity of 45 
percent, matching test conditions in the DOE test procedure. 73 FR 
34114-15. Based on market data and discussions with several beverage 
vending machine distributors, DOE assumed that 25 percent of Class B 
machines are placed outdoors, with the remaining 75 percent placed 
indoors. DOE sought but did not receive comments on this distribution; 
thus, DOE maintained the same distribution of Class B machines for this 
final rule.

F. Life-Cycle Cost and Payback Period Analyses

    In response to the requirements of section 325(o)(2)(B)(i) of EPCA, 
DOE conducted LCC and PBP analyses to evaluate the economic impacts of 
possible new beverage vending machine standards on individual 
customers. DOE used the same spreadsheet models to evaluate the LCC and 
PBP as it used for the NOPR analysis; however, DOE updated certain 
specific inputs to the models. Details of the spreadsheet model and of 
all the inputs to the LCC and PBP analyses are in TSD chapter 8. DOE 
conducted the LCC and PBP analyses using a spreadsheet model developed 
in Microsoft Excel for Windows 2003.
    The LCC is the total cost for a unit of beverage vending machine 
equipment over the life of the equipment, including purchase and 
installation expense and operating costs (energy expenditures and 
maintenance). To compute the LCC, DOE summed the installed price of the 
equipment and its lifetime operating costs discounted to the time of 
purchase. The PBP is the change in purchase expense due to a given 
energy conservation standard divided by the change in first-year 
operating cost that results from the standard. DOE expresses PBP in 
years. DOE measures the changes in LCC and in PBP associated with a 
given energy use standard level relative to a base case equipment 
energy use. The base case forecast reflects the market in the absence 
of mandatory energy conservation standards.
    The data inputs to the PBP calculation are the purchase expense 
(otherwise known as the total installed customer cost or first cost) 
and the annual operating costs for each selected design. The inputs to 
the equipment purchase expense were the equipment price and the 
installation cost, with appropriate markups. The inputs to the 
operating costs were the annual energy consumption, electricity price, 
and repair and maintenance costs. The PBP calculation uses the same 
inputs as the LCC analysis, but because it is a simple payback, the 
operating cost is for the year the standard takes effect, assumed to be 
2012. DOE believes LCC is a better indicator of economic impacts on 
customers. For each efficiency level analyzed, the LCC analysis 
required input data for the total installed cost of the equipment, 
operating cost, and discount rate.
    Table IV.3 summarizes the inputs and key assumptions DOE used to 
calculate the economic impacts of various energy consumption levels on 
customers. Equipment price, installation cost, and baseline and 
standard design selection affect the installed cost of the equipment. 
Annual energy use, electricity costs, electricity price trends, and 
repair and maintenance costs affect the operating cost. The effective 
date of the standard, the discount rate, and the lifetime of equipment 
affect the calculation of the present value of annual operating cost 
savings from today's standard. Table IV.3 also shows how DOE modified 
these inputs and key assumptions for the final rule relative to the May 
2009 NOPR. Chapter 8 of the TSD provides the changes to the input data 
and discusses the overall approach to the LCC analysis.

  Table IV.3--Summary of Inputs and Key Assumptions Used in the LCC and
                              PBP Analyses
------------------------------------------------------------------------
                                                           Changes for
             Input                 NOPR description        final rule
------------------------------------------------------------------------
Baseline Manufacturer Selling   Price charged by        Data reflect
 Price.                          manufacturer to         updated
                                 either a wholesaler     engineering
                                 or large customer for   analysis.
                                 baseline equipment.
                                 Developed by using
                                 industry-supplied
                                 efficiency level data
                                 and a design option
                                 analysis.

[[Page 44928]]

 
Standard-Level Manufacturer     Incremental change in   Data reflect
 Selling Price Increases.        manufacturer selling    updated
                                 price for equipment     engineering
                                 at each of the higher   analysis.
                                 efficiency standard
                                 levels. Developed by
                                 using a combination
                                 of energy consumption
                                 level and design
                                 option analyses.
Markups and Sales Tax.........  Associated with         Markups updated
                                 converting the          based on
                                 manufacturer selling    revised data on
                                 price to a customer     sales tax and
                                 price (chapter 6 of     wholesaler
                                 TSD). Developed based   financial data.
                                 on product
                                 distribution channels
                                 and sales taxes.
Installation Price............  Cost to the customer    Data reflect
                                 of installing the       updated
                                 equipment. This         installation
                                 includes labor,         costs.
                                 overhead, and any
                                 miscellaneous
                                 materials and parts.
                                 The total installed
                                 cost equals the
                                 customer equipment
                                 price plus the
                                 installation price.
                                 Installation cost
                                 data provided by
                                 industry comment.
Equipment Energy Consumption..  Site energy use         Data reflect
                                 associated with the     updated
                                 use of beverage         engineering
                                 vending machines,       analysis for
                                 which includes only     each efficiency
                                 the use of              level.
                                 electricity by the
                                 equipment itself.
                                 Taken from
                                 engineering analysis
                                 and validated in
                                 energy use
                                 characterization.
                                 (chapter 7 of the
                                 TSD).
Electricity Prices............  Established average     No change.
                                 commercial
                                 electricity price ($/
                                 kWh) from EIA data
                                 for 2008 in 2007$.
                                 DOE then established
                                 scaling factors for
                                 beverage vending
                                 machine customers
                                 based on the 2003
                                 Commercial Building
                                 Energy Consumption
                                 Survey.
Electricity Price Trends......  Used the AEO2009        All price cases
                                 Reference Case to       revised to
                                 forecast future         reflect April
                                 electricity prices      2009 update to
                                 and extrapolated        AEO2009 values.
                                 prices to 2042.
Maintenance Costs.............  Labor and material      No change in
                                 costs associated with   methodology;
                                 maintaining the         however,
                                 beverage vending        reinterpreted
                                 machines (e.g.,         year's values.
                                 cleaning heat
                                 exchanger coils,
                                 checking refrigerant
                                 charge levels, lamp
                                 replacement). Based
                                 on industry comment
                                 on the NOPR, included
                                 an updated annualized
                                 cost of one
                                 refurbishment/
                                 remanufacturing cycle.
Repair Costs..................  Labor and material      No change.
                                 costs associated with
                                 repairing or
                                 replacing components
                                 that have failed.
                                 Estimated based on
                                 replacement
                                 frequencies and costs
                                 for key components.
Equipment Lifetime............  Age at which the        No change.
                                 beverage vending
                                 machine is retired
                                 from service. Based
                                 on industry comment
                                 on the ANOPR, reduced
                                 average service life
                                 to 10 years, with 15
                                 years as a maximum.
Discount Rate.................  Computed by estimating  Updated based on
                                 the cost of capital     data available
                                 for companies that      in the 2009
                                 purchase                version of the
                                 refrigeration           Damodaran Web
                                 equipment using         site.
                                 business financial
                                 data from the
                                 Damodaran Online
                                 database from 2008.
Rebound Effect................  A rebound effect was    No change.
                                 not taken into
                                 account in the LCC
                                 analysis.
Analysis Period...............  The time span over      No change.
                                 which DOE calculated
                                 the LCC (i.e., 2012-
                                 2042).
------------------------------------------------------------------------

    The changes in the input data and the discussion of the overall 
approach to the LCC analysis are provided in chapter 8 of the TSD.

G. Shipments Analysis

    The shipments analysis develops future shipments for each class of 
beverage vending machines based on current shipments and equipment life 
assumptions, and takes into account the existing stock and expected 
trends in markets that use beverage vending machines. DOE received 
several comments on the shipments analysis and the resulting shipments 
during the NOPR. Although DOE used the same shipments model for the 
final rule analysis as the NOPR, many of the underlying assumptions 
concerning future market behavior were changed as a result of the 
interested party comments.
1. Split Incentives
    Coca-Cola (Coca-Cola, Public Meeting Transcript, No. 56 at p. 196 
and Coca-Cola, No. 63 at p. 2) and PepsiCo (PepsiCo, Public Meeting 
Transcript, No. 56 at p. 94) stated that if costlier components and 
expensive control schemes are necessary to produce higher efficiency 
equipment, it would purchase less equipment. While DOE recognizes the 
principle that higher costs of equipment might possibly affect sales, 
neither major purchaser provided any data that would allow a 
quantitative assessment of the effect of higher prices on overall 
purchases (price elasticity) to be calculated. However, DOE notes that 
for Class A equipment, the increase in installed cost at TSL 6 is in 
the range of 5 to 10 percent; for Class B machines, the increase in 
installed cost is in the range of 2 to 4 percent. Even if shipments 
fell by the same percentage that installed cost increased by (i.e., 
price elasticity equaled 1.0, a relatively large number), neither the 
net present value of TSL 6 for Class A equipment nor the net present 
value of TSL 3 for Class B equipment would be noticeably affected, nor 
would the choice of standard levels.
2. Sustainability of Sales Less Than 100 Thousand Units
    USA Technologies (USA Tech, Public Meeting Transcript, No. 56 at 
pp. 78, 79, and 85) expressed a concern that the industry's current 
number of manufacturers could not stay in business if total production 
were under 100,000 machines per year. DOE acknowledges the concern 
about industry sustainability. However, for the final rule, DOE assumes 
a level of shipments of 190,000 units per year, as explained in section 
IV.G.4. This assumption mitigates the concern about sales declining 
below 100,000 units. One major manufacturer (Dixie-Narco, Public 
Meeting Transcript, No. 56 at p. 86) stated that it can survive even at 
today's low sales levels (less than 100,000 units) by operating on one 
shift; additionally, neither manufacturer with a large market share 
believed that a costly investment was necessary to meet the proposed 
standard. (Dixie-Narco, Public Meeting Transcript, No. 56 at p.

[[Page 44929]]

186; Royal Vendors, Public Meeting Transcript, No. 56 at p. 188)
3. Distribution of Equipment Classes and Sizes
    In the analysis conducted for the NOPR, DOE assumed based on 
interested party comments that Class A equipment would constitute 55 
percent of new sales and Class B equipment would constitute 45 percent 
of new sales. PepsiCo (PepsiCo, Public Meeting Transcript, No. 56 at p. 
89) commented that Class A sales would be between 50 and 60 percent and 
Coca-Cola (Coca-Cola, Public Meeting Transcript, No. 56 at p. 90) 
commented that, although they expected Class A equipment would be the 
majority of sales, currently Class B machines are more than 50 percent 
of sales. DOE has decided to shift to a ratio of 60 percent Class A 
machines to 40 percent Class B sales for the final rule. DOE also 
assumed in the analysis for the NOPR that small-size units would 
constitute approximately zero percent of future sales, medium-size 
units at 75 percent, and large-size units at 25 percent of sales. Coca-
Cola (Coca-Cola, Public Meeting Transcript, No. 56 at p. 107) confirmed 
the distribution used for the NOPR. Dixie-Narco (Dixie-Narco, Public 
Meeting Transcript, No. 56 at p. 107) commented that the small-size 
unit sales were zero, but that the large equipment share might be 
higher--by as much as 40 percent. Dixie-Narco also recommended that the 
NAMA could act as an intermediary to compile the data on sales and 
provide it to DOE. DOE asked NAMA, and NAMA was able to provide an 
estimate of the distribution between Class A and Class B units for a 
subset of the manufacturers, approximately 60 percent Class B machines 
and 40 percent Class A machines (NAMA, No. 65 at p. 2). To take account 
of all of the comments received, DOE has decided to shift to a ratio of 
50 percent Class A machines to 50 percent Class B sales for the final 
rule. NAMA was not able to provide data on the size distribution within 
classes. In the absence of that data and to account for all comments 
received, DOE has modified its distribution of sales to account for as 
follows for both Class A and Class B units: Small-size units, zero 
percent; medium-size units, 67 percent; and large-size units, 33 
percent.
4. Future Sales Decline
    For the analysis at the NOPR stage, DOE assumed based on comments 
from interested parties on the ANOPR that future sales would all be 
replacement sales and would be flat at the then-current level of sales 
of about 90,000 units per year for the entire period of analysis. This 
level of replacements would result in a reduction in stock from today's 
level of about 2.3 million units to about 1 million units by 2020. The 
commenters agreed that the current economic situation would result in 
additional decline in the number of deployed units (Royal Vendors, 
Public Meeting Transcript, No. 56 at p. 74; Dixie-Narco, Public Meeting 
Transcript, No. 56 at p. 76); Coca-Cola, Public Meeting Transcript, No. 
56 at pp. 77 and 91), but with a possibility of a near-term recovery 
based on the need to replace older equipment as it reaches the end of 
its lifetime and to continue to serve the current customer base. 
(Dixie-Narco, Public Meeting Transcript, No. 56 p. 79-80; Pepsi, Public 
Meeting Transcript, No. 56 at p. 88; Coca-Cola, Public Meeting 
Transcript, No. 56 at p. 91) Several commenters (Dixie-Narco, Public 
Meeting Transcript, No. 56 at p. 76; Coca-Cola, Public Meeting 
Transcript, No. 56 at pp. 77 and 83; ASAP, Public Meeting Transcript, 
No. 56 at p. 87) stated that 1 million units was too small to sustain 
the current customer base and that the shipments would therefore have 
to be higher than the current level. During the public meeting, 
participants estimated the ultimate stock ranged from about 1.6 million 
(Dixie-Narco, Public Meeting Transcript, No. 56 at p. 84) to above 2 
million units. (Coca-Cola, Public Meeting Transcript, No. 56 at p. 83) 
In view of these comments that there would be some additional shrinkage 
of stock but that the eventual level of stock in 2020 will need to be 
approximately 2 million units, DOE assumed that future shipments would 
quickly recover to 190,000 units per year by 2011 and continue at that 
level for the foreseeable future. This allows for some continued stock 
shrinkage to about 1.6 million units in the short run as the 1998-2000 
vintage equipment retires faster than it is replaced, but with stock 
recovering to 1.9 million units by 2020 and to approximately 2 million 
units by 2022. As ASAP observed (ASAP, Public Meeting Transcript, No. 
56 at p. 87), this change in assumptions for the final rule 
significantly increases the overall economic benefit of the rule, but 
its effect is proportional to sales and does not significantly affect 
the choice between potential levels of the standards.

H. National Impact Analysis

    The national impact analysis (NIA) assesses future NES and the 
national economic impacts of different efficiency levels. The analysis 
measures economic impacts using the NPV (future amounts discounted to 
the present) of total commercial customer costs and savings expected to 
result from new standards at specific efficiency levels. For the final 
rule analysis, DOE used the same spreadsheet model used in the NOPR to 
calculate the energy savings and the national economic costs and 
savings from new standards, but did so with updates to specific input 
data. Unlike the LCC analysis, the NES spreadsheet does not use 
distributions for inputs or outputs. DOE examined sensitivities by 
applying different scenarios. DOE used the NIA spreadsheet to perform 
calculations of NES and NPV using; (1) the annual energy consumption 
and total installed cost data from the LCC analysis, and (2) estimates 
of national shipments and stock for each beverage vending machine class 
from the shipments analysis. DOE forecasted the energy savings from 
each TSL from 2012 to 2042. DOE forecasted the energy cost savings, 
equipment costs, and NPV of benefits for all refrigerated beverage 
vending machines classes from 2012 to 2057. The forecasts provided 
annual and cumulative values for all four output parameters.
    DOE calculated the NES by subtracting energy use under a standards 
scenario from energy use in a base case (no new standards) scenario. 
Energy use is reduced when a unit of refrigerated beverage vending 
machines in the base case efficiency distribution is replaced by a more 
efficient piece of equipment as a result of the standard. Energy 
savings for each equipment class are the same national average values 
as calculated in the LCC and PBP spreadsheet. Table IV.4 summarizes key 
inputs to the NIA analysis and the changes DOE made in the analysis for 
the final rule. Chapter 11 of the TSD provides additional information 
about the NIA spreadsheet.

[[Page 44930]]



  Table IV.4--Summary of National Energy Savings and Net Present Value
                                 Inputs
------------------------------------------------------------------------
                                  Description of NOPR      Changes for
          Input data                   analysis            final rule
------------------------------------------------------------------------
Shipments.....................  No growth in            Shipments grow
                                 shipments; based on     to 190,000 per
                                 industry comments on    year.
                                 the NOPR, all
                                 shipments are
                                 replacements.
Effective Date of Standard....  2012..................  No change.
Base Case Efficiencies........  Distribution of base    No change.
                                 case shipments by
                                 efficiency level.
Standards Case Efficiencies...  Distribution of         No change.
                                 shipments by
                                 efficiency level for
                                 each standards case.
                                 Standards case annual
                                 market shares by
                                 efficiency level
                                 remain constant over
                                 time for the base
                                 case and each
                                 standards case.
Annual Energy Consumption per   Annual weighted-        No change.
 Unit.                           average values are a
                                 function of energy
                                 consumption level per
                                 unit, which are
                                 established in
                                 chapter 7 of the TSD.
Total Installed Cost per Unit.  Annual weighted-        No change in
                                 average values are a    methodology.
                                 function of energy      Installed costs
                                 consumption level       reflect the
                                 (chapter 8 of the       updated final
                                 TSD).                   rule LCC.
Repair Cost per Unit..........  Annual weighted-        No change in
                                 average values are      methodology.
                                 constant in real        Repair costs
                                 dollar terms for each   reflect the
                                 energy consumption      updated final
                                 level (chapter 8 of     rule LCC
                                 the TSD).               values.
Maintenance Cost per Unit.....  Annual weighted-        No change in
                                 average value           methodology.
                                 (chapter 8 of the
                                 TSD), plus lighting
                                 maintenance cost.
Escalation of Electricity       Energy Information      All cases
 Prices.                         Administration (EIA)    updated to
                                 Annual Energy Outlook   April 2009
                                 2009 (AEO2009)          update to
                                 forecasts (to 2030)     AEO2009
                                 and extrapolates        forecasts
                                 beyond 2030 (chapter    (chapter 8 of
                                 8 of the TSD).          the TSD).
Electricity Site-to-Source      Conversion factor       Site-to-source
 Conversion.                     varies yearly and is    ratio follows
                                 generated by EIA's      April 2009
                                 NEMS model. Includes    update to
                                 the impact of           AEO2009.
                                 electric generation,
                                 transmission, and
                                 distribution losses
                                 based on AEO2008.
Discount Rate.................  3 and 7 percent real..  No change.
Present Year..................  Future costs are        No change.
                                 discounted to 2009.
Rebound Effect................  A rebound effect (due   No change.
                                 to changes in
                                 shipments resulting
                                 from standards) was
                                 not considered in the
                                 NIA.
------------------------------------------------------------------------

    The modifications DOE made to the NES and NIA analyses for the 
final rule primarily reflect the latest available updates to the same 
data sources used in the NOPR, but not changes in methodology. In 
addition, the underlying input data on equipment costs and energy 
savings by TSL are based on the LCC analysis results as revised in the 
final rule.

Maintenance Costs Savings for LED Lighting in Machines

    At the NOPR stage, the Joint Comment (No. 67 at p. 3) indicated 
that there are maintenance costs savings and therefore potential life-
cycle cost savings when LED lighting is used in place of the baseline 
T8 fluorescent lighting for beverage vending machines. The Joint 
Comment referenced an article in the September 3, 2008, edition of 
``Automatic Merchandiser,'' Energize Displays with LED Lighting, 
accessed on Vendingmarketwatch.com for information on LED lighting 
maintenance costs versus maintenance costs for a beverage vending 
machine with a fluorescent lighting system (last accessed July 25, 
2009). DOE also reviewed a more recent industry publication on 
maintenance cost savings for LED display lights in beverage vending 
machines in the April 15, 2009, edition of ``Automatic Merchandiser,'' 
Tools to Enhance Energy Savings, which was accessed on 
Vendingmarketwatch.com (last accessed July 25, 2009).
    In response to this comment, DOE conducted a sensitivity analysis 
for today's final rule to estimate the net economic effect of reduced 
maintenance costs for using LED lighting in place of baseline T8 
fluorescent lighting in beverage vending machine equipment. The 
sensitivity analysis estimated the annualized life cycle cost savings 
for LED lighting. For machines with T8 lighting, the analysis assumes 
two maintenance visits to a machine to change out three T8 lamps and a 
change out of the T8 lamps and the ballast at refurbishment (at 5 
years) DOE assumed there was no additional labor for this change out, 
since this is undertaken at refurbishment. DOE estimated the total cost 
for maintenance (labor and materials) for machines with T8 lighting 
over the machine lifetime (10 years) to be $194.
    For machines with LED lighting, no lighting maintenance visits 
would be required over the lifetime of the machine. The cost of 
replacing three LED strips at $50 each would take place during 
refurbishment and would be $150. DOE assumed there would be no 
additional labor charge for this change out since this was being 
undertaken at refurbishment.
    The analysis estimated that the annualized net maintenance cost 
savings is $4.68 for a LED lighting system used to light a machine 
compared to the baseline T8 lighting system for a machine. This net 
annualized maintenance cost savings is very small and does not 
significantly affect the life cycle cost analysis and thus does not 
impact the standards levels for today's final rule. Chapter 8 of the 
TSD provides additional details of this sensitivity analysis.
1. Choice of Discount Rate
    ASAP commented that the balance of DOE's discussion of the choice 
of proposed standard overemphasized the 7 percent discount rate when 
both 7 percent and 3 percent are mandated by the Office of Management 
and Budget (OMB). (ASAP, Public Meeting Transcript, No. 56 at p. 144) 
ASAP argued that the actual cost of capital the Department chose for 
the purchase of the machine was lower than 7 percent so that the 3 
percent rate should be considered in the Department's analysis, and is 
required to be considered by OMB. In response, DOE notes that it 
follows the guidelines on discount factors set forth in guidance that 
OMB provides to Federal agencies on the development of regulatory 
analysis (OMB Circular A-4 (September 17, 2003), particularly section 
E, ``Identifying and Measuring Benefits and Costs''). Accordingly, DOE 
is continuing to use 3 percent and 7 percent real discount rates for 
the relevant calculations for this final rule.

[[Page 44931]]

2. Discounting of Physical Values
    ASAP commented that DOE should not be applying financial discount 
rates to physical values such as energy savings. (ASAP, Public Meeting 
Transcript, No. 56 at p. 37) It said that doing so is an inappropriate 
application of financial evaluation tools and should be discontinued.
    DOE continues to report both undiscounted and discounted values of 
energy savings and carbon emission reductions. DOE believes this allows 
for consideration of a range of policy perspectives, one of which is 
the view that a reduction in emissions today is more valuable than one 
in 30 years.

I. Life-Cycle Cost Subgroup Analysis

    In analyzing the potential impact of new or amended standards on 
commercial customers, DOE evaluates the impact on identifiable groups 
(i.e., subgroups) of customers, such as different types of businesses 
that may be disproportionately affected by a National standard level. 
For this rulemaking, DOE identified manufacturing and industrial 
facilities that purchase their own beverage vending machines as a 
relevant sub-group. This customer subgroup is likely to include owners 
of high-cost beverage vending machines because it has the highest 
capital costs. This group also faces the lowest electricity prices of 
any customer subgroup. These two conditions make it likely that this 
subgroup will have the lowest life-cycle cost savings of any major 
customer sub-group.
    DOE determined the impact on this refrigerated beverage vending 
machines customer subgroup using the LCC spreadsheet model. DOE 
conducted the LCC and PBP analyses for customers represented by the 
subgroup. DOE did not receive comments on its identification of this 
class of customers as the key sub-group or on the assumptions applied 
to those subgroups. DOE relied on the same methodology outlined in the 
NOPR for the final rule analysis. The results of DOE's LCC subgroup 
analysis are summarized in section VI.C.1.b and described in detail in 
chapter 12 of the TSD.

J. Manufacturer Impact Analysis

    DOE performed an MIA to estimate the financial impact of energy 
conservation standards on manufacturers of beverage vending machine 
equipment, and to assess the impact of such standards on employment and 
manufacturing capacity. DOE conducted the MIA for beverage vending 
machine equipment in three phases. Phase 1, Industry Profile, consisted 
of preparing an industry characterization, including data on market 
share, sales volumes and trends, pricing, employment, and financial 
structure. Phase 2, Industry Cash Flow Analysis, focused on the 
industry as a whole. In this phase, DOE used the GRIM to prepare an 
industry cash-flow analysis. Using publicly available information 
developed in Phase 1, DOE adapted the GRIM's generic structure to 
perform an analysis of beverage vending machine equipment energy 
conservation standards. In Phase 3, Subgroup Impact Analysis, DOE 
conducted interviews with manufacturers representing the majority of 
domestic beverage vending machine equipment sales. This group included 
large and small manufacturers, providing a representative cross-section 
of the industry. During these interviews, DOE discussed engineering, 
manufacturing, procurement, and financial topics specific to each 
company, and obtained each manufacturer's view of the industry. The 
interviews provided valuable information DOE used to evaluate the 
impacts of an energy conservation standard on manufacturer cash flows, 
manufacturing capacities, and employment levels.
    The GRIM inputs consist of the beverage vending machine industry's 
cost structure, shipments, and revenues. This includes information from 
many of the analyses described above, such as manufacturing costs and 
selling prices from the engineering analysis and shipments forecasts 
from the NES.
    The GRIM uses the manufacturer selling prices in the engineering 
analysis to calculate the manufacturer production costs for each 
equipment class at each TSL. By multiplying the production costs by 
different sets of markups, DOE derives the MSPs used to calculate 
industry revenues.
    The GRIM estimates manufacturer revenues based on total-unit-
shipment forecasts and the distribution of these shipments by 
efficiency. Changes in the efficiency mix at each standard level are a 
key driver of manufacturer finances. For the final rule analysis, DOE 
used the total shipments and efficiency distribution found in the final 
rule NES.
    DOE estimates the equipment conversion costs and capital conversion 
costs that the industry would incur at each TSL. Equipment conversion 
costs include engineering, prototyping, testing, and marketing expenses 
incurred by a manufacturer as it prepares to comply with a standard. 
Capital conversion costs are the one-time outlays for tooling and plant 
changes required for the industry to comply.
    During the NOPR public meeting, DOE asked manufacturers to discuss 
their ability to meet the proposed TSLs and describe the impacts of 
those standards. Both Royal Vendors and Dixie-Narco discussed their 
ability to meet the proposed standards in terms of the conversion costs 
each would incur to develop higher efficiency equipment. Royal Vendors 
stated that, in the past, considerable costs were incurred to get from 
pre-ENERGY STAR efficiency levels to ENERGY STAR Tier I efficiency 
levels. These costs included implementation of ECM fan motors, magnetic 
ballasts, and higher efficiency compressors. (Royal Vendors, Public 
Meeting Transcript, No. 56 at p. 185) Dixie-Narco agreed with Royal 
Vendors and stated that it faced a costly transition from ENERGY STAR 
Tier I to ENERGY STAR Tier II efficiency levels. (Dixie-Narco, Public 
Meeting Transcript, No. 56 at p. 186) In a written comment, NAMA also 
noted the considerable funds already spent by its members to comply 
with ENERGY STAR standards. (NAMA, No. 65 at p. 2) For Class B 
machines, Royal Vendors expects meeting TSL 3 will not require a 
tremendous effort. (Royal Vendors, Public Meeting Transcript, No. 56 at 
p. 220) Dixie-Narco also stated that it will be able to achieve the 
proposed standard for Class B machines without investing significant 
costs that would need to be passed on to its customers. (Dixie-Narco, 
No. 64 at p. 4) Dixie-Narco noted that it achieved the TSL 6 energy 
consumption level with one of its Class A vending machines this year, 
using a lighting management system. (Dixie-Narco, Public Meeting 
Transcript, No. 56 at p. 188) Royal Vendors stated that it could meet 
TSL 6 for Class A machines at relatively minor cost if it were not 
precluded by proprietary design restrictions from adopting a lighting 
management system similar to Dixie-Narco's. (Royal Vendors, Public 
Meeting Transcript, No. 56 at p. 189) Royal Vendors stated that 
implementing an energy management system is not an expensive addition 
to the machine and that it can be passed on at essentially no 
additional cost. (Royal Vendors, Public Meeting Transcript, No. 56 at 
p. 188)
    Based on public comments, DOE believes that it accurately estimated 
the conversion costs for Class B vending machines and did not make any 
changes for the final rule. However, for Class A vending machines, DOE 
believes that the use of energy management systems (e.g., lighting) 
could provide a method of achieving energy savings at minimal cost to 
manufacturers. To account for

