[Federal Register Volume 74, Number 215 (Monday, November 9, 2009)]
[Proposed Rules]
[Pages 57738-57802]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-26544]



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Part II





Department of Energy





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10 CFR Part 431



Energy Conservation Program: Energy Conservation Standards for Certain 
Consumer Products (Dishwashers, Dehumidifiers, Microwave Ovens, and 
Electric and Gas Kitchen Ranges and Ovens) and for Certain Commercial 
and Industrial Equipment (Commercial Clothes Washers); Proposed Rule

  Federal Register / Vol. 74, No. 215 / Monday, November 9, 2009 / 
Proposed Rules  

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DEPARTMENT OF ENERGY

10 CFR Part 431

[Docket Number EERE-2006-STD-0127]
RIN 1904-AB93


Energy Conservation Program: Energy Conservation Standards for 
Certain Consumer Products (Dishwashers, Dehumidifiers, Microwave Ovens, 
and Electric and Gas Kitchen Ranges and Ovens) and for Certain 
Commercial and Industrial Equipment (Commercial Clothes Washers)

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

ACTION: Supplemental notice of proposed rulemaking and notice of public 
meeting.

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SUMMARY: On October 17, 2008, the U.S. Department of Energy (DOE) 
issued a notice of proposed rulemaking (NOPR) in which DOE proposed 
amendments to the energy conservation standards for several residential 
products and commercial equipment, including commercial clothes washers 
(CCWs). DOE decided to conduct additional, supplemental rulemaking 
analyses for CCWs to address certain alleged data problems. Today's 
document details these supplemental analyses and proposes revised CCW 
standard levels for consideration.

DATES: DOE will hold a public meeting on November 16, 2009, from 9 a.m. 
to 5 p.m., in Washington, DC. DOE must receive requests to speak at the 
public meeting and receive a signed original and an electronic copy of 
statements to be given at the public meeting before 4 p.m., November 
13, 2009.
    DOE will accept comments, data, and information regarding the 
supplemental notice of proposed rulemaking (SNOPR) received not later 
than December 9, 2009. See section VII, ``Public Participation,'' of 
today's supplemental notice for details.

ADDRESSES: The public meeting will be held at the U.S. Department of 
Energy, Forrestal Building, 1E-245, 1000 Independence Avenue, SW., 
Washington, DC 20585. (Please note that foreign nationals visiting DOE 
Headquarters are subject to advanced security screening procedures. If 
you are a foreign national and wish to participate in the workshop, 
please inform DOE of this fact as soon as possible by contacting Ms. 
Brenda Edwards at (202) 586-2945 so that the necessary procedures can 
be completed.)
    Any comments submitted must identify the SNOPR for Energy 
Conservation Standards for Home Appliance Products, and provide docket 
number EERE-2006-STD-0127 and/or regulatory information number (RIN) 
1904-AB93. Comments may be submitted using any of the following 
methods:
    1. Federal eRulemaking Portal: http://www.regulations.gov. Follow 
the instructions for submitting comments.
    2. E-mail: [email protected]. Include docket 
number EE-2006-STD-0127 and/or RIN number 1904-AB93 in the subject line 
of the message.
    3. Postal Mail: Ms. Brenda Edwards, U.S. Department of Energy, 
Building Technologies Program, Mailstop EE-2J, 1000 Independence 
Avenue, SW., Washington, DC 20585-0121. Please submit one signed 
original paper copy.
    4. Hand Delivery/Courier: Ms. Brenda Edwards, U.S. Department of 
Energy, Building Technologies Program, Room 1J-018, 1000 Independence 
Avenue, SW., Washington, DC 20585-0121. Telephone: (202) 586-2945. 
Please submit one signed original paper copy.
    For detailed instructions on submitting comments and additional 
information on the rulemaking process, see section VII, ``Public 
Participation,'' of today's supplemental notice for details.
    Docket: For access to the docket to read background documents or 
comments received, visit the U.S. Department of Energy, Resource Room 
of the Building Technologies Program, 950 L'Enfant Plaza, SW., Suite 
600, Washington, DC 20585-0121, (202) 586-2945, between 9 a.m. and 4 
p.m., Monday through Friday, except Federal holidays. Please call Ms. 
Brenda Edwards at the above telephone number for additional information 
regarding visiting the Resource Room.

FOR FURTHER INFORMATION CONTACT: Mr. Stephen Witkowski, U.S. Department 
of Energy, Energy Efficiency and Renewable Energy, Building 
Technologies Program, EE-2J, 1000 Independence Avenue, SW., Washington, 
DC 20585-0121. Telephone: (202) 586-7463. E-mail: 
[email protected].
    Ms. Francine Pinto, Esq. or Ms. Betsy Kohl, Esq., U.S. Department 
of Energy, Office of General Counsel, GC-71/72, 1000 Independence 
Avenue, SW., Washington, DC 20585-0121. Telephone: (202) 586-5000. E-
mail: [email protected], [email protected].

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Summary of the Proposed Rule
II. Introduction
    A. Consumer Overview
    B. Authority
    C. Background
    1. Current Standards
    2. History of Standards Rulemaking
    D. Test Procedures
    E. Technological Feasibility
    1. General
    2. Maximum Technologically Feasible Levels
    F. Energy Savings
    1. Determination of Savings
    2. Significance of Savings
    G. Economic Justification
    1. Specific Criteria
    a. Economic Impact on Manufacturers and Consumers
    b. Life-Cycle Costs
    c. Energy Savings
    d. Lessening of Utility or Performance of Equipment
    e. Impact of Any Lessening of Competition
    f. Need of the Nation to Conserve Energy
    g. Other Factors
    2. Rebuttable Presumption
III. Methodology and Revisions to the Analyses Employed in the 
October 2008 Proposed Rule
    A. Equipment Classes
    B. Technology Assessment
    C. Engineering Analysis
    1. Efficiency Levels
    a. Revised Efficiency Levels
    b. Technological Feasibility of the Revised Top-Loading Max-Tech 
Level
    2. Manufacturing Costs
    D. Life-Cycle Cost and Payback Period Analysis
    1. Equipment Prices
    2. Installation Cost
    3. Annual Energy Consumption
    4. Energy and Water Prices
    a. Energy Prices
    b. Water and Wastewater Prices
    5. Repair and Maintenance Costs
    6. Equipment Lifetime
    7. Discount Rates
    8. Effective Date of the Amended Standards
    9. Equipment Energy Efficiency in the Base Case
    10. CCW Split Incentive
    11. Rebound Effect
    12. Inputs to Payback Period Analysis
    13. Rebuttable-Presumption Payback Period
    E. National Impact Analysis--National Energy Savings and Net 
Present Value Analysis
    1. General
    2. Shipments
    a. New Construction Shipments
    b. Replacements and Non-replacements
    c. Purchase Price, Operating Cost, and Income Impacts
    3. Other Inputs
    a. Base-Case Forecasted Efficiencies
    b. Standards-Case Forecasted Efficiencies
    c. Annual Energy Consumption
    d. Site-to-Source Conversion
    e. Energy Used in Water and Wastewater Treatment and Delivery
    f. Total Installed Costs and Operating Costs
    g. Discount Rates

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    h. Effects of Standards on Energy Prices
    F. Consumer Subgroup Analysis
    G. Manufacturer Impact Analysis
    H. Employment Impact Analysis
    I. Utility Impact Analysis
    J. Environmental Assessment
    K. Monetizing Carbon Dioxide and Other Emissions Impacts
IV. Discussion of Other Comments
    A. Proposed TSLs for Commercial Clothes Washers
    B. Proposed Standards for Commercial Clothes Washers
V. Analytical Results
    A. Trial Standard Levels
    B. Economic Justification and Energy Savings
    1. Economic Impacts on Consumers
    a. Life-Cycle Cost and Payback Period
    b. Consumer Subgroup Analysis
    c. Rebuttable-Presumption Payback
    2. Economic Impacts on Manufacturers
    a. Industry Cash-Flow Analysis Results
    b. Impacts on Employment
    c. Impacts on Manufacturing Capacity
    d. Impacts on Subgroups of Manufacturers
    3. National Impact Analysis
    a. Significance of Energy Savings
    b. Net Present Value
    c. Impacts on Employment
    4. Impact on Utility or Performance of Equipment
    5. Impact of Any Lessening of Competition
    6. Need of the Nation to Conserve Energy
    C. Proposed Standards
    1. Overview
    2. Conclusion
VI. Procedural Issues and Regulatory Review
    A. Review Under Executive Order 12866
    B. Review Under the Regulatory Flexibility Act
    C. Review Under the Paperwork Reduction Act
    D. Review Under the National Environmental Policy Act
    E. Review Under Executive Order 13132
    F. Review Under Executive Order 12988
    G. Review Under the Unfunded Mandates Reform Act of 1995
    H. Review Under the Treasury and General Government 
Appropriations Act, 1999
    I. Review Under Executive Order 12630
    J. Review Under the Treasury and General Government 
Appropriations Act, 2001
    K. Review Under Executive Order 13211
    L. Review Under the Information Quality Bulletin for Peer Review
VII. Public Participation
    A. Attendance at Public Meeting
    B. Procedure for Submitting Requests to Speak
    C. Conduct of Public Meeting
    D. Submission of Comments
    E. Issues on Which DOE Seeks Comment
VIII. Approval of the Office of the Secretary

I. Summary of the Proposed Rule

    The Energy Policy and Conservation Act \1\ (EPCA), as amended, 
provides that any amended energy conservation standard DOE prescribes, 
including those for CCWs, shall be designed to ``achieve the maximum 
improvement in energy efficiency * * * which the Secretary determines 
is technologically feasible and economically justified.'' (42 U.S.C. 
6295(o)(2)(A) and 6316(a)) Furthermore, any new or amended standard 
must ``result in significant conservation of energy.'' (42 U.S.C. 
6295(o)(3)(B) and 6316(a)) In accordance with these and other statutory 
criteria discussed in this notice, DOE proposes in today's SNOPR to 
amend the energy conservation standards for CCWs and raise efficiency 
levels as shown in Table I.1. The standards would apply to all CCWs 
manufactured in, or imported into, the United States 3 years after the 
publication of the final rule in the Federal Register.
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    \1\ 42 U.S.C. 6291 et seq.

          Table I.1--Existing and Proposed Energy Conservation Standards for Commercial Clothes Washers
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 Existing energy conservation standards (effective January 1,        Proposed energy conservation standards
                             2007)                             -------------------------------------------------
---------------------------------------------------------------
           Equipment class                    Standards             Equipment class             Standards
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Commercial clothes washers...........  1.26 Modified Energy     Top-loading commercial   1.6 Modified Energy
                                        Factor/9.5 Water         clothes washers.         Factor/8.5 Water
                                        Factor.                                           Factor.
                                                                Front-loading            2.00 Modified Energy
                                                                 commercial clothes       Factor/5.5 Water
                                                                 washers.                 Factor.
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    DOE estimates that the energy conservation standards proposed in 
today's SNOPR would save a significant amount of energy--an estimated 
0.10 quadrillion British thermal units (Btu), or quads, of cumulative 
energy over 30 years (2013-2043). This amount is equivalent to 2 days 
of U.S. gasoline use. In addition, today's proposed standards for CCWs 
save over 143 billion gallons of cumulative water consumption over 30 
years (2013-2043).
    The cumulative national net present value (NPV) of total consumer 
costs and savings of today's proposed standards from 2013 to 2043, in 
2008 dollars (2008$), ranges from $0.4 billion (7-percent discount 
rate) to $0.9 billion (3-percent discount rate). This is the estimated 
total value of future operating-cost savings minus the estimated 
increased equipment costs, discounted to the present year (2009). DOE 
estimates the CCW industry net present value (INPV) to be approximately 
$62 million in 2008$. If DOE adopts today's proposed standards, 
manufacturers expect a decline of between 7.8 percent and 11.4 percent 
of the INPV, which is approximately $5 to $7 million. However, the NPV 
for consumers (at the 7-percent discount rate) would exceed industry 
losses due to energy efficiency standards by at least 80 times.
    DOE believes that the impacts of standards on consumers would be 
positive for CCWs, even though the standards may increase some initial 
costs. DOE estimates that today's proposed modified energy factor (MEF) 
and water factor (WF) standards for CCWs would increase the retail 
price by $214 per unit for top-loading washers and $23 for front-
loading washers, but the operating cost savings outweigh these price 
increases, resulting in positive economic impacts to CCW consumers.
    DOE's analyses indicate that the energy savings resulting from 
today's proposed standards would have benefits to utilities and to the 
environment. The energy saved is in the form of electricity and natural 
gas, and DOE expects the energy savings from today's proposed standards 
to eliminate the need for approximately 18 megawatts (MW) of generating 
capacity by 2043. This result reflects DOE's use of energy price 
projections from the U.S. Energy Information Administration (EIA)'s 
April 2009 release of the Annual Energy Outlook 2009 (AEO 2009) 
reflecting provisions of the American Recovery and Reinvestment Act of 
2009 (ARRA 2009; Pub. L. 111-5). DOE intends to use the most recently 
available version of EIA's AEO to generate the results for the final 
rule.
    In addition, today's proposed standards would have environmental 
benefits, which would be estimated to result in cumulative 
(undiscounted) greenhouse gas emission reductions of 5.1 million tons 
(Mt) of carbon dioxide (CO2) from 2013 to 2043. DOE 
estimates that the range of the monetized value of

[[Page 57740]]

CO2 emission reductions based on global estimates of the 
value of CO2 is $13 million to $140 million at a 7-percent 
discount rate and $28 million to $303 million at a 3-percent discount 
rate. The standards for CCWs would also result in 3.04 kilotons (kt) of 
nitrogen oxides (NOX) emissions reductions from 2013 to 
2043. The standards for CCWs would also possibly result in power plant 
mercury (Hg) emissions reductions of up to 0.03 t from 2013 to 2043.
    The benefits and costs of today's proposed standards can also be 
expressed in terms of annualized (2008$) values from 2013-2043. 
Estimates of annualized values are shown in Table I.2. 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. Although this $19 value represents emissions that 
are valued in 2007$, the monetary benefits of cumulative emissions 
reductions are reported in 2008$ so that they can be compared with the 
other costs and benefits in the same dollar units. The derivation of 
this value is discussed in section V.B.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 $5 to $55 
per metric ton (2007$), which are meant to reflect the global benefits 
of carbon dioxide reductions; and 2) the assessments of operating 
savings and CO2 savings are performed with different 
computer models, leading to different time frames for analysis. The 
present value of national operating savings is measured for the period 
2013-2065 (31 years from 2013 to 2043 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 2065.
    Using a 7-percent discount rate for the annualized cost analysis, 
the combined cost of the standards established in today's notice for 
CCWs is $23.4 million per year in increased equipment and installation 
costs, while the annualized benefits are $60.6 million per year in 
reduced equipment operating costs and $5.1 million in CO2 
reductions, for a net benefit of $42.2 million per year. Using a 3-
percent discount rate, the cost of the standards established in today's 
final rule is $22.7 million per year in increased equipment and 
installation costs, while the benefits of today's standards are $72.8 
million per year in reduced operating costs and $5.9 million in 
CO2 reductions, for a net benefit of $56.0 million per year.