[[Page 44932]]

this possibility, DOE modified the assumed conversion costs required 
for manufacturers to meet the Class A energy consumption levels. In the 
NOPR, DOE assumed that since almost all of the market was already 
reaching TSL 1 (i.e., ENERGY STAR Tier II) for Class A machines, the 
conversion costs at TSL 1 were zero. The conversion costs progressively 
increased from TSL 2 through TSL 7 (i.e., max-tech). For the final 
rule, DOE accounted for the potential use of an energy management 
system by assuming there would be negligible conversion costs through 
TSL 2 for all Class A machines, shifting the conversion costs for TSLs 
2 through 5 from the NOPR to TSLs 3 through 6 for the final rule. For 
TSL 7, DOE maintained the conversion costs from the NOPR since they 
represent the maximum possible conversion costs for the max-tech level. 
For more information about DOE's manufacturer impact assumptions, see 
chapter 13 of the TSD.
    In a comment submitted on the NOPR, NAMA stated that one of its 
manufacturers would have difficulty achieving the reduction in energy 
consumption required by the proposed standard levels. The manufacturer 
could only meet the standards by changing the cabinet insulation 
thickness, which would require retooling its production lines at an 
estimated cost of over $1 million. (NAMA, No. 65 at p. 3)
    DOE estimated the conversion costs to manufacturers of the standard 
levels for both equipment classes and reports the values in chapter 13 
of the TSD. DOE's total estimated costs exceed the 1 million dollars 
reported by the manufacturer. Because DOE has accounted for conversion 
costs of this magnitude for the industry, DOE maintained the conversion 
costs reported in chapter 13 of the TSD.
    For the final rule, DOE analyzed manufacturer impacts under two 
distinct markup scenarios: (1) The preservation-of-gross-margin-
percentage markup scenario, and (2) the preservation-of-operating-
profit markup scenario.
    Under the first scenario, DOE applied a single uniform ``gross 
margin percentage'' markup that represents the current markup for 
manufacturers in the beverage vending machine industry. This markup 
scenario implies that as production costs increase with efficiency, the 
absolute dollar markup will also increase. DOE calculated that the non-
production cost markup--which consists of selling, general, and 
administrative (SG&A) expenses; research and development (R&D) 
expenses; interest; and profit--is 1.26.
    Under the second scenario, the implicit assumption behind the 
``preservation-of-operating-profit'' scenario is that the industry can 
only maintain its operating profit (earnings before interest and taxes) 
from the baseline after implementation of the standard in 2012. The 
industry impacts occur in this scenario when manufacturers expand their 
capital base and production costs to make more expensive equipment, but 
the operating profit does not change from current conditions. DOE 
implemented this markup scenario in the GRIM by setting the 
manufacturer markups at each TSL to yield approximately the same 
operating profit in both the base case and the standard case in the 
standards effective year of 2012. Together, these two markup scenarios 
characterize the range of possible conditions that the beverage vending 
machine market will experience as a result of new energy conservation 
standards.
    In the NOPR, DOE sought comments on whether and to what extent 
parties estimate they will be able to transfer costs of implementing 
TSL 6 to consumers. 74 FR 26022. During the NOPR public meeting, Coca-
Cola stated that, 10 years ago, it only had to sell 20 cases for a 
vending machine to make a profit. Now, it has to sell 100 cases for a 
vending machine to make a profit. It continued that there are many 
factors driving the profitability model of a vending machine, and to 
assume that model will not change is erroneous. (Coca-Cola, Public 
Meeting transcript, No. 56 at p. 91) Coca-Cola stated that, 
historically, cost increases in equipment could not be passed through 
to the customer. It does not believe the increased cost of 
manufacturing higher efficiency equipment can be passed on to the 
consumer. As a result, the profit margin for each machine diminishes, 
resulting in an overall reduction in purchases. (Coca-Cola, Public 
Meeting Transcript, No. 56 at p. 183, Coca-Cola, No. 63 at p. 2, and 
NAMA, No. 65 at p. 5) As a result, Coca-Cola concluded that any 
increase in cost resulting from installing more energy-efficient 
technologies into a vending machine cannot be transferred over to 
consumers. (Coca-Cola, Public Meeting Transcript, No. 56 at p. 182 and 
NAMA, No. 65 at p. 2) Coca-Cola estimates that today's standard will 
result in an overall weighted average price markup of 14\1/2\. (Coca-
Cola, No. 63 at p. 2)
    The inability to pass on costs starts at the consumer level and 
ultimately travels throughout the entire distribution chain. As stated 
in comments from the NOPR public meeting, consumers are typically 
unwilling to incur additional costs for more energy-efficient 
equipment. In addition, end-users (e.g., bottlers) are typically 
unwilling to incur additional costs for energy-efficient equipment, 
primarily due to the split-incentive issue. The split incentive issue 
is described in detail in the ANOPR. 73 FR 34101. Therefore, it is very 
difficult for manufacturers to transfer any cost increases for more 
energy-efficient equipment to their customers. The preservation-of-
operating-profit scenario models the more negative potential impacts on 
the refrigerated beverage vending machine industry, and accounts for 
manufacturers' inability to transfer additional costs to end-users. For 
additional detail on the manufacturer impact analysis, refer to chapter 
13 of the TSD. In addition, as stated earlier in section IV.J, multiple 
major manufacturers stated that their equipment could meet today's 
standard at little or no added cost. (Dixie-Narco, No. 64 at p. 2 and 
Royal Vendors, Public Meeting Transcript, No. 56 at p. 189)

K. Utility Impact Analysis

    The utility impact analysis estimates the effects of reduced energy 
consumption due to improved equipment efficiency on the utility 
industry. This analysis compares forecast results for a case comparable 
to the April 2009 updated AEO2009 Reference Case and forecast results 
for policy cases incorporating each of the beverage vending machines 
proposed TSLs.
    DOE analyzed the effects of proposed standards on electric utility 
industry generation capacity and fuel consumption using a variant of 
EIA's NEMS model. EIA uses NEMS to produce its AEO, a widely recognized 
baseline energy forecast for the United States. DOE used a variant 
known as NEMS-BT, run similar to the April 2009 update to the NEMS, 
except that refrigerated beverage vending machines energy usage is 
reduced by the amount of energy (by fuel type) saved due to the TSLs. 
DOE obtained the inputs of national energy savings from the NES 
spreadsheet model. In response to the May 2009 NOPR, DOE did not 
receive comments directly on the methodology used for the utility 
impact analysis. DOE revised the final rule inputs to use the NEMS-BT 
consistent with the April 2009 update to AEO2009 and to use the NES 
impacts developed in the beverage vending machines final rule analysis.
    In the utility impact analysis, DOE reported the changes in 
installed capacity and generation by fuel type that result for each TSL 
as well as changes in end-use electricity sales.

[[Page 44933]]

Chapter 14 of the TSD provides details of the utility analysis methods 
and results.

L. Employment Impact Analysis

    DOE considers direct and indirect employment impacts when 
developing a standard. In this case, direct employment impacts are any 
changes in the number of employees for beverage vending machines 
manufacturers, their suppliers, and related service firms. Indirect 
impacts are those changes in employment in the larger economy that 
occur due to the shift in expenditures and capital investment caused by 
the purchase and operation of more efficient beverage vending machines. 
In this rulemaking, the MIA addresses direct impacts (chapter 13 of the 
TSD), and the employment impact analysis addresses indirect impacts 
(chapter 15 of the TSD).
    Indirect employment impacts from beverage vending machines 
standards consist of the net jobs created or eliminated in the national 
economy (other than in the manufacturing sector being regulated) as a 
consequence of (1) reduced spending by end users on electricity (offset 
to some degree by the increased spending on maintenance and repair); 
(2) reduced spending on new energy supply by the utility industry; (3) 
increased spending on the purchase price of new refrigerated beverage 
vending machines; and (4) the effects of those three factors throughout 
the economy. DOE expects the net monetary savings from standards to be 
redirected to other forms of economic activity. DOE also expects these 
shifts in spending and economic activity to affect the demand for 
labor.
    DOE used a different methodology to estimate indirect national 
employment impacts using an input-output model of the U.S. economy 
called ImSET (Impact of Sector Energy Technologies) developed by DOE's 
Building Technologies Program. 74 FR 26047, 26058. The new method uses 
the most recent version of the U.S. input-output table and updated 
sector employment intensities. The ImSET model estimates changes in 
employment, industry output, and wage income in the overall U.S. 
economy resulting from changes in expenditures in various economic 
sectors. DOE estimated changes in expenditures using the NES 
spreadsheet. ImSET then estimated the net national indirect employment 
impacts of potential refrigerated beverage vending machines efficiency 
standards on employment by sector. In response to the May 2009 NOPR, 
DOE did not receive comments directly on the methodology used for the 
utility impact analysis. DOE updated its indirect employment impact 
analysis using Version 3 of the ImSET model in the final rule.

M. Environmental Assessment

    Pursuant to the National Environmental Policy Act of 1969 (NEPA) 
(42 U.S.C. 4321 et seq.) and 42 U.S.C. 6295(o)(2)(B)(i)(VI), DOE 
prepared an environmental assessment (EA) of the potential impacts of 
the proposed standards it considered for today's final rule, which it 
has included as chapter 16 of the TSD for the final rule. DOE found 
that the environmental effects associated with the standards for 
beverage vending machines were not significant. Therefore, DOE is 
issuing a Finding of No Significant Impact (FONSI), pursuant to NEPA, 
the regulations of the Council on Environmental Quality (40 CFR parts 
1500-1508), and DOE's regulations for compliance with NEPA (10 CFR part 
1021). The FONSI is available in the docket for this rulemaking.
    In the EA, DOE estimated the reduction in total emissions of 
CO2 and NOX using the NEMS-BT computer model. DOE 
calculated a range of estimates for reduction in Hg emissions using 
current power sector emission rates. The EA does not include the 
estimated reduction in power sector impacts of sulfur dioxide 
(SO2), because DOE is uncertain that an energy conservation 
standard would not affect the overall level of SO2 emissions 
in the United States due to the presence of national caps on 
SO2 emissions. These topics are addressed further below; see 
chapter 16 of the TSD for additional detail.
    The NEMS-BT is run similarly to the April 2009 update of NEMS, 
except that the refrigeration energy use is reduced by the amount of 
energy saved due to the trial standard levels. The inputs of national 
energy savings come from the NIA analysis. For the EA, the output is 
the forecasted physical emissions. The net benefit of the standard is 
the difference between emissions estimated by NEMS-BT and the April 
2009 updated AEO2009 Reference Case. The NEMS-BT tracks CO2 
emissions using a detailed module that provides results with a broad 
coverage of all sectors and inclusion of interactive effects.
    Title IV of the Clean Air Act sets an annual emissions cap on 
SO2 for all affected Electric Generating Units. The 
attainment of the emissions cap is flexible among generators and is 
enforced through the use of emissions allowances and tradable permits. 
Thus, DOE is not certain that there will be reduced overall 
SO2 emissions from the standards. However, there may be an 
economic benefit from reduced demand for SO2 emission 
allowances. Electricity savings decrease the generation of 
SO2 emissions from power production, which can lessen the 
need to purchase SO2 emissions allowance credits, and 
thereby decrease the costs of complying with regulatory caps on 
emissions.
    NOX emissions from 28 eastern States and the District of 
Columbia (DC) are limited under the Clean Air Interstate Rule (CAIR), 
published in the Federal Register on May 12, 2005. 70 FR 25162 (May 12, 
2005). Although CAIR has been remanded to EPA by the DC Circuit, it 
will remain in effect until it is replaced by a rule consistent with 
the Court's July 11, 2008 opinion in North Carolina v. EPA. 531 F.3d 
896 (D.C. Cir. 2008); see also North Carolina v. EPA, 550 F.3d 1176 (DC 
Cir. 2008). These court positions were taken into account in the May 
2009 NOPR. Thus, the same methodology was followed in estimating future 
NOX in the May 2009 NOPR as in the final rule. Because all 
States covered by CAIR opted to reduce NOX emissions through 
participation in cap-and-trade programs for electric generating units, 
emissions from these sources are capped across the CAIR region.
    For the 28 eastern States and DC where CAIR is in effect, no 
NOX emissions reductions will occur due to the permanent 
cap. Under caps, physical emissions reductions in those States would 
not result from the energy conservation standards under consideration 
by DOE, but standards might have produced an environmentally related 
economic impact in the form of lower prices for emissions allowance 
credits, if they were large enough. However, DOE determined that in the 
present case, such standards would not produce an environmentally 
related economic impact in the form of lower prices for emissions 
allowance credits, because the estimated reduction in NOX 
emissions or the corresponding allowance credits in States covered by 
the CAIR cap would be too small to affect allowance prices for 
NOX under the CAIR. In contrast, new or amended energy 
conservation standards would reduce NOX emissions in those 
22 States not affected by the CAIR. As a result, DOE used the NEMS-BT 
to forecast emission reductions from the beverage vending machine 
standards that are considered in today's final rule.
    Similar to SO2 and NOX, future emissions of 
Hg would have been subject to emissions caps under the Clean Air 
Mercury Rule (CAMR) [70 FR 28606 (May 18, 2005)], which would

[[Page 44934]]

have permanently capped emissions of mercury for new and existing coal-
fired power plants in all States beginning in 2010, but the CAMR was 
vacated by the DC Circuit in its decision in New Jersey v. 
Environmental Protection Agency prior to publication of the May 2009 
NOPR. 517 F 3d 574 (DC Cir. 2008).
    After CAMR was vacated, DOE was unable to use the NEMS-BT model to 
estimate any changes in the quantity of mercury emissions (anywhere in 
the country) that would result from standard levels it considered for 
the proposed rule. Instead, DOE used a range of Hg emissions rates (in 
tons of Hg per unit energy produced) based on the AEO2008 for the May 
2009 NOPR. Because virtually all mercury emitted from electricity 
generation is from coal-fired power plants, DOE based the high-end 
emissions rate on the tons of mercury emitted per terawatt hour (TWh) 
of coal-generated electricity. To estimate the reduction in mercury 
emissions, DOE multiplied the emissions rate by the reduction in coal-
generated electricity associated with the standards considered. DOE's 
low estimate assumed that future standards would displace electrical 
generation only from natural gas-fired power plants, thereby resulting 
in an effective emission rate of zero. The low end of the range of Hg 
emissions rates is zero because natural gas-fired powered power plants 
have virtually no Hg emissions associated with their operations. 
Because the CAMR remains vacated, DOE continued to use the approach it 
used for the May 2009 NOPR to estimate the Hg emission reductions due 
to standards for today's final rule. To estimate the reduction in Hg 
emissions, DOE multiplied the emissions rates by the reduction in 
electricity generation associated with the standards proposed in 
today's final rule.
    Earthjustice commented that DOE's approach to estimating mercury 
emissions arbitrarily ignores the results of the Department's own 
utility impact analysis, which models cumulative avoided electricity 
from all sources and a breakout disclosing cumulative generation from 
several sources (coal, petroleum, natural gas, and renewables). 
(Earthjustice, No. 66 at pp. 1-2) Given that DOE's own utility impact 
analysis models the energy savings from each source of electricity 
generation, DOE may not refuse to apply that information to estimate 
the cumulative mercury emissions reductions without a rational 
explanation. EarthJustice added that DOE need only refer to the AEO 
Reference Case average emissions rates to obtain updated projections 
for future Hg emissions factors.
    DOE estimates its emission factors based on marginal emissions 
rates for energy savings for the primary energy saved by the standard. 
Diagnosis of NEMS-BT model runs leaves significant uncertainty 
concerning which generating fuels would be affected at the margin at 
the scale of energy savings expected as a result of the standard. The 
differences in emission rates are particularly important for Hg because 
some fuels generate almost no Hg. Therefore, DOE has elected to keep a 
range of emissions values in this rule. DOE also notes that the average 
Hg emissions values suggested by Earthjustice fell between the two 
values used by DOE.
    DOE notes that neither EPCA nor NEPA requires that the economic 
value of emissions reductions be incorporated in the LCC or NPV 
analysis of energy savings. DOE has chosen to report these benefits 
separately from the net benefits of energy savings. A summary of the 
monetary results is shown in section VI.C.6 of this final rule. DOE 
considered both values when weighing the benefits and burdens of 
standards.

N. Monetizing Carbon Dioxide and Other Emissions Impacts

    DOE also calculated the possible monetary benefit of 
CO2, NOX, and Hg reductions. Cumulative monetary 
benefits discounted from the year of the emission reduction to the 
present using discount rates of 3 and 7 percent. DOE monetized 
reductions in CO2 emissions due to the standards proposed in 
this final rule based on a range of monetary values drawn from studies 
that attempt to estimate the present value of the marginal economic 
benefits (based on the avoided marginal social costs of carbon) likely 
to result from lowering future atmospheric concentrations of greenhouse 
gases. The marginal social cost of carbon is an estimate of the 
monetary value to society of the environmental damages of 
CO2 emissions. One comment was provided on the economic 
valuation of CO2 at the NOPR public meeting.
    ASAP stated that it is important for DOE to reevaluate its approach 
to carbon valuation. (ASAP, Public Meeting Transcript, No. 56 at p. 37) 
ASAP believes that DOE's estimate for the value of carbon is low, but 
did not provide data for analysis. As discussed in section VI.C.6, DOE 
has updated the approach described in the May 2009 NOPR for its 
monetization of environmental emissions reductions for today's final 
rule. DOE continues to work with other Federal agencies on a common 
approach and values to be used in monetizing carbon and other 
emissions.
    Although this rulemaking may not affect SO2 emissions 
nationwide and does not affect NOX emissions in the 28 
eastern States and D.C. where CAIR is in effect, there are markets for 
SO2 and NOX emissions allowances. The market 
clearing price of SO2 and NOX emissions 
allowances is roughly the marginal cost of meeting the regulatory cap, 
not the marginal value of the cap itself. Further, because national 
SO2 and NOX emissions are regulated by a cap-and-
trade system, the cost of meeting these caps is included in the price 
of energy. Thus, the value of energy savings already includes the value 
of SO2 and NOX control for those customers 
experiencing energy savings. The economic cost savings associated with 
SO2 and NOX emissions caps is approximately equal 
to the change in the price of traded allowances resulting from energy 
savings multiplied by the number of allowances that would be issued 
each year. That calculation is uncertain because the energy savings 
from new standards for beverage vending machines would be so small 
relative to the entire electricity generation market that the resulting 
emissions savings would have almost no impact on price formation in the 
allowances market. These savings would most likely be outweighed by 
uncertainties in the marginal costs of compliance with SO2 
and NOX emissions caps.
    The current NEMS-BT model used in projecting the environmental 
impacts includes the CAIR rule, as described above, which is projected 
to reduce SO2 and NOX emissions. NEMS-BT also 
takes into account the current set of State level renewable portfolio 
standards, the effect of the Northeastern states Regional Greenhouse 
Gas Initiative (RGGI), and utility investor reactions to the 
possibility of future CO2 cap and trade programs, all of 
which affect electricity prices and reduce the projected carbon 
intensity of generation. The most recent Reference Case, AEO2009, is 
available at http://www.eia.doe.gov/oiaf/servicerpt/stimulus/index.html, and documentation of the AEO2009 assumptions is available 
at http://www.eia.doe.gov/oiaf/aeo/assumption/index.html.

V. Discussion of Other Comments

    Since DOE opened the docket for this rulemaking, it has received 
more than 100 written comments from a diverse set of parties, including 
manufacturers and their representatives, wholesalers and

[[Page 44935]]

distributors, energy conservation advocates, State officials and 
agencies, and electric utilities. Section IV of this preamble discusses 
comments DOE received on the analytic methodologies it used. Additional 
comments DOE received in response to the May 2009 NOPR addressed the 
information DOE used in its analyses, results of and inferences drawn 
from the analyses, impacts of standards, the merits of the different 
TSLs and standards options DOE considered, and other issues affecting 
adoption of standards for beverage vending machines. DOE addresses 
these comments in this section.

A. Information and Assumptions Used in Analyses

1. Engineering Analysis
    During the NOPR public meeting, Royal Vendors commented that the 
data used for Class A fluorescent lighting systems in the engineering 
analysis is not consistent with the specifications of the fluorescent 
lighting systems it uses in its glass-front machines. Specifically, it 
stated that DOEs estimated energy consumption of 32 watts (W) per 
fixture is too high. Royal Vendors claims its fluorescent fixtures only 
consume 22 W (Royal Vendors, Public Meeting Transcript, No. 56 at p. 
68).
    DOE uses aggregate values for its engineering analysis inputs. 
These values are derived using publicly available data or information 
provided by multiple manufacturers and/or component suppliers. Analysis 
inputs are generalized so as to better represent the industry as a 
whole. DOE's estimate of 32 W of energy consumed for T8 fluorescent 
fixtures in Class A machines is adequate for the beverage vending 
machine industry and it has not made any adjustments for the final 
rule.

B. Benefits and Burdens

    Royal Vendors stated that the proposed standards appeared to be 
reversed for Class A machines and Class B machines. It stated that 
Class A machines typically use more energy than Class B machines. 
(Royal Vendors, Public Meeting Transcript, No. 56 at p. 27) Dixie-Narco 
disagreed with Royal Vendors, stating that the proposed standards are 
correct and appropriate. (Dixie-Narco, Public Meeting Transcript, No. 
56 at p. 29) ASAP stated that it generally supports DOE's proposed 
standard levels. It stated that for Class A machines, DOE's proposal, 
TSL 6, is the maximum level that is cost effective. However, for Class 
B machines, ASAP suggested that DOE consider selecting TSL 4 rather 
than TSL 3 because the economic results for these two levels are very 
similar. (ASAP, Public Meeting Transcript, No. 56 at p. 31) Dixie-Narco 
stated that when you consider that the standards equations are based on 
refrigerated volume and not can capacity (or vendible capacity), the 
equations for the standards are appropriate for both equipment classes. 
(Dixie-Narco, Public Meeting Transcript, No. 56 at p. 152) Dixie-Narco 
further stated that it is currently achieving the proposed efficiency 
level for Class A machines but not for Class B machines, and therefore 
would have to make modifications to meet the proposed level for Class B 
machines. (Dixie-Narco, Public Meeting Transcript, No. 56 at p. 163, 
219) Royal Vendors stated that for Class A machines, they do not 
currently meet those levels, but given no proprietary design problems, 
they could meet them fairly easily. For Class B machines, Royal Vendors 
stated that they do not meet the proposed standards currently, but 
could without tremendous effort. (Royal Vendors, Public Meeting 
Transcript, No. 56 at p. 220) Coca-Cola commented that an appropriate 
standard for Class A equipment would be one that is ``on par'' with the 
ENERGY STAR Tier II level. (Coca-Cola, No. 63 at p. 2)
    In a written comment, NAMA stated that it received a mixed response 
from its members regarding the technological feasibility and economic 
benefits of the standard levels proposed by DOE. One manufacturer 
stated that it would have difficulty achieving additional reductions 
for Class A and Class B machines, while another stated that it could 
achieve the standard for both Class A and Class B machines without 
significant costs to them or their customers. However, most responses 
to NAMA's request for information indicated that the proposed standard 
for Class B machines was appropriate and achievable. One manufacturer 
specifically stated that TSL 3 for Class B could be reached without 
significant costs. The proposed standard for Class A, on the other 
hand, raised questions among many manufacturers, although one 
manufacturer stated that it already exceeds the Class A standard 
without adding significant costs. (NAMA, No. 65 at pp. 3, 4) DOE 
considers these comments on its selection of the final energy 
conservation standard level for beverage vending machines. See section 
VI.D.

VI. Analytical Results and Conclusions

A. Trial Standard Levels

    DOE analyzed seven energy consumption levels for Class A equipment 
and six energy consumption levels for Class B equipment in the LCC and 
NIA analyses. For the May 2009 NOPR, DOE determined that each of these 
levels should be presented as a possible TSL and correspondingly 
identified seven TSLs for Class A and six TSLs for Class B equipment. 
For each equipment class, the range of TSLs selected includes the 
energy consumption level providing the maximum NES level for the class, 
the level providing the maximum NES while providing a positive NPV, the 
level providing the maximum NPV, and the level approximately equivalent 
to ENERGY STAR Tier II. Many of the higher levels selected correspond 
to equipment designs that incorporate specific noteworthy technologies 
that can provide energy savings benefits. For Class A machines, DOE 
also included two intermediate efficiency levels to fill in significant 
energy consumption gaps between the levels identified above the ENERGY 
STAR Tier II equivalent level. For Class A equipment, the ENERGY STAR 
Tier II level is equivalent to TSL 1, which allows for the highest 
energy consumption. For Class B equipment, DOE included one TSL with 
energy consumption higher than that provided by ENERGY STAR Tier II 
level.
    For the May 2009 NOPR, four of the TSLs for each equipment class 
were based on the levels that provided maximum energy savings, maximum 
efficiency level with positive LCC savings, maximum LCC savings, and 
the highest efficiency level with a payback of less than 3 years.
    DOE preserved energy consumption levels from the NOPR that met the 
same economic criteria in the final rule but also included the ENERGY 
STAR Tier II equivalency level and several additional TSLs. These 
additional levels either provide additional intermediate efficiency 
levels or include specific noteworthy technologies examined in the 
engineering analysis. Table VI.1 and Table VI.2 show the TSL levels DOE 
selected for the equipment classes and sizes analyzed. For Class A 
equipment, TSL 7 is the max-tech level for each equipment class. TSL 6 
is the maximum efficiency level with a positive NPV at the 7 percent 
discount rate, achieved by incorporating an ECM condenser fan. TSL 5 is 
the efficiency level with the maximum NPV and maximum LCC savings, 
achieved by using an advanced refrigerant condenser design. TSL 4 is 
the level that first incorporated light-emitting diode (LED) lighting 
as a design feature in the engineering analysis. TSL 3 and TSL 2 were 
intermediate efficiency levels chosen to bridge the gap between TSL 4, 
and the

[[Page 44936]]

ENERGY STAR Tier II equivalent level, which is TSL 1.

                    Table VI.1--Trial Standard Levels for Class A Equipment Expressed in Terms of Daily Energy Consumption (kWh/day)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                    Trial standard level in order of efficiency
               Size                          TSL         -----------------------------------------------------------------------------------------------
                                                           Baseline      TSL 1       TSL 2       TSL 3       TSL 4       TSL 5       TSL 6       TSL 7
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    LCC Efficiency level        1           2           3           4           5           6           7           8
Small.............................  Engineering Level...        1           5         *NA         *NA           6           7           9          11
                                    kWh/day.............        6.10        5.27        4.75        4.25        3.95        3.73        3.58        3.25
Medium............................  Engineering Level...        1           5         *NA         *NA           6           7           9          11
                                    kWh/day.............        6.53        5.51        5.25        4.75        4.19        3.95        3.79        3.43
Large.............................  Engineering Level...        1           4         *NA         *NA           5           6           8          10
                                    kWh/day.............        6.75        6.21        5.75        5.25        4.89        4.60        4.41        3.94
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Not applicable. These levels established as intermediate points along the engineering cost curves.


                    Table VI.2--Trial Standard Levels for Class B Equipment Expressed in Terms of Daily Energy Consumption (kWh/day)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                          Trial standard level in order of efficiency
                  Size                                TSL            -----------------------------------------------------------------------------------
                                                                       Baseline      TSL 1       TSL 2       TSL 3       TSL 4       TSL 5       TSL 6
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                          LCC Efficiency Level......        1           2           3           4           5           6           7
Small...................................  Engineering Level.........        1           2           4           4           5           6           7
                                          kWh/day...................        4.96        4.62        4.31        4.31        4.28        3.78        3.69
Medium..................................  Engineering Level.........        1           2           4           5           6           7           8
                                          kWh/day...................        5.56        5.20        4.99        4.76        4.72        4.22        4.12
Large...................................  Engineering Level.........        1           2           3           4           5           6           7
                                          kWh/day...................        5.85        5.48        5.33        5.07        5.03        4.52        4.41
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Not applicable. These levels established as intermediate points along the engineering cost curves.