                     Table I.2--Annualized Benefits and Costs for Commercial Clothes Washers
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                                                                                              Units
                                  Primary        Low estimate    High estimate  --------------------------------
          Category             estimate  (AEO    (low growth      (high growth      Year     Disc (in    Period
                              reference case)       case)            case)        dollars    percent)   covered
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Benefits
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Annualized Monetized........  60.6...........  54.9...........  66.6...........       2008          7         31
(millions$/year)............  72.8...........  65.3...........  80.4...........       2008          3         31
Annualized Quantified.......  0.14 CO2 (Mt)..  0.14 CO2 (Mt)..  0.14 CO2 (Mt)..         NA          7         31
                              0.087 NOX (kt).  0.087 NOX (kt).  0.087 NOX (kt).         NA          7         31
                              0.001 Hg (t)...  0.001 Hg (t)...  0.001 Hg (t)...         NA          7         31
                              0.16 CO2 (Mt)..  0.16 CO2 (Mt)..  0.16 CO2 (Mt)..         NA          3         31
                              0.094 NOX (kt).  0.094 NOX (kt).  0.094 NOX (kt).         NA          3         31
                              0.001 Hg (t)...  0.001 Hg (t)...  0.001 Hg (t)...         NA          3         31
CO2 Monetized Value (at $19/  5.1............  5.1............  5.1............       2008          7         31
 Metric Ton, millions$/year).
                              5.9............  5.9............  5.9............       2008          3         31
Total Monetary Benefits.....  65.7...........  59.9...........  71.6...........       2008          7         31
(millions$/year)*...........  78.7...........  71.2...........  86.3...........       2008          3         31
Qualitative.................
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Costs
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Annualized Monetized........  23.4...........  21.9...........  24.6...........       2008          7         31
(millions$/year)............  22.7...........  20.9...........  23.9...........       2008          3         31
Qualitative.................
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Net Benefits/Costs
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Annualized Monetized,         42.2...........  38.1...........  47.0...........       2008          7         31
 including Carbon Benefits*
 (million$/year).
                              56.0...........  50.3...........  62.4...........       2008          3         31
Qualitative.................
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*Per the above discussion, this represents a simplified estimate that includes both 2007$ and 2008$.


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    In sum, today's proposed standards represent the maximum 
improvement in energy and water efficiency that is technologically 
feasible and economically justified. DOE found that the benefits of 
today's proposed standards (energy and water savings, consumer average 
life-cycle cost (LCC) savings, national NPV increase, and emissions 
reductions) outweigh the costs (loss of INPV and LCC increases for some 
consumers). DOE has concluded that the standards proposed in today's 
SNOPR are economically justified and technologically feasible, 
particularly since units achieving these standard levels are already 
commercially available. DOE notes that it considered higher efficiency 
levels as trial standard levels (TSLs), and is still considering them 
in this rulemaking; however, DOE tentatively believes that the burdens 
of the higher efficiency levels (loss of INPV and LCC increases for 
some consumers) outweigh the benefits (energy savings, LCC savings for 
some consumers, national NPV increase, and emissions reductions). After 
reviewing public comments on this SNOPR, DOE may ultimately decide to 
adopt one of the other TSLs or another value in between.

II. Introduction

A. Consumer Overview

    DOE is proposing in today's SNOPR energy conservation standard 
levels for CCWs as shown in Table I.1 above. These proposed standards 
would apply to equipment manufactured or imported 3 years after the 
date the final rule is published in the Federal Register.\2\
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    \2\ DOE anticipates publishing a final rule for commercial 
clothes washer energy conservation standards by January 1, 2010, 
pursuant to the requirements of the Energy Policy Act of 2005 (EPACT 
2005; Pub. L. 109-058), which would make any amended standards 
effective on January 1, 2013.
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    DOE research suggests that commercial consumers will see benefits 
from today's proposed standards even though DOE expects the purchase 
price of the high efficiency CCWs to increase (by 2 to 28 percent) from 
the average price of this equipment today. However, the energy 
efficiency gains are expected to result in lower energy and water 
costs, saving consumers $53 to $103 per year on their energy and water 
bills, again depending on the equipment class. When these savings are 
summed over the lifetime of the equipment, consumers are expected to 
save an average of $20 to $190, depending on the equipment class, 
utility costs, and other factors. DOE estimates that the payback period 
for the more efficient, higher-priced equipment will range from 0.2 to 
5.6 years, depending on the equipment class.

B. Authority

    Title III of EPCA sets forth a variety of provisions designed to 
improve energy efficiency. Part A-1 of Title III (42 U.S.C. 6311-6317) 
establishes an energy conservation program for ``Certain Industrial 
Equipment,'' which deals with a variety of commercial and industrial 
equipment (referred to hereafter as ``covered equipment'') including 
CCWs. (42 U.S.C. 6312; 6313(e)) EPCA sets both energy and water 
efficiency standards for CCWs, and authorizes DOE to amend both. (42 
U.S.C. 6313(e))
    Section 136(a) and (e) of the Energy Policy Act of 2005 (EPACT 
2005; Pub. L. 109-058) added CCWs as equipment covered under EPCA and 
established standards for such equipment that is manufactured on or 
after January 1, 2007.\3\ (42 U.S.C. 6311(1) and 6313(e)) These 
amendments to EPCA also require that DOE issue a final rule by January 
1, 2010, to determine whether these standards should be amended. (EPACT 
2005, section 136(e); 42 U.S.C. 6313(e)) If amended standards are 
justified, they would become effective no later than January 1, 2013. 
(Id.)
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    \3\ Under the statute, a CCW must have a modified energy factor 
(MEF) of at least 1.26 and a water factor (WF) of not more than 9.5.
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    It is pursuant to the authority set forth above that DOE is 
conducting the present rulemaking for CCWs. The following discusses 
some of the key provisions of EPCA relevant to this standards-setting 
rulemaking.
    Under EPCA, the overall program consists of the following core 
elements: (1) Testing; (2) labeling; and (3) Federal energy 
conservation standards. The Federal Trade Commission (FTC) is 
responsible for labeling equipment covered by part A, and DOE 
implements the remainder of the program. Under 42 U.S.C. 6293 and 6314, 
EPCA authorizes DOE, subject to certain criteria and conditions, to 
develop test procedures to measure the energy efficiency, energy use, 
or estimated annual operating cost of covered equipment. The test 
procedures for CCWs appear at 10 CFR part 430, subpart B, appendix J1 
(pursuant to 10 CFR 431.154).
    EPCA provides criteria for prescribing new or amended standards for 
covered products and equipment.\4\ As indicated above, any new or 
amended standard 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 6316(a)) The statute also 
provides that, in deciding whether a standard is economically 
justified, 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:
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    \4\ The EPCA provisions discussed in the remainder of this 
subsection directly apply to covered products, and also apply to 
certain covered equipment, such as CCWs, by virtue of 42 U.S.C. 
6316(a). Note that the term ``product'' is used generally to refer 
to consumer appliances, while ``equipment'' is used generally to 
refer to commercial units.
---------------------------------------------------------------------------

    (1) The economic impact of the standard on manufacturers and 
consumers of the products or equipment subject to the standard;
    (2) The savings in operating costs throughout the estimated average 
life of the covered products or equipment in the type (or class) 
compared to any increase in the price, initial charges, or maintenance 
expenses for the covered products that are likely to result from the 
imposition of the standard;
    (3) The total projected amount of energy (or, as applicable, water) 
savings likely to result directly from the imposition of the standard;
    (4) Any lessening of the utility or the performance of the covered 
products or equipment likely to result from the imposition of the 
standard;
    (5) The impact of any lessening of competition, as determined in 
writing by the Attorney General, that is likely to result from the 
imposition of the standard;
    (6) The need for national energy and water conservation; and
    (7) Other factors the Secretary considers relevant. (42 U.S.C. 
6295(o)(2)(B)(i) and 6316(a))
    Furthermore, EPCA contains what is commonly known as an ``anti-
backsliding'' provision. (42 U.S.C. 6295(o)(1)) This provision 
prohibits the Secretary from prescribing any amended standard that 
either increases the maximum allowable energy use or decreases the 
minimum required energy efficiency of a covered product or equipment. 
Also, the Secretary may not prescribe an amended or a new standard if 
the Secretary finds that interested persons have established by a 
preponderance of the evidence that the standard is likely to result in 
the unavailability in the United States of any product type (or class) 
with performance characteristics, features, sizes, capacities, and 
volume 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))
    In addition, EPCA, as amended (42 U.S.C. 6295(o)(2)(B)(iii)), 
establishes a

[[Page 57742]]

rebuttable presumption that a standard is economically justified if the 
Secretary finds that ``the additional cost to the consumer of 
purchasing a product complying with an energy conservation standard 
level will be less than three times the value of the energy (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. (42 U.S.C. 6295(o)(2)(B)(iii)) 
See Section II.G.2.
    In promulgating a standard for a type or class of covered product 
or equipment that has two or more subcategories, DOE must specify a 
different standard level from that which applies generally to such type 
or class of products or equipment ``for any group of covered products 
which have the same function or intended use, if * * * covered 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)) In determining whether a 
performance-related feature justifies such a different standard for a 
group of equipment, DOE must consider ``such factors as the utility to 
the consumer of such a feature'' and other factors DOE deems 
appropriate. Id. Any rule prescribing such a standard must include an 
explanation of the basis on which such higher or lower level was 
established. (42 U.S.C. 6295(q)(2))
    Federal energy conservation requirements generally supersede State 
laws or regulations concerning energy conservation testing, labeling, 
and standards. (42 U.S.C. 6297(a)-(c)) DOE can, however, grant waivers 
of Federal preemption for particular State laws or regulations, in 
accordance with the procedures and other provisions of EPCA found in 42 
U.S.C. 6297(d). Specifically, States that regulate an energy 
conservation standard for a type of covered product for which there is 
a Federal energy conservation standard may petition the Secretary for a 
DOE rule that allows the State regulation to become effective with 
respect to such covered product. (42 U.S.C. 6297(d)(1)(A)) DOE must 
prescribe a rule granting the petition if the Secretary finds that the 
State has established by a preponderance of the evidence that its 
regulation is needed to meet ``unusual and compelling State or local 
energy * * * interests.'' (42 U.S.C. 6297(d)(1)(B))

C. Background

1. Current Standards
    EPCA, as amended by EPACT 2005, prescribes energy conservation 
standards for CCWs manufactured on or after January 1, 2007. (42 U.S.C. 
6313(e)) These standards require that CCWs have an MEF of at least 1.26 
cubic feet of capacity (ft\3\) per kilowatt-hour (kWh) and a WF of not 
more than 9.5 gallons of water (gal) per ft\3\. (Id.; 10 CFR 431.156)
2. History of Standards Rulemaking
    To initiate the current rulemaking to consider energy conservation 
standards, on March 15, 2006, DOE published on its Web site a document 
titled, Rulemaking Framework for Commercial Clothes Washers and 
Residential Dishwashers, Dehumidifiers, and Cooking Products (Framework 
Document).\5\ 71 FR 15059 (March 27, 2006). The Framework Document 
described the procedural and analytical approaches that DOE anticipated 
using to evaluate energy conservation standards for these products, and 
identified various issues to be resolved in conducting the rulemaking. 
DOE held a public meeting on April 27, 2006, to present the Framework 
Document, to describe the analyses it planned to conduct during the 
rulemaking, to receive comments from interested parties, and to inform 
and facilitate interested parties' involvement in the rulemaking. DOE 
received 11 written comments in response to the Framework Document 
after the public meeting.
---------------------------------------------------------------------------

    \5\ This document is available on the DOE Web site at: http://www1.eere.energy.gov/buildings/appliance_standards/commercial/clothes_washers.html.
---------------------------------------------------------------------------

    On December 4, 2006, DOE posted two spreadsheet tools for this 
rulemaking on its Web site.\6\ The first tool calculates LCC and 
payback periods (PBPs) and included spreadsheets for: (1) Dishwashers; 
(2) dehumidifiers; (3) cooktops; (4) ovens; (5) microwave ovens; and 
(6) CCWs. The second tool--the national impact analysis (NIA) 
spreadsheets--calculate the impacts on shipments and the national 
energy savings (NES) and NPV at various candidate standard levels for: 
(1) Dishwashers; (2) dehumidifiers; (3) cooktops and ovens; (4) 
microwave ovens; and (5) CCWs.
---------------------------------------------------------------------------

    \6\ These spreadsheets are available on the DOE Web site at: 
http://www1.eere.energy.gov/buildings/appliance_standards.
---------------------------------------------------------------------------

    DOE published the advance notice of proposed rulemaking (ANOPR) for 
this rulemaking on November 15, 2007 (November 2007 ANOPR) (72 FR 
64432), and held a public meeting on December 13, 2007, to present and 
seek comment on the November 2007 ANOPR analytical methodology and 
results. The November 2007 ANOPR included background information on the 
history and conduct of this rulemaking. 72 FR 64432, 64438-39 (Nov. 15, 
2007) In the November 2007 ANOPR, DOE described and sought further 
comment on the analytical framework, models, and tools (e.g., LCC and 
NIA spreadsheets) it was using to analyze the impacts of energy 
conservation standards for these products. In conjunction with the 
November 2007 ANOPR, DOE also posted on its Web site the complete 
November 2007 ANOPR technical support document (TSD). The TSD included 
the results of a number of DOE's preliminary analyses, including: (1) 
The market and technology assessment; (2) screening analysis; (3) 
engineering analysis; (4) energy and water use determination; (5) 
markups analysis to determine equipment price; (6) LCC and PBP 
analyses; (7) shipments analysis; (8) NIA; and (9) manufacturer impact 
analysis (MIA). In the November 2007 ANOPR and at the public meeting, 
DOE invited comment in particular on the following issues concerning 
CCWs: (1) Product classes; (2) horizontal-axis designs; (3) 
technologies unable to be analyzed and exempted product classes, 
including potential limitations of existing test procedures; (4) per-
cycle energy consumption; (5) consumer prices; (6) repair and 
maintenance costs; (7) efficiency distributions in the base case; (8) 
shipments forecasts; (9) base-case and standards-case forecasted 
efficiencies; and (10) TSLs. 72 FR 64432, 64512-14 (Nov. 15, 2007).
    On October 17, 2008, DOE published a NOPR (October 2008 NOPR) in 
the Federal Register, in which it proposed amended energy conservation 
standards for certain products and equipment, including CCWs. 73 FR 
62034. The energy conservation standards proposed in the October 2008 
NOPR for CCWs are shown in Table II.1.

[[Page 57743]]



   Table II.1--Commercial Clothes Washer Energy Conservation Standards
                    Proposed in the October 2008 NOPR
------------------------------------------------------------------------
                                      Modified energy     Water factor,
             Equipment               factor, ft\3\/kWh      gal/ft\3\
------------------------------------------------------------------------
Top-loading CCWs...................               1.76               8.3
Front-loading CCWs.................               2.0                5.5
------------------------------------------------------------------------

    In the October 2008 NOPR, DOE described and sought further comment 
on the analytical framework, models, and tools (e.g., LCC and NIA 
spreadsheets) it was using to analyze the impacts of energy 
conservation standards for this equipment. In conjunction with the 
October 2008 NOPR, DOE also posted on its Web site the complete 
technical support document (TSD), which along with the October 2008 
NOPR, is available at http://www1.eere.energy.gov/buildings/appliance_standards/. The TSD included the results of a number of DOE's analyses, 
including: (1) The market and technology assessment; (2) screening 
analysis; (3) engineering analysis; (4) energy and water use 
determination; (5) markups analysis to determine equipment price; (6) 
LCC and PBP analyses; (7) shipments analysis; (8) NES and national 
impact analyses; and (9) MIA. In the October 2008 NOPR and at the 
public meeting held on November 13, 2008 (referred to as the ``November 
2008 public meeting''), DOE invited comment in particular on the 
following issues concerning CCWs: (1) The efficiency levels; (2) DOE's 
determination of the maximum technologically feasible (max-tech) 
efficiency levels for top-loading and front-loading CCWs; (3) the 
magnitude of possible equipment class shifting to front-loading CCWs; 
(4) the analysis and data relevant to the price elasticity of demand 
for calculating the anticipated energy and water savings at different 
TSLs; (5) the analysis of consumer knowledge of the Federal ENERGY STAR 
program and its potential as a resource for increasing knowledge of the 
availability and benefits of energy efficient appliances in the home 
appliance consumer market; (6) discount rates other than 7 percent and 
3 percent real to discount future emissions reductions; (7) data that 
might enable DOE to test for market failures or other specific problems 
for CCWs; and (8) the determination of anticipated environmental 
impacts of the standards proposed in the October 2008 NOPR, 
particularly with respect to the methods for valuing the expected 
CO2 and NOX emissions savings. 73 FR 62034, 62133 
(Oct. 17, 2008).
    The October 2008 NOPR also included background information, in 
addition to that set forth above, on the history and conduct of this 
rulemaking. 73 FR 62034, 62040-62041 (Oct. 17, 2008). DOE presented the 
methodologies and results for the October 2008 NOPR analyses at the 
November 2008 public meeting. Comments presented by interested parties 
during this meeting and submitted in response to the October 2008 NOPR 
concerning the accuracy of the stated max-tech CCW efficiency level led 
to a thorough investigation of CCW efficiencies and today's SNOPR. DOE 
subsequently tested the max-tech unit at an independent test facility, 
revised the max-tech level, updated the analysis, and is publishing the 
SNOPR to allow interested parties to comment on the revised efficiency 
level proposals.
    DOE expects to issue a final rule in this rulemaking no later than 
January 1, 2010, as required by EPCA, as amended by EPACT 2005 (42 
U.S.C. 6313(e)). Based on this schedule, the estimated effective date 
of any amended energy conservation standards for this equipment would 
be January 1, 2013, 3 years after the final rule is published in the 
Federal Register.

D. Test Procedures

    EPCA directs DOE to use the same test procedures for CCWs as those 
established by DOE for residential clothes washers (RCWs). (42 U.S.C. 
6314(a)(8)) 73 FR 62034, 62043-62044 (Oct. 17, 2008). While DOE 
believes commercial laundry practices likely differ from residential 
practices,\7\ DOE concluded in the October 2008 NOPR that the existing 
clothes washer test procedure (at 10 CFR part 430, subpart B, appendix 
J1) adequately accounts for the efficiency rating of CCWs, and that 
DOE's methods for characterizing energy and water use in the October 
2008 NOPR analyses adequately accounted for the consumer usage patterns 
specific to CCWs.
---------------------------------------------------------------------------

    \7\ CCWs are typically used more frequently and filled with a 
larger load than RCWs.
---------------------------------------------------------------------------

    In response to the October 2008 NOPR, Alliance Laundry Systems 
(Alliance), GE Consumer & Industrial (GE), and AHAM agreed with DOE's 
conclusion that the DOE clothes washer test procedure is adequate for 
rating CCWs. (Alliance, Public Meeting Transcript, No. 40.5 at p. 22; 
Alliance, No. 45 at p. 1; GE, No. 48 at p. 4; AHAM, Public Meeting 
Transcript, No. 40.5 at pp. 26-27; AHAM, No. 47 at p.4) \8\ DOE did not 
receive any comments objecting to the use of the DOE clothes washer 
test procedure for CCWs. Therefore DOE continues to consider the 
existing DOE test procedure adequate to measure energy and water 
consumption of CCWs.
---------------------------------------------------------------------------

    \8\ A notation in the form ``Alliance, No. 45 at p. 1'' 
identifies a written comment (1) made by Alliance Laundry Systems 
(Alliance), (2) recorded in document number 45 that is filed in the 
docket of this rulemaking (Docket No. EE-2006-STD-0127), maintained 
in the Resource Room of the Building Technologies Program, and (3) 
which appears on page 1 of document number 45.
---------------------------------------------------------------------------

E. Technological Feasibility

1. General
    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. Therefore, in each standards 
rulemaking, DOE conducts a screening analysis, based on information it 
has gathered regarding existing technology options and prototype 
designs. In consultation with manufacturers, design engineers, and 
other interested parties, DOE develops a list of design options for 
consideration in the rulemaking. Once DOE has determined that a 
particular design option is technologically feasible, it further 
evaluates each design option in light of the following three additional 
criteria: (a) Practicability to manufacture, install, and service; (b) 
adverse impacts on product utility or availability; or (c) adverse 
impacts on health or safety. 10 CFR part 430, subpart C, appendix A, 
section 4(a)(3) and (4). All design options that pass these screening 
criteria are candidates for further assessment in the engineering and 
subsequent analyses in the NOPR (or SNOPR) stage.
    DOE published a list of evaluated CCW technologies in the November 
2007 ANOPR. 72 FR 64432, 64458 (Nov. 15, 2007). For the reasons 
described in

[[Page 57744]]

the November 2007 ANOPR and in chapter 4 of the SNOPR TSD, DOE is not 
considering the following design options, as they do not meet one or 
more of the screening criteria: bubble action, electrolytic 
disassociation of water, ozonated laundering, reduced thermal mass, 
suds saving, and ultrasonic washing. In this supplemental notice, DOE 
has not screened out any additional technology options that were 
retained in the October 2008 NOPR analyses. No comments were received 
objecting to the technology options which were screened out in the 
October 2008 NOPR. 73 FR 62034, 62052 (Oct. 17, 2008).
    Therefore, DOE believes all of the efficiency levels evaluated in 
this notice, which are based upon the retained design options, are 
technologically feasible. For more detail on DOE's method for 
developing CCW technology options and the process for screening these 
options, refer to the chapters 3 and 4 of the SNOPR TSD.
2. Maximum Technologically Feasible Levels
    When DOE considers an amended or new standard for a type (or class) 
of equipment such as front-loading or top-loading CCWs, it must 
``determine the maximum improvement in energy efficiency or maximum 
reduction in energy use that is technologically feasible'' for such 
equipment. (42 U.S.C. 6295(p)(2) and 6316(a)) For the October 2008 
NOPR, DOE determined the max-tech efficiency levels for front-loading 
and top-loading CCWs in the engineering analysis, based on published 
MEF and WF values of commercially available equipment. (See chapter 5 
in the NOPR TSD.) In proposing these max-tech levels, DOE noted that 
some CCWs exceed the max-tech MEF or WF levels, but not both. For 
example, two front-loading models exceed the max-tech MEF--they are 
rated at 2.45 and 2.68 MEF, respectively, in the Consortium for Energy 
Efficiency (CEE) qualifying product list for its Commercial, Family-
Sized Washer Initiative--but don't achieve a max-tech WF level--they 
are rated at 5.69 and 5.47 WF, respectively. In the California Energy 
Commission (CEC) equipment database for CCWs, DOE found one top-loading 
model that exceeds the max-tech WF--it is rated at 7.3 WF--but not the 
max-tech MEF level--it is rated at 1.32 WF. This model has been 
discontinued, as discussed in the November 2007 ANOPR and the October 
2008 NOPR TSD. The max-tech efficiency levels proposed in the October 
2008 NOPR were selected to represent the best available combinations of 
high MEF and low WF for each equipment class.
    For the October 2008 NOPR, DOE proposed the max-tech levels shown 
in Table II.2. 73 FR 62034, 62036 (Oct. 17, 2008).

    Table II.2--Commercial Clothes Washer Max-Tech Efficiency Levels
                    Proposed in the October 2008 NOPR
------------------------------------------------------------------------
                                                       Max-tech level
                                                   ---------------------
                  Equipment class                      MEF,    WF,  gal/
                                                     ft\3\/kW    ft\3\
------------------------------------------------------------------------
Top-Loading CCWs..................................       1.76        8.3
Front-Loading CCWs................................       2.35        4.4
------------------------------------------------------------------------

    According to the CEE database, three front-loading CCWs rated at 
the max-tech efficiency level are on the market in the United States. 
One model listed in the database which exceeds the max-tech level is 
rated at (2.84 MEF/3.68 WF), but DOE determined this CCW has yet to be 
sold in the United States. The front-loading max-tech level was based 
on a single model listed in the CEC database.
    The max-tech top-loading CCW efficiency rating in the October 2008 
NOPR was questioned by Alliance at the November 2008 NOPR meeting. 
(Alliance, Public Meeting Transcript, No. 40.5 at pp. 90-92) In 
response, DOE contracted an independent testing laboratory to verify 
the performance ratings for the max-tech top-loading CCW. The 
laboratory results (based on a 3-unit sample) suggest that the unit 
achieves 1.63 MEF/8.4 WF. Based on this information, for the SNOPR 
analysis, DOE revised the max-tech top-loading CCW level downward to 
1.60 MEF/8.5 WF, a level proposed in the October 2008 NOPR as a ``gap-
fill'' level and one which DOE concludes is attainable by the max-tech 
CCW model. For more details on this selection of max-tech levels for 
the SNOPR, see section III.C.1 of today's supplemental notice.
    In sum, Table II.3 lists the max-tech levels that DOE is proposing 
for today's SNOPR. Today's proposed front-loading max-tech level is the 
same as in the October 2008 NOPR, whereas today's proposed top-loading 
max-tech level has been revised based on the independent test results.

    Table II.3--Commercial Clothes Washer Max-Tech Efficiency Levels
                         Proposed for This SNOPR
------------------------------------------------------------------------
                                                       Max-tech level
                                                   ---------------------
                  Equipment class                      MEF,    WF,  gal/
                                                     ft\3\/kW    ft\3\
------------------------------------------------------------------------
Top-Loading CCWs..................................       1.60        8.5
Front-Loading CCWs................................       2.35        4.4
------------------------------------------------------------------------

F. Energy Savings

1. Determination of Savings
    DOE used its NIA spreadsheet tool to estimate energy savings from 
amended standards for CCWs. (Section III.E of today's supplemental 
notice and chapter 11 of the SNOPR TSD describe the NIA spreadsheet 
model.) DOE forecasted energy savings over the period of analysis 
(beginning in 2013, the year that amended standards would go into 
effect, and ending in 2043) for each TSL, relative to the base case, 
which represents the forecast of energy consumption in the absence of 
amended energy conservation standards. DOE quantified the energy 
savings attributable to amended energy conservation standards as the 
difference in energy consumption between the standards case and the 
base case. The base case represents the forecast of energy consumption 
in the absence of amended energy conservation standards. The base case 
considers market demand for more efficient equipment.
    The NIA spreadsheet tool calculates the electricity savings in 
``site energy'' expressed in kWh. Site energy is the energy directly 
consumed on location by an individual equipment. DOE reports national 
energy savings on an annual basis in terms of the aggregated source 
energy savings, which is the savings of energy that is used to generate 
and transmit the energy consumed at the site. To convert site energy to 
source energy, DOE derived conversion factors, which change with time, 
from the March 2009 release of the AEO 2009. (See TSD chapter 11 
accompanying today's supplemental notice for further details.)
2. Significance of Savings
    EPCA, as amended, prohibits DOE from adopting a standard for a 
product if that standard would not result in ``significant'' energy 
savings. (42 U.S.C. 6295(o)(3)(B)) While the Act does not define the 
term ``significant,'' the U.S. Court of Appeals for the District of 
Columbia, in Natural Resources Defense Council v. Herrington, 768 F.2d 
1355,

[[Page 57745]]

1373 (D.C. Cir. 1985), indicated that Congress intended ``significant'' 
energy savings in this context to be savings that were not ``genuinely 
trivial.'' The energy savings for energy conservation standards at each 
of the TSLs considered in this rulemaking are nontrivial, and, 
therefore, DOE considers them ``significant'' within the meaning of 42 
U.S.C. 6295(o)(3)(B).