    For Class B equipment, TSL 6 is the max-tech level for each 
equipment size. TSL 5 is the level that first incorporated LED lighting 
as a design option in the engineering analysis. TSL 4 is the next 
highest efficiency level incorporating an ECM condenser fan motor. TSL 
3 was achieved by using an advanced refrigerant condenser design. This 
TSL provided an NPV value of essentially 0, with total capital 
expenditures for new equipment balanced by total operating cost savings 
over the NIA analysis period, based on a 7 percent discount rate. TSL 2 
is the ENERGY STAR Tier II level for Class B machines. This TSL 
provided the maximum LCC savings and maximum NPV savings at a 7 percent 
discount rate. TSL 1, which provided an energy consumption level 
approximately 4 percent higher than TSL 2, was also included in the 
analysis. TSL 1 represented the first level incorporating an evaporator 
fan driven by an ECM in the engineering analysis.
    As stated in the May 2009 NOPR, DOE chose to characterize the 
proposed TSL levels in terms of equations that establish a maximum 
daily energy consumption (MDEC) limit through a linear equation of the 
following form:

MDEC = A x V + B

Where:

A is expressed in terms of kWh/day/ft \3\ of measured volume,
V is the measured refrigerated volume (ft \3\) calculated for the 
equipment, and
B is an offset factor expressed in kWh/day.

    Coefficients A and B are uniquely derived for each equipment class 
based on a linear equation passing between the daily energy consumption 
values for equipment of different refrigerated volumes. For the A and B 
coefficients, DOE used the energy consumption values shown in Table 
VI.1 and Table VI.2 for the medium and large equipment sizes within 
each class of beverage vending machine. DOE did not use the small sizes 
in either equipment class because information from the May 2009 NOPR 
indicated that there are no significant shipments of this equipment 
size. Results are described in more detail in chapter 9 of the TSD.
    Chapter 9 of the TSD also explains the methodology DOE used for 
selecting TSLs and developing the equations shown in Table VI.3.

   Table VI.3--Trial Standard Levels Expressed in Terms of Equations and Coefficients for Class A and Class B
                                                    Equipment
----------------------------------------------------------------------------------------------------------------
     Trial standard level         Test metric           Class A                          Class B
----------------------------------------------------------------------------------------------------------------
Baseline.....................  kWh/day.........  MDEC = 0.019 x V +     MDEC = 0.068 x V + 4.07.
                                                  6.09.
1............................  kWh/day.........  MDEC = 0.062 x V +     MDEC = 0.066 x V + 3.76.
                                                  4.12.
2............................  kWh/day.........  MDEC = 0.044 x V +     MDEC = 0.080 x V + 3.24.
                                                  4.26.
3............................  kWh/day.........  MDEC = 0.044 x V +     MDEC = 0.073 x V + 3.16.
                                                  3.76.

[[Page 44937]]

 
4............................  kWh/day.........  MDEC = 0.062 x V +     MDEC = 0.073 x V + 3.12.
                                                  2.80.
5............................  kWh/day.........  MDEC = 0.058 x V +     MDEC = 0.070 x V + 2.68.
                                                  2.66.
6............................  kWh/day.........  MDEC = 0.055 x V +     MDEC = 0.068 x V + 2.63.
                                                  2.56.
7............................  kWh/day.........  MDEC = 0.045 x V +     NA. *
                                                  2.42..
----------------------------------------------------------------------------------------------------------------
* Not applicable. There is no TSL 7 for Class B equipment.

B. Significance of Energy Savings

    To estimate the energy savings through 2042 due to new standards, 
DOE compared the energy consumption of beverage vending machines under 
the base case (no standards) to energy consumption of this equipment 
under each TSL that DOE considered. Table VI.4 and Table VI.5 show 
DOE's NES estimates, which it based on the April 2009 update of the 
AEO2009 Reference Case, for each TSL. Chapter 11 of the TSD describes 
these estimates in more detail. DOE reports both undiscounted and 
discounted values of energy savings. Discounted energy savings 
represent a policy perspective where energy savings farther in the 
future are less significant than energy savings closer to the present. 
Table VI.4 shows the forecasted aggregate national energy savings, both 
discounted and undiscounted, of Class A equipment at each TSL. The 
table also shows the magnitude of the estimated energy savings if the 
savings are discounted at the 7 percent and 3 percent real discount 
rates. Each TSL considered in this rulemaking would result in 
significant energy savings, and the amount of savings increases with 
higher energy conservation standards (ranging from an estimated 0.007 
quads to 0.170 quads, undiscounted, for TSLs 1 through 7) (see chapter 
11 of the TSD).

                 Table VI.4--Summary of Cumulative National Energy Savings for Class A Equipment
                                [Energy savings for units sold from 2012 to 2042]
----------------------------------------------------------------------------------------------------------------
                                                                   Primary national energy savings (quads)
                   Trial standard level                    -----------------------------------------------------
                                                              Undiscounted      3% Discounted     7% Discounted
----------------------------------------------------------------------------------------------------------------
1.........................................................             0.007             0.004             0.002
2.........................................................             0.031             0.018             0.010
3.........................................................             0.069             0.040             0.021
4.........................................................             0.107             0.061             0.032
5.........................................................             0.127             0.073             0.038
6.........................................................             0.139             0.080             0.042
7.........................................................             0.170             0.097             0.051
----------------------------------------------------------------------------------------------------------------

    In Table VI.5, DOE reports both undiscounted and discounted values 
of energy savings for Class B equipment. As with Class A equipment, 
each TSL considered would result in significant energy savings, and the 
amount of energy savings increases with higher energy conservation 
standards (ranging from an estimated 0.003 quads to 0.068 quads, 
undiscounted, for TSLs 1 through 6.

                Table VI.5--Summary of Cumulative National Energy Savings for Class B Equipment ]
                                [Energy savings for units sold from 2012 to 2042]
----------------------------------------------------------------------------------------------------------------
                                                                   Primary national energy savings (quads)
                   Trial standard level                    -----------------------------------------------------
                                                              Undiscounted      3% Discounted     7% Discounted
----------------------------------------------------------------------------------------------------------------
1.........................................................             0.003             0.002             0.001
2.........................................................             0.004             0.002             0.001
3.........................................................             0.020             0.012             0.006
4.........................................................             0.023             0.013             0.007
5.........................................................             0.061             0.035             0.018
6.........................................................             0.068             0.039             0.020
----------------------------------------------------------------------------------------------------------------

C. Economic Justification

1. Economic Impact on Commercial Customers
a. Life-Cycle Costs and Payback Period
    To evaluate the economic impact of the TSLs on customers, DOE 
conducted an LCC analysis for each TSL. More efficient beverage vending 
machines are expected to affect customers in two ways: Annual operating 
expense is expected to decrease and purchase price is expected to 
increase. DOE analyzed the net effect by calculating the LCC. Inputs 
used for calculating the LCC include total installed costs (i.e., 
equipment price plus installation costs), annual energy savings, 
average electricity costs by customer, energy price trends, repair 
costs, maintenance costs, equipment lifetime, and discount rates.
    DOE's LCC and PBP analyses provided five outputs for each TSL that 
are reported in Table VI.6 through Table VI.8 for Class A equipment. 
The first three outputs are the percentages of

[[Page 44938]]

standard-compliant machine purchases that would result in (1) a net LCC 
increase, (2) no impact, or (3) a net LCC savings for the customer. DOE 
used the estimated distribution of shipments by efficiency level for 
each equipment class to determine the affected customers. The fourth 
output is the average net LCC savings from standard-compliant 
equipment. The fifth output is the average PBP for the customer 
investment in standard-compliant equipment. The PBP is the number of 
years it would take for the customer through energy savings to recover 
the increased costs of higher efficiency equipment compared to baseline 
efficiency equipment.

                                          Table VI.6--Summary LCC and PBP Results for Class A Equipment--Large
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                  Trial standard level
                           Results                            ------------------------------------------------------------------------------------------
                                                                    1            2            3            4            5            6            7
--------------------------------------------------------------------------------------------------------------------------------------------------------
Equipment with Net LCC Increase (%)..........................          0            1            3            3            3            5          100
Equipment with No Change in LCC (%)..........................         90            0            0            0            0            0            0
Equipment with Net LCC Savings (%)...........................         10           99           97           97           97           95            0
Mean LCC Savings ($).........................................         84          132          184          222          244          240      (1,481)
Mean Payback Period (years)..................................          2.3          3.1          3.4          3.6          3.8          4.3         83.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Numbers in parentheses indicate negative values.


                                          Table VI.7--Summary LCC and PBP Results for Class A Equipment--Medium
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                  Trial standard level
                           Results                            ------------------------------------------------------------------------------------------
                                                                    1            2            3            4            5            6            7
--------------------------------------------------------------------------------------------------------------------------------------------------------
Equipment with Net LCC Increase (%)..........................          0            0            1            1            3            5          100
Equipment with No Change in LCC (%)..........................         90            0            0            0            0            0            0
Equipment with Net LCC Savings (%)...........................         10          100           99           99           97           95            0
Mean LCC Savings ($).........................................        162          207          235          296          305          295      (1,183)
Mean Payback Period (years)..................................          2.1          2.0          3.1          3.3          3.6          4.0         71.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Numbers in parentheses indicate negative values.


                                          Table VI.8--Summary LCC and PBP Results for Class A Equipment--Small
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                  Trial standard level
                           Results                            ------------------------------------------------------------------------------------------
                                                                    1            2            3            4            5            6            7
--------------------------------------------------------------------------------------------------------------------------------------------------------
Equipment with Net LCC Increase (%)..........................          0            1            3            3            3            5          100
Equipment with No Change in LCC (%)..........................         90            0            0            0            0            0            0
Equipment with Net LCC Savings (%)...........................         10           99           97           97           97           95            0
Mean LCC Savings ($).........................................        130          179          227          255          265          255      (1,153)
Mean Payback Period (years)..................................          2.1          2.9          3.3          3.5          3.8          4.2         80.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Numbers in parentheses indicate negative values.

    For the Class A equipment, there are positive net LCC savings on 
average for TSL 1 through 6. Only 10 percent of all equipment purchased 
is expected to achieve a net LCC savings at TSL 1, since about 90 
percent of the equipment on the market in 2012 is expected to meet that 
standard. LCC savings consistently peak at TSL 5, but about 95 percent 
of purchasers of Class A equipment are projected to achieve LCC savings 
even at TSL 6. Simple average PBPs are projected to be less than 3 
years for all Class A equipment for TSL 1, and PBPs are less than 4 
years from TSL 1 through 5.
    DOE's LCC and PBP analyses provided the same five outputs for each 
TSL for Class B equipment. These outputs are reported in Table VI.9 
through Table VI.11.

                      Table VI.9--Summary LCC and PBP Results for Class B Equipment--Large
----------------------------------------------------------------------------------------------------------------
                                                                      Trial standard level
                    Results                    -----------------------------------------------------------------
                                                    1          2          3          4          5          6
----------------------------------------------------------------------------------------------------------------
Equipment with Net LCC Increase (%)...........        0          9         27         35        100        100
Equipment with No Change in LCC (%)...........       90          0          0          0          0          0
Equipment with Net LCC Savings (%)............       10         91         73         65          0          0
Mean LCC Savings ($)..........................       43         46         40         30      (545)    (2,414)
Mean Payback Period (years)...................        3.3        4.5        6.5        7.5       83.8      100.0
----------------------------------------------------------------------------------------------------------------
Note: Numbers in parentheses indicate negative values.


[[Page 44939]]


                     Table VI.10--Summary LCC and PBP Results for Class B Equipment--Medium
----------------------------------------------------------------------------------------------------------------
                                                                      Trial standard level
                    Results                    -----------------------------------------------------------------
                                                    1          2          3          4          5          6
----------------------------------------------------------------------------------------------------------------
Equipment with Net LCC Increase (%)...........        0          9         29         39        100        100
Equipment with No Change in LCC (%)...........       90          0          0          0          0          0
Equipment with Net LCC Savings (%)............       10         91         71         61          0          0
Mean LCC Savings ($)..........................       41         49         36         26      (558)    (2,230)
Mean Payback Period (years)...................        3.4        4.6        6.9        7.9       85.4       99.9
----------------------------------------------------------------------------------------------------------------
Note: Numbers in parentheses indicate negative values.


                      Table VI.11--Summary LCC and PBP Results for Class B Equipment--Small
----------------------------------------------------------------------------------------------------------------
                                                                          Trial standard level
                       Results                        ----------------------------------------------------------
                                                           1          2          3          4          5       6
----------------------------------------------------------------------------------------------------------------
Equipment with Net LCC Increase (%)..................        1         41         41         55        100    10
                                                                                                              0
Equipment with No Change in LCC (%)..................       90          0          0          0          0    0
Equipment with Net LCC Savings (%)...................       10         59         59         45          0    0
Mean LCC Savings ($).................................       35         16         16          2      (612)    (2
                                                                                                              ,1
                                                                                                              29
                                                                                                               )
Mean Payback Period (years)..........................        3.9        8.7        8.7       10.9       94.7  10
                                                                                                              0.
                                                                                                              0
----------------------------------------------------------------------------------------------------------------
Note: Numbers in parentheses indicate negative values.

    For Class B equipment, there are positive net LCC savings on 
average for TSLs 1 through 4. Only 10 percent of all equipment 
purchased is expected to achieve a net LCC savings at TSL 1, since 
about 90 percent of the equipment on the market in 2012 is expected to 
meet that standard. LCC savings consistently peak at TSL 2, but for 26 
to 65 percent of purchasers, Class B equipment is projected to achieve 
LCC savings at TSL 4. Simple average PBPs are projected to be 3.3 to 
3.4 years for large and medium size Class B equipment at TSL 1. PBPs 
are about 4.5 to 4.6 years for large and medium size Class B equipment 
for TSLs 1 and 2 and under 7 years for TSLs 1 through 3.
b. Life-Cycle Cost Subgroup Analysis
    Using the LCC spreadsheet model, DOE estimated the impact of the 
TSLs on the following customer subgroup: Manufacturing facilities that 
have purchased their own beverage vending machines. This is the largest 
component of the 5 percent of site owners, who also own their own 
beverage vending machines, and comprises about 2 percent of all 
beverage vending machines. About 95 percent of beverage vending 
machines are owned by bottlers and vendors. The manufacturing 
facilities subgroup was analyzed because, in addition to being the 
largest independent block of owners, it had among the highest financing 
costs (based on weighted average cost of capital) and faced the lowest 
energy costs of any customer subgroup. The group was therefore expected 
to have the least LCC savings and longest PBP of any identifiable 
customer subgroup.
    DOE estimated the LCC and PBP for the manufacturing facilities 
subgroup. Table VI.12 shows the mean LCC savings for equipment that 
meets the energy conservation standards in today's final rule for the 
manufacturing facilities subgroup, and Table VI.13 shows the mean PBP 
(in years) for this subgroup. Chapter 12 of the TSD provides more 
detailed discussion on the LCC subgroup analysis and results.

  Table VI.12--Mean Life-Cycle Cost Savings for Refrigerated Beverage Vending Machine Equipment Purchased by the Manufacturing Facilities LCC Subgroup
                                                                         (2008$)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                 Trial standard level
           Equipment class                     Size         --------------------------------------------------------------------------------------------
                                                                  1            2            3            4            5             6             7
--------------------------------------------------------------------------------------------------------------------------------------------------------
A...................................  S....................           92          118          143        158           159           142        (1,258)
                                      M....................          115          148          154        190           188           171        (1,302)
                                      L....................           62           86          116        137           146           134        (1,585)
B...................................  S....................           28           24            8         (3)         (590)       (2,433)           NA
                                      M....................           26           26            4         (8)         (603)       (2,251)           NA
                                      L....................           28           24            8         (3)         (590)       (2,433)           NA
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Numbers in parentheses indicate negative values. NA = not applicable.


   Table VI.13--Mean Payback Period for Refrigerated Beverage Vending Machine Equipment Purchased by the Manufacturing Facilities LCC Subgroup (Years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                  Trial standard level
           Equipment class                      Size          ------------------------------------------------------------------------------------------
                                                                    1            2            3            4            5            6            7
--------------------------------------------------------------------------------------------------------------------------------------------------------
A....................................  S.....................          2.6          3.6          4.1          4.3          4.7          5.2         90.6
                                       M.....................          2.6          2.4          3.7          4.0          4.4          5.0         82.7
                                       L.....................          2.7          3.8          4.2          4.4          4.7          5.3         92.2

[[Page 44940]]

 
B....................................  S.....................          4.9         11.9         11.9         15.5         99.5        100.0           NA
                                       M.....................          4.2          5.8          9.0         10.5         94.1        100.0           NA
                                       L.....................          4.1          5.7          8.4          9.9         93.0        100.0           NA
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: NA = not applicable.

    For beverage vending machines, the positive LCC and PBP impacts for 
manufacturing facilities that own their own beverage vending machines 
are less than those of all customers. Because they face lower energy 
costs, the lower value of energy savings lengthens the period over 
which the original investment is paid back and also reduces operating 
cost savings over the lifetime of more efficient beverage vending 
machines. In addition, because they face higher financing costs, these 
customers sites have a relatively high opportunity cost for investment, 
so the value of future electricity savings from higher efficiency 
equipment is further reduced. Even so, for this subgroup of customers, 
LCC savings are still positive for all but TSL 7 for Class A and is 
positive at TSL 3 and below for Class B. PBP is lengthened by about a 
year for Class A and 2 years for Class B but is still less about 5 
years at TSL 6 for Class A and less than 9 years for medium-size Class 
B equipment (which is less than the equipment lifetime) at TSL 3.
2. Economic Impact on Manufacturers
    DOE determined the economic impacts of today's standard on 
manufacturers, as described in the proposed rule. 74 FR 26053-56. As 
updated for today's final rule, DOE analyzed manufacturer impacts under 
two distinct markup scenarios: (1) The preservation-of-gross-margin-
percentage markup scenario, and (2) the preservation-of-operating-
profit (absolute dollars) markup scenario.
    Together, these two markup scenarios characterize the range of 
possible conditions the beverage vending machine market will experience 
as a result of new energy conservation standards. See chapter 13 of the 
TSD for additional details of the markup scenarios and analysis.
a. Industry Cash-Flow Analysis Results
    Using two different markup scenarios, DOE estimated the impact of 
new standards for beverage vending machines on the INPV of the beverage 
vending machine industry. The impact consists of the difference between 
INPV in the base case and INPV in the standards case. INPV is the 
primary metric used in the MIA, and represents one measure of the fair 
value of the industry in today's dollars. DOE calculated the INPV by 
summing all of the net cash flows, discounted at the beverage vending 
machine industry's cost of capital or discount rate.
    Table VI.14 through Table VI.17 show the changes in INPV that DOE 
estimates would result from the TSLs DOE considered for this final rule 
using the preservation-of-gross-margin-percentage and preservation-of-
operating-profit scenarios described above. The tables also present the 
equipment conversion costs and capital conversion costs that the 
industry would incur at each TSL. Equipment conversion costs include 
engineering, prototyping, testing, and marketing expenses incurred by a 
manufacturer as it prepares to comply with a standard. Capital 
conversion costs are the one-time outlays for tooling and plant changes 
required for the industry to comply.

 Table VI.14--Manufacturer Impact Analysis for Class A Refrigerated Beverage Vending Machine Equipment Under the Preservation-of-Gross-Margin-Percentage
                                                                     Markup Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                 Preservation of gross margin percentage markup scenario
---------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                              Trial standard level
                   Metric                                  Units                Base  ------------------------------------------------------------------
                                                                                case      1        2        3         4         5         6         7
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV........................................  2008$ millions................     44.1     44.2     44.3     44.5     42.9      42.8      36.2      41.0
Change in INPV..............................  2008$ millions................  .......      0.0      0.2      0.3     (1.3)     (1.3)     (7.9)     (3.2)
                                              %.............................  .......      0.1      0.5      0.7     (2.9)     (3.0)    (18.0)     (7.2)
Equipment Conversion Costs..................  2008$ millions................  .......      0.0      0.0      0.6      0.6       1.2       2.9       3.5
Capital Conversion Costs....................  2008$ millions................  .......      0.0      0.0      0.0      2.2       2.2       9.1      14.1
Total Investment Required...................  2008$ millions................  .......      0.0      0.0      0.6      2.8       3.4      11.9      17.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Numbers in parentheses indicate negative values.


 Table VI.15--Manufacturer Impact Analysis for Class A Refrigerated Beverage Vending Machine Equipment Under the Preservation-of-Operating-Profit Markup
                                                                        Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                    Preservation of operating profit markup scenario
---------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                            Trial standard level
                  Metric                                Units                Base  ---------------------------------------------------------------------
                                                                             case       1         2         3         4         5         6         7
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV......................................  2008$ millions...............     44.1     44.1      43.9      43.0      40.6      40.1      33.1      15.8
Change in INPV............................  2008$ millions...............  .......     (0.0)     (0.3)     (1.1)     (3.5)     (4.1)    (11.1)    (28.3)
                                            %............................  .......     (0.1)     (0.6)     (2.5)     (7.9)     (9.3)    (25.1)    (64.2)

[[Page 44941]]

 
Equipment Conversion Costs................  2008$ millions...............  .......      0.0       0.0       0.6       0.6       1.2       2.9       3.5
Capital Conversion Costs..................  2008$ millions...............  .......      0.0       0.0       0.0       2.2       2.2       9.1      14.1
Total Investment Required.................  2008$ millions...............  .......      0.0       0.0       0.6       2.8       3.4      11.9      17.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Numbers in parentheses indicate negative values.


 Table VI.16--Manufacturer Impact Analysis for Class B Refrigerated Beverage Vending Machine Equipment Under the Preservation-of-Gross-Margin-Percentage
                                                                     Markup Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                 Preservation of gross margin percentage markup scenario
---------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                               Trial standard level
                                                            Units                 Base   ---------------------------------------------------------------
                                                                                  case        1         2         3          4          5          6
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV.........................................  2008$ millions.................      33.7      33.7      33.7      33.1       32.7       26.3       30.5
Change in INPV...............................  2008$ millions.................  ........       0.0       0.0      (0.6)      (1.0)      (7.4)      (3.2)
                                               %..............................  ........       0.1       0.1      (1.9)      (3.0)     (21.9)      (9.5)
Equipment Conversion Costs...................  2008$ millions.................  ........       0.0       0.0       1.7        2.6        3.5        6.9
Capital Conversion Costs.....................  2008$ millions.................  ........       0.0       0.0       0.0        0.0       11.0       14.7
Total Investment Required....................  2008$ millions.................  ........       0.0       0.0       1.7        2.6       14.5       21.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Numbers in parentheses indicate negative values.


 Table VI.17--Manufacturer Impact Analysis for Class B Refrigerated Beverage Vending Machine Equipment Under the Preservation-of-Operating-Profit Markup
                                                                        Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                    Preservation of operating profit markup scenario
---------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                              Trial standard level
                                                           Units                Base   -----------------------------------------------------------------
                                                                                case        1          2          3          4          5          6
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV........................................  2008$ millions................      33.7      33.7       33.7       32.5       32.0       17.2        0.2
Change in INPV..............................  2008$ millions................  ........      (0.0)      (0.0)      (1.2)      (1.7)     (16.5)     (33.5)
                                              %.............................  ........      (0.1)      (0.2)      (3.5)      (5.0)     (48.9)     (99.4)
Equipment Conversion Costs..................  2008$ millions................  ........       0.0        0.0        1.7        2.6        3.5        6.9
Capital Conversion Costs....................  2008$ millions................  ........       0.0        0.0        0.0        0.0       11.0       14.7
Total Investment Required...................  2008$ millions................  ........       0.0        0.0        1.7        2.6       14.5       21.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Numbers in parentheses indicate negative values.

    The May 2009 NOPR discusses the estimated impact of new beverage 
vending machine standards on INPV for each equipment class. 74 FR 
26053-55. See chapter 13 of the TSD for details.
b. Cumulative Regulatory Burden
    While any one regulation may not impose a significant burden on 
manufacturers, the combined effects of several regulations may have 
serious consequences for some manufacturers, groups of manufacturers, 
or an entire industry. Assessing the impact of a single regulation may 
overlook this cumulative regulatory burden.
    DOE recognizes that each regulation can significantly affect 
manufacturers' financial operations. Multiple regulations affecting the 
same manufacturer can reduce manufacturers' profits and possibly cause 
manufacturers to exit from the market. During the public meeting, 
PepsiCo stated that pending regulation would mandate that the beverage 
vending machine industry add nutrition labels to the exterior of all 
machines that specify the nutritional information for its contents. 
(PepsiCo, Public Meeting Transcript, No. 56 at p. 178)
    On May 14, 2009, the Menu Education and Labeling (MEAL) Act, a bill 
to amend the Federal Food, Drug, and Cosmetic Act to extend the food 
labeling requirements of the Nutrition Labeling and Education Act of 
1990, was introduced into Congress. The bill includes a provision to 
require the vending machine industry to post labels on their machines 
containing certain nutrition information about their contents. While 
this legislation may potentially result in an additional labeling 
requirement for beverage vending machine manufacturers, DOE cannot 
consider in its cumulative regulatory burden analysis any legislation 
that has not yet been enacted. Furthermore, DOE has not found or 
received any quantitative or qualitative information regarding the 
magnitude of the financial burden that may accompany the pending 
nutritional information regulation.
    DOE did not identify any other DOE regulations that would affect 
the manufacturers of beverage vending machines or their parent 
companies. DOE requested information about the

[[Page 44942]]

cumulative regulatory burden during manufacturer interviews. In 
general, manufacturers were not greatly concerned about other Federal, 
State, or international regulations. The requirements of their major 
customers have a greater impact on their business than any of these 
other regulations. For further information about the cumulative 
regulatory burden, see chapter 13 of the TSD.
c. Impacts on Employment
    DOE used the GRIM to assess the impacts of energy conservation 
standards on beverage vending machine industry employment. DOE used 
statistical data from the U.S. Census Bureau's 2006 Annual Survey of 
Manufacturers, the results of the engineering analysis, and interviews 
with manufacturers to estimate the inputs necessary to calculate 
industry-wide labor expenditures and employment levels. Results of the 
U.S. Census Bureau's 2007 Annual Survey of Manufacturers are not yet 
available.
    The vast majority of beverage vending machines are manufactured in 
the United States. Based on results of the GRIM, DOE expects that there 
would be slightly positive direct employment impacts among domestic 
beverage vending machine manufacturers for TSLs 1 through 6 for Class A 
equipment and TSLs 1 through 5 for Class B equipment. The GRIM 
estimates that employment would increase by fewer than 36 employees for 
Class A equipment at TSLs 1 through 6 and fewer than 97 employees for 
Class B equipment at TSLs 1 though 5. The employment impacts are more 
positive at the max-tech levels (TSL 7 for Class A equipment and TSL 6 
for Class B equipment) because more labor is required and the 
production costs of the most efficient equipment greatly increase. The 
employment impacts calculated in the GRIM are shown in Table VI.35 and 
Table VI.36 in section VI.D.
    The results calculated in the GRIM do not account for the possible 
relocation of domestic jobs to lower-labor-cost countries, which may 
occur independently of new standards or may be influenced by the level 
of investments new standards require. Manufacturers stated that 
although there are no current plans to relocate production facilities, 
higher TSLs would increase pressure to cut costs, which could result in 
relocation. The labor impacts would be different if manufacturers chose 
to relocate to lower cost countries or if manufacturers consolidated. 
In addition, standards could increase pressure to consolidate within 
the industry due to the low profitability and existing excess 
production capacity. Chapter 13 of the TSD further discusses how the 
employment impacts are calculated and shows the projected changes in 
employment levels by TSL.
    The conclusions in this section are independent of any conclusions 
regarding employment impacts from the broader U.S. economy estimated in 
the employment impact analysis. Those impacts are documented in chapter 
15 of the TSD.
d. Impacts on Manufacturing Capacity
    According to the majority of beverage vending machine 
manufacturers, new energy conservation standards will not affect 
manufacturers' production capacity. Within the last decade, annual 
shipments of beverage vending machines have decreased almost three-
fold. Due to the decline in shipments, it is likely that any of the 
major manufacturers has the capacity to meet most of the recent market 
demand. Consequently, the industry has the capacity to make many times 
more units than are currently sold each year. Thus, DOE believes 
manufacturers will be able to maintain manufacturing capacity levels 
and continue to meet market demand under new energy conservation 
standards.
e. Impacts on Subgroups of Manufacturers
    As discussed in the May 2009 NOPR, 74 FR 26044-45, 26056, 26069-72, 
DOE evaluated the impacts of new energy conservation standards on small 
manufacturers as defined by the U.S. Small Business Administration 
(SBA). DOE identified six small manufacturers and requested information 
that would determine if there are differential impacts that may result 
from new energy conservation standards. In the NOPR, DOE specifically 
requested comments on how small business manufacturers will be affected 
by new energy conversation standards. 74 FR 26071. However, DOE did not 
receive any comments in response to this request. For a discussion of 
the impacts on small business manufacturers, see chapter 13 of the TSD 
and section VII.B of this preamble (``Review Under the Regulatory 
Flexibility Act'').
3. National Impact Analysis
a. Amount and Significance of Energy Savings
    Because the pattern and strategies for improving the energy 
performance of beverage vending machines is somewhat different between 
Class A and B equipment, energy savings are reported separately for 
each class of equipment by TSL. The national energy savings are between 
0.003 and 0.170 quads, beyond that achieved in ENERGY STAR Tier 1 
equipment, depending on the TSL and equipment class, an amount of 
energy savings that DOE considers significant. As stated previously, 
energy savings increase as TSLs grow progressively more stringent than 
the baseline efficiency level.
    To estimate the energy savings through 2042 due to new energy 
conservation standards, DOE compared the energy consumption of beverage 
vending machines under the base case to energy consumption under a new 
standard. The energy consumption calculated in the NIA is source 
energy, taking into account energy losses in the generation and 
transmission of electricity as discussed in section VI.B.
    DOE tentatively determined the amount of energy savings at each of 
the seven TSLs being considered for Class A equipment and six TSLs for 
Class B equipment, then analyzed and aggregated the results across the 
three sizes for each equipment class.
    Table VI.18 shows the forecasted aggregate national energy savings, 
both discounted and undiscounted, of Class A equipment at each TSL. The 
table also shows the magnitude of the estimated energy savings if the 
savings are discounted at the 7 percent and 3 percent real discount 
rates. Each TSL considered in this rulemaking would result in 
significant energy savings, and the amount of savings increases with 
higher energy conservation standards (ranging from an estimated 0.007 
to 0.170 quads, undiscounted, for Class A equipment for TSLs 1 through 
7). See chapter 11 of the TSD for details of the NIA.

[[Page 44943]]



 Table VI.18--Summary of Cumulative National Energy Savings for Class A Equipment (Energy Savings for Units Sold
                                               From 2012 to 2042)
----------------------------------------------------------------------------------------------------------------
                                                                   Primary national energy savings  quads
                   Trial standard level                    -----------------------------------------------------
                                                              Undiscounted      3% Discounted     7% Discounted
----------------------------------------------------------------------------------------------------------------
1.........................................................             0.007             0.004             0.002
2.........................................................             0.031             0.018             0.010
3.........................................................             0.069             0.040             0.021
4.........................................................             0.107             0.061             0.032
5.........................................................             0.127             0.073             0.038
6.........................................................             0.139             0.080             0.042
7.........................................................             0.170             0.097             0.051
----------------------------------------------------------------------------------------------------------------

    In Table VI.19, DOE reports both undiscounted and discounted values 
of energy savings for Class B equipment. Each TSL considered would 
result in significant energy savings, and the amount of savings 
increases with higher energy conservation standards (ranging from an 
estimated 0.003 to 0.068 quads, undiscounted, for Class B equipment for 
TSLs 1 through 6).

 Table VI.19--Summary of Cumulative National Energy Savings for Class B Equipment (Energy Savings for Units Sold
                                               from 2012 to 2042)
----------------------------------------------------------------------------------------------------------------
                                                                    Primary national energy savings quads
                   Trial standard level                    -----------------------------------------------------
                                                              Undiscounted      3% Discounted     7% Discounted
----------------------------------------------------------------------------------------------------------------
1.........................................................             0.003             0.002             0.001
2.........................................................             0.004             0.002             0.001
3.........................................................             0.020             0.012             0.006
4.........................................................             0.023             0.013             0.007
5.........................................................             0.061             0.035             0.018
6.........................................................             0.068             0.039             0.020
----------------------------------------------------------------------------------------------------------------

b. Net Present Value
    The NPV analysis is a measure of the cumulative benefit or cost of 
standards to the Nation. In accordance with OMB guidelines on 
regulatory analysis (OMB Circular A-4, section E, September 17, 2003), 
DOE calculated an estimated NPV using both a 7 percent and 3 percent 
real discount rate. The 7 percent rate is an estimate of the average 
before-tax rate of return to private capital in the U.S. economy. This 
rate reflects the returns to real estate and small business capital as 
well as corporate capital. DOE used this discount rate to approximate 
the opportunity cost of capital in the private sector, since recent OMB 
analysis has found the average rate of return to capital to be near 
this rate. DOE also used the 3 percent discount rate to capture the 
potential effects of standards on private consumption (e.g., through 
higher prices for equipment and purchase of reduced amounts of energy). 
This rate represents the rate at which society discounts future 
consumption flows to their present value. This rate can be approximated 
by the real rate of return on long-term Government debt (e.g., the 
yield on Treasury notes minus the annual rate of change in the Consumer 
Price Index), which has averaged about 3 percent on a pre-tax basis for 
the last 30 years.
    Table VI.20 shows the estimated cumulative NPV calculated for all 
Class A equipment. Table VI.20 assumes the AEO2009 Reference Case 
forecast for electricity prices. At a 7 percent discount rate, TSLs 1 
through 6 show positive cumulative NPVs. The highest NPV is provided by 
TSL 5 at $0.192 billion. TSL 6 showed an NPV at $0.185 billion. TSL 7 
showed an NPV at -$1.449 billion, the result of negative NPV observed 
in all sizes of this equipment class.

    Table VI.20--Summary of Cumulative Net Present Value for Class A
                   Equipment (AEO2009 Reference Case)
------------------------------------------------------------------------
                                                NPV* billion 2008$
                                         -------------------------------
          Trial standard level              7% Discount     3% Discount
                                               rate            rate
------------------------------------------------------------------------
1.......................................          0.015           0.034
2.......................................          0.068           0.153
3.......................................          0.112           0.268
4.......................................          0.175           0.415
5.......................................          0.192           0.464
6.......................................          0.185           0.465
7.......................................         (1.449)         (2.466)
------------------------------------------------------------------------
Note: Numbers in parentheses indicate negative NPV (i.e., net cost).


[[Page 44944]]

    At a 3 percent discount rate, all but TSL 7 showed a positive NPV, 
with the highest NPV provided at TSL 6 ($0.465 billion). TSL 5 showed a 
near equivalent NPV at $0.464 billion. TSL 7 showed an NPV of -$2.466 
billion. DOE observed that all Class A equipment at TSL 7 has a 
negative NPV at a 3 percent discount rate.
    Table VI.21 shows the estimated cumulative NPV for beverage vending 
machines resulting from the sum of the NPV calculated for Class B 
equipment. This table assumes the AEO2009 Reference Case forecast for 
electricity prices. At a 7 percent discount rate, TSLs 1 and 2 show 
positive cumulative NPVs. The highest NPV is provided by TSL 2 at 
$0.006 billion. TSL 3 showed -$0.003 billion NPV. TSLs 4 through 6 also 
show a negative NPV. TSL 6 has a -$2.452 billion NPV, the result of 
negative NPV observed in all sizes of Class B equipment.

    Table VI.21--Summary of Cumulative Net Present Value for Class B
                   Equipment (AEO2009 Reference Case)
------------------------------------------------------------------------
                                                 NPV billion 2008$
                                         -------------------------------
          Trial standard level              7% Discount     3% Discount
                                               rate            rate
------------------------------------------------------------------------
1.......................................          0.005           0.011
2.......................................          0.006           0.014
3.......................................         (0.003)          0.011
4.......................................         (0.014)         (0.006)
5.......................................         (0.621)         (1.083)
6.......................................         (2.452)         (4.427)
------------------------------------------------------------------------
Note: Numbers in parentheses indicate negative NPV (i.e., net cost).

    At a 3 percent discount rate, TSLs 1 through 3 showed a positive 
NPV, with the highest NPV of $0.014 billion provided at TSL 2. TSL 1 
and 3 provided a near equivalent NPV at $0.009 billion. TSL 4 showed an 
NPV of -$0.006 billion. DOE observed that all Class B equipment sizes 
at TSL 5 have a negative NPV at a 3 percent discount rate.
    In addition to the Reference Case, DOE examined the NPV under the 
AEO2009 high-growth and low-growth electricity price forecasts. Chapter 
11 of the TSD presents the results of this examination.
c. Impacts on Employment
    Besides the direct impacts on manufacturing employment discussed in 
section VI.C.2.c, DOE develops general estimates of the indirect 
employment impacts of proposed standards on the economy. As discussed 
above, DOE expects energy conservation standards for beverage vending 
machines to reduce energy bills for commercial customers, and the 
resulting net savings to be redirected to other forms of economic 
activity. DOE also realizes that these shifts in spending and economic 
activity by beverage vending machine operators and site owners could 
affect the demand for labor. The impact comes in a variety of 
businesses not directly involved in the decision to make, operate, or 
pay the utility bills for beverage vending machines. Thus, the economic 
impact is ``indirect.'' To estimate these indirect economic effects, 
DOE used an input/output model of the U.S. economy using U.S. 
Department of Commerce, Bureau of Economic Analysis (BEA) and Bureau of 
Labor Statistics (BLS) data (as described in section IV.L. See chapter 
15 of the TSD for details of the net national employment impact.
    In this input/output model, the spending of the money saved on 
utility bills when more efficient vending machines are deployed is 
centered in economic sectors that create more jobs than are lost in 
electric utilities when spending is shifted from electricity to other 
products and services. Thus, today's refrigerated beverage vending 
machine energy conservation standards are likely to slightly increase 
the net demand for labor in the economy. However, the net increase in 
jobs is so small that it would be imperceptible in national labor 
statistics and might be offset by other, unanticipated effects on 
employment. Neither the BLS data nor the input/output model used by DOE 
includes the quality of jobs. As shown in Table VI.22 and Table VI.23, 
DOE estimates that net indirect employment impacts from a proposed 
beverage vending machine standard are likely to be very small.

Table VI.22--Net National Change in Indirect Employment From Class A Equipment: Number of Jobs From 2012 to 2042
----------------------------------------------------------------------------------------------------------------
                                                                 Net national change in employment
              Trial standard level               ---------------------------------------------------------------
                                                       2012            2022            2032            2042
----------------------------------------------------------------------------------------------------------------
1...............................................               0              13              13              13
2...............................................               4              67              69              82
3...............................................              17             142             159             172
4...............................................              30             221             238             265
5...............................................              42             256             285             313
6...............................................              44             286             316             344
7...............................................             157             402             444             475
----------------------------------------------------------------------------------------------------------------
Note: Numbers in parentheses indicate negative values.


[[Page 44945]]


Table VI.23--Net National Change in Indirect Employment From Class B Equipment: Number of Jobs From 2012 to 2042
----------------------------------------------------------------------------------------------------------------
                                                                 Net national change in employment
              Trial standard level               ---------------------------------------------------------------
                                                       2012            2022            2032            2042
----------------------------------------------------------------------------------------------------------------
1...............................................               1               6               6               6
2...............................................               1               9               9              10
3...............................................               8              41              45              49
4...............................................               9              47              52              55
5...............................................              58             138             150             162
6...............................................             166             193             204             216
----------------------------------------------------------------------------------------------------------------
Note: Numbers in parentheses indicate negative values.

4. Impact on Utility or Performance of Equipment
    As indicated in section V.B.4 of the May 2009 NOPR, the new 
standards DOE is adopting today will not lessen the utility or 
performance of any beverage vending machine. 74 FR 26059.
5. Impact of Any Lessening of Competition
    As discussed in the May 2009 NOPR, 74 FR 26059, and in section 
III.D.1.e of this preamble, DOE considers any lessening of competition 
likely to result from standards. The Attorney General determines the 
impact, if any, of any lessening of competition.
    The DOJ believes that the Class B standards contained in the 
proposed rule would not likely lead to a lessening of competition. 
(DOJ, No. 61 at p. 1)
    For Class A machines, DOJ concluded that the proposed TSL 6 could 
potentially lessen competition. DOJ commented that beverage vending 
machine manufacture is a highly concentrated industry in the United 
States, and compliance with the proposed Class A standard could require 
a disproportionate investment by some manufacturers, potentially 
placing them at a disadvantage with respect to others and leading to 
greater concentration. DOJ requested that DOE take this possible 
competitive impact into account and to ensure that the standard it 
adopts for Class A beverage vending machines will not require access to 
intellectual property owned by an industry participant, which would 
place other industry participants at a comparative disadvantage. (DOJ, 
No. 61 at pp. 1-2)
    DOE agrees with DOJ that the market is highly concentrated, with 
three major manufacturers supplying the vast majority of the U.S. 
market. In the May 2009 NOPR, DOE stated that it did not believe there 
would be differential impacts among manufacturers at TSL 6 for Class A 
equipment. At this level the manufacturers would have to redesign all 
their existing equipment and make capital investments in their 
production lines to comply with the standard, but the investments would 
be similar for each manufacturer at this level. (74 FR 26054)
    For today's final rule, DOE modified the assumed conversion costs 
required for manufacturers to meet the Class A energy consumption 
levels by accounting for the potential use of an energy management 
system (see section IV.J). This change mitigates the overall impacts at 
TSL 6, but does not impose disproportionate investments on some 
manufacturers.
    In addition, DOE received a written comment on the NOPR from NAMA 
suggesting that there could be a differential impact among 
manufacturers for part of the standards proposed in the NOPR. NAMA 
stated that it received a mixed response from its members regarding the 
technological feasibility and economic benefits of the standard levels 
proposed by DOE. One manufacturer stated that it would have difficulty 
achieving additional reductions for Class A and Class B machines, while 
another stated that it could achieve the standards for both Class A and 
Class B machines without significant costs to them or their customers. 
However, most responses to NAMA's request for information indicated 
that the proposed standard for Class B machines was appropriate and 
achievable, but the proposed standard for Class A raised questions 
among some manufacturers. (NAMA, No. 65 at p. 3) Dixie-Narco indicated 
for the NOPR that they could achieve the proposed TSL 6 for Class A 
machines without the use of intellectual property owned by an industry 
participant. Dixie-Narco stated that it is currently achieving the 
proposed efficiency level for Class A machines. (Dixie-Narco, Public 
Meeting Transcript, No. 56 at pp. 163 and 219) Royal Vendors stated 
that for Class A machines, they do not currently meet those levels, but 
given no proprietary design issues, they could meet them fairly easily. 
(Royal Vendors, Public Meeting Transcript, No. 56 at p. 220; Royal 
Vendors, No. 60 at p. 1) Dixie-Narco addressed the proprietary design 
issue by stating that it is not aware of any intellectual property 
issues that would prevent its competitors from achieving the levels in 
the proposed standards (Dixie-Narco, No. 64 at p. 2) The Joint Comment 
also stated that the proposed standards could be met without using LED 
lighting, which addresses concerns raised by interested parties 
concerning patent limitations on LED lighting use in vending machines. 
(Joint Comment, No. 67 at p. 1).
    For today's final rule, DOE did not receive comments that indicated 
that the energy conservation standards would result in the 
unavailability of standards-compliant products. DOE recognizes that 
there was a mixed response from manufacturers regarding their ability 
to meet the standards for Class A machines. However, DOE notes that the 
technology options that could be used to meet the standard are 
available to all manufacturers, and DOE does not believe manufacturers 
will have to obtain proprietary technologies to meet the energy 
conservation standards set forth by today's rule. As stated in section 
IV.B, all major manufacturers have access to alternative technology 
pathways to meet the efficiency levels in the analysis, including TSL 
6, without the use of proprietary technology. DOE did not receive any 
information or comments that would indicate that the identified 
alternative technologies that could be used to meet energy conservation 
standards set forth by today's final rule will lead to any lessening of 
competition. Section IV.B of today's final rule further discusses 
alternative technology pathways and proprietary technologies.
    In the NOPR, DOE requested comment on whether the proposed standard 
could result in industry consolidation. NAMA submitted a comment 
stating that the industry has

[[Page 44946]]

experienced a trend of industry consolidation that would continue, if 
not accelerate, if equipment costs escalate due to the proposed 
standard. (NAMA, No. 65 at p. 6)
    DOE believes that an increase in equipment costs due to standards 
would have a comparable impact on all manufacturers. Therefore, 
industry participants would not be placed at a comparative 
disadvantage.
    The Attorney General's response is reprinted at the end of today's 
rulemaking.
6. Need of the Nation To Conserve Energy
    Improving the energy efficiency of beverage vending machines, where 
economically justified, would likely improve the security of the 
Nation's energy system by reducing overall demand for energy, thus 
reducing the Nation's reliance on foreign sources of energy. Reduced 
demand would also likely improve the reliability of the electricity 
system, particularly during peak-load periods. As a measure of this 
reduced demand, DOE expects the energy savings from the adopted 
standards to eliminate the need for approximately 0.103 Gigawatts (GW) 
of generating capacity for Class A equipment and 0.015 GW for Class B 
equipment by 2042.
    Enhanced energy savings also produces environmental benefits in the 
form of reduced emissions of air pollutants and greenhouse gases 
associated with energy production. Table VI.24 provides DOE's estimate 
of cumulative CO2, NOX, and Hg emissions 
reductions that would result from the TSLs considered in this 
rulemaking for both Class A and Class B equipment. The expected energy 
savings from these standards for beverage vending machines may also 
reduce the cost of maintaining nationwide emissions standards and 
constraints. In the EA (chapter 16 of the TSD), DOE reports estimated 
annual changes in CO2, NOX, and Hg emissions 
attributable to each TSL.

            Table VI.24--Cumulative CO2 NOX and Hg Emissions Reductions for Classes A and B Equipment
                          [Cumulative reductions for equipment sold from 2012 to 2042]
----------------------------------------------------------------------------------------------------------------
                                                  Trial standard levels for Class A equipment
           Results           -----------------------------------------------------------------------------------
                                   1           2           3           4           5           6           7
----------------------------------------------------------------------------------------------------------------
                                              Emissions reductions
----------------------------------------------------------------------------------------------------------------
CO2 (Mt)....................       0.40        1.89        4.18        6.45        7.63        8.40       10.22
NOX (kt)....................       0.13        0.65        1.43        2.20        2.60        2.87        3.49
----------------------------------------------------------------------------------------------------------------
                                                    Hg (tons)
----------------------------------------------------------------------------------------------------------------
Low.........................       0           0           0           0           0           0           0
High........................       0.008       0.037       0.082       0.127       0.150       0.165       0.201


 
----------------------------------------------------------------------------------------------------------------
                                                        Trial standard levels for Class B equipment
                 Results                 -----------------------------------------------------------------------
                                               1           2           3           4           5           6
----------------------------------------------------------------------------------------------------------------
                                              Emissions reductions
----------------------------------------------------------------------------------------------------------------
CO2 (Mt)................................       0.16        0.24        1.19        1.36        3.66        4.08
NOX (kt)................................       0.05        0.08        0.41        0.46        1.25        1.39
----------------------------------------------------------------------------------------------------------------
                                                    Hg (tons)
----------------------------------------------------------------------------------------------------------------
Low.....................................       0           0           0           0           0           0
High....................................       0.003       0.005       0.023       0.027       0.072       0.080
----------------------------------------------------------------------------------------------------------------
Mt = million metric tons.
kt = thousand tons.
Note: Detail may not sum to total due to rounding.

    As noted in section IV.M of this final rule, DOE does not report 
SO2 emissions reductions from power plants because DOE is 
uncertain that an energy conservation standard would affect the overall 
level of U.S. SO2 emissions due to emissions caps.
    NOX emissions from 28 eastern States and the District of 
Columbia (DC) are limited under the CAIR, published in the Federal 
Register on May 12, 2005. 70 FR 25162 (May 12, 2005). Although CAIR has 
been remanded to EPA by the DC. Circuit, it will remain in effect until 
it is replaced by a rule consistent with the Court's December 23, 2008, 
opinion in North Carolina v. EPA. North Carolina v. EPA, 550 F.3d 1176 
(DC Cir. 2008). These court positions were taken into account in the 
May 2009 NOPR. Thus, the same methodology was followed in estimating 
future NOX emission reductions in the May 2009 NOPR as in 
the final rule. Because all States covered by CAIR opted to reduce 
NOX emissions through participation in cap-and-trade 
programs for electric generating units, emissions from these sources 
are capped across the CAIR region.
    For the 28 eastern States and DC where CAIR is in effect, no 
NOX emissions reductions will occur due to the permanent 
cap. Under caps, physical emissions reductions in those States would 
not result from the energy conservation standards under consideration 
by DOE, but standards might have produced an environmentally related 
economic impact in the form of lower prices for emissions allowance 
credits, if they were large enough. However, DOE determined that in the 
present case, such standards would not produce an environmentally 
related economic impact in the form of lower prices for emissions 
allowance credits, because

[[Page 44947]]

the estimated reduction in NOX emissions or the 
corresponding allowance credits in States covered by the CAIR cap would 
be too small to affect allowance prices for NOX under the 
CAIR. In contrast, new or amended energy conservation standards would 
reduce NOX emissions in those 22 States that are not 
affected by the CAIR, and these emissions could be estimated from NEMS-
BT. As a result, DOE used the NEMS-BT to forecast emission reductions 
from the beverage machine standards in today's final rule.
    As noted in section IV.M, DOE was able to estimate the changes in 
Hg emissions associated with an energy conservation standard as 
follows. DOE notes that the NEMS-BT model used for the NOPR, and used 
as an integral part of today's rulemaking, does not estimate Hg 
emission reductions due to new energy conservation standards, as it 
assumed that Hg emissions would be subject to EPA's CAMR. 70 FR 28606 
(May 18, 2005). CAMR would have permanently capped emissions of mercury 
for new and existing coal-fired plants in all States by 2010. DOE 
assumed that under such a system, energy conservation standards would 
have resulted in no physical effect on these NOX emissions, 
but might have resulted in an environmentally related economic benefit 
in the form of a lower price for emissions allowance credits if those 
credits were large enough. DOE estimated that the change in the Hg 
emissions from energy conservation standards would not be large enough 
to influence allowance prices under CAMR.
    On February 8, 2008, the DC Circuit issued its decision in New 
Jersey v. Environmental Protection Agency to vacate CAMR. 517 F.3d 574 
(DC Cir. 2008). In light of this development and because the NEMS-BT 
model could not be used to directly calculate Hg emission reductions, 
DOE used the Hg emission rates discussed below to calculate emissions 
reductions in the NOPR. This same methodology is used for the final 
rule as well due to the continued fluid environment ``* * * with many 
States planning to enact new laws or make existing laws more 
stringent.'' EIA AEO2009 (March 2009), p. 18. The NEMS-BT has only 
rough estimates of mercury emissions, and it was felt that the range of 
emissions used in the NOPR remain appropriate given these 
circumstances.
    Therefore, rather than using the NEMS-BT model, DOE established a 
range of Hg emission rates to estimate the Hg emissions that could be 
reduced through energy conservation standards. The estimate should 
provide the full range of possible outcomes and DOE has therefore 
selected the low and high values to bracket the uncertainties 
associated with estimating mercury emission reductions. DOE's low 
estimate assumed that future standards would displace electrical 
generation only from natural gas-fired power plants, thereby resulting 
in an effective emission rate of zero. (Under this scenario, coal-fired 
power plant generation would remain unaffected.) The low-end emission 
rate is zero because natural gas-fired power plants have virtually zero 
Hg emissions associated with their operation.
    DOE's high estimate, which assumed that standards would displace 
only coal-fired power plants, was based on a nationwide Hg emission 
rate from AEO2008. (Under this scenario, gas-fired power plant 
generation would remain unaffected.) Because power plant emission rates 
are a function of local regulation, scrubbers, and the mercury content 
of coal, it is extremely difficult to identify a precise high-end 
emission rate. Therefore, the most reasonable estimate is based on the 
assumption that all displaced coal generation would have been emitting 
at the average emission rate for coal generation as specified in the 
April update to AEO2009. As noted previously, because virtually all Hg 
emitted from electricity generation is from coal-fired power plants, 
DOE based the emission rate on the tons of Hg emitted per TWh of coal-
generated electricity. Based on the emission rate for 2006, DOE derived 
a high-end emission rate of 0.0255 tons per TWh. To estimate the 
reduction in Hg emissions, DOE multiplied the emission rate by the 
reduction in coal-generated electricity due to the standards considered 
in the utility impact analysis. These changes in Hg emissions are 
extremely small, ranging from 0 to 0.04 percent of the national base-
case emissions forecast by NEMS-BT, depending on the TSL.
    In the May 2009 NOPR, DOE indicated that it intended to consider 
the likely monetary benefits of CO2 emission reductions 
associated with standards. 74 FR 102, 26020 (May 29, 2009). To put the 
potential monetary benefits from reduced CO2 emissions into 
a form that would likely be most useful to decision makers and 
interested parties, DOE used methods that were similar to those it used 
to calculate the net present value of consumer cost savings. DOE 
converted the estimated yearly reductions in CO2 emissions 
into monetary values that represented the present value, in that year, 
of future benefits resulting from that reduction in emissions, which 
were then discounted from that year to the present using both 3 percent 
and 7 percent discount rates.
    In the May 2009 NOPR, DOE proposed to use the range $0 to $20 per 
ton for 2007 in 2007$. These estimates were originally derived to 
represent the lower and upper bounds of the costs and benefits likely 
to be experienced in the United States. The lower bound was based on an 
assumption of no benefit and the upper bound was based on an estimate 
of the mean value of worldwide impacts due to climate change that was 
reported by the Intergovernmental Panel on Climate Change (IPCC) in its 
``Fourth Assessment Report.'' For today's final rule, DOE is relying on 
a new set of values recently developed by an interagency process that 
conducted a more thorough review of existing estimates of the social 
cost of carbon (SCC).
    The SCC is intended to be a monetary measure of the incremental 
damage resulting from greenhouse gas (GHG) emissions, including, but 
not limited to, net agricultural productivity loss, human health 
effects, property damages from sea level rise, and changes in ecosystem 
services. Any effort to quantify and to monetize the harms associated 
with climate change will raise serious questions of science, economics, 
and ethics. But with full regard for the limits of both quantification 
and monetization, the SCC can be used to provide estimates of the 
social benefits of reductions in GHG emissions.
    For at least three reasons, any single estimate of the SCC will be 
contestable. First, scientific and economic knowledge about the impacts 
of climate change continues to grow. With new and better information 
about relevant questions, including the cost, burdens, and possibility 
of adaptation, current estimates will inevitably change over time. 
Second, some of the likely and potential damages from climate change--
for example, the value society places on adverse impacts on endangered 
species--are not included in all of the existing economic analyses. 
These omissions may turn out to be significant, in the sense that they 
may mean that the best current estimates are too low. Third, 
controversial ethical judgments, including those involving the 
treatment of future generations, play a role in judgments about the SCC 
(see in particular the discussion of the discount rate, below).
    To date, regulations have used a range of values for the SCC. For 
example, a regulation proposed by the U.S. Department of Transportation 
(DOT) in

[[Page 44948]]