G. Economic Justification

1. Specific Criteria
    As noted earlier, EPCA provides seven factors to be evaluated in 
determining whether an energy conservation standard is economically 
justified. (42 U.S.C. 6295(o)(2)(B)). The following sections discuss 
how DOE has addressed each of those seven factors in this rulemaking.
a. Economic Impact on Manufacturers and Consumers
    DOE uses an annual-cash-flow approach in determining the 
quantitative impacts of a new or amended standard on manufacturers. 
This includes both a short-term assessment, based on the cost and 
capital requirements during the period between the announcement of a 
regulation and the time when the regulation becomes effective, and a 
long-term assessment. The impacts analyzed include INPV (which values 
the industry on the basis of expected future cash flows), cash flows by 
year, changes in revenue and income, and other measures of impact, as 
appropriate. Second, DOE analyzes and reports the impacts on different 
types of manufacturers, with particular attention to impacts on small 
manufacturers. Third, DOE considers the impact of standards on domestic 
manufacturer employment, manufacturing capacity, plant closures, and 
loss of capital investment. DOE also takes into account cumulative 
impacts of different regulations on manufacturers. For more details on 
this analysis, see section III.G.
    For commercial consumers, measures of economic impact include the 
changes in LCC and payback period for the equipment at each TSL. Under 
EPCA, the LCC is one of the seven factors to be considered in 
determining economic justification. (42 U.S.C. 6295(o)(2)(B)(i)(II)) It 
is discussed in detail in the section below.
b. Life-Cycle Costs
    The LCC is the sum of the purchase price of equipment (including 
the installation) and the operating expense (including energy and 
maintenance expenditures), discounted over the lifetime of the 
equipment.
    In this rulemaking, DOE calculated both LCC and LCC savings for 
various CCW efficiency levels. DOE established the variability and 
uncertainty in energy and water use by defining the uncertainty and 
variability in the use (cycles per day) of the equipment. The 
variability in energy and water pricing were characterized by regional 
differences in energy and water prices. To account for uncertainty and 
variability in other inputs, such as equipment lifetime and discount 
rate, DOE used a distribution of values with probabilities attached to 
each value. For each consumer with a CCW, DOE sampled the values of 
these inputs from the probability distributions. As a result, the 
analysis produced a range of LCCs. This approach permits DOE to 
identify the percentage of consumers achieving LCC savings or attaining 
certain payback values due to an increased energy conservation 
standard, in addition to the average LCC savings or average payback for 
that standard. DOE presents the LCC savings as a distribution, with a 
mean value and a range. In the analysis prepared for the October 2008 
NOPR, DOE assumed that the consumer will purchase the equipment in 
2012. For today's SNOPR, that assumption has been changed to 2013 due 
to the expected effective date of any amended standards. See section 
III.D for more details on the analysis.
c. Energy Savings
    While significant conservation of energy is a separate statutory 
requirement for imposing an energy conservation standard, EPCA requires 
DOE, in determining the economic justification of a proposed standard, 
to consider the total projected energy savings that are expected to 
result directly from the standard. (42 U.S.C. 6295(o)(2)(B)(i)(III)) As 
in the October 2008 NOPR, DOE used the NIA spreadsheet results in its 
consideration of total projected savings expected to be directly 
attributable to the considered standard levels. See section III.E for 
more details on this analysis.
d. Lessening of Utility or Performance of Equipment
    In establishing classes of equipment, DOE considered whether the 
evaluated design options would likely lessen the utility or performance 
of CCWs. (42 U.S.C. 6295(o)(2)(B)(i)(IV)) In the October 2008 NOPR, DOE 
determined that none of the considered TSLs would reduce the utility or 
performance of the equipment under consideration in the rulemaking. 
Specifically, the standards proposed in the October 2008 NOPR would 
maintain the consumer utility of washing clothes in a washer with 
either top or front access. 73 FR 62034, 62047 (Oct. 17, 2008). This 
conclusion remains the same for the proposed standards in today's 
SNOPR. As in the October 2008 NOPR, the efficiency levels considered in 
today's SNOPR for both equipment classes require no changes in 
equipment design or unusual installation requirements that could reduce 
the utility or performance of CCWs.
e. Impact of Any Lessening of Competition
    EPCA directs DOE to consider any lessening of competition that is 
likely to result from standards. It directs the Attorney General to 
determine the impact, if any, of any lessening of competition likely to 
result from a proposed standard and to transmit such determination to 
the Secretary, not later than 60 days after the publication of a 
proposed rule, 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)). DOE received 
the Attorney General's determination dated December 16, 2008. It is 
discussed in section V.B.5 below, and is reprinted at the end of this 
SNOPR. Impacts on manufacturers are also discussed in section III.G 
below.
f. Need of the Nation To Conserve Energy
    The non-monetary benefits of today's proposed standards are likely 
to be reflected in improvements to the security and reliability of the 
Nation's energy system-namely, reductions in the overall demand for 
energy will result in reduced costs for maintaining reliability of the 
Nation's electricity system. DOE conducts a utility impact analysis to 
estimate how standards may impact the Nation's needed power generation 
capacity. This analysis captures the effects of efficiency improvements 
on electricity consumption by the equipment which is the subject of 
this rulemaking.
    Today's proposed standards also are likely to result in 
improvements to the environment. In quantifying these improvements, DOE 
has defined a range of primary energy conversion factors and associated 
emissions reductions based on the estimated level of power generation 
displaced by energy conservation standards. DOE reports the 
environmental effects from each TSL in an environmental assessment in 
chapter 16 of the SNOPR TSD. (42. U.S.C. 6295(o)(2)(B)(i)(VI) and 
6316(a)) See section III.J for more details on this analysis.

[[Page 57746]]

g. Other Factors
    The Secretary, in determining whether a standard is economically 
justified, may consider other factors that the Secretary deems to be 
relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)) In considering amended 
standards for today's SNOPR, the Secretary found no relevant factors 
other than those identified elsewhere in today's SNOPR.
2. Rebuttable Presumption
    As set forth under 42 U.S.C. 6295(o)(2)(B)(iii), there is a 
rebuttable presumption that an energy conservation standard is 
economically justified if the increased installed cost for equipment 
that meets the standard is less than three times the value of the 
first-year energy savings resulting from the standard (and water 
savings in the case of a water efficiency standard). DOE's LCC and PBP 
analyses generate values that calculate the payback period for 
consumers of equipment meeting potential energy conservation standards, 
which includes, but is not limited to, the 3-year payback period 
contemplated under the rebuttable presumption test discussed above. 
(See chapter 8 of the TSD that accompanies this notice.) However, DOE 
routinely conducts a full economic analysis that considers the full 
range of impacts, including those to the consumer, manufacturer, 
Nation, and environment, as required under 42 U.S.C. 6295(o)(2)(B)(i). 
The results of this analysis serve as the basis for DOE to definitively 
evaluate the economic justification for a potential standard level 
(thereby supporting or rebutting the results of any preliminary 
determination of economic justification). Section III.D.13 of today's 
supplemental notice addresses the rebuttable-presumption payback 
calculation.

III. Methodology and Revisions to the Analyses Employed in the October 
2008 Proposed Rule

    DOE used economic models to estimate the impacts of the TSLs used 
in weighing the benefits and burdens of amended standards for the 
equipment that is the subject of this rulemaking. Specifically, DOE 
developed the relationship between cost and efficiency for this 
equipment, and calculated the simple payback period for the purposes of 
addressing the rebuttable presumption that a standard with a payback 
period of less than 3 years is economically justified. The LCC 
spreadsheet calculates the consumer benefits and payback periods for 
amended energy conservation standards. The NIA spreadsheet provides 
shipments forecasts and then calculates NES and NPV impacts of 
potential amended energy conservation standards. DOE also assessed 
manufacturer impacts, largely through use of the Government Regulatory 
Impact Model (GRIM).
    Additionally, DOE estimated the impacts of energy conservation 
standards due to equipment on utilities and the environment. DOE used a 
version of EIA's National Energy Modeling System (NEMS) for the utility 
and environmental analyses. The NEMS model simulates the energy economy 
of the United States and has been developed over several years by the 
EIA primarily for the purpose of preparing the AEO. The NEMS produces 
forecasts for the United States that are available in the public 
domain. The version of NEMS used for appliance standards analysis is 
called NEMS-BT and is primarily based on the AEO 2009 April Release 
with minor modifications.\9\ The NEMS-BT offers a sophisticated picture 
of the effect of standards, since it accounts for the interactions 
between the various energy supply and demand sectors and the economy as 
a whole.
---------------------------------------------------------------------------

    \9\ The EIA approves the use of the name NEMS to describe only 
an AEO version of the model without any modification to code or 
data. Because the present analysis entails some minor code 
modifications and runs the model under various policy scenarios that 
deviate from AEO assumptions, the name NEMS-BT refers to the model 
as used here. (``BT'' stands for DOE's Building Technologies 
Program.) For more information on NEMS, refer to The National Energy 
Modeling System: An Overview, DOE/EIA-0581 (98) (Feb. 
1998)(available at: http://tonto.eia.doe.gov/ FTPROOT/forecasting/
058198.pdf).
---------------------------------------------------------------------------

A. Equipment Classes

    In general, when evaluating and establishing energy conservation 
standards, DOE divides covered products or equipment into classes by 
the type of energy used, capacity, or other performance-related 
features that affect consumer utility and efficiency. (42 U.S.C. 
6295(q); 6316(a)) Different energy conservation standards may apply to 
different equipment classes. Id.
    In the October 2008 NOPR, DOE proposed separate equipment classes 
and accompanying standards for top-loading and front-loading CCWs with 
separate standards for each class. 73 FR 62034, 62036 (Oct. 17, 2008). 
Thus the October 2008 NOPR represented a change from the November 2007 
ANOPR and from EPACT 2005 \10\, which placed all CCWs into a single 
equipment class with a single energy efficiency and water efficiency 
standard. The October 2008 NOPR stated that DOE believes it has the 
authority to establish additional equipment classes within an equipment 
category, if warranted. DOE determined in the October 2008 NOPR that 
two equipment classes are warranted because an amended standard would 
set MEF for all CCWs at a level significantly higher than what the max-
tech for top-loading machines can attain today, and effectively 
eliminate top-loading CCWs from the market. Id.
---------------------------------------------------------------------------

    \10\ 42 U.S.C. 6313(e); codified at 10 CFR 431.156.
---------------------------------------------------------------------------

    DOE explained the basis of its authority to establish separate 
classes, and noted that it had previously established and used classes 
for residential clothes washers (RCW) in previous rulemakings and had 
cited the likely elimination of one of these classes as one of several 
reasons for denying the California Energy Commission's (CEC) petition 
for waiver from Federal preemption of its RCW regulation. DOE then 
concluded that, ``Given the similarities in technologies and design and 
operating characteristics between RCWs and CCWs, * * * the axis of 
access must be accorded similar treatment in the context of the current 
CCW rulemaking.'' DOE also asserted that, ``If DOE were to propose an 
amended standard for CCWs under the statutory criteria set forth in 
EPCA based upon a single product class, the result would be a standard 
that would effectively eliminate top-loading CCW's from the market * * 
*;''
    Alliance, GE, Whirlpool Corporation (Whirlpool), and AHAM supported 
the two equipment classes as proposed in the October 2008 NOPR. 
(Alliance, Public Meeting Transcript, No. 40.5 at p. 22; Alliance, No. 
45 at p. 1; GE, Public Meeting Transcript, No. 40.5 at p. 31; GE, No. 
48 at p. 4; Whirlpool, Public Meeting Transcript, No. 40.5 at p. 28; 
Whirlpool, No. 50 at pp. 2-3, AHAM, Public Meeting Transcript, No. 40.5 
at p. 26; AHAM, No. 47 at p. 4)
    ASAP, American Council for an Energy-Efficient Economy (ACEEE), 
American Rivers, Natural Resources Defense Council, Northeast Energy 
Efficiency Partnerships, Northwest Power and Conservation Council, 
Southern California Edison, Southern California Gas Company, and San 
Diego Gas and Electric Company, jointly, (the Joint Comment) and ASAP, 
individually, stated that they dispute DOE's conclusion that two 
equipment classes are required under the law to preserve the 
availability of top-loading machines. (Joint Comment, No. 44 at pp. 5-
6; ASAP, Public Meeting Transcript, No. 40.5 at p. 33) EarthJustice 
(EJ) noted that a horizontal-axis CCW, like some horizontal-axis 
residential models, could be designed with top-loading access through a 
hatch. (EJ, Public Meeting Transcript, No. 40.5 at p. 26)

[[Page 57747]]

The Joint Comment stated that the ability to load a CCW from the front 
is substantially the same as the ability to load from the top. (Joint 
Comment, No. 44 at appendix A, pp. 1-4) Thus, the unavailability of 
top-loading CCWs would have no effect on equipment utility.
    In response to the EarthJustice, DOE examined the potential use of 
top-loading, horizontal-axis machines in the CCW market. While a top-
loading horizontal-axis design can provide access similar to 
traditional vertical-axis clothes washers, the consumer utility of a 
top-loading, horizontal-axis clothes washer may not be sufficiently 
comparable to that of a top-loading, vertical-axis clothes washer, 
since users of top-loading horizontal-axis units must perform multiple 
actions to undo and re-secure the hatch every time they access the 
inside of the wash basket. DOE research suggests that the added 
complication in loading and unloading such a clothes washer appears to 
be more relevant in a shared laundry and laundromat setting and less 
relevant in an institutional setting due to consumer education issues. 
In any case, DOE knows of no top-loading, horizontal-axis machines in 
the U.S. market for CCWs.
    As discussed in the October 2008 NOPR, DOE concluded that the 
method of ``loading'' clothes (i.e., the axis of access) is a 
``feature'' of RCWs within the meaning of 42 U.S.C. 6295(o)(4). Due to 
similarities in technologies and in design and operating 
characteristics between RCWs and CCWs, the axis of access may also be 
considered a feature in the context of this CCW rulemaking. Therefore, 
DOE tentatively concludes that top-loading, vertical-axis CCWs provide 
unique utility, and that, as determined in the October 2008 NOPR, axis 
of access is a feature pursuant to EPCA. Thus, DOE is retaining the two 
proposed equipment classes from the October 2008 NOPR in today's SNOPR.
    DOE seeks comment as to whether the method of ``loading'' clothes 
washers, or any other characteristic commonly associated with 
traditional ``top-loading'' or ``front-loading'' clothes washers are 
``features'' within the meaning of 42 U.S.C. 6295(o)(4) in EPCA and 
whether the availability of such feature(s) would likely be affected by 
eliminating the separate classes for these equipment types previously 
established by DOE. This is identified as Issue 1 in section VII.E of 
today's supplemental notice (Issues on Which DOE Seeks Comment.)
    As noted above, in the October 2008 NOPR, DOE took the position 
that EPCA does not permit adoption of a standard that would eliminate 
top-loading CCWs because the method of loading is a ``feature.'' 73 FR 
62034, 62049-50. Furthermore, in DOE's denial of the CEC's petition for 
waiver from Federal preemption (71 FR 78157 (December 28, 2006)) and 
the ensuing litigation, California Energy Commission v. DOE, Case. No. 
07-71576 (9th Cir.), DOE took the position that it could not waive 
Federal preemption, in part because the proposed California regulation 
of residential clothes washer water usage would result in the 
unavailability of top-loading residential clothes washers in the 
California market, based on DOE's evaluation of the clothes washer 
market in 2006.
    DOE is willing to reconsider its previous conclusions as part of 
this rulemaking. More specifically, DOE is soliciting public comments 
on whether one or more of the characteristics commonly associated with 
different types of clothes washers, such as method of loading, presence 
or absence of agitators, ability to interrupt cycles, and possibly 
others, provide consumer utility that should, under existing law, be 
recognized and protected by DOE through the maintenance or 
establishment of separate equipment classes. DOE also seeks comments as 
to whether, as a consequence of market and technology developments, it 
should maintain the same equipment classes for commercial clothes 
washers as it does for residential clothes washers.
    DOE notes that, if warranted by the public comments received and 
its further consideration of this issue, it were to establish a single 
equipment class in setting standards for CCWs, DOE intends to give 
considerable weight to the potential adverse effects of a single 
equipment class efficiency standard on competition in the CCW market. 
That is, DOE does not intend to set a standard that would produce 
significant adverse impacts on competition in this market.