2008 assumed a value of $7 per ton CO2 (2006$) for 2011 
emission reductions (with a range of $0-14 for sensitivity analysis). 
Regulation finalized by DOE used a range of $0-$20 (2007$). Both of 
these ranges were designed to reflect the value of damages to the 
United States resulting from carbon emissions, or the ``domestic'' SCC. 
In the final Model Year 2011 Corporate Average Fuel Economy rule, DOT 
used both a domestic SCC value of $2/tCO2 and a global SCC 
value of $33/tCO2 (with sensitivity analysis at $80/
tCO2), increasing at 2.4 percent per year thereafter.
    In recent months, a variety of agencies have worked to develop an 
objective methodology for selecting a range of interim SCC estimates to 
use in regulatory analyses until improved SCC estimates are developed. 
The following summary reflects the initial results of these efforts and 
proposes ranges and values for interim social costs of carbon used in 
this rule. It should be emphasized that the analysis described below is 
preliminary. These complex issues are of course undergoing a process of 
continuing review. Relevant agencies will be evaluating and seeking 
comment on all of the scientific, economic, and ethical issues before 
establishing final estimates for use in future rulemakings.
    The interim judgments resulting from the recent interagency review 
process can be summarized as follows: (a) DOE and other Federal 
agencies should consider the global benefits associated with the 
reductions of CO2 emissions resulting from efficiency 
standards and other similar rulemakings, rather continuing the previous 
focus on domestic benefits; (b) these global benefits should be based 
on SCC estimates (in 2007$) of $55, $33, $19, $10, and $5 per ton of 
CO2 equivalent emitted (or avoided) in 2007; (c) the SCC 
value of emissions that occur (or are avoided) in future years should 
be escalated using an annual growth rate of 3 percent from the current 
values); and (d) domestic benefits are estimated to be approximately 6 
percent of the global values. These interim judgments are based on the 
following:
    1. Global and domestic estimates of SCC. Because of the distinctive 
nature of the climate change problem, estimates of both global and 
domestic SCC values should be considered, but the global measure should 
be ``primary.'' This approach represents a departure from past 
practices, which relied, for the most part, on measures of only 
domestic impacts. As a matter of law, both global and domestic values 
are permissible; the relevant statutory provisions are ambiguous and 
allow the agency to choose either measure. (It is true that Federal 
statutes are presumed not to have extraterritorial effect, in part to 
ensure that the laws of the United States respect the interests of 
foreign sovereigns. But use of a global measure for the SCC does not 
give extraterritorial effect to Federal law and hence does not intrude 
on such interests.)
    It is true that under OMB guidance, analysis from the domestic 
perspective is required, while analysis from the international 
perspective is optional. The domestic decisions of one nation are not 
typically based on a judgment about the effects of those decisions on 
other nations. But the climate change problem is highly unusual in the 
sense that it involves (a) a global public good in which (b) the 
emissions of one nation may inflict significant damages on other 
nations and (c) the United States is actively engaged in promoting an 
international agreement to reduce worldwide emissions.
    In these circumstances, the global measure is preferred. Use of a 
global measure reflects the reality of the problem and is expected to 
contribute to the continuing efforts of the United States to ensure 
that emission reductions occur in many nations.
    Domestic SCC values are also presented. The development of a 
domestic SCC is greatly complicated by the relatively few region- or 
country-specific estimates of the SCC in the literature. One potential 
estimate comes from the DICE (Dynamic Integrated Climate Economy, 
William Nordhaus) model. In an unpublished paper, Nordhaus (2007) 
produced disaggregated SCC estimates using a regional version of the 
DICE model. He reported a U.S. estimate of $1/tCO2 (2007 value, 2007$), 
which is roughly 11 percent of the global value.
    An alternative source of estimates comes from a recent EPA modeling 
effort using the FUND (Climate Framework for Uncertainty, Negotiation 
and Distribution, Center for Integrated Study of the Human Dimensions 
of Global Change) model. The resulting estimates suggest that the ratio 
of domestic to global benefits varies with key parameter assumptions. 
With a 3 percent discount rate, for example, the U.S. benefit is about 
6 percent of the global benefit for the ``central'' (mean) FUND 
results, while, for the corresponding ``high'' estimates associated 
with a higher climate sensitivity and lower global economic growth, the 
U.S. benefit is less than 4 percent of the global benefit. With a 2 
percent discount rate, the U.S. share is about 2 to 5 percent of the 
global estimate.
    Based on this available evidence, a domestic SCC value equal to 6 
percent of the global damages is used in this rulemaking. This figure 
is in the middle of the range of available estimates from the 
literature. It is recognized that the 6 percent figure is approximate 
and highly speculative and alternative approaches will be explored 
before establishing final values for future rulemakings.
    2. Filtering existing analyses. There are numerous SCC estimates in 
the existing literature, and it is legitimate to make use of those 
estimates to produce a figure for current use. A reasonable starting 
point is provided by the meta-analysis in Richard Tol, ``The Social 
Cost of Carbon: Trends, Outliers, and Catastrophes, Economics: The 
Open-Access, Open-Assessment E-Journal,'' Vol. 2, 2008-25. http://www.economics-ejournal.org/economics/journalarticles/2008-25 (2008). 
With that starting point, it is proposed to ``filter'' existing SCC 
estimates by using those that (1) are derived from peer-reviewed 
studies; (2) do not weight the monetized damages to one country more 
than those in other countries; (3) use a ``business as usual'' climate 
scenario; and (4) are based on the most recent published version of 
each of the three major integrated assessment models (IAMs): FUND, DICE 
and PAGE (Policy Analysis of the Greenhouse Effect) Policy.
    Proposal (1) is based on the view that those studies that have been 
subject to peer review are more likely to be reliable than those that 
have not been. Proposal (2) is based on a principle of neutrality and 
simplicity; it does not treat the citizens of one nation differently on 
the basis of speculative or controversial considerations. Proposal (3) 
stems from the judgment that as a general rule, the proper way to 
assess a policy decision is by comparing the implementation of the 
policy against a counterfactual state where the policy is not 
implemented. A departure from this approach would be to consider a more 
dynamic setting in which other countries might implement policies to 
reduce GHG emissions at an unknown future date, and the United States 
could choose to implement such a policy now or in the future.
    Proposal (4) is based on three complementary judgments. First, the 
FUND, PAGE, and DICE models now stand as the most comprehensive and 
reliable efforts to measure the damages from climate change. Second, 
the latest versions of the three IAMs are likely to reflect the most 
recent evidence and learning, and hence they are presumed

[[Page 44949]]

to be superior to those that preceded them. It is acknowledged that 
earlier versions may contain information that is missing from the 
latest versions. Third, any effort to choose among them, or to reject 
one in favor of the others, would be difficult to defend at this time. 
In the absence of a clear reason to choose among them, it is reasonable 
to base the SCC on all of them.
    The agency is keenly aware that the current IAMs fail to include 
all relevant information about the likely impacts from greenhouse gas 
emissions. For example, ecosystem impacts, including species loss, do 
not appear to be included in at least two of the models. Some human 
health impacts, including increases in food-borne illnesses and in the 
quantity and toxicity of airborne allergens, also appear to be 
excluded. In addition, there has been considerable recent discussion of 
the risk of catastrophe and of how best to account for worst-case 
scenarios. It is not clear whether the three IAMs take adequate account 
of these potential effects.
    3. Use a model-weighted average of the estimates at each discount 
rate. At this time, there appears to be no scientifically valid reason 
to prefer any of the three major IAMs (FUND, PAGE, and DICE). 
Consequently, the estimates are based on an equal weighting of 
estimates from each of the models. Among estimates that remain after 
applying the filter, the average of all estimates within a model is 
derived. The estimated SCC is then calculated as the average of the 
three model-specific averages. This approach ensures that the interim 
estimate is not biased towards specific models or more prolific 
authors.
    4. Apply a 3 percent annual growth rate to the chosen SCC values. 
SCC is assumed to increase over time, because future emissions are 
expected to produce larger incremental damages as physical and economic 
systems become more stressed as the magnitude of climate change 
increases. Indeed, an implied growth rate in the SCC is produced by 
most studies that estimate economic damages caused by increased GHG 
emissions in future years. But neither the rate itself nor the 
information necessary to derive its implied value is commonly reported. 
In light of the limited amount of debate thus far about the appropriate 
growth rate of the SCC, applying a rate of 3 percent per year seems 
appropriate at this stage. This value is consistent with the range 
recommended by IPCC (2007) and close to the latest published estimate 
(Hope, 2008).
    For climate change, one of the most complex issues involves the 
appropriate discount rate. OMB's current guidance offers a detailed 
discussion of the relevant issues and calls for discount rates of 3 
percent and 7 percent. It also permits a sensitivity analysis with low 
rates for intergenerational problems. (``If your rule will have 
important intergenerational benefits or costs you might consider a 
further sensitivity analysis using a lower but positive discount rate 
in addition to calculating net benefits using discount rates of 3 and 7 
percent.'') The SCC is being developed within the general context of 
the current guidance.
    The choice of a discount rate, especially over long periods of 
time, raises highly contested and exceedingly difficult questions of 
science, economics, philosophy, and law. See, e.g., William Nordhaus, 
``The Challenge of Global Warming (2008); Nicholas Stern, ``The 
Economics of Climate Change'' (2007); ``Discounting and 
Intergenerational Equity'' (Paul Portney and John Weyant, eds., 1999). 
Under imaginable assumptions, decisions based on cost-benefit analysis 
with high discount rates might harm future generations--at least if 
investments are not made for the benefit of those generations. See 
Robert Lind, ``Analysis for Intergenerational Discounting,'' id. at 
173, 176-177. At the same time, use of low discount rates for 
particular projects might itself harm future generations, by ensuring 
that resources are not used in a way that would greatly benefit them. 
In the context of climate change, questions of intergenerational equity 
are especially important.
    Reasonable arguments support the use of a 3 percent discount rate. 
First, that rate is among the two figures suggested by OMB guidance, 
and hence it fits with existing National policy. Second, it is standard 
to base the discount rate on the compensation that people receive for 
delaying consumption, and the 3 percent rate is close to the risk-free 
rate of return, proxied by the return on long term inflation-adjusted 
U.S. Treasury Bonds. (In the context of climate change, it is possible 
to object to this standard method for deriving the discount rate.) 
Although these rates are currently closer to 2.5 percent, the use of 3 
percent provides an adjustment for the liquidity premium that is 
reflected in these bonds' returns.
    At the same time, other arguments support use of a 5 percent 
discount rate. First, that rate can also be justified by reference to 
the level of compensation for delaying consumption, because it fits 
with market behavior with respect to individuals' willingness to trade 
off consumption across periods as measured by the estimated post-tax 
average real returns to private investment (e.g., the S&P 500). In the 
climate setting, the 5 percent discount rate may be preferable to the 
riskless rate because it is based on risky investments and the return 
to projects to mitigate climate change is also risky. In contrast, the 
3 percent riskless rate may be a more appropriate discount rate for 
projects where the return is known with a high degree of confidence 
(e.g., highway guardrails).
    Second, 5 percent, and not 3 percent, is roughly consistent with 
estimates implied by reasonable inputs to the theoretically derived 
Ramsey equation, which specifies the optimal time path for consumption. 
That equation specifies the optimal discount rate as the sum of two 
components. The first reflects the fact that consumption in the future 
is likely to be higher than consumption today (even accounting for 
climate impacts), so diminishing marginal utility implies that the same 
monetary damage will cause a smaller reduction of utility in the 
future. Standard estimates of this term from the economics literature 
are in the range of 3 to 5 percent. The second component reflects the 
possibility that a lower weight should be placed on utility in the 
future, to account for social impatience or extinction risk, which is 
specified by a pure rate of time preference (PRTP). A conventional 
estimate of the PRTP is 2 percent. (Some observers believe that a 
principle of intergenerational equity suggests that the PRTP should be 
close to zero.) It follows that discount rate of 5 percent is within 
the range of values which are able to be derived from the Ramsey 
equation, albeit at the low end of the range of estimates usually 
associated with Ramsey discounting.
    It is recognized that the arguments above--for use of market 
behavior and the Ramsey equation--face objections in the context of 
climate change, and of course there are alternative approaches. In 
light of climate change, it is possible that consumption in the future 
will not be higher than consumption today, and if so, the Ramsey 
equation will suggest a lower figure. Some people have suggested that a 
very low discount rate, below 3 percent, is justified in light of the 
ethical considerations calling for a principle of intergenerational 
neutrality. See Nicholas Stern, ``The Economics of Climate Change'' 
(2007); for contrary views, see William Nordhaus, The A Question of 
Balance (2008); Martin Weitzman, ``Review of the Stern Review on the 
Economics of Climate Change.'' Journal of Economic Literature, 45(3): 
703-724 (2007). Additionally, some analyses attempt to deal with 
uncertainty with respect to interest rates

[[Page 44950]]

over time; a possible approach enabling the consideration of such 
uncertainties is discussed below. Richard Newell and William Pizer, 
``Discounting the Distant Future: How Much do Uncertain Rates Increase 
Valuations?'' J. Environ. Econ. Manage. 46 (2003) 52-71.
    The application of the methodology outlined above yields estimates 
of the SCC that are reported in Table VI.25. These estimates are 
reported separately using 3 percent and 5 percent discount rates. The 
cells are empty in rows 10 and 11, because these studies did not report 
estimates of the SCC at a 3 percent discount rate. The model-weighted 
means are reported in the final or summary row; they are $33 per 
tCO2 at a 3% discount rate and $5 per tCO2 with a 
5% discount rate.

 Table VI.25--Global Social Cost of Carbon (SCC) Estimates ($/tCO2 in 2007 (2006$)), Based on 3% and 5% Discount
                                                     Rates *
----------------------------------------------------------------------------------------------------------------
                                                                     Climate
                                    Model            Study           scenario           3%              5%
----------------------------------------------------------------------------------------------------------------
 1...........................  FUND...........  Anthoff et al.   FUND default...            6                 -1
                                                 2009.
 2...........................  FUND...........  Anthoff et al.   SRES A1b.......            1                 -1
                                                 2009.
 3...........................  FUND...........  Anthoff et al.   SRES A2........            9                 -1
                                                 2009.
 4...........................  FUND...........  Link and Tol     No THC.........           12                  3
                                                 2004.
 5...........................  FUND...........  Link and Tol     THC continues..           12                  2
                                                 2004.
 6...........................  FUND...........  Guo et al. 2006  Constant PRTP..            5                 -1
 7...........................  FUND...........  Guo et al. 2006  Gollier                   14                  0
                                                                  discount 1.
 8...........................  FUND...........  Guo et al. 2006  Gollier                    7                 -1
                                                                  discount 2.
----------------------------------------------------------------------------------------------------------------
                                                                 FUND Mean......            8.25               0
----------------------------------------------------------------------------------------------------------------
 9...........................  PAGE...........  Wahba & Hope     A2-scen........           57                  7
                                                 2006.
10...........................  PAGE...........  Hope 2006......  ...............  ..............               7
11...........................  DICE...........  Nordhaus 2008..  ...............  ..............               8
----------------------------------------------------------------------------------------------------------------
    Summary....................................................  Model-weighted            33                  5
                                                                  Mean.
----------------------------------------------------------------------------------------------------------------
* The sample includes all peer reviewed, non-equity-weighted estimates included in Tol (2008), Nordhaus (2008),
  Hope (2008), and Anthoff et al. (2009), that are based on the most recent published version of FUND, PAGE, or
  DICE and use business-as-usual climate scenarios. All values are based on the best available information from
  the underlying studies about the base year and year dollars, rather than the Tol (2008) assumption that all
  estimates included in his review are 1995 values in 1995$. All values were updated to 2007 using a 3 percent
  annual growth rate in the SCC, and adjusted for inflation using GDP deflator.

    Analyses have been conducted at $33 and $5 as these represent the 
estimates associated with the 3 percent and 5 percent discount rates, 
respectively. The 3 percent and 5 percent estimates have independent 
appeal and at this time a clear preference for one over the other is 
not warranted. Thus, DOE has also included--and centered its current 
attention on--the average of the estimates associated with these 
discount rates, which is $19. (Based on the $19 global value, the 
domestic value would be $1.14 per ton of CO2 equivalent.)
    It is true that there is uncertainty about interest rates over long 
time horizons. Recognizing that point, Newell and Pizer have made a 
careful effort to adjust for that uncertainty. See Newell and Pizer, 
supra. This is a relatively recent contribution to the literature.
    There are several concerns with using this approach in this 
context. First, it would be a departure from current OMB guidance. 
Second, an approach that would average what emerges from discount rates 
of 3 percent and 5 percent reflects uncertainty about the discount 
rate, but based on a different model of uncertainty. The Newell-Pizer 
approach models discount rate uncertainty as something that evolves 
over time; in contrast, one alternative approach would assume that 
there is a single discount rate with equal probability of 3 percent and 
5 percent.
    Table VI.26 reports on the application of the Newell-Pizer 
adjustments. The precise numbers depend on the assumptions about the 
data generating process that governs interest rates. Columns (1a) and 
(1b) assume that ``random walk'' model best describes the data and uses 
3 percent and 5 percent discount rates, respectively. Columns (2a) and 
(2b) repeat this, except that it assumes a ``mean-reverting'' process. 
As Newell and Pizer report, there is stronger empirical support for the 
random walk model.

  Table VI.26--Global Social Cost of Carbon (SCC) Estimates ($/tCO2 in 2007 (2006$)),* Using Newell & Pizer (2003) Adjustment for Future Discount Rate
                                                                     Uncertainty **
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                          Random-walk model       Mean-reverting model
                                                                                                     ---------------------------------------------------
                                            Model                 Study           Climate scenario         3%           5%           3%           5%
                                                                                                     ---------------------------------------------------
                                                                                                          (1a)         (1b)         (2a)         (2b)
--------------------------------------------------------------------------------------------------------------------------------------------------------
 1................................  FUND................  Anthoff et al. 2009.  FUND default........           10            0            7           -1
 2................................  FUND................  Anthoff et al. 2009.  SRES A1b............            2            0            1           -1
 3................................  FUND................  Anthoff et al. 2009.  SRES A2.............           15            0           10           -1
 4................................  FUND................  Link and Tol 2004...  No THC..............           20            6           13            4
 5................................  FUND................  Link and Tol 2004...  THC continues.......           20            4           13            2
 6................................  FUND................  Guo et al. 2006.....  Constant PRTP.......            9            0            6           -1
 7................................  FUND................  Guo et al. 2006.....  Gollier discount 1..           14            0           14            0
 8................................  FUND................  Guo et al. 2006.....  Gollier discount 2..            7           -1            7           -1
--------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 44951]]

 
                                                                                FUND Mean...........           12            1            9            0
--------------------------------------------------------------------------------------------------------------------------------------------------------
 9................................  PAGE................  Wahba & Hope 2006...  A2-scen.............           97           13           63            8
10................................  PAGE................  Hope 2006...........  ....................  ...........           13  ...........            8
11................................  DICE................  Nordhaus 2008.......  ....................  ...........           15  ...........            9
--------------------------------------------------------------------------------------------------------------------------------------------------------
    Summary...................................................................  Model-weighted Mean.           55           10           36            6
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The sample includes all peer reviewed, non-equity-weighted estimates included in Tol (2008), Nordhaus (2008), Hope (2008), and Anthoff et al. (2009),
  that are based on the most recent published version of FUND, PAGE, or DICE and use business-as-usual climate scenarios. All values are based on the
  best available information from the underlying studies about the base year and year dollars, rather than the Tol (2008) assumption that all estimates
  included in his review are 1995 values in 1995$. All values were updated to 2007 using a 3 percent annual growth rate in the SCC, and adjusted for
  inflation using GDP deflator.
** Assumes a starting discount rate of 3 percent. Newell and Pizer (2003) based adjustment factors are not applied to estimates from Guo et al. (2006)
  that use a different approach to account for discount rate uncertainty (rows 7-8).

    The resulting estimates of the social cost of carbon are 
necessarily greater. When the adjustments from the random walk model 
are applied, the estimates of the social cost of carbon are $10 and 
$55, with the 3 percent and 5 percent discount rates, respectively. The 
application of the mean-reverting adjustment yields estimates of $6 and 
$36.
    Since the random walk model has greater support from the data, 
analyses are also conducted with the value of the SCC set at $10 and 
$55.
    Based on this analysis, DOE has concluded that it is appropriate to 
consider the global benefits of reducing CO2 emissions, 
while also presenting the domestic benefits. Consequently, DOE 
considered in its decision process for this final rule the potential 
global benefits resulting from reduced CO2 emissions valued 
at $5, $10, $19, $30 and $55 per metric ton, and has also presented the 
domestic benefits derived using a value of $1.14 per metric ton. All of 
these values represent emissions that are valued in 2007$. As indicated 
in the analysis summarized above, the value of future emissions is 
determined using a 3 percent escalation rate. The resulting range is 
based on current peer-reviewed estimates of the value of SCC and, DOE 
believes, fairly represents the uncertainty surrounding the global 
benefits resulting from reduced CO2 emissions and, at the 
$1.14 level, also encompasses the likely domestic benefits, DOE also 
concluded, based on the most recent Tol analysis, that it was 
appropriate to escalate these values at 3 percent per year to represent 
the expected increases, over time, of the benefits associated with 
reducing CO2 and other greenhouse gas emissions. Estimates 
of SCC are assumed to increase over time since future emissions are 
expected to produce larger incremental damages as physical and economic 
systems become more stressed as the magnitude of climate change 
increases. Although most studies that estimate economic damages caused 
by increased GHG emissions in future years produce an implied growth 
rate in the SCC, neither the rate itself nor the information necessary 
to derive its implied value is commonly reported. Given the limited 
amount of debate thus far about the appropriate growth rate of the SCC, 
applying a rate of 3 percent per year seems appropriate at this stage. 
This value is consistent with the range recommended by IPCC (2007).
    Table VI.27 and Table VI.28 present the resulting estimates of the 
potential range of NPV benefits associated with reducing CO2 
emissions for both Class A and Class B equipment based on the range of 
values used by DOE for this final rule.

      Table VI.27--Estimates of Savings From CO2 Emissions Reductions at All TSLs and CO2 Prices at a 7 Percent Discount Rate for Class A Equipment
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                           Value of estimated CO2 emission reductions (million 2007$)**
                                             Estimated   -----------------------------------------------------------------------------------------------
                   TSL                    cumulative CO2   CO2 Value of    CO2 Value of    CO2 Value of    CO2 Value of    CO2 Value of    CO2 Value of
                                          (MMt) emission   $1.14/metric    $5/metric ton  $10/metric ton  $19/metric ton  $33/metric ton  $55/metric ton
                                            reductions      ton CO2* $         CO2 $           CO2 $           CO2 $           CO2 $           CO2 $
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.......................................            0.40            0.23            1.00            1.99            3.79            6.58           10.97
2.......................................            1.89            1.09            4.77            9.54           18.13           31.49           52.48
3.......................................            4.18            2.41           10.56           21.12           40.12           69.69          116.14
4.......................................            6.45            3.71           16.28           32.55           61.85          107.43          179.04
5.......................................            7.63            4.39           19.25           38.49           73.13          127.02          211.70
6.......................................            8.40            4.84           21.21           42.42           80.61          140.00          233.34
7.......................................           10.22            5.88           25.80           51.60           98.04          170.28          283.80
--------------------------------------------------------------------------------------------------------------------------------------------------------
* This value per ton represents the domestic negative externalities of CO2 only.


[[Page 44952]]


      Table VI.28--Estimates of Savings From CO2 Emissions Reductions at All TSLs and CO2 Prices at a 3 Percent Discount Rate for Class A Equipment
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                           Value of estimated CO2 emission reductions (million 2007$)**
                                             Estimated   -----------------------------------------------------------------------------------------------
                   TSL                    cumulative CO2   CO2 Value of    CO2 Value of    CO2 Value of    CO2 Value of    CO2 Value of    CO2 Value of
                                          (MMt) emission   $1.14/metric    $5/metric ton  $10/metric ton  $19/metric ton  $33/metric ton  $55/metric ton
                                            reductions      ton CO2* $         CO2 $           CO2 $           CO2 $           CO2 $           CO2 $
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.......................................            0.40            0.46            2.04            4.07            7.73           13.43           22.39
2.......................................            1.89            2.22            9.74           19.47           36.99           64.25          107.09
3.......................................            4.18            4.91           21.55           43.09           81.87          142.20          237.00
4.......................................            6.45            7.57           33.21           66.43          126.21          219.21          365.35
5.......................................            7.63            8.95           39.27           78.54          149.23          259.20          432.00
6.......................................            8.40            9.87           43.29           86.57          164.48          285.68          476.14
7.......................................           10.22           12.00           52.65          105.29          200.06          347.46          579.11
--------------------------------------------------------------------------------------------------------------------------------------------------------
* This value per ton represents the domestic negative externalities of CO2 only.


      Table VI.29--Estimates of Savings From CO2 Emissions Reductions at All TSLs and CO2 Prices at a 7 Percent Discount Rate for Class B Equipment
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                           Value of estimated CO2 emission reductions (million 2007$)**
                                             Estimated   -----------------------------------------------------------------------------------------------
                   TSL                    cumulative CO2   CO2 Value of    CO2 Value of    CO2 Value of    CO2 Value of    CO2 Value of    CO2 Value of
                                          (MMt) emission   $1.14/metric    $5/metric ton  $10/metric ton  $19/metric ton  $33/metric ton  $55/metric ton
                                            reductions      ton CO2* $         CO2 $           CO2 $           CO2 $           CO2 $           CO2 $
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.......................................            0.16            0.09            0.40            0.81            1.53            2.66            4.43
2.......................................            0.24            0.14            0.60            1.20            2.27            3.95            6.58
3.......................................            1.19            0.68            3.00            6.00           11.40           19.81           33.01
4.......................................            1.36            0.78            3.43            6.86           13.04           22.65           37.75
5.......................................            3.66            2.11            9.24           18.48           35.11           60.98          101.64
6.......................................            4.08            2.35           10.29           20.58           39.10           67.91          113.18
--------------------------------------------------------------------------------------------------------------------------------------------------------
* This value per ton represents the domestic negative externalities of CO2 only.


      Table VI.30--Estimates of Savings From CO2 Emissions Reductions at All TSLs and CO2 Prices at a 3 Percent Discount Rate for Class B Equipment
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                           Value of estimated CO2 emission reductions (million 2007$)**
                                             Estimated   -----------------------------------------------------------------------------------------------
                   TSL                    cumulative CO2   CO2 Value of    CO2 Value of    CO2 Value of    CO2 Value of    CO2 Value of    CO2 Value of
                                          (MMt) emission   $1.14/metric    $5/metric ton  $10/metric ton  $19/metric ton  $33/metric ton  $55/metric ton
                                            reductions      ton CO2* $         CO2 $           CO2 $           CO2 $           CO2 $           CO2 $
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.......................................            0.16            0.19            0.82            1.64            3.12            5.42            9.04
2.......................................            0.24            0.28            1.22            2.44            4.64            8.05           13.42
3.......................................            1.19            1.40            6.12           12.25           23.27           40.42           67.36
4.......................................            1.36            1.60            7.00           14.01           26.61           46.22           77.04
5.......................................            3.66            4.30           18.85           37.71           71.65          124.44          207.40
6.......................................            4.08            4.79           21.00           41.99           79.78          138.57          230.95
--------------------------------------------------------------------------------------------------------------------------------------------------------
* This value per ton represents the domestic negative externalities of CO2 only.

    DOE recognizes that scientific and economic knowledge about the 
contribution of CO2 and other GHG to changes in the future 
global climate and the potential resulting damages to the world economy 
continues to evolve rapidly. Thus, any value placed in this rulemaking 
on reducing CO2 emissions is subject to change.
    DOE, together with other Federal agencies, will continue to review 
various methodologies for estimating the monetary value of reductions 
in CO2 and other greenhouse gas emissions. This ongoing 
review will consider the comments on this subject that are part of the 
public record for this and other rulemakings, as well as other 
methodological assumptions and issues. However, consistent with DOE's 
legal obligations, and taking into account the uncertainty involved 
with this particular issue, DOE has included in this final rule the 
most recent values and analyses resulting from the ongoing interagency 
review process.
    DOE also investigated the potential monetary benefit of reduced 
SO2, NOX, and Hg emissions from the TSLs it 
considered. As previously stated, DOE's initial analysis assumed the 
presence of nationwide emission caps on SO2 and Hg, and caps 
on NOX emissions in the 28 States covered by the CAIR. In 
the presence of these caps, DOE concluded that no physical reductions 
in power sector emissions would occur, but that the standards could put 
downward pressure on the prices of emissions allowances in cap-and-
trade markets. Estimating this effect is very difficult because such 
factors as credit banking can change the trajectory of prices. DOE has 
concluded that the effect from energy conservation standards on 
SO2 allowance prices is likely to be negligible based on 
runs of the NEMS-

[[Page 44953]]

BT model. See chapter 16 of the TSD for further details.
    Because the courts have decided to allow the CAIR rule to remain in 
effect, projected annual NOX allowances from NEMS-BT are 
relevant. The update to the AEO2009-based version of NEMS-BT includes 
the representation of CAIR. As noted above, standards would not produce 
an economic impact in the form of lower prices for emissions allowance 
credits in the 28 eastern States and D.C. covered by the CAIR cap. New 
or amended energy conservation standards would reduce NOX 
emissions in those 22 States that are not affected by the CAIR. For the 
area of the United States not covered by the CAIR, DOE estimated the 
monetized value of NOX emissions reductions resulting from 
each of the TSLs considered for today's final rule based on 
environmental damage estimates from the literature. Available estimates 
suggest a very wide range of monetary values for NOX 
emissions, ranging from $370 per ton to $3,800 per ton of 
NOX from stationary sources, measured in 2001$ (equivalent 
to a range of $432 to $4,441 per ton in 2007$). Refer to the OMB, 
Office of Information and Regulatory Affairs, ``2006 Report to Congress 
on the Costs and Benefits of Federal Regulations and Unfunded Mandates 
on State, Local, and Tribal Entities,'' Washington, DC, for additional 
information.
    For Hg emissions reductions, DOE estimated the national monetized 
values resulting from the TSLs considered for today's rule based on 
environmental damage estimates from the literature. DOE conducted 
research for today's final rule and determined that the impact of 
mercury emissions from power plants on humans is considered highly 
uncertain. However, DOE identified two estimates of the environmental 
damage of mercury based on two estimates of the adverse impact of 
childhood exposure to methyl mercury on intelligence quotient (IQ) for 
American children, and subsequent loss of lifetime economic 
productivity resulting from these IQ losses. The high-end estimate is 
based on an estimate of the current aggregate cost of the loss of IQ in 
American children that results from exposure to mercury of U.S. power 
plant origin ($1.3 billion per year in year 2000$), which works out to 
$32.6 million per ton emitted per year (2007$). Refer to L. Trasande et 
al., ``Applying Cost Analyses to Drive Policy that Protects Children,'' 
1076 Ann. N.Y. Acad. Sci. 911 (2006) for additional information. The 
low-end estimate is $0.66 million per ton emitted (in 2004$) or $0.729 
million per ton in 2007$. DOE derived this estimate from a published 
evaluation of mercury control using different methods and assumptions 
from the first study but also based on the present value of the 
lifetime earnings of children exposed. See Ted Gayer and Robert Hahn, 
``Designing Environmental Policy: Lessons from the Regulation of 
Mercury Emissions,'' Regulatory Analysis 05-01, AEI-Brookings Joint 
Center for Regulatory Studies, Washington, DC (2004). A version of this 
paper was published in the Journal of Regulatory Economics in 2006. The 
estimate was derived by back-calculating the annual benefits per ton 
from the net present value of benefits reported in the study. Table 
VI.31 through Table VI.34 present the resulting estimates of the 
potential range of present value benefits associated with reducing 
national NOX and Hg emissions for Class A and B equipment.

Table VI.31--Estimates of Savings From Reducing NOX and Hg Emissions at All Trial Standard Levels at a 7 Percent
                                       Discount Rate for Class A Equipment
----------------------------------------------------------------------------------------------------------------
                                                     Estimated       Value of        Estimated       Value of
                                                  cumulative NOX   estimated NOX   cumulative Hg   estimated Hg
                       TSL                           emission        emission        emission        emission
                                                    reductions      reductions      reductions      reductions
                                                              kt  thousand 2007$            tons  thousand 2007$
----------------------------------------------------------------------------------------------------------------
1...............................................            0.13          15-150           0.008            0-61
2...............................................            0.65          70-716           0.037           0-293
3...............................................            1.43       154-1,584           0.082           0-649
4...............................................            2.20       238-2,442           0.127         0-1,001
5...............................................            2.60       281-2,888           0.150         0-1,183
6...............................................            2.87       310-3,183           0.165         0-1,304
7...............................................            3.49       377-3,871           0.201         0-1,586
----------------------------------------------------------------------------------------------------------------


Table VI.32--Estimates of Savings From Reducing NOX and Hg Emissions at All Trial Standard Levels at a 7 Percent
                                       Discount Rate for Class B Equipment
----------------------------------------------------------------------------------------------------------------
                                                     Estimated       Value of        Estimated       Value of
                                                  cumulative NOX   estimated NOX   cumulative Hg   estimated Hg
                       TSL                           emission        emission        emission        emission
                                                    reductions      reductions      reductions      reductions
                                                              kt  thousand 2007$            tons  thousand 2007$
----------------------------------------------------------------------------------------------------------------
 
1...............................................            0.05            6-60           0.003            0-25
2...............................................            0.08            9-90           0.005            0-37
3...............................................            0.41          44-450           0.023           0-185
4...............................................            0.46          50-515           0.027           0-211
5...............................................            1.25       135-1,386           0.072           0-568
6...............................................            1.39       150-1,544           0.080           0-633
----------------------------------------------------------------------------------------------------------------


[[Page 44954]]


Table VI.33--Estimates of Savings From Reducing NOX and Hg Emissions at All Trial Standard Levels at a 3 Percent
                                       Discount Rate for Class A Equipment
----------------------------------------------------------------------------------------------------------------
                                                     Estimated       Value of        Estimated       Value of
                                                  cumulative NOX   estimated NOX   cumulative Hg   estimated Hg
                       TSL                           emission        emission        emission        emission
                                                    reductions      reductions      reductions      reductions
                                                              kt  thousand 2007$            tons  thousand 2007$
----------------------------------------------------------------------------------------------------------------
1...............................................            0.13          31-317           0.008           0-132
2...............................................            0.65       148-1,516           0.037           0-633
3...............................................            1.43       326-3,356           0.082         0-1,401
4...............................................            2.20       503-5,174           0.127         0-2,160
5...............................................            2.60       595-6,117           0.150         0-2,554
6...............................................            2.87       656-6,742           0.165         0-2,815
7...............................................            3.49       798-8,200           0.201         0-3,424
----------------------------------------------------------------------------------------------------------------


Table VI.34--Estimates of Savings From Reducing NOX and Hg Emissions at All Trial Standard Levels at a 3 Percent
                                       Discount Rate for Class B Equipment
----------------------------------------------------------------------------------------------------------------
                                                     Estimated       Value of        Estimated       Value of
                                                  cumulative NOX   estimated NOX   cumulative Hg   estimated Hg
                       TSL                           emission        emission        emission        emission
                                                    reductions      reductions      reductions      reductions
                                                              kt  thousand 2007$            tons  thousand 2007$
----------------------------------------------------------------------------------------------------------------
1...............................................            0.05          12-128           0.003            0-53
2...............................................            0.08          18-190           0.005            0-79
3...............................................            0.41          93-954           0.023           0-398
4...............................................            0.46       106-1,091           0.027           0-455
5...............................................            1.25       286-2,937           0.072         0-1,226
6...............................................            1.39       318-3,270           0.080         0-1,365
----------------------------------------------------------------------------------------------------------------

7. Other Factors
    EPCA allows the Secretary of Energy, in determining whether a 
standard is economically justified, to consider any other factors that 
the Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i) and 
(v)) Under this provision, DOE considered LCC impacts on identifiable 
groups of customers, such as customers of different business types who 
may be disproportionately affected by any national energy conservation 
standard level. DOE also considered the reduction in generated capacity 
that could result from the imposition of any national energy 
conservation standard level. DOE identified no factors other than those 
already considered above for analysis.

D. Conclusion

    EPCA specifies that any new or amended energy conservation standard 
for any type (or class) of covered equipment shall be designed to 
achieve the maximum improvement in energy efficiency that the Secretary 
determines is technologically feasible and economically justified. (42 
U.S.C. 6295(o)(2)(A) and 6316(e)(1)) In determining whether a standard 
is economically justified, the Secretary must determine whether the 
benefits of the standard exceed its burdens. (42 U.S.C. 
6295(o)(2)(B)(i) and 6316(e)(1)) The new or amended standard must 
``result in significant conservation of energy.'' (42 U.S.C. 
6295(o)(3)(B) and 6316(e)(1))
    DOE established a separate set of TSLs for Class A and B beverage 
vending machines. DOE considered seven TSLs for Class A and six TSLs 
for Class B beverage vending machines. The following discussion briefly 
explains the development of the TSLs, consideration of the TSLs 
(starting with the most stringent) under the statutory factors, and 
DOE's conclusions.
    Table VI.35 and Table VI.36 present summaries of quantitative 
analysis results for each TSL for Class A and B equipment, 
respectively, based on the assumptions and methodology discussed above. 
These tables present the results or, in some cases, ranges of results, 
for each TSL. The ranges reported for industry impacts represent the 
results of the different markup scenarios DOE used to estimate impacts.

                                       Table VI.35--Summary of Results for Class A Equipment Based Upon the AEO2009 Reference Case Energy Price Forecast *
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                        Trial standard level
             Results              --------------------------------------------------------------------------------------------------------------------------------------------------------------
                                             1                      2                      3                      4                      5                      6                     7
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Primary Energy Saved (quads).....  0.007................  0.031................  0.069................  0.107................  0.127................  0.139...............  0.170.
7% Discount Rate.................  0.002................  0.010................  0.021................  0.032................  0.038................  0.042...............  0.051.
3% Discount Rate.................  0.004................  0.018................  0.040................  0.061................  0.073................  0.080...............  0.097.

[[Page 44955]]

 
Generation Capacity Reduction      0.005................  0.023................  0.051................  0.079................  0.094................  0.103...............  0.126.
 (GW) **.
NPV 2008$ billion:
    7% Discount Rate.............  0.015................  0.068................  0.112................  0.175................  0.192................  0.185...............  (1.449).
    3% Discount Rate.............  0.034................  0.153................  0.268................  0.415................  0.464................  0.465...............  (2.466).
Industry Impacts:
    Industry NPV (2008$ million).  0.0-(0.0)............  0.2-(0.3)............  0.3-(1.1)............  (1.3)-(3.5)..........  (1.3)-(4.1)..........  (7.9)-(11.1)........  (3.2)-(28.3).
    Industry NPV (% change)......  0.1-(0.1)............  0.5-(0.6)............  0.7-(2.5)............  (2.9)-(7.9)..........  (3.0)-(9.3)..........  (18.0)-(25.1).......  (7.2)-(64.2).
Cumulative Emissions
 Impacts[dagger]:
    CO2 Reductions (Mt)..........  0.4..................  1.9..................  4.2..................  6.4..................  7.6..................  8.4.................  10.2.
    Value of CO2 Reductions at 7%  0.2 to 11............  1.1 to 52.5..........  2.4 to 116.1.........  3.7 to 179...........  4.4 to 211.7.........  4.8 to 233.3........  5.9 to 283.8.
     Discount Rate (million
     2007$).
    Value of CO2 Reductions at 3%  0.5 to 22.4..........  2.2 to 107.1.........  4.9 to 237...........  7.6 to 365.4.........  9 to 432.............  9.9 to 476.1........  12 to 579.1.
     Discount Rate (million
     2007$).
NOX Reductions (kt)..............  0.1..................  0.6..................  1.4..................  2.2..................  2.6..................  2.9.................  3.5.
Value of NOX Reductions at 7%      15-150...............  70-716...............  154-1,584............  238-2,442............  281-2,888............  310-3,183...........  377-3,871.
 Discount Rate (thousand 2007$).
Value of NOX Reductions at 3%      31-317...............  148-1,516............  326-3,356............  503-5,174............  595-6,117............  656-6,742...........  798-8,200.
 Discount Rate (thousand 2007$).
Hg Reductions (tons).............  0.008................  0.037................  0.082................  0.127................  0.150................  0.165...............  0.201.
Value of Hg Reductions at 7%       0-61.................  0-293................  0-649................  0-1,001..............  0-1,183..............  0-1,304.............  0-1,586.
 Discount Rate (thousand 2007$).
Value of Hg reductions at 3%       0-132................  0-633................  0-1,401..............  0-2,160..............  0-2,554..............  0-2,815.............  0-3,424.
 Discount Rate (thousand 2007$).
Life-Cycle Cost:
    Net Savings (%)..............  10...................  100..................  98...................  98...................  97...................  95..................  0.
    Net Increase (%).............  0....................  0....................  2....................  2....................  3....................  5...................  100.
    No Change (%)................  90...................  0....................  0....................  0....................  0....................  0...................  0.
    Mean LCC Savings (2008$).....  136..................  182..................  218..................  272..................  285..................  277.................  (1,281).
    Mean PBP (years).............  2.2..................  2.4..................  3.2..................  3.4..................  3.7..................  4.1.................  75.2.
Direct Domestic Employment         1....................  5....................  15...................  23...................  30...................  36..................  259.
 Impacts (2012) (jobs).
Indirect Domestic Employment       13...................  82...................  172..................  265..................  313..................  344.................  475.
 Impacts (2042) (jobs).
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values. For LCCs, a negative value means an increase in LCC.
** Change in installed generation capacity by 2042 based on April 2009 update to the AEO2009 Reference Case.
[dagger] CO2 emissions impacts include physical reductions at power plants. NOX emissions impacts include physical reductions at power plants as well as production of emissions allowance
  credits where NOX emissions are subject to emissions caps.


                    Table VI.36--Summary of Results for Class B Equipment Based on the AEO2009 Reference Case Energy Price Forecast *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                   Trial standard level
            Results             ------------------------------------------------------------------------------------------------------------------------
                                          1                    2                   3                   4                   5                   6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Primary Energy Saved (quads)...  0.003..............  0.004.............  0.020.............  0.023.............  0.061.............  0.068.
7% Discount Rate...............  0.001..............  0.001.............  0.006.............  0.007.............  0.018.............  0.020.
3% Discount Rate...............  0.002..............  0.002.............  0.012.............  0.013.............  0.035.............  0.039.
Generation Capacity Reduction    0.002..............  0.003.............  0.015.............  0.017.............  0.045.............  0.050.
 (GW) **.
NPV (2008$ billion):
    7% Discount Rate...........  0.005..............  0.006.............  (0.003)...........  (0.014)...........  (0.621)...........  (2.452).
    3% Discount Rate...........  0.011..............  0.014.............  0.011.............  (0.006)...........  (1.083............  (4.427)
Industry Impacts:
    Industry NPV (2008$          0..................  0.................  (0.6)-(1.2).......  (1.0)-(1.7).......  (7.4)-(16.5)......  (3.2)-(33.5).
     million).
    Industry NPV (% Change)....  0.1-(0.1)..........  0.1-(0.2).........  (1.8)-(3.5).......  (3.0)-(5.0).......  (21.9)-(48.9).....  (9.5)-(99.4).
Cumulative Emissions
 Impacts[dagger]:
    CO2 Reductions (Mt)........  0.2................  0.2...............  1.2...............  1.4...............  3.7...............  4.1.

[[Page 44956]]

 
    Value of CO2 reductions at   0.1 to 4.4.........  0.1 to 6.6........  0.7 to 33.........  0.8 to 37.8.......  2.1 to 101.6......  2.3 to 113.2.
     7% discount rate (million
     2007$).
    Value of CO2 reductions at   0.2 to 9...........  0.3 to 13.4.......  1.4 to 67.4.......  1.6 to 77.........  4.3 to 207.4......  4.8 to 230.9.
     3% discount rate (million
     2007$).
NOX Reductions (kt)............  0.1................  0.1...............  0.4...............  0.5...............  1.3...............  1.4.
Value of NOX reductions at 7%    6-60...............  9-90..............  44-450............  50-515............  135-1,386.........  150-1,544.
 discount rate (thousand 2007$).
Value of NOX reductions at 3%    12-128.............  18-190............  93-954............  106-1,091.........  286-2,937.........  318-3,270.
 discount rate (thousand 2007$).
Hg Reductions (t)..............  0.003..............  0.005.............  0.023.............  0.027.............  0.072.............  0.080.
Value of Hg reductions at 7%     0-25...............  0-37..............  0-185.............  0-211.............  0-568.............  0-633.
 discount rate (thousand 2007$).
Value of Hg reductions at 3%     0-53...............  0-79..............  0-398.............  0-455.............  0-1,226...........  0-1,365.
 discount rate (thousand 2007$).
Life-Cycle Cost:
    Net Savings (%)............  10.................  91................  72................  62................  0.................  0.
    Net Increase (%)...........  0..................  9.................  28................  38................  100...............  100.
    No Change (%)..............  90.................  0.................  0.................  0.................  0.................  0.
    Mean LCC Savings (2008$)...  42.................  48................  37................  27................  (554).............  (2,291).
    Mean PBP (years)...........  3.4................  4.5...............  6.8...............  7.8...............  84.9..............  99.9.
Direct Domestic Employment       0..................  1.................  8.................  11................  97................  316.
 Impacts (2012) (jobs).
Indirect Employment Impacts      6..................  10................  49................  55................  162...............  216.
 (2042) (jobs).
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values. For LCCs, a negative value means an increase in LCC.
** Change in installed generation capacity by 2042 based on the April 2009 update to the AEO2009 reference case.
[dagger] CO2 emissions impacts include physical reductions at power plants. NOX emissions impacts include physical reductions at power plants as well as
  production of emissions allowance credits where NOX emissions are subject to emissions caps.

1. Class A Equipment
    First, DOE considered TSL 7, the most efficient level for Class A 
beverage vending machines that was determined to be technologically 
feasible. TSL 7 would save a cumulative 0.170 quads of energy through 
2042, an amount DOE considers significant. For the Nation as a whole, 
DOE projects that TSL 7 would result in a net decrease of $1.449 
billion in NPV using a discount rate of 7 percent and $2.47 billion 
discounted at 3 percent. The emissions reductions at TSL 7 are 10.22 Mt 
of CO2, up to 3.49 kt of NOX, and up to 0.201 ton 
of Hg. These reductions have a value in 2007$ of up to $283.8 million 
for CO2, up to $3.9 million for NOX, and up to 
$1.6 million for Hg at a discount rate of 7 percent. These reductions 
have a value in 2007$ of up to $579.1 million for CO2, up to 
$8.2 million for NOX, and up to $3.4 million for Hg at a 
discount rate of 3 percent. DOE also estimates that at TSL 7, total 
electric generating capacity in 2042 will decrease compared to the base 
case by 0.126 GW.
    At TSL 7, DOE projects that the average Class A beverage vending 
machine customer will experience an increase in LCC of $1,281 compared 
to the baseline. At TSL 7, DOE estimates the fraction of customers 
experiencing LCC increases will be 100 percent. The mean PBP for the 
average Class A beverage vending machine customer at TSL 7 compared to 
the baseline level is projected to be 75.2 years.
    At higher TSLs, manufacturers have a more difficult time 
maintaining current operating profit levels, as higher standards 
increase recurring operating costs such as capital expenditures, 
purchased materials, and carrying inventory. Therefore, TSL 7 is more 
likely to cause impacts in the higher end of the ranges (i.e., a drop 
of 64.2 percent in INPV). Manufacturers expressed great concern about 
high capital and equipment conversion costs necessary to convert 
production to standards-compliant equipment. At TSL 7, all 
manufacturers would have to completely redesign their production lines, 
and the risk of very large negative impacts on the industry from 
reduction in manufacturers' operating profits levels is high.
    After carefully considering the analysis and weighing the benefits 
and burdens of TSL 7, DOE finds that the benefits to the Nation of TSL 
7 (i.e., energy savings and emissions reductions, including 
environmental and monetary benefits) do not outweigh the burdens (i.e., 
a decrease of $1,738 million in NPV and a decrease of 64.2 percent in 
INPV). Because the burdens of TSL 7 outweigh the benefits, TSL 7 is not 
economically justified. Therefore, DOE rejects TSL 7 for Class A 
equipment.
    DOE then considered TSL 6, which provides for Class A equipment the 
maximum efficiency level that the analysis showed to have positive NPV 
to the Nation. TSL 6 would likely save a cumulative 0.139 quads of 
energy through 2042, an amount DOE considers significant. For the 
Nation as a whole, DOE projects that TSL 6 would result in a net 
increase of $185 million in NPV using a discount rate of 7 percent and 
$465 million using a discount rate of 3 percent. The estimated 
emissions reductions at TSL 6 are up to 8.4 Mt of CO2, up to 
2.87 kt of NOX, and up to 0.165 tons of Hg. These reductions 
have a value in 2007$ of up to $233.3 million for CO2, up to 
$3.2 million for NOx, and up to $1.3 million for Hg, at a discount rate 
of 7 percent, and a value in 2007$ of up to $476.1 million for 
CO2, up to $6.7 million for NOX, and up to $2.8 
million for Hg, at a discount rate of 3 percent. Total electric 
generating capacity in 2042 is estimated to decrease compared to the 
base case by 0.103 GW under TSL 6.
    At TSL 6, DOE projects that the average beverage vending machine 
customer will experience a reduction in LCC of $277 compared to the 
baseline. The mean PBP for the average beverage vending machine 
customer at TSL 6 is

[[Page 44957]]

projected to be 4.1 years compared to the purchase of baseline 
equipment.
    At TSL 6, DOE believes the majority of manufacturers would need to 
completely redesign all Class A equipment offered for sale. Therefore, 
DOE expects beverage vending machine manufacturers would have some 
difficulty maintaining current operating profit levels with higher 
production costs. Similar to TSL 7, it is more likely that the higher 
end of the range of impacts would be reached at TSL 6 (i.e., a decrease 
of 25.1 percent in INPV). However, the higher end of the range of 
impacts at TSL 6 is lower than the higher end of the range of impacts 
for TSL 7. In addition, Class A equipment showed significant positive 
LCC savings on a national average basis and customers did not 
experience an increase in LCC with a standard at TSL 6 compared to the 
baseline. The PBP calculated for Class A equipment was less than the 
life of the equipment.
    After carefully considering the analysis and weighing the benefits 
and burdens of TSL 6, DOE finds that for Class A equipment, TSL 6 
represents the maximum improvement in energy efficiency that is 
technologically feasible and economically justified. TSL 6 is 
technologically feasible because the technologies required to achieve 
these levels are already in existence. TSL 6 is economically justified 
because the benefits to the Nation [i.e., increased energy savings of 
0.139 quads, emissions reductions including environmental and monetary 
benefits of, for example, up to 8.4 Mt of carbon dioxide emissions 
reduction with an associated value in 2007$ of up to $233.3 million at 
a discount rate of 7 percent ($476.1 million at 3 percent), and an 
increase in NPV of $185 million at 7 percent discount rate to $465 
million at 3 percent discount rate] outweigh the costs (i.e., a 
decrease of 25.1 percent in INPV). In addition, the carbon dioxide 
reductions at the central value of $19 would further increase NPV by 
$80.6 million (2007$) at 7% discount rate and by $164 million at a 3 
percent discount rate. The combined NPV, including the value of 
CO2 emissions reductions, would be $265.6 million at 7 
percent discount rate and $629.0 million at a 3 percent discount rate. 
There is also the added benefit of a reduction in total electrical 
generating capacity in 2042 compared to the base case of 0.103 GW under 
the TSL 6 scenario. Therefore, DOE establishes TSL 6 as the energy 
conservation standard for Class A beverage vending machines in this 
final rule.
2. Class B Equipment
    First, DOE considered TSL 6, the most efficient level for Class B 
beverage vending machines. TSL 6 would likely save a cumulative 0.068 
quads of energy through 2042, an amount DOE considers significant. For 
the Nation as a whole, DOE projects that TSL 6 would result in a net 
decrease of $2.452 billion in NPV using a discount rate of 7 percent, 
and $4.427 billion in NPV using a discount rate of 3 percent. The 
emissions reductions at TSL 6 are up to 4.08 Mt of CO2, up 
to 1.39 kt of NOX, and up to 0.080 ton of Hg. These 
reductions have a value in 2007$ of up to $113.2 million for 
CO2, up to $1.5 million for NOX, and up to 
$633,000 for Hg at a discount rate of 7 percent and a value of up to 
$230.9 million for CO2, up to $3.3 million for 
NOX, and up to $1.4 million for Hg at a discount rate of 3 
percent. DOE also estimates that at TSL 6, total electric generating 
capacity in 2042 will decrease compared to the base case by 0.050 GW.
    At TSL 6, DOE projects that for the average customer, the LCC of 
Class B beverage vending machines will increase by $2,291 compared to 
the baseline. At TSL 6, DOE estimates the fraction of customers 
experiencing LCC increases will be 100 percent. The mean PBP for the 
average Class B beverage vending machine customer at TSL 6 compared to 
the baseline is projected to be almost 100 years.
    At higher TSLs, manufacturers have large increases in production 
costs, resulting in difficulty maintaining operating profit. Therefore, 
it is more likely that the higher end of the range of impacts would be 
reached at TSL 6 (i.e., a decrease of 99.4 percent in INPV). At TSL 6, 
all manufacturers would have to completely redesign their production 
lines, and there is the risk of very large negative impacts on the 
industry if manufacturers' operating profit levels are reduced.
    After carefully considering the analysis and weighing the benefits 
and burdens of TSL 6, DOE finds that the benefits to the Nation of TSL 
6 (i.e., energy savings and emissions reductions including 
environmental and monetary benefits) do not outweigh the burdens (i.e., 
a decrease of $2.45 to $4.43 billion in NPV, a decrease of 99.4 percent 
in INPV, and an economic burden on customers). DOE finds that the 
burdens of TSL 6 outweigh the benefits and TSL 6 is not economically 
justified. Therefore, DOE rejects TSL 6 for Class B equipment.
    TSL 5, the next most efficient level, would likely save a 
cumulative 0.061 quads of energy through 2042, an amount DOE considers 
significant. For the Nation as a whole, DOE projects that TSL 5 would 
result in a net decrease of $621 million in NPV, using a discount rate 
of 7 percent and $1.083 billion in NPV, using a discount rate of 3 
percent. The estimated emissions reductions at TSL 5 are up to 3.66 Mt 
of CO2, up to 1.25 kt of NOX, and up to 0.072 ton 
of Hg. These reductions have a value in 2007$ of up to $101.6 million 
for CO2, up to $1.4 million for NOX, and up to 
$568,000 for Hg at a discount rate of 7 percent, and a value in 2007$ 
of up to $207.4 million for CO2, up to $2.9 million for 
NOX, and up to $1.2 million for Hg at a discount rate of 3 
percent. Total electric generating capacity in 2042 is estimated to 
decrease compared to the base case by 0.045 GW at TSL 5.
    At TSL 5, DOE projects that the average Class B beverage vending 
machine customer will experience an increase in LCC of $554 compared to 
the baseline. The mean PBP for the average Class B beverage vending 
machine customer at TSL 5 is projected to be 84.9 years compared to the 
purchase of baseline equipment.
    At TSL 5, DOE believes the majority of manufacturers would need to 
completely redesign all Class B equipment offered for sale at TSL 5. 
Therefore, DOE expects that manufacturers will have difficulty 
maintaining operating profit with larger cost increases. Though the 
higher end of the range of expected impacts is lower for TSL 5 than for 
TSL 6, TSL 5 would likely cause impacts at the higher end of the range 
(i.e., a decrease of 48.9 percent in INPV).
    After carefully considering the analysis and evaluating the 
benefits and burdens of TSL 5, DOE finds that the benefits to the 
Nation of TSL 5 (i.e., energy savings and emissions reductions, 
including environmental and monetary benefits) do not outweigh the 
burdens (i.e., a decrease of $621 to 1.08 billion in NPV and a decrease 
of 48.9 percent in INPV as well as the economic burden on customers). 
DOE finds that the burdens of TSL 5 outweigh the benefits and TSL 5 is 
not economically justified. Therefore, DOE rejects TSL 5 for Class B 
equipment.
    TSL 4 would save a cumulative 0.023 quads of energy through 2042, 
an amount DOE considers significant. For the Nation as a whole, DOE 
projects that TSL 4 would result in a net decrease of $14 million in 
NPV using a discount rate of 7 percent and a net decrease of $6 million 
in NPV using a discount rate of 3 percent. The estimated emissions 
reductions at TSL 4 are up to 1.36 Mt of CO2, up to 0.46 kt 
of NOX, and up to 0.027 ton of Hg. Based on previously