B. Technology Assessment

    For the technology assessment in the October 2008 NOPR analyses, 
DOE considered all RCW and CCW technology options that it is aware are 
or have been incorporated into working prototypes or commercially 
available clothes washers at the time of the analysis. ASAP stated that 
DOE should give more serious consideration to innovations currently in 
production on the RCW market. (ASAP, Public Meeting Transcript, No. 
40.5 at pp. 33-34) DOE did not receive information on specific 
technologies for RCWs that it did not consider. Further, DOE notes that 
it considered as design options many technologies that are found in 
both RCWs and CCWs. Of the technology options screened out, only suds 
saving \11\ has appeared previously as a feature in commercially 
available RCWs. DOE research suggests that clothes washers 
incorporating a suds-saving feature have not been available on the 
market since 2005, and further DOE research suggests that suds saving 
would be impractical to install in a commercial setting for reasons 
such as space limitations, questionable energy savings, incompatibility 
with CCW usage patterns, and lack of consumer acceptance. Therefore, 
DOE concludes that suds-savings is an RCW feature that was 
appropriately screened out for the CCW SNOPR analysis.
---------------------------------------------------------------------------

    \11\ A suds-saving feature allows water from one wash cycle to 
be reused in the next wash cycle. After agitation, sudsy wash water 
is pumped into a separate storage tub, remaining there until the 
next wash cycle. While the water is stored, soil settles to the 
bottom of the tub. During the next wash cycle, all but an inch of 
the water is pumped back into the washer tub for use again. Clothes 
washers with the suds-saving feature must be larger than typical 
clothes washers in order to accommodate the additional storage tub.
---------------------------------------------------------------------------

    In addition, DOE has gathered and analyzed data published by CEC, 
CEE, and the ENERGY STAR Program to provide an overview of the energy 
efficiency levels achieved in today's CCWs and RCWs. Certain 
information about technologies associated with high-efficiency clothes 
washers can be determined by evaluating the models in these databases. 
DOE found that all front-loading CCWs on the market today are more 
efficient than top-loading CCW models. No top-loading CCW listed in 
these databases has an MEF greater than 1.76, whereas the majority of 
front-loading CCWs are listed as having MEFs greater than 2.0. 
Similarly, no top-loading CCW is rated as having a WF below 8.0, 
whereas the majority of front-loading CCWs have rated WFs below 7.0. In 
contrast, DOE research suggests that the most efficient vertical-axis 
RCWs achieve efficiency levels comparable to some horizontal-axis CCWs 
on the market today.\12\ High efficiency, vertical-axis platforms that 
do not employ an agitator have been sold into the RCW market for 
several

[[Page 57748]]

years, but have yet to be released in a CCW form. DOE expects 
manufacturers will continue to introduce new features first in the 
higher-volume residential markets before transitioning them to 
commercial applications. At this time, however, DOE is not aware of 
such technologies being incorporated in either commercially available 
CCWs or working CCW prototypes, and therefore did not consider them in 
the SNOPR analyses.
---------------------------------------------------------------------------

    \12\ Typically, vertical-axis clothes washers are accessed from 
the top (also known as ``top-loaders''), while horizontal-axis 
clothes washers are accessed from the front (also known as ``front-
loaders''). However, a limited number of residential horizontal-axis 
clothes washers which are accessible from the top (using a hatch in 
the wash basket) are currently available, although DOE is unaware of 
any such CCWs on the market. For the purposes of this analysis, the 
terms ``vertical-axis'' and ``top-loading'' will be used 
interchangeably, as will the terms ``horizontal-axis'' and ``front-
loading.'' Additionally, clothes washers that have a wash basket 
whose axis of rotation is tilted from horizontal are considered to 
be horizontal-axis machines.
---------------------------------------------------------------------------

    Whirlpool stated that there are considerable differences between 
RCWs and CCWs, including, but not limited to heavier duty components 
and a smaller basket utilized in CCW's. According to Whirlpool, the 
smaller basket is required by CCW customers, and it is inherently more 
difficult to achieve high efficiency with smaller baskets. (Whirlpool, 
No. 50 at p. 3)
    For these reasons, DOE believes it has adequately considered RCW 
technologies that may be applicable to CCWs in its technology 
assessment. See chapter 3 of the SNOPR TSD for more information on the 
technologies considered.

C. Engineering Analysis

    The purpose of the engineering analysis is to characterize the 
relationship between the incremental manufacturing cost and efficiency 
improvements of CCWs. DOE used this cost-efficiency relationship as 
input to the PBP, LCC, and NES analyses.
    To estimate incremental manufacturing costs, DOE has identified 
three basic methodologies: (1) The design-option approach, which 
provides the incremental costs of adding to a baseline model design 
options that will improve its efficiency; (2) the efficiency-level 
approach, which provides the incremental costs of moving to higher 
energy efficiency levels, without regard to the particular design 
option(s) used to achieve such increases; and (3) the cost-assessment 
(or reverse-engineering) approach, which provides ``bottom-up'' 
manufacturing cost assessments for achieving various levels of 
increased efficiency, based on detailed data on costs for parts and 
material, labor, shipping/packaging, and investment for models that 
operate at particular efficiency levels. DOE conducted the engineering 
analysis for this rulemaking using the efficiency-level approach. For 
this analysis, DOE relied upon efficiency data published in multiple 
databases, including those published by CEC, CEE and ENERGY STAR, which 
were supplemented with limited laboratory testing, data gained through 
reverse-engineering analysis, and primary and secondary research.
1. Efficiency Levels
    The efficiency levels for CCWs are defined by two factors 
normalized by wash basket volume--MEF and WF. These two variables are 
only directly related to each other via the average hot water usage by 
a clothes washer, as measured by the DOE test procedure. Other measured 
parameters affect only one variable or the other. For example, cold 
water consumption only affects the WF, while remaining moisture content 
(RMC) only affects the MEF. (See chapter 5 of the SNOPR TSD for further 
explanation.)
    In the October 2008 NOPR, DOE proposed the following efficiency 
levels for CCWs.

Table III.1--Commercial Clothes Washer Efficiency Levels Proposed in the
                            October 2008 NOPR
------------------------------------------------------------------------
                                     Modified energy factor (ft\3\/kWh)/
                                          water factor (gal/ft\3\)
         Efficiency level          -------------------------------------
                                       Top-loading       Front-loading
------------------------------------------------------------------------
Baseline..........................           1.26/9.5           1.72/8.0
1.................................           1.42/9.5           1.80/7.5
2.................................           1.60/8.5           2.00/5.5
3.................................           1.76/8.3           2.20/5.1
4.................................                N/A           2.35/4.4
------------------------------------------------------------------------

a. Revised Efficiency Levels
    In response to the October 2008 NOPR, Alliance disputed DOE's 
finding that the proposed max-tech level for top-loading CCWs is 
technically feasible, based on Alliance's internal testing of one max-
tech unit. Alliance stated that there were numerous inconsistencies 
related to the stated efficiencies of the max-tech top-loading CCW, the 
GE WNRD2050G, in databases such as those published by the CEC and 
ENERGY STAR. (Alliance, Public Meeting Transcript, No. 40.5 at pp. 22-
24 and 90-92) According to Alliance, its own tests for the same model 
did not achieve the published efficiency levels of 1.76 MEF/8.3 WF. 
Alliance suggested that DOE should test and confirm the max-tech 
model's efficiency before continuing to use it as the basis for the 
max-tech efficiency levels proposed in the October 2008 NOPR. 
(Alliance, No. 45 at Attachment 2, pp. 4-5)
    GE responded in its written comments that there was indeed a 
transposition error, which led to the inconsistencies noted by 
Alliance. GE stated that the equipment label indicated an energy rating 
of 472 kWh per year, equaling 1.204 kWh per cycle, meaning that 
consumers were getting a more efficient product than the energy rating 
contained on the label. GE stated that it takes any labeling error very 
seriously, and corrected the issue immediately upon its discovery. (GE, 
No. 48 at pp. 4-5). DOE review of present and past ENERGY STAR 
databases for CCWs failed to find an entry for the WNRD2050G. Based on 
market research and the CEC addition of the unit in December 2007, it 
appears that the WNRD2050G was released into production in December 
2007. Thus, because the model's stated WF (8.3) was above the cutoff 
for ENERGY STAR eligibility (8.0) at that time, DOE concludes that the 
WNRD2050G was never listed in the ENERGY STAR database for CCWs.
    In response to comments about the validity of published CCW data, 
the DOE rulemaking team purchased three nominally identical max-tech 
top-loading CCWs, and hired an independent test facility to determine 
their average efficiency rating per the DOE test procedure.\13\ The 
test results suggest that the max-tech CCW achieves a 1.63 MEF/8.4 WF 
efficiency rating instead of 1.76 MEF/8.3 WF as stated. Even at this 
lower max-tech level, the unit identified as the max-tech top-loading 
CCW model for the October 2008 NOPR continues to be the max-

[[Page 57749]]

tech top-loading CCW for the SNOPR analyses. However, as the tested 
values do not agree with the MEF and WF ratings in the CEC database on 
which the October 2008 NOPR analyses were based, and because this model 
was the only top-loading CCW stated to meet the (1.76 MEF/8.3 WF) max-
tech level defined in the October 2008 NOPR, DOE elected to eliminate 
that efficiency level from the top-loading CCW analysis in the SNOPR.
---------------------------------------------------------------------------

    \13\ A minimum of three washers are required to be tested per 
the DOE test procedure (10 CFR 430 subpart B, appendix J1) to give 
test results some statistical certainty. If variability in the test 
results for the three washers is too high, an additional three units 
must be tested. For the DOE testing, no additional test units were 
required because the initial results had sufficiently low 
variability to be statistically valid.
---------------------------------------------------------------------------

    Accordingly, DOE is proposing (1.60 MEF/8.5 WF) for today's max-
tech level. Originally included based upon the CEE's Tier 2 qualifying 
criteria for CCWs effective between January 1, 2004, and January 1, 
2007, 1.6 MEF/8.5 WF is an efficiency level for which DOE had 
previously solicited feedback from interested parties and which is also 
very close to the tested results for the max-tech CCW. The max-tech 
model uses many standard top-loader components and materials; hence, 
DOE research suggests that no CCW manufacturer would suffer material 
harm since they all should be able to produce top-loading machines that 
meet the max-tech efficiency level without technical difficulty.
    ASAP stated that DOE should review current and upcoming ENERGY STAR 
efficiency levels for RCWs and subsequently revise efficiency levels 
under consideration for CCWs. ASAP noted that there are vertical-axis 
RCWs with agitators on the market that exceed the max-tech CCW level 
(i.e., that impeller-type clothes washers are not necessary to exceed 
the current max-tech CCW efficiency level as implied by some 
manufacturers). (ASAP, Public Meeting Transcript, No. 40.5 at pp. 202-
203) DOE is aware of the clothes washers referenced by ASAP and notes 
that they are only sold into the RCW market. Thus, it is not possible 
to assess whether these washers would be able to stand up to the rigors 
of operating in the CCW market. DOE research suggests that these 
washers are heavily patented, possibly preventing competitors such as 
the LVM from developing similar appliances. DOE research also suggests 
that some of the means by which these washers achieve their high 
efficiency levels (such as adaptive fill, a high number of wash 
programs, etc.) would yield few savings in a CCW setting, where washers 
are typically only washed with full loads and a limited number of wash 
programs are desired to limit consumer education needs. For these 
reasons, DOE did not consider these clothes washers in determining 
revised efficiency levels for the CCW analysis.
    Thus, for today's SNOPR, DOE has proposed revised top-loading CCW 
efficiency levels shown in Table III.2, in which the max-tech top-
loading level is now efficiency level 2 (1.60 MEF/8.5 WF). No changes 
have been made to the efficiency levels proposed in the October 2008 
NOPR for front-loading CCWs in today's supplemental notice.