[[Page 44958]]

developed estimates, these reductions could have a value in 2007$ of up 
to $37.8 million for CO2, up to $515,000 for NOX, 
and up to $211,000 for Hg at a discount rate of 7 percent and a value 
in 2007$ of up to $77.0 million for CO2, up to $1.1 million 
for NOX, and up to $455,000 for Hg at a discount rate of 3 
percent. Total electric generating capacity in 2042 is estimated to 
decrease compared to the base case by 0.017 GW at TSL 4.
    At TSL 4, DOE projects that the average Class B beverage vending 
machine customer will experience a reduction in LCC of $27 compared to 
the baseline. The mean PBP for the average Class B beverage vending 
machine customer at TSL 4 is projected to be 7.8 years compared to the 
purchase of baseline equipment.
    At TSL 4, DOE believes that while a complete redesign would not be 
required, manufacturers would need to redesign most existing Class B 
equipment offered for sale. Therefore, while perhaps to a somewhat 
lesser extent than for TSL 5 and TSL 6, DOE expects that manufacturers 
will have difficulty maintaining operating profit with high increases 
in production costs. In addition, while the higher end of the range of 
impacts expected from TSL 4 is less than those for TSL 5 and TSL 6, it 
is still likely that the higher end of the range of impacts would be 
reached at TSL 4 (i.e., a decrease of 5.0 percent in INPV). However, 
compared to the baseline, Class B equipment showed positive LCC savings 
on a national average and most customers did not experience an increase 
in LCC at TSL 4. The PBP calculated for Class B equipment was less than 
the lifetime of the equipment.
    After carefully considering the analysis and evaluating the 
benefits and burdens of TSL 4, DOE finds that the benefits to the 
Nation of TSL 4 (i.e., energy savings and emissions reductions, 
including estimates of the monetary value of the environmental 
benefits) do not outweigh the burdens (i.e., a decrease of $6 million 
to $14 million in NPV and a decrease of up to 5.0 percent in INPV, 
primarily from equipment redesigns). DOE finds that the burdens, 
especially the likelihood of net economic losses indicated by negative 
NPV values at both discount rates, of TSL 4 outweigh the benefits and 
TSL 4 is not economically justified. Therefore, DOE rejects TSL 4 for 
Class B equipment.
    TSL 3 would save a cumulative 0.020 quads of energy through 2042, 
an amount DOE considers significant. For the Nation as a whole, DOE 
projects that TSL 3 would result in a decrease in NPV of $3 million, 
using a discount rate of 7 percent. However, using a 3 percent discount 
rate, DOE projects that TSL 3 would result in a net increase of $11 
million in NPV. The estimated emissions reductions at TSL 3 are up to 
1.2 Mt of CO2, up to 0.41 kt of NOX, and up to 
0.023 ton of Hg. Based on previously developed estimates, these 
reductions could have a value in 2007$ of up to $33.0 million for 
CO2, up to $450,000 for NOX, and up to $185,000 
for Hg at a discount rate of 7 percent. At a 3 percent discount rate, 
these reductions could have a value in 2007$ of up to $67.4 million for 
CO2, up to $954,000 for NOX, and up to $398,000 
for Hg. Total electric generating capacity in 2042 is estimated to 
decrease compared to the base case by 0.015 GW at TSL 3.
    At TSL 3, DOE projects that the average Class B beverage vending 
machine customer will experience a reduction in LCC of $37 compared to 
the baseline. The mean PBP for the average Class B beverage vending 
machine customer at TSL 3 is projected to be 6.8 years compared to the 
purchase of baseline equipment.
    At TSL 3, DOE believes manufacturers would have to make some 
component switches to comply with the standard, but most manufacturers 
will not have to significantly alter their production process. These 
minor design changes would not raise the production costs beyond the 
cost of most equipment sold today, resulting in minimal impacts on 
industry value. Compared to the baseline, Class B equipment showed 
significant positive LCC savings on a national average and customers 
did not experience an increase in LCC at TSL 3. The PBP calculated for 
Class B equipment was less than the lifetime of the equipment.
    After carefully considering the analysis and weighing the benefits 
and burdens of TSL 3, DOE finds that for Class B equipment, TSL 3 
represents the maximum improvement in energy efficiency that is 
technologically feasible and economically justified. TSL 3 is 
technologically feasible because the technologies required to achieve 
these levels are already in existence. TSL 3 is economically justified 
because DOE finds that the benefits to the Nation [i.e., an increase of 
$11 million in NPV using a 3 percent discount rate, energy savings, and 
emissions reductions, including environmental and monetary benefits of, 
for example, up to 1.2 Mt of carbon dioxide emissions reduction with an 
associated value in 2007$ of up to $33 million at a discount rate of 7 
percent and $67.4 million at a discount rate of 3 percent, and an 
increase in NPV of $11 million at 3 percent discount rate] outweigh the 
costs (i.e., a $3 million loss in NPV at a 7 percent discount rate and 
a decrease of 3.5 percent in INPV, primarily from upgraded components). 
In addition, the carbon dioxide reductions at the central value of $19 
would further increase NPV by $11.4 million (2007$) at 7% discount rate 
and by $23.3 million at a 3 percent discount rate. The combined NPV, 
including the value of CO2 emissions reductions, would be 
$8.4 million at a 7 percent discount rate and $34.3 million at a 3 
percent discount rate. DOE finds that, while there is a greater 
likelihood of net economic losses at TSL 4 (indicated by negative NPV 
values at 3 percent and 7 percent discount rates), TSL 3 is more 
favorable since it shows a greater possibility of a net economic 
benefit (indicated by a positive NPV value at a 3 percent discount 
rate). There is also the added benefit of a reduction in total 
electrical generating capacity in 2042 compared to the base case of 
0.015 GW under the TSL 3 scenario. Therefore, DOE establishes TSL 3 as 
the energy conservation standard for Class B beverage vending machines 
in this final rule.
    DOE also calculated the annualized values for certain benefits and 
costs at the various TSLs. Table VI.37 shows the annualized values for 
Class A equipment and Table VI.38 shows the annualized values for Class 
B equipment.

[[Page 44959]]



                                             Table VI.37--Annualized Benefits and Costs for Class A Machines
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              Primary estimate (AEO   Low estimate (low growth     High estimate (high
                                                                                 reference case)                case)                 growth case)
          TSL                     Category                   Unit          -----------------------------------------------------------------------------
                                                                                 7%           3%           7%           3%           7%           3%
--------------------------------------------------------------------------------------------------------------------------------------------------------
1......................                                                              Benefits
                        --------------------------------------------------------------------------------------------------------------------------------
                         Annualized Consumer        2008$.................        1.96         2.29         1.79         2.09         2.07         2.41
                          Benefits ($millions/
                          year).
                         Annualized Emission        CO2 (Mt)..............        0.01         0.01         0.01         0.01         0.01         0.01
                          Reductions.
                                                    NOX (kT)..............       0.003        0.004        0.003        0.004        0.003        0.004
                                                    Hg (T)................       0.000        0.000        0.000        0.000        0.000        0.000
                        --------------------------------------------------------------------------------------------------------------------------------
                                                                                      Costs
                        --------------------------------------------------------------------------------------------------------------------------------
                         Annualized Consumer Costs  2008$.................        0.45         0.43         0.45         0.43         0.45         0.43
                          ($millions/year).
                        --------------------------------------------------------------------------------------------------------------------------------
                                                                           Net Consumer Benefits/Costs
                        --------------------------------------------------------------------------------------------------------------------------------
                         Net Consumer Benefits      2008$.................        1.50         1.86         1.34         1.65         1.62         1.98
                          (excluding emission
                          benefits) ($millions/
                          year).
--------------------------------------------------------------------------------------------------------------------------------------------------------
2......................                                                              Benefits
                        --------------------------------------------------------------------------------------------------------------------------------
                         Annualized Consumer        2008$.................        9.23        10.81         8.46         9.83         9.76        11.38
                          Benefits ($millions/
                          year).
                         Annualized Emission        CO2 (Mt)..............        0.06         0.06         0.06         0.06         0.06         0.06
                          Reductions.
                                                    NOX (kT)..............       0.016        0.019        0.016        0.019        0.016        0.019
                                                    Hg (T)................       0.001        0.001        0.001        0.001        0.001        0.001
                        --------------------------------------------------------------------------------------------------------------------------------
                                                                                      Costs
                        --------------------------------------------------------------------------------------------------------------------------------
                         Annualized Consumer Costs  2008$.................        2.56         2.46         2.56         2.46         2.56         2.46
                          ($millions/year).
                        --------------------------------------------------------------------------------------------------------------------------------
                                                                           Net Consumer Benefits/Costs
                        --------------------------------------------------------------------------------------------------------------------------------
                         Net Consumer Benefits      2008$.................        6.67         8.34         5.90         7.37         7.20         8.92
                          (excluding emission
                          benefits) ($millions/
                          year).
--------------------------------------------------------------------------------------------------------------------------------------------------------
3......................                                                              Benefits
                        --------------------------------------------------------------------------------------------------------------------------------
                         Annualized Consumer        2008$.................       19.32        22.66        17.61        20.51        20.50        23.93
                          Benefits ($millions/
                          year).
                         Annualized Emission        CO2 (Mt)..............        0.12         0.13         0.12         0.13         0.12         0.13
                          Reductions.
                                                    NOX (kT)..............       0.035        0.041        0.035        0.041        0.035        0.041
                                                    Hg (T)................       0.002        0.002        0.002        0.002        0.002        0.002
                        --------------------------------------------------------------------------------------------------------------------------------
                                                                                      Costs
                        --------------------------------------------------------------------------------------------------------------------------------
                         Annualized Consumer Costs  2008$.................        8.33         8.02         8.33         8.02         8.33         8.02
                          ($millions/year).
                        --------------------------------------------------------------------------------------------------------------------------------
                                                                           Net Consumer Benefits/Costs
                        --------------------------------------------------------------------------------------------------------------------------------
                         Net Consumer Benefits      2008$.................       10.99        14.64         9.29        12.50        12.17        15.92
                          (excluding emission
                          benefits) ($millions/
                          year).
--------------------------------------------------------------------------------------------------------------------------------------------------------
4......................                                                              Benefits
                        --------------------------------------------------------------------------------------------------------------------------------
                         Annualized Consumer        2008$.................       29.80        34.96        27.18        31.65        31.62        36.92
                          Benefits ($millions/
                          year).
                         Annualized Emission        CO2 (Mt)..............        0.19         0.20         0.19         0.20         0.19         0.20
                          Reductions.
                                                    NOX (kT)..............       0.054        0.064        0.054        0.064        0.054        0.064
                                                    Hg (T)................       0.003        0.004        0.003        0.004        0.003        0.004
                        --------------------------------------------------------------------------------------------------------------------------------

[[Page 44960]]

 
                                                                                      Costs
                        --------------------------------------------------------------------------------------------------------------------------------
                         Annualized Consumer Costs  2008$.................       12.74        12.26        12.74        12.26        12.74        12.26
                          ($millions/year).
                        --------------------------------------------------------------------------------------------------------------------------------
                                                                           Net Consumer Benefits/Costs
                        --------------------------------------------------------------------------------------------------------------------------------
                         Net Consumer Benefits      2008$.................       17.06        22.70        14.44        19.39        18.89        24.66
                          (excluding emission
                          benefits) ($millions/
                          year).
--------------------------------------------------------------------------------------------------------------------------------------------------------
5......................                                                              Benefits
                        --------------------------------------------------------------------------------------------------------------------------------
                         Annualized Consumer        2008$.................       34.83        40.87        31.72        36.95        36.98        43.19
                          Benefits ($millions/
                          year).
                         Annualized Emission        CO2 (Mt)..............        0.22         0.24         0.22         0.24         0.22         0.24
                          Reductions.
                                                    NOX (kT)..............       0.064        0.036        0.064        0.036        0.064        0.036
                                                    Hg (T)................       0.004        0.004        0.004        0.004        0.004        0.004
                        --------------------------------------------------------------------------------------------------------------------------------
                                                                                      Costs
                        --------------------------------------------------------------------------------------------------------------------------------
                         Annualized Consumer Costs  2008$.................       16.10        15.50        16.10        15.50        16.10        15.50
                          ($millions/year).
                        --------------------------------------------------------------------------------------------------------------------------------
                                                                           Net Consumer Benefits/Costs
                        --------------------------------------------------------------------------------------------------------------------------------
                         Net Consumer Benefits      2008$.................       18.73        25.37        15.63        21.46        20.88        27.69
                          (excluding emission
                          benefits) ($millions/
                          year).
--------------------------------------------------------------------------------------------------------------------------------------------------------
6......................                                                              Benefits
                        --------------------------------------------------------------------------------------------------------------------------------
                         Annualized Consumer        2008$.................       37.67        44.22        34.24        39.91        40.04        46.78
                          Benefits ($millions/
                          year).
                         Annualized Emission        CO2 (Mt)..............        0.25         0.26         0.25         0.26         0.25         0.26
                          Reductions.
                                                    NOX (kT)..............       0.070        0.039        0.070        0.039        0.070        0.039
                                                    Hg (T)................       0.004        0.005        0.004        0.005        0.004        0.005
                        --------------------------------------------------------------------------------------------------------------------------------
                                                                                      Costs
                        --------------------------------------------------------------------------------------------------------------------------------
                         Annualized Consumer Costs  2008$.................       19.56        18.83        19.56        18.83        19.56        18.83
                          ($millions/year).
                        --------------------------------------------------------------------------------------------------------------------------------
                                                                           Net Consumer Benefits/Costs
                        --------------------------------------------------------------------------------------------------------------------------------
                         Net Consumer Benefits      2008$.................       18.11        25.40        14.68        21.08        20.48        27.95
                          (excluding emission
                          benefits) ($millions/
                          year).
--------------------------------------------------------------------------------------------------------------------------------------------------------
7......................                                                              Benefits
                        --------------------------------------------------------------------------------------------------------------------------------
                         Annualized Consumer        2008$.................       (0.59)        1.02        (4.76)       (4.22)        2.30         4.13
                          Benefits ($millions/
                          year).
                         Annualized Emission        CO2 (Mt)..............        0.30         0.32         0.30         0.32         0.30         0.32
                          Reductions.
                                                    NOX (kT)..............       0.085        0.048        0.085        0.048        0.085        0.048
                                                    Hg (T)................       0.005        0.006        0.005        0.006        0.005        0.006
                        --------------------------------------------------------------------------------------------------------------------------------
                                                                                      Costs
                        --------------------------------------------------------------------------------------------------------------------------------
                         Annualized Consumer Costs  2008$.................      141.02       135.74       141.02       135.74       141.02       135.74
                          ($millions/year).
                        --------------------------------------------------------------------------------------------------------------------------------
                                                                           Net Consumer Benefits/Costs
                        --------------------------------------------------------------------------------------------------------------------------------
                         Net Consumer Benefits      2008$.................     (141.61)     (134.72)     (145.77)     (139.97)     (138.72)     (131.61)
                          (excluding emission
                          benefits) ($millions/
                          year).
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 44961]]


                                             Table VI.38--Annualized Benefits and Costs for Class B Machines
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              Primary estimate (AEO   Low estimate (low growth     High estimate (high
                                                                                 reference case)                case)                 growth case)
          TSL                     Category                   Unit          -----------------------------------------------------------------------------
                                                                                 7%           3%           7%           3%           7%           3%
--------------------------------------------------------------------------------------------------------------------------------------------------------
1......................                                                              Benefits
                        --------------------------------------------------------------------------------------------------------------------------------
                         Annualized Consumer        2008$.................        0.73         0.86         0.66         0.77         0.77         0.90
                          Benefits ($millions/
                          year).
                         Annualized Emission        CO2 (Mt)..............        0.00         0.00         0.00         0.00         0.00         0.00
                          Reductions.
                                                    NOX (kT)..............       0.001        0.002        0.001        0.002        0.001        0.002
                                                    Hg (T)................       0.000        0.000        0.000        0.000        0.000        0.000
                        --------------------------------------------------------------------------------------------------------------------------------
                                                                                      Costs
                        --------------------------------------------------------------------------------------------------------------------------------
                         Annualized Consumer Costs  2008$.................        0.26         0.25         0.26         0.25         0.26         0.25
                          ($millions/year).
                        --------------------------------------------------------------------------------------------------------------------------------
                                                                           Net Consumer Benefits/Costs
                        --------------------------------------------------------------------------------------------------------------------------------
                         Net Consumer Benefits      2008$.................        0.47         0.61         0.41         0.53         0.52         0.66
                          (excluding emission
                          benefits) ($millions/
                          year).
--------------------------------------------------------------------------------------------------------------------------------------------------------
2......................                                                              Benefits
                        --------------------------------------------------------------------------------------------------------------------------------
                         Annualized Consumer        2008$.................        1.03         1.21         0.94         1.09         1.10         1.28
                          Benefits ($millions/
                          year).
                         Annualized Emission        CO2 (Mt)..............        0.01         0.01         0.01         0.01         0.01         0.01
                          Reductions.
                                                    NOX (kT)..............       0.002        0.002        0.002        0.002        0.002        0.002
                                                    Hg (T)................       0.000        0.000        0.000        0.000        0.000        0.000
                        --------------------------------------------------------------------------------------------------------------------------------
                                                                                      Costs
                        --------------------------------------------------------------------------------------------------------------------------------
                         Annualized Consumer Costs  2008$.................        0.48         0.46         0.48         0.46         0.48         0.46
                          ($millions/year).
                        --------------------------------------------------------------------------------------------------------------------------------
                                                                           Net Consumer Benefits/Costs
                        --------------------------------------------------------------------------------------------------------------------------------
                         Net Consumer Benefits      2008$.................        0.56         0.76         0.46         0.63         0.62         0.83
                          (excluding emission
                          benefits) ($millions/
                          year).
--------------------------------------------------------------------------------------------------------------------------------------------------------
3......................                                                              Benefits
                        --------------------------------------------------------------------------------------------------------------------------------
                         Annualized Consumer        2008$.................        4.11         4.87         3.62         4.26         4.44         5.23
                          Benefits ($millions/
                          year).
                         Annualized Emission        CO2 (Mt)..............        0.03         0.04         0.03         0.04         0.03         0.04
                          Reductions.
                                                    NOX (kT)..............       0.010        0.012        0.010        0.012        0.010        0.012
                                                    Hg (T)................       0.001        0.001        0.001        0.001        0.001        0.001
                        --------------------------------------------------------------------------------------------------------------------------------
                                                                                      Costs
                        --------------------------------------------------------------------------------------------------------------------------------
                         Annualized Consumer Costs  2008$.................        4.44         4.28         4.44         4.28         4.44         4.28
                          ($millions/year).
                        --------------------------------------------------------------------------------------------------------------------------------
                                                                           Net Consumer Benefits/Costs
                        --------------------------------------------------------------------------------------------------------------------------------
                         Net Consumer Benefits      2008$.................       (0.34)        0.59        (0.82)       (0.02)       (0.00)        0.95
                          (excluding emission
                          benefits) ($millions/
                          year).
--------------------------------------------------------------------------------------------------------------------------------------------------------
4......................                                                              Benefits
                        --------------------------------------------------------------------------------------------------------------------------------
                         Annualized Consumer        2008$.................        4.36         5.19         3.81         4.49         4.75         5.60
                          Benefits ($millions/
                          year).
                         Annualized Emission        CO2 (Mt)..............        0.04         0.04         0.04         0.04         0.04         0.04
                          Reductions.
                                                    NOX (kT)..............       0.011        0.013        0.011        0.013        0.011        0.013
                                                    Hg (T)................       0.001        0.001        0.001        0.001        0.001        0.001
                        --------------------------------------------------------------------------------------------------------------------------------

[[Page 44962]]

 
                                                                                      Costs
                        --------------------------------------------------------------------------------------------------------------------------------
                         Annualized Consumer Costs  2008$.................        5.72         5.51         5.72         5.51         5.72         5.51
                          ($millions/year).
                        --------------------------------------------------------------------------------------------------------------------------------
                                                                           Net Consumer Benefits/Costs
                        --------------------------------------------------------------------------------------------------------------------------------
                         Net Consumer Benefits      2008$.................       (1.36)       (0.32)       (1.91)       (1.02)       (0.97)        0.09
                          (excluding emission
                          benefits) ($millions/
                          year).
--------------------------------------------------------------------------------------------------------------------------------------------------------
5......................                                                              Benefits
                        --------------------------------------------------------------------------------------------------------------------------------
                         Annualized Consumer        2008$.................       (7.83)       (8.30)       (9.32)      (10.18)       (6.80)       (7.18)
                          Benefits ($millions/
                          year).
                         Annualized Emission        CO2 (Mt)..............        0.11         0.11         0.11         0.11         0.11         0.11
                          Reductions.
                                                    NOX (kT)..............       0.031        0.036        0.031        0.036        0.031        0.036
                                                    Hg (T)................       0.002        0.002        0.002        0.002        0.002        0.002
                        --------------------------------------------------------------------------------------------------------------------------------
                                                                                      Costs
                        --------------------------------------------------------------------------------------------------------------------------------
                         Annualized Consumer Costs  2008$.................       52.84        50.86        52.84        50.86        52.84        50.86
                          ($millions/year).
                        --------------------------------------------------------------------------------------------------------------------------------
                                                                           Net Consumer Benefits/Costs
                        --------------------------------------------------------------------------------------------------------------------------------
                         Net Consumer Benefits      2008$.................      (60.67)      (59.16)      (62.16)      (61.04)      (59.63)      (58.05)
                          (excluding emission
                          benefits) ($millions/
                          year).
--------------------------------------------------------------------------------------------------------------------------------------------------------
6......................                                                              Benefits
                        --------------------------------------------------------------------------------------------------------------------------------
                         Annualized Consumer        2008$.................      (67.78)      (76.40)      (69.44)      (78.49)      (66.63)      (75.16)
                          Benefits ($millions/
                          year).
                         Annualized Emission        CO2 (Mt)..............        0.12         0.13         0.12         0.13         0.12         0.13
                          Reductions.
                                                    NOX (kT)..............       0.034        0.040        0.034        0.040        0.034        0.040
                                                    Hg (T)................       0.002        0.002        0.002        0.002        0.002        0.002
                        --------------------------------------------------------------------------------------------------------------------------------
                                                                                      Costs
                        --------------------------------------------------------------------------------------------------------------------------------
                         Annualized Consumer Costs  2008$.................      171.92       165.49       171.92       165.49       171.92       165.49
                          ($millions/year).
                        --------------------------------------------------------------------------------------------------------------------------------
                                                                           Net Consumer Benefits/Costs
                        --------------------------------------------------------------------------------------------------------------------------------
                         Net Consumer Benefits      2008$.................     (239.70)     (241.89)     (241.36)     (243.98)     (238.55)     (240.65)
                          (excluding emission
                          benefits) ($millions/
                          year).
--------------------------------------------------------------------------------------------------------------------------------------------------------

VII. Procedural Issues and Regulatory Review

A. Review Under Executive Order 12866

    Executive Order 12866 requires that each agency identify in writing 
the problem the agency intends to address that warrants new agency 
action (including, where applicable, the failures of private markets or 
public institutions), as well as assess the significance of that 
problem to determine whether any new regulation is necessary. Executive 
Order 12866, section 1(b)(1).
    Because today's regulatory action is a significant regulatory 
action under section 3(f)(1) of Executive Order 12866, section 6(a)(3) 
of the Executive Order requires DOE to prepare and submit for review to 
the Office of Information and Regulatory Affairs (OIRA) in OMB an 
assessment of the costs and benefits of today's rule. Accordingly, DOE 
presented to OIRA for review the draft final rule and other documents 
prepared for this rulemaking, including a regulatory impact analysis 
(RIA). These documents are included in the rulemaking record and are 
available for public review in the Resource Room of the Building 
Technologies Program, 950 L'Enfant Plaza, SW., 6th Floor, Washington, 
DC 20024, (202) 586-2945, between 9 a.m. and 4 p.m. Monday through 
Friday, except Federal holidays.
    The May 2009 NOPR contained a summary of the RIA, which evaluated 
the extent to which major alternatives to standards for beverage 
vending machines could achieve significant energy savings at reasonable 
cost, as compared to the effectiveness of the proposed rule. 74 FR 
26067-69. The complete RIA (Regulatory Impact

[[Page 44963]]

Analysis for Proposed Energy Conservation Standards for Beverage 
Vending Machines) is contained in the TSD prepared for today's rule. 
The RIA consists of: (1) A statement of the problem addressed by this 
regulation and the mandate for government action, (2) a description and 
analysis of the feasible policy alternatives to this regulation, (3) a 
quantitative comparison of the impacts of the alternatives, and (4) the 
national economic impacts of today's standards.
    The major alternatives DOE analyzed were: (1) No new regulatory 
action; (2) financial incentives, including tax credits and rebates; 
(3) revisions to voluntary energy efficiency targets; (4) early 
replacement; (5) bulk government purchases; and (6) prescriptive 
standards that would mandate design requirements. As explained in 
detail in Section VI. of the May 2009 NOPR, none of the alternatives 
DOE examined would save as much energy or have an NPV as high as the 
proposed standards. The same conclusion applies to the standards in 
today's rule. Also, several of the alternatives would require new 
enabling legislation, because DOE does not have authority to implement 
those alternatives. Additional detail on the regulatory alternatives is 
found in the RIA chapter in the TSD.

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, and a final 
regulatory flexibility analysis (FRFA) for any such rule that an agency 
adopts as a final rule, unless the agency certifies that the rule, if 
promulgated, will not have a significant economic impact on a 
substantial number of small entities. A regulatory flexibility analysis 
examines the impact of the rule on small entities and considers 
alternative ways of reducing negative impacts. Also, as required by 
Executive Order 13272, ``Proper Consideration of Small Entities in 
Agency Rulemaking,'' 67 FR 53461 (August 16, 2002), DOE published 
procedures and policies on February 19, 2003 to ensure that the 
potential impacts of its rules on small entities are properly 
considered during the rulemaking process. 68 FR 7990. DOE has made its 
procedures and policies available on the Office of General Counsel's 
Web site: http://www.gc.doe.gov.
    For the beverage vending machine manufacturing industry, the SBA 
defines small businesses as manufacturing enterprises with 500 or fewer 
employees. See http://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf. DOE used this small business definition 
to determine whether any small entities would be required to comply 
with the rule. (65 FR 30836, 30848 (May 15, 2000), as amended at 65 FR 
53533, 53544 (September 5, 2000) and codified at 13 CFR part 121.) The 
size standards are listed by North American Industry Classification 
System (NAICS) code and industry description. Beverage vending machine 
manufacturing is classified under NAICS 333311, ``Automatic Vending 
Machine Manufacturing.''
    As explained in the May 2009 NOPR, the beverage vending machine 
industry is characterized by both large and small manufacturers that 
service a wide range of customers, including large bottlers and direct 
end-users. Almost all beverage vending machines sold in the United 
States are manufactured domestically. Three major companies supply 
roughly 90 percent of all equipment sold. Most of the sales for these 
companies are made to a few major bottlers. One of the major 
manufacturers with significant market share is considered a small 
business. The remaining 10 percent of industry shipments is believed to 
be supplied by five manufacturers. All of these companies not supplying 
the major bottlers are considered small businesses.
    Before issuing this notice of proposed rulemaking, DOE contacted 
all identified small business manufacturers and provided a 
questionnaire seeking information to better understand the impacts of 
the proposed standards on small businesses and how these impacts differ 
between large and small manufacturers. The small business interview 
questionnaire is a condensed version of the manufacturer interview 
guide described in the manufacturer impact analysis, chapter 13 of the 
TSD.
    In accordance with the Regulatory Flexibility Act, during the NOPR 
stage of this rulemaking, DOE prepared an IRFA which describes 
potential impacts on small businesses associated with beverage vending 
machine design and manufacture, and incorporates information received 
in response to the questionnaire. The IRFA addresses the following: (1) 
The reasons the regulatory action is being considered, (2) the 
objectives of and legal basis for the proposed rule, (3) a description 
and estimate of the number of small entities that would be affected by 
the rule, (4) an estimate of the reporting, recordkeeping, and other 
compliance costs for the proposed rule, (5) an analysis of significant 
alternatives to the proposed rule that could lessen any 
disproportionate burdens on small entities, and (6) a discussion of any 
duplicative, overlapping, and conflicting rules. (``A Guide for 
Government Agencies: How to Comply with the Regulatory Flexibility Act, 
Chapter 2, Office of Advocacy, U.S. Small Business Administration, 
2003,'' available at http://www.sba.gov/advo/laws/rfaguide.pdf) DOE 
divided the estimate of the compliance costs for small businesses into 
two categories representing potential impacts to small business 
manufacturers with major market shares, and potential impacts to small 
business manufacturers with small market shares. DOE also analyzed 
alternatives that could reduce the disproportionate impact of the 
proposed standards on small vending machine manufacturers. DOE provided 
the complete IRFA in the May 2009 NOPR, 74 FR 26069-72, for review by 
the Chief Counsel for Advocacy of the SBA and the public. Chapter 13 of 
the TSD contains more information about the impact of this rulemaking 
on manufacturers.
    For today's final rule, DOE has prepared a FRFA, which is presented 
in the following discussion. DOE developed this FRFA for review by the 
Chief Counsel for Advocacy of the SBA and the public. The FRFA below is 
written in accordance with the requirements of the Regulatory 
Flexibility Act.
1. Need for and Objectives of the Final Rule
    Part A of subchapter III (42 U.S.C. 6291-6309) provides for the 
Energy Conservation Program for Consumer Products Other Than 
Automobiles (this part was originally titled Part B, but was 
redesignated Part A after Part B of Title III was repealed by Pub. L. 
109-58; similarly, Part C, Certain Industrial Equipment, was 
redesignated Part A-1). The amendments to EPCA contained in the EPACT 
2005, Public Law 109-58, include new or amended energy conservation 
standards and test procedures for some of these products, and direct 
DOE to undertake rulemakings to promulgate such requirements. In 
particular, section 135(c)(4) of EPACT 2005 amends EPCA to direct DOE 
to prescribe energy conservation standards for beverage vending 
machines. (42 U.S.C. 6295(v)) Hence, DOE is publishing today's final 
rule on energy conservation standards for refrigerated bottle or canned 
beverage vending machines pursuant to Part A of EPCA. Because of its 
placement in Part A of Title III of EPCA, the rulemaking for beverage 
vending

[[Page 44964]]

machine energy conservation standards is bound by the requirements of 
42 U.S.C. 6295. However, since beverage vending machines are commercial 
equipment, DOE intends to place the new requirements for beverage 
vending machines in Title 10 of the CFR, Part 431 (Energy Efficiency 
Program for Certain Commercial and Industrial Equipment), which is 
consistent with DOE's previous action to incorporate the EPACT 2005 
requirements for commercial equipment. The location of the provisions 
within the CFR does not affect either their substance or applicable 
procedure, so DOE is placing them in the appropriate CFR part based on 
their nature or type.
    EPCA provides that any new or amended standard for beverage vending 
machines must be designed to achieve the maximum improvement in energy 
efficiency that is technologically feasible and economically justified. 
(42 U.S.C. 6295(o)(2)(A) and (v)) EPCA precludes DOE from adopting any 
standard that would not result in significant conservation of energy. 
(42 U.S.C. 6295(o)(3)(B) and (v)) Moreover, DOE may not prescribe a 
standard for certain equipment if no test procedure has been 
established for that equipment, or if DOE determines by rule that the 
standard is not technologically feasible or economically justified and 
will not result in significant conservation of energy. (42 U.S.C. 
6295(o)(3)(A)(B) and (v)) To determine whether economic justification 
exists, DOE reviews comments received and conducts analysis to 
determine whether the economic benefits of the proposed standard exceed 
the burdens to the greatest extent practicable, taking into 
consideration seven factors set forth in 42 U.S.C. 6295(o)(2)(B) and 
(v). (See section II.A of this preamble.)
    EPCA also states that the Secretary may not prescribe an amended or 
new standard if interested parties have established by a preponderance 
of the evidence that the standard is likely to result in the 
unavailability in the United States of any equipment type (or class) 
with performance characteristics (including reliability), features, 
sizes, capacities, and volumes that are substantially the same as those 
generally available in the United States. (42 U.S.C. 6295(o)(4) and 
(v))
    As set forth above, DOE has determined that the standards adopted 
in today's rule are designed to achieve the maximum improvement in 
energy efficiency that is technologically feasible and economically 
justified. DOE has also determined that the standards will result in a 
significant conservation of energy and will not result in the 
unavailability in the United States of any equipment type or class with 
performance characteristics that are substantially the same as those 
generally available in the United States. Chapter 1 of the TSD provides 
further background information on this rulemaking.
2. Significant Issues Raised by Public Comments
    DOE summarized comments from interested parties, including beverage 
vending machine manufacturers, in sections IV and V of this preamble. 
DOE did not receive any comments regarding impacts specific to small 
business manufacturers for the adoption of TSL 6 for Class A machines 
and TSL 3 for Class B machines in today's final rule or the 
alternatives identified in section 6 of the IRFA, ``Significant 
Alternatives to the Rule.'' No changes were made to the IRFA as a 
result of public comment.
3. Description and Estimated Number of Small Entities Regulated
    To establish a list of small beverage vending machine 
manufacturers, DOE examined publicly available data and contacted 
manufacturers to determine if they meet the SBA's definition of a small 
manufacturing facility and if their manufacturing facilities are 
located within the United States. Based on this analysis, DOE confirmed 
that there are six small manufacturers of beverage vending machines.
    One of these six small manufacturers is one of the top three major 
manufacturers, who supply roughly 90 percent of all equipment sales. 
The full line of products offered by this small manufacturer and the 
remaining two major manufacturers, which are considered large 
businesses, are covered under this rulemaking (i.e., equipment that 
dispenses refrigerated bottled or canned beverages). The remaining five 
small manufacturers comprise approximately 10 percent of industry 
shipments for covered equipment. See chapter 3 of the TSD for further 
details on the beverage vending machine market. In its examination of 
the beverage vending machine industry, DOE has determined that these 
small business manufacturers with small market shares differ 
significantly from the major manufacturers. The primary difference 
between these small business manufacturers and the major manufacturers 
is that these five small business manufacturers produce a wide variety 
of specialty and niche equipment that are not covered under this 
rulemaking, such as machines that dispense a wide range of items 
including snacks, heated drinks, electronic goods, DVDs, bowling 
supplies, and medical products. Furthermore, unlike the major 
manufacturers, these small business manufacturers do not sell equipment 
to the major bottlers because they do not produce covered equipment in 
the necessary volumes. Instead, these manufacturers rely on providing 
customized equipment in much smaller volumes.
    Before issuing the NOPR, requests for interviews were delivered 
electronically to the six manufacturers that met the small business 
criteria. DOE received responses from fewer than half and conducted an 
on-site interview with the single manufacturer who agreed to be 
interviewed. In the questionnaire and during the interview, DOE 
requested information that would determine if there are differential 
impacts on small manufacturers that may result from new energy 
conservation standards. See chapter 13 of the TSD for further 
discussion about the methodology DOE used in its analysis of 
manufacturer impacts, including small manufacturers.
4. Description and Estimate of Reporting, Recordkeeping, and Other 
Compliance Requirements
    Potential impacts on manufacturers include impacts associated with 
beverage vending machine design and manufacturing. The level of 
research and development needed to meet energy conservation standards 
increases with more stringent standards. As mentioned previously, DOE 
examined the level of impacts that small manufacturers would incur by 
identifying small business manufacturers and sending them a short 
questionnaire seeking information to better understand the impacts of 
the proposed standard that are unique to small manufacturers. Because 
not all of the small business manufacturers responded to the 
questionnaire, it is difficult to specifically quantify how the impacts 
of the proposed standards differ between large and small manufacturers. 
However, as explained below, DOE found that the impacts of the proposed 
standard on the small business manufacturer with a major market share 
would not differ greatly from those of its larger competitors; the 
impacts would not be significant for the remaining small business 
manufacturers.
a. Small Business Manufacturer With a Major Market Share
    The small business manufacturer that has a major market share in 
covered equipment will not be disproportionately disadvantaged by the 
proposed standard. It has a large shipment volume as a major supplier 
to

[[Page 44965]]

the large bottlers and its access to capital is nearly identical to its 
larger competitors. Its large shipment volume allows it to distribute 
the added cost of compliance across its products, similar to the large 
manufacturers. Correspondingly, it echoed the large manufacturers' 
concerns about new energy conservation standards, including conversion 
costs needed to meet standards, meeting customer needs, and current 
market conditions. DOE found no significant differences in the R&D 
emphasis or marketing strategies between this small business 
manufacturer with a major market share and large manufacturers. As a 
result, DOE does not believe the impacts of the proposed standard will 
be significantly different for the small business manufacturer with a 
large market share when compared to those expected for the large 
business manufacturers.
b. Small Business Manufacturers With Small Market Shares
    DOE does not expect the small businesses with small market shares 
to be compromised by the energy conservation standard finalized in 
today's rule. DOE estimates that only approximately 40 percent of their 
offered vending equipment is covered by the standard. The majority of 
equipment offered is specialty or niche equipment. As a result, the 
primary source of revenue for these small manufacturers comes from 
supplying a market underserved by the major manufacturers of covered 
equipment. These small manufacturers may balance the cost disadvantage 
experienced in making their covered equipment compliant with today's 
standard by charging premium prices for their non-covered niche 
equipment. As a result, DOE believes the standard will not affect the 
competitive position of the small business manufacturers with small 
market shares in covered equipment.
    DOE was able to estimate a portion of the differential impacts of 
the standard on the small manufacturers with small market shares by 
evaluating costs associated with equipment testing and certification. 
Manufacturers must test the energy performance of each basic model it 
manufactures to determine compliance with energy conservation standards 
and testing requirements. Therefore, DOE examined the number of basic 
models available from each manufacturer to determine an estimate for 
the differential in overall compliance costs. The number of basic 
models attributed to each manufacturer is based on an examination of 
the different models advertised by each. DOE estimates the cost of 
testing a piece of covered equipment to be approximately $2,000. A 
typical major manufacturer has approximately 23 basic models, 
approximately 85 percent of which are covered and would require 
separate standards compliance certifications. Therefore, DOE estimates 
that a typical major manufacturer will incur approximately $44,013 in 
annual costs for standards compliance certifications. DOE estimates 
that a typical small manufacturer with small market share has 
approximately 27 basic models, 44 percent of which are covered and 
would require separate standards compliance certifications. DOE 
estimates that a typical small manufacturer will incur approximately 
$14,380 in annual costs for standards compliance certifications. 
According to this comparison, the cost of certification for a small 
manufacturer with small market share is significantly lower than that 
of a major manufacturer.
    As stated above, DOE estimated that there would be some 
differential impacts associated with beverage vending machine design 
and manufacturing on small manufacturers. DOE requested comments on how 
small business manufacturers would be affected due to new energy 
conversation standards. Specifically, DOE requested comments on the 
compliance costs and other impacts to small manufacturers that do not 
supply the high-volume customers of beverage vending machines. However, 
DOE did not receive any comments regarding impacts specific to small 
business manufacturers.
5. Steps DOE Has Taken To Minimize the Economic Impact on Small 
Manufacturers
    In consideration of the benefits and burdens of standards, 
including the burdens posed on small manufacturers, DOE concluded that 
TSL 6 for Class A machines and TSL 3 for Class B machines are the 
highest levels that can be justified for beverage vending machines. 
Therefore, while the lower TSLs analyzed may lessen the impacts on 
small entities, DOE is precluded from adopting them based on the 
requirements of EPCA.
    Section VI.C.2 discusses how business impacts, including small 
business impacts, entered into DOE's selection of today's standards for 
beverage vending machines. DOE made its decision regarding standards by 
beginning with the highest level considered (TSL 7 for Class A machines 
and TSL 6 for Class B machines) and successively eliminating TSLs until 
it found a TSL that is both technically feasible and economically 
justified, taking into account other EPCA criteria. DOE expects today's 
standard to have little or no differential impact on small 
manufacturers of beverage vending machines.
    As explained in part 6 of the IRFA, Significant Alternatives to the 
Rule, DOE expects that the differential impact on small beverage 
vending machine manufacturers would be less severe in moving from TSL 5 
to TSL 6 for Class A than it would be in moving from TSL 6 to TSL 7. 
For Class B machines, DOE expects that the differential impact on small 
beverage vending machine manufacturers would be less significant in 
moving from TSL 2 to TSL 3 than it would be in moving from TSL 4 to TSL 
5. Higher TSLs would place excessive burdens on manufacturers, 
including small manufacturers of beverage vending machines. Such 
burdens would include research and development costs and also a 
potential reduction of profit margins by limiting the flexibility of 
customers to choose design options. However, the differential impact on 
small businesses is expected to be lower at TSL 6 for Class A machines 
and TSL 3 for Class B machines because research and development efforts 
are less at lower TSLs. Chapter 13 of the TSD contains additional 
information about the impact of this rulemaking on manufacturers.
    The TSD includes a regulatory impact analysis (RIA) (chapter 17), 
which discusses the following policy alternatives to the standards 
announced today that may lessen impacts on small entities: (1) No new 
regulatory action, (2) financial incentives including rebates or tax 
credits, (3) revisions to voluntary energy efficiency targets such as 
ENERGY STAR program criteria, (4) bulk government purchases, (5) early 
replacement incentive programs, and (6) prescriptive standards that 
would mandate design requirements (e.g., lighting and refrigeration 
controls). DOE did not consider these alternatives further because they 
are either not feasible to implement, or not expected to result in 
energy savings as large as those that would be achieved by the standard 
levels under consideration.
    DOE considered the following alternatives in its IRFA in accordance 
with Section 603(c) of the RFA: (1) Establishment of different 
compliance or reporting requirements for small entities or timetables 
that take into account the resources available to small entities, (2) 
clarification, consolidation, or simplification of compliance and 
reporting requirements for small entities, (3) use of performance 
rather than design standards, and (4) exemption for certain small 
entities

[[Page 44966]]

from coverage of the rule, in whole or in part. For reasons described 
in the May 2009 NOPR, DOE did not choose any of these alternatives to 
the proposed rule. 73 FR 26071-26072.

C. Review Under the Paperwork Reduction Act

    DOE stated in the May 2009 NOPR that this rulemaking would impose 
no new information and recordkeeping requirements, and that OMB 
clearance is not required under the Paperwork Reduction Act (44 U.S.C. 
3501 et seq.). 74 FR 26072. DOE received no comments on this in 
response to the May 2009 NOPR, and, as with the proposed rule, today's 
final rule imposes no information and recordkeeping requirements. 
Therefore, DOE has taken no further action in this rulemaking with 
respect to the Paperwork Reduction Act.

D. Review Under the National Environmental Policy Act

    DOE prepared an environmental assessment of the impacts of today's 
standards which it published as chapter 16 within the TSD for the final 
rule. DOE found the environmental effects associated with today's 
various standard levels for beverage vending machines to be 
insignificant. Therefore, DOE is issuing a FONSI pursuant to NEPA (42 
U.S.C. 4321 et seq.), the regulations of the Council on Environmental 
Quality (40 CFR parts 1500-1508), and DOE's regulations for compliance 
with NEPA (10 CFR part 1021). The FONSI is available in the docket for 
this rulemaking.

E. Review Under Executive Order 13132

    DOE reviewed this rule pursuant to Executive Order 13132, 
``Federalism,'' 64 FR 43255 (August 4, 1999), which imposes certain 
requirements on agencies formulating and implementing policies or 
regulations that preempt State law or that have federalism 
implications. In accordance with DOE's statement of policy describing 
the intergovernmental consultation process it will follow in the 
development of regulations that have federalism implications, 65 FR 
13735 (March 14, 2000), DOE examined the May 2009 proposed rule and 
determined that the rule 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. 74 FR 26072. DOE received no comments on 
this issue in response to the May 2009 NOPR, and its conclusions on 
this issue are the same for the final rule as they were for the 
proposed rule. Therefore, DOE has taken no further action in today's 
final rule with respect to Executive Order 13132.

F. Review Under Executive Order 12988

    With respect to the review of existing regulations and the 
promulgation of new regulations, section 3(a) of Executive Order 12988, 
``Civil Justice Reform,'' 61 FR 4729 (February 7, 1996), imposes on 
Federal agencies the general duty to adhere to the following 
requirements: (1) Eliminate drafting errors and ambiguity, (2) write 
regulations to minimize litigation, and (3) provide a clear legal 
standard for affected conduct rather than a general standard and 
promote simplification and burden reduction. Section 3(b) of Executive 
Order 12988 specifically requires that executive agencies make every 
reasonable effort to ensure that the regulation: (1) Clearly specifies 
the preemptive effect, if any; (2) clearly specifies any effect on 
existing Federal law or regulation; (3) provides a clear legal standard 
for affected conduct while promoting simplification and burden 
reduction; (4) specifies the retroactive effect, if any; (5) adequately 
defines key terms; and (6) addresses other important issues affecting 
clarity and general draftsmanship under any guidelines issued by the 
Attorney General. Section 3(c) of Executive Order 12988 requires 
executive agencies to review regulations in light of applicable 
standards in section 3(a) and section 3(b) to determine whether they 
are met or it is unreasonable to meet one or more of them. DOE has 
completed the required review and determined that, to the extent 
permitted by law, the final regulations meet the relevant standards of 
Executive Order 12988.

G. Review Under the Unfunded Mandates Reform Act of 1995

    As indicated in the May 2009 NOPR, DOE reviewed the proposed rule 
under Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 
104-4) (UMRA), which imposes requirements on Federal agencies when 
their regulatory actions will have certain types of impacts on State, 
local, and Tribal governments and the private sector. 74 FR 26073. DOE 
concluded that this rule would not contain an intergovernmental 
mandate, nor result in expenditures of $100 million or more in one year 
by the private sector. Id. In the May 2009 NOPR, DOE addressed the UMRA 
requirements to prepare a statement as to the basis, costs, benefits, 
and economic impacts of the proposed rule, and that it identify and 
consider regulatory alternatives to the proposed rule. Id. DOE received 
no comments concerning the UMRA in response to the May 2009 NOPR, and 
its conclusions on this issue are the same for the final rule as they 
were for the proposed rule. Therefore, DOE has taken no further action 
in today's final rule with respect to the UMRA.

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

    DOE determined that, for this rulemaking, it need not prepare a 
Family Policymaking Assessment under Section 654 of the Treasury and 
General Government Appropriations Act, 1999 (Pub. L. 105-277). Id. DOE 
received no comments concerning Section 654 in response to the May 2009 
NOPR, and, therefore, has taken no further action in today's final rule 
with respect to this provision.

I. Review Under Executive Order 12630

    DOE determined under Executive Order 12630, ``Governmental Actions 
and Interference with Constitutionally Protected Property Rights,'' 53 
FR 8859 (March 18, 1988), that today's rule would not result in any 
takings that might require compensation under the Fifth Amendment to 
the U.S. Constitution. 74 FR 26073. DOE received no comments concerning 
Executive Order 12630 in response to the May 2009 NOPR, and, therefore, 
has taken no further action in today's final rule with respect to this 
Executive Order.

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 agencies to review most 
disseminations of information to the public under guidelines 
established by each agency pursuant to general guidelines issued by 
OMB. OMB's guidelines were published at 67 FR 8452 (February 22, 2002), 
and DOE's guidelines were published at 67 FR 62446 (October 7, 2002). 
DOE has reviewed today's final rule under the OMB and DOE guidelines 
and has concluded that it is consistent with applicable policies in 
those guidelines.

K. Review Under Executive Order 13211

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

[[Page 44967]]

energy action. DOE determined that today's rule, which sets energy 
conservation standards for beverage vending machines, is not a 
``significant energy action'' within the meaning of Executive Order 
13211. 74 FR 26073. Accordingly, DOE did not prepare a Statement of 
Energy Effects on the proposed rule. DOE received no comments on this 
issue in response to the May 2009 NOPR. As with the proposed rule, DOE 
has concluded that today's final rule is not a significant energy 
action within the meaning of Executive Order 13211, and has not 
prepared a Statement of Energy Effects on the final rule.

L. Review Under the Information Quality Bulletin for Peer Review

    On December 16, 2004, OMB, in consultation with the Office of 
Science and Technology, issued its ``Final Information Quality Bulletin 
for Peer Review'' (the Bulletin). 70 FR 2664 (January 14, 2005). The 
purpose of the Bulletin is to enhance the quality and credibility of 
the Government's scientific information. The Bulletin establishes that 
certain scientific information shall be peer reviewed by qualified 
specialists before it is disseminated by the Federal Government. As 
indicated in the May 2009 NOPR, this includes influential scientific 
information related to agency regulatory actions, such as the analyses 
in this rulemaking. 74 FR 26073-74.
    As set forth in the May 2009 NOPR, DOE held formal in-progress peer 
reviews of the types of analyses and processes that DOE has used to 
develop the energy efficiency standards in today's rule, and issued a 
report on these peer reviews. The report is available at http://www.eere.energy.gov/buildings/appliance_standards/peer_review.html. 
Id.

M. Congressional Notification

    As required by 5 U.S.C. 801, DOE will submit to Congress a report 
regarding the issuance of today's final rule prior to the effective 
date set forth at the outset of this notice. The report will state that 
it has been determined that the rule is a ``major rule'' as defined by 
5 U.S.C. 804(2). DOE also will submit the supporting analyses to the 
Comptroller General in the U.S. Government Accountability Office (GAO) 
and make them available to each House of Congress.

VIII. Approval of the Office of the Secretary

    The Secretary of Energy has approved publication of today's final 
rule.

List of Subjects in 10 CFR Part 431

    Administrative practice and procedure, Confidential business 
information, Energy conservation, Incorporation by reference.

    Issued in Washington, DC, on August 5, 2009.
Cathy Zoi,
Assistant Secretary, Energy Efficiency and Renewable Energy.

0
For the reasons set forth in the preamble, chapter II of title 10, Code 
of Federal Regulations, part 431 is amended to read 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.


0
2. In Sec.  431.292 add, in alphabetical order, new definitions for 
``bottled or canned beverage,'' ``Class A,'' ``Class B,'' ``combination 
vending machine,'' and ``V'' to read as follows:


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

* * * * *
    Bottled or canned beverage means a beverage in a sealed container.
    Class A means a refrigerated bottled or canned beverage vending 
machine that is fully cooled, and is not a combination vending machine.
    Class B means any refrigerated bottled or canned beverage vending 
machine not considered to be Class A, and is not a combination vending 
machine.
    Combination vending machine means a refrigerated bottled or canned 
beverage vending machine that also has non-refrigerated volumes for the 
purpose of vending other, non-``sealed beverage'' merchandise.
* * * * *
    V means the refrigerated volume (ft\3\) of the refrigerated bottled 
or canned beverage vending machine, as measured by ANSI/AHAM HRF-1-2004 
(incorporated by reference, see Sec.  431.293).

0
3. Section 431.293 is revised to read as follows:


Sec.  431.293  Materials incorporated by reference.

    (a) General. DOE incorporates by reference the following standards 
into Subpart Q of Part 431. The material listed has been approved for 
incorporation by reference by the Director of the Federal Register in 
accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Any subsequent 
amendment to a standard by the standard-setting organization will not 
affect the DOE regulations unless and until amended by DOE. Material is 
incorporated as it exists on the date of the approval and a notice of 
any change in the material will be published in the Federal Register. 
All approved material is available for inspection at the National 
Archives and Records Administration (NARA). For information on the 
availability of this material at NARA, call (202) 741-6030 or visit 
http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html. This material is also available for 
inspection at U.S. Department of Energy, Office of Energy Efficiency 
and Renewable Energy, Building Technologies Program, 6th Floor, 950 
L'Enfant Plaza, SW., Washington, DC 20024, 202-586-2945, or visit 
http://www1.eere.energy.gov/buildings/appliance_standards. Standards 
can be obtained from the sources listed below.
    (b) ANSI. American National Standards Institute, 25 W. 43rd Street, 
4th Floor, New York, NY 10036, 212-642-4900, or visit http://www.ansi.org.
    (1) ANSI/AHAM HRF-1-2004, Energy, Performance and Capacity of 
Household Refrigerators, Refrigerator-Freezers and Freezers, approved 
July 7, 2004, IBR approved for Sec. Sec.  431.292 and 431.294.
    (2) ANSI/ASHRAE Standard 32.1-2004, Methods of Testing for Rating 
Vending Machines for Bottled, Canned, and Other Sealed Beverages, 
approved December 2, 2004, IBR approved for Sec.  431.294.


0
4. In Subpart Q, add an undesignated center heading and Sec.  431.296 
to read as follows:

Energy Conservation Standards


Sec.  431.296  Energy conservation standards and their effective dates.

    Each refrigerated bottled or canned beverage vending machine 
manufactured on or after [Insert date 3 years from the date of 
publication of this final rule] shall have a maximum daily energy 
consumption (in kilowatt hours per day), when measured at the 75 [deg]F 
 2 [deg]F and 45  5% RH condition, that does 
not exceed the following:

[[Page 44968]]



----------------------------------------------------------------------------------------------------------------
              Equipment class                     Maximum daily energy consumption (kilowatt hours per day)
----------------------------------------------------------------------------------------------------------------
Class A....................................  MDEC = 0.055 x V + 2.56.
Class B....................................  MDEC = 0.073 x V + 3.16.
Combination Vending Machines...............  [RESERVED].
----------------------------------------------------------------------------------------------------------------

    [The following letter from the Department of Justice will not 
appear in the Code of Federal Regulations.]

Appendix

Department of Justice

    Antitrust Division.

Christine A. Varney

    Assistant Attorney General.

Main Justice Building, 950 Pennsylvania Avenue, NW., Washington, DC 
20530-0001, (202) 514-2401/(202) 616-2645 (f), E-mail: 
[email protected], Web site: http://www.usdoj.gov.

July 23, 2009.

Eric J. Fygi, Deputy General Counsel, Department of Energy, 
Washington, DC 20585.

    Dear Deputy General Counsel Fygi: I am responding to your May 
22, 2009 letter seeking the views of the Attorney General about the 
potential impact on competition of proposed energy conservation 
standards for Class A and Class B refrigerated beverage vending 
machines (``BVMs''). Your request was submitted pursuant to Section 
325(o)(2)(B)(i)(V), which requires the Attorney General to make a 
determination of the impact of any lessening of competition that is 
likely to result from the imposition of proposed energy conservation 
standards. The Attorney General's responsibility for responding to 
requests from other departments about the effect of a program on 
competition has been delegated to the Assistant Attorney General for 
the Antitrust Division in 28 CFR 0.40(g).
    In conducting its analysis the Antitrust Division examines 
whether a proposed standard may lessen competition, for example, by 
substantially limiting consumer choice, leaving consumers with fewer 
competitive alternatives, placing certain manufacturers of a product 
at an unjustified competitive disadvantage compared to other 
manufacturers, or by inducing avoidable inefficiencies in production 
or distribution of particular products.
    We have reviewed the proposed standard contained in the Notice 
of Proposed Rulemaking (``NOPR'') (74 FR 26020) and attended the 
June 17, 2009 public hearing on the proposed standard. In addition, 
we have conducted interviews with members of the industry.
    Based on our review of the record and information we have 
gathered, we do not believe the proposed standard for Class B BVMs 
would likely lead to a lessening of competition. We are concerned, 
however, that the proposed Trial Standard Level 6 for Class A BVMs 
could potentially lessen competition. BVM manufacture is a highly 
concentrated industry in the United States, and compliance with the 
proposed Class A standard could require a disproportionate 
investment by some manufacturers, potentially placing them at a 
disadvantage vis-[agrave]-vis others and leading to greater 
concentration. Compliance with a lesser standard does not appear to 
raise similar concerns.
    We ask the Department of Energy to take this possible 
competitive impact into account. We further ask the Department of 
Energy to ensure that the standard it adopts for Class A BVMs will 
not require access to intellectual property owned by an industry 
participant, which would place other industry participants at a 
comparative disadvantage.

    Sincerely,
Christine A. Varney,
Assistant Attorney General.

[FR Doc. E9-19392 Filed 8-28-09; 8:45 am]
BILLING CODE 6450-01-P