  Table III.2--Commercial Clothes Washer Efficiency Levels Proposed for
                               This SNOPR
------------------------------------------------------------------------
                                     Modified energy factor (ft\3\/kWh)/
                                          water factor (gal/ft\3\)
         Efficiency level          -------------------------------------
                                       Top-loading       Front-loading
------------------------------------------------------------------------
Baseline..........................           1.26/9.5           1.72/8.0
1.................................           1.42/9.5           1.80/7.5
2.................................           1.60/8.5           2.00/5.5
3.................................                N/A           2.20/5.1
4.................................                N/A           2.35/4.4
------------------------------------------------------------------------

    DOE seeks comment on the revised efficiency levels for top-loading 
CCWs. This is identified as Issue 2 in section VII.E of today's 
supplemental notice (Issues on Which DOE Seeks Comment).
b. Technological Feasibility of the Revised Top-Loading Max-Tech Level
    DOE also received numerous comments regarding the viability in 
commercial settings of the max-tech top-loading CCW evaluated in the 
October 2008 NOPR. Alliance and GE commented that the commercial 
acceptance of the technology behind the max-tech vertical-axis CCW is 
as yet unknown because the GE model was introduced only recently and 
because the max-tech unit is currently only sold into the on-premise 
laundry market segment, where the frequency of user abuse such as 
overloading is lower than in other commercial segments (laundromats, 
multi-family housing, etc.). (Alliance, Public Meeting Transcript, No. 
40.5 at p. 23; GE, Public Meeting Transcript, No. 40.5 at pp. 173-174; 
GE, No. 48 at p.4;) Whirlpool suggested that the practice of 
overloading impairs top-loading CCWs more than front-loading machines, 
and, thus, inherently limits the efficiency levels that top-loading 
CCWs can achieve. Whirlpool also stated that CCWs are more prone to 
user abuse, such as extreme overloading, than RCWs. Whirlpool noted 
that certain residential platforms are not able to achieve proper 
clothes roll-over and, hence, cleaning when overfilled. (Whirlpool, No. 
50 at pp. 2-3) The Joint Comment stated that on-premise laundry is 
served primarily by larger capacity equipment than is covered by this 
rulemaking. (Joint Comment, No. 44 at pp. 4-5) Conversely, Alliance 
stated that the max-tech vertical-axis CCW is based on a lightweight 
RCW platform that is poorly suited to commercial usage. (Alliance, No. 
45 at Attachment 2, p. 7)
    DOE recognizes that the max-tech top-loading CCW is currently 
marketed only to on-premise laundry facilities and is not yet offered 
with a coin-box or smart card reader option for laundromat or multi-
housing laundry use. DOE research indicates that the max-tech CCW is 
based on a standard vertical-axis RCW platform (i.e., one with an 
agitator) with selective upgrades, including spray rinse, four water-
level settings, additional low-temperature wash programs, a low-standby 
power supply, and an electronic control board/user interface/drive 
system that is customized for its intended use. No proprietary 
technologies were observed, and, thus, DOE believes that all CCW 
manufacturers could market vertical-axis clothes washers with similar 
performance in time for the effective date of today's proposed rule. 
The unit shares many characteristics with CCWs from the same 
manufacturer marketed towards laundromat and multi-unit housing 
applications, including an industry-standard 25-minute wash cycle. In 
its teardown analysis, DOE observed that the max-tech top-loading CCW 
appears to be built with similar construction and components as similar 
CCW models marketed to commercial laundromats, which are also largely 
based on an existing RCW platform. Thus, DOE believes that the max-tech 
CCW is equally rugged and durable as

[[Page 57750]]

other units on the market. Further, DOE believes that applicable 
payment-system interfaces could be incorporated in time for the 
effective date of today's proposed standards.
    DOE research also suggests that commercial acceptance depends on 
wash performance. Multiple comments from interested parties were 
received concerning wash performance of high-efficiency clothes 
washers. The Multi-Housing Laundry Association (MLA) and Alliance 
commented that the top-loading CCW standard proposed in the October 
2008 NOPR could result in reduced equipment quality and clothes washing 
and rinsing performance. Alliance stated that the required reductions 
in water consumption and and/or low wash temperature to meet the 
standard proposed in the October 2008 NOPR would negatively affect 
consumer utility. Alliance stated that the max-tech vertical-axis CCW, 
when used with common clothes washing detergents, may not provide 
adequate clothes washing performance. (Alliance, Public Meeting 
Transcript, No. 40.5 at pp. 23-24 and p. 202; Alliance No. 45 at p. 1 
and Attachment 2, p. 14; MLA No. 49 at pp. 3-4) DOE recognizes that any 
amended energy efficiency standard could result in a lessening of 
certain equipment utility and hence interviews interested parties to 
better understand the potential impacts of energy efficiency strategies 
that manufacturers might employ in their equipment. Although interested 
parties have suggested that the max-tech model does not provide 
acceptable washing and rinsing performance targets, especially when 
overloaded, they have yet to submit evidence of such performance 
degradation. Furthermore, DOE is not aware of any widely accepted, 
quantitative measures associated with clothes washing performance. 
While DOE research uncovered a rinse-performance standard that was 
developed by Australian clothes washer manufacturers, this rinse test 
has yet to find acceptance in the U.S. market.
    DOE also received comments on whether the max-tech vertical-axis 
efficiency level could be achieved by multiple CCW models. Alliance 
stated that it would be unwise to set a standard close to the max-tech 
level, since it could eliminate all but the max-tech model from the 
market. (Alliance, No. 45 at Attachment 2, p. 13) Alliance believes a 
properly functioning top-loading CCW market requires a range of models 
to serve all users. (Alliance, No. 45 at Attachment 2, p. 13) DOE notes 
that the MEF/WF combination for vertical-axis CCWs proposed in the 
October 2008 NOPR as TSL 2 and currently proposed in today's SNOPR as 
the max-tech level is not based on either the stated or the tested max-
tech vertical-axis unit. Rather, the combination of MEF and WF proposed 
is set at a level slightly below the measured max-tech values, and is a 
level for which DOE had previously collected manufacturing, capital 
expenditure, product development, and other costs. For today's 
supplemental notice, DOE revised the max-tech level to the values at 
TSL 2 proposed in the October 2008 NOPR--1.60 MEF/8.5 WF --based on its 
independent testing. Compared to the top-loading max-tech level and 
proposed standard of 1.76 MEF/8.3 WF published in the October 2008 
NOPR, the revised level is slightly less stringent (see section III.C.1 
for a complete discussion of this change) and may allow manufacturers 
to field units with higher tested efficiencies in the future. For 
example, the max-tech unit may be revised to achieve its stated 
efficiency level. DOE believes that this revision of the proposed max-
tech level for today's SNOPR should help alleviate some manufacturers' 
concerns regarding the technological feasibility and commercial 
acceptance of a max-tech top-loading CCW.
    Alliance commented that front-loading CCWs with electric heaters 
have an MEF of 1.96, which would not meet the front-loading standards 
proposed in the October 2008 NOPR. According to Alliance, customers in 
some parts of the northern United States need such heaters to 
supplement their hot water supply in order to maintain proper wash 
temperatures despite very cold water supply temperatures. (Alliance, 
Public Meeting Transcript, No. 40.5 at p. 22) DOE has received no data 
on the extent or size of this impact or of the affected population. 
Hence, DOE invites comment, including population and efficiency impact 
data, to describe this issue.
    DOE also invites further comment and information on the 
technological feasibility of the proposed max-tech CCW, including 
washing and rinsing performance measures for CCWs and population data 
for water heating CCWs. This is identified as Issue 3 in section VII.E 
of today's supplemental notice (Issues on Which DOE Seeks Comment).
2. Manufacturing Costs
    In the October 2008 NOPR, DOE presented manufacturing cost 
estimates based on the November 2007 ANOPR analysis, revised in 
response to detailed CCW manufacturer feedback obtained at the NOPR 
stage for equipment at each efficiency level. 73 FR 62034, 62055-62056 
(Oct. 17, 2008). These manufacturing costs were the basis of inputs for 
a number of other analyses in this rulemaking, including the LCC, 
national impact, and GRIM analyses.
    As described in the October 2008 NOPR, DOE found that a low-volume 
manufacturer (LVM) operates in both the residential and CCW markets. 
DOE considers this manufacturer to be low-volume because its annual 
shipments in the combined RCW and CCW market are significantly lower 
than those of its larger competitors. However, unlike its larger 
rivals, most of the LVM's unit shipments are in the CCW market, where 
the LVM has significant market share. Also unlike its diversified 
competitors, this company exclusively manufactures laundry equipment. A 
review of the Securities and Exchange Commission (SEC) 10-K documents 
filed by the LVM revealed that, as of 2005, this company derived 22 
percent of its total revenue from the sale of front- and top-loading 
clothes washers and 87 percent of that income was from the commercial 
market.\14\ As a result, the LVM could be affected disproportionately 
by any rulemaking concerning CCWs compared to its competitors, for whom 
CCWs represent less than 2 percent of total clothes washer sales. 
Alliance stated that it is the LVM and that it has neither the 
purchasing power nor the funding to support wide-ranging research and 
development programs like those of its larger, more diverse rivals. 
(Alliance, No. 45 at Attachment 2, p. 8) As a result, the manufacturing 
costs for Alliance are inherently higher compared to those of its 
rivals. Alliance believes that the cost of compliance with the top-
loading CCW standard proposed in the October 2008 NOPR would be 
especially high if Alliance were required to introduce non-traditional 
agitator designs to meet it. (Alliance, Public Meeting Transcript, No. 
40.5 at p. 23 and p. 202) DOE research suggests that this efficiency 
level for vertical-axis clothes washers can be met with conventional, 
non-proprietary technology that is on the market today. Since the 
October 17, 2008 NOPR meeting, DOE has received no further comments on 
the manufacturing cost curves. Thus, for today's SNOPR, DOE has 
retained all cost estimates presented in the October 2008 NOPR at the 
retained efficiency levels, though each value was scaled by the 
Producer Price Index (PPI) multiplier for the commercial laundry 
equipment industry (NAICS 333312)

[[Page 57751]]

between 2007 and 2008 to update the costs in the October 2008 NOPR to 
2008$.\15\ These are shown in Table III.3.
---------------------------------------------------------------------------

    \14\ SEC documents pertaining to the LVM are available online 
at: http://sec.gov/cgi-bin/browse-idea?action=getcompany&CIK=0001063697&owner=exclude&count=40.
    \15\ PPI data is maintained by the Bureau of Labor Statistics 
and is available at http://www.bls.gov/ppi/.

                     Table III.3--Commercial Clothes Washer Incremental Manufacturing Costs
----------------------------------------------------------------------------------------------------------------
                                                  Modified energy factor (ft\3\/         Incremental cost
                                                   kWh)/water factor (gal/ft\3\) -------------------------------
                Efficiency level                 --------------------------------
                                                    Top-loading    Front-loading    Top-loading    Front-loading
----------------------------------------------------------------------------------------------------------------
Baseline........................................        1.26/9.5        1.72/8.0           $0.00           $0.00
1...............................................        1.42/9.5        1.80/7.5           77.60            0.00
2...............................................        1.60/8.5        2.00/5.5          134.99           14.21
3...............................................             N/A        2.20/5.1             N/A           39.34
4...............................................             N/A        2.35/4.4             N/A           66.16
----------------------------------------------------------------------------------------------------------------

D. Life-Cycle Cost and Payback Period Analysis

    In response to the requirements of section 325(o)(2)(B)(i) of the 
Act, DOE conducted LCC and PBP analyses to evaluate the economic 
impacts of possible amended energy conservation standards for owners of 
CCWs. This section of the notice describes these analyses. DOE 
conducted the analysis using a spreadsheet model developed in Microsoft 
(MS) Excel for Windows 2007. (See the SNOPR TSD, chapter 8).
    The LCC is the total consumer expense over the life of the 
equipment, including purchase and installation expense and operating 
costs (energy and water expenditures, repair costs, and maintenance 
costs). The PBP is the number of years it would take for the consumer 
to recover the increased costs of a higher-efficiency equipment through 
energy savings. To calculate the LCC, DOE discounted future operating 
costs to the time of purchase and summed them over the lifetime of the 
equipment. DOE measured the change in LCC and the change in PBP 
associated with a given efficiency level relative to a base case 
forecast of equipment efficiency. The base case forecast reflects the 
market in the absence of amended mandatory energy conservation 
standards. As part of the LCC and PBP analyses, DOE developed data that 
it used to establish equipment prices, installation costs, annual 
energy consumption, energy and water prices, maintenance and repair 
costs, equipment lifetime, and discount rates.
    DOE was unable to develop a consumer sample for CCWs because EIA's 
Commercial Building Energy Consumption Survey (CBECS) does not provide 
the necessary data to develop one.\16\ Instead, DOE established the 
variability and uncertainty in energy and water use by defining the 
uncertainty and variability in the use (cycles per day) of the 
equipment. The variability in energy and water pricing was 
characterized by regional differences in energy and water prices. DOE 
calculated the LCC associated with a baseline CCW. To calculate the LCC 
savings and PBP associated with equipment meeting higher efficiency 
standards, DOE substituted the baseline unit with a more efficient 
design.
---------------------------------------------------------------------------

    \16\ Available online at: http://www.eia.doe.gov/emeu/cbecs/.
---------------------------------------------------------------------------

    Table III.4 summarizes the approaches and data DOE used to derive 
the inputs to the LCC and PBP calculations for the October 2008 NOPR, 
and the changes it made for today's SNOPR. DOE did not introduce 
changes to the LCC and PBP analyses methodology described in the 
October 2008 NOPR. However, as the following sections discuss in more 
detail, DOE revised some of the inputs to the analysis. Chapter 8 of 
the TSD accompanying this notice contains detailed discussion of the 
methodology utilized for the LCC and PBP analyses as well as the inputs 
developed for the analyses.

  Table III.4--Summary of Inputs and Key Assumptions in the LCC and PBP
                                Analyses
------------------------------------------------------------------------
                                                       Changes for the
           Inputs               October 2008 NOPR           SNOPR
------------------------------------------------------------------------
Affecting Installed Costs:
    Equipment Price.........  Derived by            Updated prices from
                               multiplying           2006$ to 2008$.
                               manufacturer cost
                               by manufacturer,
                               distributor markups
                               and sales tax.
    Installation Cost.......  Baseline cost         Updated costs from
                               updated with RS       2006$ to 2008$.
                               Means Mechanical
                               Cost Data, 2008.
Affecting Operating Costs:
    Annual Energy and Water   Per-cycle energy and  No change.
     Use.                      water use based on
                               MEF and WF levels.
                               Disaggregated into
                               per-cycle machine,
                               dryer, and water
                               heating energy
                               using data from
                               DOE's 2000 TSD for
                               residential clothes
                               washers. Annual
                               energy and water
                               use determined from
                               the annual usage
                               (number of use
                               cycles). Usage
                               based on several
                               studies including
                               research sponsored
                               by MLA \17\ and the
                               Coin Laundry
                               Association \18\
                               (CLA). Different
                               use cycles
                               determined for
                               multi-family and
                               laundromat
                               equipment
                               applications.

[[Page 57752]]

 
    Energy and Water/         Electricity: Updated  Electricity: Updated
     Wastewater Prices.        using EIA's 2006      using EIA's 2007
                               Form 861 data.        Form 861 data.
                              Natural Gas: Updated  Natural Gas: Updated
                               using EIA's 2006      using EIA's 2007
                               Natural Gas Monthly.  Natural Gas
                              Water/Wastewater:      Monthly.
                               Updated using RFC/   Water/Wastewater: No
                               AWWA's 2006 Water     change.
                               and Wastewater       Variability: No
                               Survey.               change.
                              Variability:
                               Regional energy
                               prices determined
                               for 13 regions;
                               regional water/
                               wastewater price
                               determined for four
                               regions.
    Energy and Water/         Energy: Forecasts     Reference Case
     Wastewater Price Trends.  updated with EIA's    forecast updated
                               AEO 2008.             with EIA's AEO 2009
                              Water/Wastewater:      April Release. High-
                               Linear                Growth and Low-
                               extrapolation of      Growth forecasts
                               1970-2007             updated with EIA's
                               historical trends     AEO 2009 March
                               in national water     Release.
                               price index.         Water/Wastewater
                                                     Prices: Updated to
                                                     include historical
                                                     trend through 2008.
                                                     For the four years
                                                     after 2008, fixed
                                                     the annual price to
                                                     the value in 2008
                                                     to prevent a dip in
                                                     the forecasted
                                                     prices.
    Repair and Maintenance    Estimated annualized  Updated costs from
     Costs.                    repair costs for      2006$ to 2008$.
                               each efficiency
                               level based on half
                               the equipment
                               lifetime divided by
                               the equipment
                               lifetime.
Affecting Present Value of
 Annual Operating Cost
 Savings
    Equipment Lifetime......  Based on data from    No change.
                               various sources
                               including the CLA.
                               Different lifetimes
                               established for
                               multi-family and
                               laundromat
                               equipment
                               applications.
                               Variability and
                               uncertainty
                               characterized with
                               Weibull probability
                               distributions.
    Discount Rates..........  Approach based on     No change.
                               cost of capital of
                               publicly traded
                               firms in the
                               sectors that
                               purchase CCWs.
                               Primary data source
                               is Damodaran
                               Online\19\.
Affecting Installed and
 Operating Costs:
    Effective Date of New     2012................  2013.
     Standard.
    Base-Case Efficiency      Analyzed as two       Updated to reflect
     Distributions.            equipment classes:    the most recent
                               top-loading and       distributions on
                               front-loading.        the number of
                               Distributions for     available models at
                               both classes based    the efficiency
                               on the number of      levels.
                               available models at  Top-Loading: 64.8%
                               the efficiency        at 1.26 MEF/9.5 WF;
                               levels.               33.8% at 1.42 MEF/
                              Top-Loading: 63.6%     9.5 WF; 1.4% at
                               at 1.26 MEF/9.5 WF;   1.60 MEF/8.5 WF;
                               33.3% at 1.42 MEF/    1.76 MEF/8.3 WF
                               9.5 WF; 0% at 1.60    removed as Max
                               MEF/8.5 WF; 3.0% at   Tech.
                               1.76 MEF/8.3 WF.     Front-Loading: 3.5%
                               Front-Loading: 7.4%   at 1.72 MEF/8.0 WF;
                               at 1.72 MEF/8.0 WF;   0.0% at 1.80 MEF/
                               4.4% at 1.80 MEF/     7.5 WF; 73.7% at
                               7.5 WF; 85.3% at      2.00 MEF/5.5 WF;
                               2.00 MEF/5.5 WF;      22.8% at 2.20 MEF/
                               1.5% at 2.20 MEF/     5.1 WF; 0.0% at
                               5.1 WF; 1.5% at       2.35 MEF/4.4 WF.
                               2.35 MEF/4.4 WF.
------------------------------------------------------------------------

1. Equipment Prices
    To calculate the equipment prices faced by CCW purchasers, DOE 
multiplied the manufacturing costs developed from the engineering 
analysis by the supply chain markups it developed (along with sales 
taxes). DOE used the same supply chain markups for today's SNOPR that 
were developed for the October 2008 NOPR. See chapter 7 of the TSD 
accompanying this notice for additional information. To calculate the 
final installed prices, DOE added installation cost to the equipment 
prices.
---------------------------------------------------------------------------

    \17\ Please see the following Web site for further information: 
http://www.mla-online.com/.
    \18\ Please see the following Web site for further information: 
http://www.coinlaundry.org/.
    \19\ Please see the following Web site for further information: 
http://pages.stern.nyu.edu/~adamodar/.
---------------------------------------------------------------------------

2. Installation Cost
    Installation costs include labor, overhead, and any miscellaneous 
materials and parts. For the October 2008 NOPR and today's SNOPR, DOE 
used data from the RS Means Mechanical Cost Data, 2008 on labor 
requirements to estimate installation costs for CCWs.\20\ DOE estimates 
that installation costs do not increase with equipment efficiency.
---------------------------------------------------------------------------

    \20\ Available online at: http://www.rsmeans.com/bookstore/.
---------------------------------------------------------------------------

3. Annual Energy Consumption
    DOE determined the annual energy and water consumption of CCWs by 
multiplying the per-cycle energy and water use by the estimated number 
of cycles per year. In the October 2008 NOPR, DOE concluded that the 
use of the existing RCW test procedure provides a representative basis 
for rating and estimating the per-cycle energy use of CCWs. For today's 
SNOPR, DOE maintained the above approach.
4. Energy and Water Prices
a. Energy Prices
    DOE derived average electricity and natural gas prices for 13 
geographic areas consisting of the nine U.S. Census divisions, with 
four large States (New York, Florida, Texas, and California) treated 
separately.
    DOE estimated commercial electricity prices for each of the 13 
geographic areas based on data from EIA Form 861, Annual Electric Power 
Industry Report.\21\ DOE calculated an average commercial electricity 
price by first estimating an average commercial price

[[Page 57753]]

for each utility, and then calculated a regional average price by 
weighting each utility with customers in a region by the number of 
commercial customers served in that region. The calculations for 
today's SNOPR used the most recent available data from 2007.
---------------------------------------------------------------------------

    \21\ Available online at: http://www.eia.doe.gov/cneaf/electricity/page/eia861.html.
---------------------------------------------------------------------------

    For the October 2008 NOPR, DOE estimated average commercial natural 
gas prices in each of the 13 geographic areas based on 2006 data from 
the EIA publication Natural Gas Monthly.\22\ DOE calculated an average 
natural gas price for each area by first calculating the average prices 
for each State, and then calculating a regional price by weighting each 
State in a region by its population. For today's SNOPR, DOE used 2007 
data from the same source.
---------------------------------------------------------------------------

    \22\ Available online at: http://www.eia.doe.gov/oil_gas/natural_gas/data_publications/natural_gas_monthly/ngm.html.
---------------------------------------------------------------------------

    To estimate the trends in electricity and natural gas prices for 
the October 2008 NOPR, DOE used the price forecasts in the AEO 
2008.\23\ To arrive at prices in future years, DOE multiplied the 
average prices described above by the forecast of annual average price 
changes in AEO 2008. For today's supplemental notice, DOE updated its 
energy price forecasts using those in the AEO 2009 April Release. 
Because the AEO forecasts prices only to 2030, DOE followed past 
guidelines provided to the Federal Energy Management Program by EIA and 
used the average rate of change during 2020-2030 to estimate the price 
trends beyond 2030.
---------------------------------------------------------------------------

    \23\ All AEO publications are available online at: http://www.eia.doe.gov/oiaf/aeo/.
---------------------------------------------------------------------------

    The spreadsheet tools used to conduct the LCC and PBP analysis 
allow users to select either the AEO's high-growth case or low-growth 
case price forecasts to estimate the sensitivity of the LCC and PBP to 
different energy price forecasts. The AEO 2009 April Release provides 
only forecasts for the Reference Case. Therefore, for today's 
supplemental notice, DOE used the AEO 2009 March Release high-growth 
case or low-growth forecasts to estimate high-growth and low-growth 
price trends.
    DOE received comment regarding the inputs into the energy price 
forecasts. The Joint Comment recommended that DOE conduct a sensitivity 
analysis using a basket of other forecasts besides the AEO. (Joint 
Comment, No. 44 at p. 11) As mentioned above, DOE considered the AEO's 
high-growth case and low-growth case price forecasts to estimate the 
sensitivity of the LCC and PBP results to different energy price 
forecasts. The AEO alternative forecasts provide a suitable range to 
examine the sensitivity of LCC and PBP results to different energy 
price forecasts.
    Interested parties also recommended DOE consider pending 
legislation that could influence future energy prices. The Joint 
Comment stated that to realistically depict energy prices in the 
future, DOE must consider the impact of carbon control legislation, 
since such legislation is very likely. It also noted that there are 
regional cap and trade programs that are in effect in the Northeast 
(Regional Greenhouse Gas Initiative (RGG)) and the West (Western 
Climate Initiative (WCI)) that will impact the price of electricity and 
are not reflected in the AEO energy price forecasts. (Joint Comment, 
No. 44 at p. 12) EJ stated that caps will likely be in place by the 
time new standards become effective, so DOE should increase its 
electricity prices to reflect the cost of complying with emission caps. 
(EJ, Public Meeting Transcript, No. 40.5 at pp. 105-106) The shape of 
Federal carbon control legislation, and the ensuing cost of carbon 
mitigation to electricity generators, is as yet too uncertain to 
incorporate into the energy price forecasts that DOE uses. The costs of 
carbon mitigation to electricity generators resulting from the regional 
programs are also very uncertain over the forecast period for this 
rulemaking. Even so, EIA did include the effect of the RGGI in its AEO 
2009 April Release energy price forecasts. (WCI did not provide 
sufficient detail to EIA in order for them to model the impact of the 
WCI on energy price forecasts.) Therefore, the energy price forecasts 
used in today's supplemental notice do include the impact of one of the 
two regional cap and trade programs in the United States.
b. Water and Wastewater Prices
    DOE obtained commercial water and wastewater price data from the 
Water and Wastewater Rate Survey conducted by Raftelis Financial 
Consultants (RFC) and the American Water Works Association (AWWA). For 
the October 2008 NOPR and today's SNOPR, DOE used the 2006 Water and 
Wastewater Rate Survey.\24\ The survey covers approximately 300 water 
utilities and 200 wastewater utilities, with each industry analyzed 
separately. DOE calculated values at the Census region level 
(Northeast, South, Midwest, and West). Edison Electric Institute (EEI) 
questioned why water and wastewater prices were not developed at the 
Census division level. (EEI, Public Meeting Transcript, No. 40.5, p. 
103 and p. 178) The samples that DOE obtained of 200-300 utilities are 
not large enough to calculate regional prices for all U.S. Census 
divisions and large States. Hence, DOE was only able to capture the 
variability of water and wastewater prices at the Census region level.
---------------------------------------------------------------------------

    \24\ Raftelis Financial Consultants, Inc., 2006 RFC/AWWA Water 
and Wastewater Rate Survey, 2006, (2006). This document is available 
at: http://www.raftelis.com/ratessurvey.html.
---------------------------------------------------------------------------

    To estimate the future trend for water and wastewater prices, DOE 
used data on the historic trend in the national water price index (U.S. 
city average) provided by the Bureau of Labor Statistics (BLS). For the 
October 2008 NOPR, DOE extrapolated a future trend based on the linear 
growth from 1970 to 2007. The Joint Comment stated that (1) the trend 
line for water and wastewater prices developed by DOE begins with an 
anomalous dip of over seven percent in costs for 2008, rather than the 
likely increase of 2 percent or more; and (2) DOE's trend forecast 
understates the future cost of water and wastewater service by some ten 
percent. (Joint Comment, No. 44 at pp. 3-4) For today's SNOPR, DOE 
modified its future trends of water and wastewater prices based on some 
of the Joint Comment's suggestions. DOE continued to the use the BLS 
historical data, which now provides data for the year 2008, and 
extrapolated the future trend based on the linear growth from 1970 to 
2008. But rather than use the extrapolated trend to forecast the prices 
for the four years after 2008, DOE pinned the annual price to the value 
in 2008. Otherwise, forecasted prices for this 4-year time period would 
have been up to 8 percent lower than the price in 2008. Estimating 
prices in this manner is appropriate because it is consistent with the 
historical trend that demonstrates that prices do not decrease over 
time. Estimating prices in this manner also prevents the anomalous dip 
noted by the Joint Comment. Beyond the 4-year time period, DOE used the 
extrapolated trend to forecast prices out to the year 2043.
5. Repair and Maintenance Costs
    Repair costs are associated with repairing or replacing components 
that have failed in the appliance, whereas maintenance costs are 
associated with maintaining the operation of the equipment. For the 
October 2008 NOPR, DOE included increased repair costs based on an 
algorithm developed by DOE for central air conditioners and heat pumps 
and which was also used for residential furnaces and boilers.\25\

[[Page 57754]]

This algorithm calculates annualized repair costs by dividing half of 
the equipment retail price over the equipment lifetime. Whirlpool 
agreed with the assumptions DOE used to estimate CCW repair costs in 
the October 2008 NOPR. (Whirlpool, No. 50 at p. 3) MLA stated that more 
efficient CCWs incur higher maintenance costs. (MLA, No. 49 at p. 4) 
ASAP asked whether DOE had gathered empirical data to estimate CCW 
repair and maintenance costs. (ASAP, Public Meeting Transcript, No. 
40.5 at pp. 110-111) DOE was unable to gather any empirical data 
specific to CCWs to estimate repair and maintenance cost. In the 
absence of better data, DOE retained its approach from the October 2008 
NOPR for today's SNOPR.
---------------------------------------------------------------------------

    \25\ U.S. Department of Energy, Technical Support Document: 
Energy Efficiency Standards for Consumer Products: Residential 
Central Air Conditioners and Heat Pumps (May 2002) chapter 5. This 
document is available at: http://www.eere.energy.gov/buildings/appliance_standards/residential/ac_central_1000_r.html.
---------------------------------------------------------------------------

6. Equipment Lifetime
    For the October 2008 NOPR and today's SNOPR, DOE used a variety of 
sources to establish low, average, and high estimates for equipment 
lifetime. The average CCW lifetime was 11.3 years for multi-family 
applications, and 7.1 years in laundromat applications. DOE 
characterized CCW lifetimes with Weibull probability distributions.
7. Discount Rates
    To establish discount rates for CCWs for the October 2008 NOPR and 
today's SNOPR, DOE estimated the cost of capital of publicly traded 
firms in the sectors that purchase CCWs as the weighted average of the 
cost of equity financing and the cost of debt financing. DOE identified 
the following sectors purchasing CCWs: (1) Educational services; (2) 
hotels; (3) real estate investment trusts; and (4) personal services. 
DOE estimated the weighted-average cost of capital (WACC) using the 
respective shares of equity and debt financing for each sector that 
purchases CCWs. It calculated the real WACC by adjusting the cost of 
capital by the expected rate of inflation. To obtain an average 
discount rate value, DOE used additional data on the number of CCWs in 
use in various sectors. DOE estimated the average discount rate for 
companies that purchase CCWs at 5.7 percent. DOE received comment on 
the discount rates from Alliance, who suggested that the discount rates 
used in LCC and PBP analyses should be updated to reflect current 
financial market conditions. (Alliance, Public Meeting Transcript, No. 
40.5 at pp. 115-116) DOE used the most recent available data (from 
2006) from Damodaran Online and Ibbotson Associates to estimate its 
discount rates for CCWs. Damodaran Online is a widely used source of 
information about company debt and equity financing for most types of 
firms. Ibbotson Associates is a leading authority on asset allocation 
with expertise in capital market expectations and portfolio 
implementation. DOE believes that the data it used are representative 
of conditions that may apply when the first purchases impacted by 
standards would be made. Therefore, DOE continued to use these sources 
for today's SNOPR and will determine if the data used from both sources 
needs to be updated for the final rule.
8. Effective Date of the Amended Standards
    The compliance date is the future date when parties subject to the 
requirements of a new standard must begin compliance. For the October 
2008 NOPR, DOE assumed that any new energy efficiency standards adopted 
in this rulemaking would require compliance in March 2012, 3 years 
after the final rule was expected to be published in the Federal 
Register. For today's SNOPR, DOE expects that the final rule will be 
published by January 1, 2010, as required by EPACT 2005, with 
compliance with new standards required by January 1, 2013. DOE 
calculated the LCC for the appliance consumers as if they would 
purchase new equipment in the year after the standard takes effect.
9. Equipment Energy Efficiency in the Base Case
    For the LCC and PBP analysis, DOE analyzes higher efficiency levels 
relative to a baseline efficiency level. However, some consumers may 
already purchase equipment with efficiencies greater than the baseline 
equipment levels. Thus, to accurately estimate the percentage of 
consumers that would be affected by a particular standard level, DOE 
estimates the distribution of equipment efficiencies that consumers are 
expected to purchase under the base case (i.e., the case without new 
energy efficiency standards). DOE refers to this distribution of 
equipment energy efficiencies as a base-case efficiency distribution. 
As discussed previously in section III.A, DOE decided to analyze CCWs 
with two equipment classes--top-loading CCWs and front-loading CCWs. 
For the October 2008 NOPR and today's SNOPR, DOE used the number of 
available models within each equipment class to establish the base-case 
efficiency distributions. Table III.5 presents the market shares of the 
efficiency levels in the base case for CCWs. See chapter 8 of the TSD 
accompanying this notice for further details on the development of CCW 
base-case market shares.

                                            Table III.5--Commercial Clothes Washers: Base Case Market Shares
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    Top-loading                                                                 Front-loading
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                          Market                                                                Market
               Standard level                    MEF           WF         share             Standard level             MEF           WF         share
                                                                        (percent)                                                             (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline...................................         1.26         9.50         64.8  Baseline.....................         1.72         8.00          3.5
1..........................................         1.42         9.50         33.8  1............................         1.80         7.50          0.0
2..........................................         1.60         8.50          1.4  2............................         2.00         5.50         73.7
                                                                                    3............................         2.20         5.10         22.8
                                                                                    4............................         2.34         4.40          0.0
--------------------------------------------------------------------------------------------------------------------------------------------------------

10. CCW Split Incentive
    Under a split incentive situation, the party purchasing more 
efficient and presumably more expensive equipment (referred to as 
``consumers'' in this notice) may not realize the operating cost 
savings from that equipment, because another party may pay the utility 
bill. For the October 2008 NOPR, DOE evaluated the ability of CCW 
owners to pass on the higher purchase costs of more expensive CCWs in 
return for lower operational costs. DOE concluded that few route 
operators

[[Page 57755]]

would allow themselves to be held to a lease agreement which would 
prevent them from recovering the cost of more efficient CCW equipment. 
The Joint Comment stated that contracts between route operators are 
multi-housing property owners are subject to revision and renewal, and 
that the division of coin-box revenue may be negotiated as a result of 
cost-effective efficiency improvements in CCWs. (Joint Comment, No. 44 
at p. 6) Because DOE received only supportive comments regarding its 
assessment of the potential of a split incentive in the CCW market, DOE 
continues to conclude for today's SNOPR that new CCW efficiency 
standards are unlikely to lead to split incentives in the CCW market.
11. Rebound Effect
    The rebound effect occurs when a piece of equipment, made more 
efficient and used more intensively, does not yield the expected energy 
savings from the efficiency improvement. In the case of more efficient 
clothes washers, limited research has been conducted to show that there 
is no rebound effect for home appliances, although the consumer may 
choose to purchase larger models with more features that would result 
in higher energy use.\26\ DOE did not receive any comments from 
interested parties on the issue of the rebound effect for CCWs. Based 
on the limited research showing no rebound effect for home appliances, 
DOE did not include a rebound effect in its analysis of CCW standards.
---------------------------------------------------------------------------

    \26\ L.A. Greening, D.L. Greene, and C. Difiglio. ``Energy 
efficiency and consumption--the rebound effect--a survey.'' Energy 
Policy 28 (2000) 389-401. Available for purchase at http://www.elsevier.com/locate/enpol.
---------------------------------------------------------------------------

12. Inputs to Payback Period Analysis
    The PBP is the amount of time (expressed in years) it takes the 
consumer to recover the additional installed cost of more efficient 
equipment through operating cost savings, compared to baseline 
equipment. The simple PBP does not account for changes in operating 
expense over time or the time value of money. The inputs to the PBP 
calculation are the total installed cost of the equipment to the 
customer for each efficiency level and the annual (first-year) 
operating expenditures for each efficiency level. For the October 2008 
NOPR and today's SNOPR, the PBP calculation uses the same inputs as the 
LCC analysis, except that energy price trends and discount rates are 
not needed.
13. Rebuttable-Presumption Payback Period
    As noted above, EPCA, as amended (42 U.S.C. 6295(o)(2)(B)(iii) and 
6316(a)), establishes a rebuttable presumption that a standard is 
economically justified if the Secretary finds that ``the additional 
cost to the consumer of purchasing a product complying with an energy 
conservation standard level will be less than three times the value of 
the energy (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. For 
each TSL, DOE determined the value of the first year's energy savings 
by calculating the quantity of those savings in accordance with DOE's 
test procedure, and multiplying that amount by the average energy price 
forecast for the year in which a new standard would be first 
effective--in this case, 2013.
    DOE received comments addressing the topic of using a rebuttable 
presumption payback period to establish the economic justification of 
an energy conservation standard level. The Joint Comment and EJ stated 
that DOE's view that consideration of a full range of impacts is 
necessary because the rebuttable presumption payback period criterion 
is not sufficient for determining economic justification does not 
reflect the extent to which the rebuttable presumption analysis 
constrains DOE's authority to reject standards based on economic 
impacts. (Joint Comment, No. 44 at appendix B, p. 1; EJ, Public Meeting 
Transcript, No. 40.5 at p. 130) The Joint Comment stated that in 42 
U.S.C. 6295(o)(2)(B)(iii), Congress erected a significant barrier to 
DOE's rejection, on the basis of economic justifiability, of standard 
levels to which the rebuttable presumption applies. Further, EJ and the 
Joint Comment stated DOE preference to proceed under the seven-factor 
test contained in 42 U.S.C. 6295(o)(2)(B)(i) is not pertinent.
    The Joint Comment agreed with DOE that analysis under the seven-
factor test is necessary and has typically supported standards with 
paybacks longer than 3 years. However, the Joint Comment stated that 
DOE's decision-making must reflect the expressed intent of Congress 
that the highest standard level resulting in cost recovery within 3 
years constitutes the presumptive lowest standard level that DOE must 
adopt. (Joint Comment, No. 44 at appendix B, pp. 1-2)
    DOE does consider both the rebuttable presumption payback criteria, 
as well as a full analysis including all seven relevant statutory 
criteria under 42 U.S.C. 6295(o)(2)(B)(i) when examining potential 
standard levels. However, DOE believes that the interested parties are 
misinterpreting the statutory provision in question. The Joint Comment 
and EJ present one possible reading of an ambiguous provision (i.e., 
that DOE need not look beyond the results of the rebuttable presumption 
inquiry), but DOE believes that such an approach is neither required 
nor appropriate, because it would ask the agency to potentially ignore 
other relevant information that would bear on the selection of the most 
stringent standard level that meets all applicable statutory criteria. 
The interested parties' interpretation would essentially restrict DOE 
from being able to rebut the findings of the preliminary presumptive 
analysis.
    The statute contains no such restriction, and such an approach 
would hinder DOE's efforts to base its regulations on the best 
available information. Similarly, DOE believes that the Joint Comment 
misreads the statute in calling for a level that meets the rebuttable 
presumption test to serve as a minimum level when setting the final 
energy conservation standard. To do so would not only eliminate the 
``rebuttable'' aspect of the presumption but would also lock in place a 
level that may not be economically justified based upon the full review 
of statutory criteria. DOE is already obligated under EPCA to select 
the most stringent standard level that meets the applicable statutory 
criteria, so there is no need to tie the same requirement to the 
rebuttable presumption.

E. National Impact Analysis--National Energy Savings and Net Present 
Value Analysis

1. General
    DOE's NIA assesses the national energy savings, as well as the 
national NPV of total consumer costs and savings, expected to result 
from new standards at specific efficiency levels. DOE applied the NIA 
spreadsheet to perform calculations of energy savings and NPV, using 
the annual energy consumption and total installed cost data from the 
LCC analysis. DOE forecasted the energy savings, energy cost savings, 
equipment costs, and NPV for each equipment class from 2013 to 2043. 
The forecasts provide annual and cumulative values for all four 
parameters. In addition, DOE incorporated into its NIA spreadsheet the 
capability to analyze sensitivity of the results to forecasted energy 
prices

[[Page 57756]]

and equipment efficiency trends. Table III.6 summarizes the approach 
and data DOE used to derive the inputs to the NES and NPV analyses for 
the October 2008 NOPR and the changes made in the analyses for today's 
SNOPR. A discussion of the inputs and the changes follows below. (See 
chapter 11 of the SNOPR TSD for further details.)

Table III.6--Approach and Data Used to Derive the Inputs to the National
                     Energy Savings and NPV Analyses
------------------------------------------------------------------------
                                    2008 NOPR          Changes for the
           Inputs                  description              SNOPR
------------------------------------------------------------------------
Shipments...................  Annual shipments      See Table III.7.
                               from Shipments
                               Model.
Effective Date of Standard..  2012................  2013.
Base-Case Forecasted          Shipment-weighted     No change.
 Efficiencies.                 efficiency (SWEF)
                               determined in the
                               year 2005. SWEF
                               held constant over
                               forecast period.
Standards-Case Forecasted     Analyzed as two       No change.
 Efficiencies.                 equipment classes.
                               For each equipment
                               class, roll-up
                               scenario used for
                               determining SWEF in
                               the year that
                               standards become
                               effective for each
                               standards case.
                               SWEF held constant
                               over forecast
                               period.
Annual Energy Consumption     Annual weighted-      No change.
 per Unit.                     average values as a
                               function of SWEF.
Total Installed Cost per      Annual weighted-      Updated costs from
 Unit.                         average values as a   2006$ to 2008$.
                               function of SWEF.
Energy and Water Cost per     Annual weighted-      Updated costs from
 Unit.                         average values a      2006$ to 2008$.
                               function of the
                               annual energy
                               consumption per
                               unit and energy
                               (and water) prices.
Repair Cost and Maintenance   Incorporated changes  Updated costs from
 Cost per Unit.                in repair costs as    2006$ to 2008$.
                               a function of
                               efficiency.
Escalation of Energy and      Energy Prices: AEO    Energy Prices:
 Water/Wastewater Prices.      2008 forecasts (to    Updated to AEO 2009
                               2030) extrapolation   April Release
                               to 2042.              forecasts for the
                              Water/Wastewater       Reference Case. AEO
                               Prices: Linear        2009 April Release
                               extrapolation of      does not provide
                               1970-2007             High-Growth and Low-
                               historical trends     Growth forecasts;
                               in national water     used AEO 2009 March
                               price index.          Release High-Growth
                                                     and Low-Growth
                                                     forecasts to
                                                     estimate high and
                                                     low growth price
                                                     trends.
                                                    Water/Wastewater
                                                     Prices: Updated to
                                                     include historical
                                                     trend through 2008.
                                                     For the four years
                                                     following 2013
                                                     fixed the annual
                                                     price to the value
                                                     in 2008 to prevent
                                                     a dip in the
                                                     forecasted prices.
Energy Site-to-Source         Conversion varies     No change.
 Conversion.                   yearly and is
                               generated by DOE/
                               EIA's NEMS program
                               (a time-series
                               conversion factor;
                               includes electric
                               generation,
                               transmission, and
                               distribution
                               losses).
Effect of Standards on        Determined but found  No change.
 Energy Prices.                not to be
                               significant.
Discount Rate...............  Three and seven       No change.
                               percent real.
Present Year................  Future expenses       Future expenses
                               discounted to year    discounted to year
                               2007.                 2009.
------------------------------------------------------------------------

2. Shipments
    The shipments portion of the NIA Spreadsheet is a Shipments Model 
that uses historical data as a basis for projecting future shipments of 
the equipment that are the subject of this rulemaking. In projecting 
CCW shipments, DOE accounted for three market segments: (1) New 
construction; (2) existing buildings (i.e., replacing failed 
equipment); and (3) retired units not replaced. DOE used the non-
replacement market segment to calibrate the Shipments Model to 
historical shipments data. For purposes of estimating the impacts of 
prospective standards on equipment shipments (i.e., forecasting 
standards-case shipments) DOE considered the combined effects of 
changes in purchase price, annual operating cost, and household income 
on the magnitude of shipments.
    Table III.7 summarizes the approach and data DOE used to derive the 
inputs to the shipments analysis for the October 2008 NOPR, and the 
changes it made for today's SNOPR. The general approach for forecasting 
CCW shipments for today's SNOPR remains unchanged from the October 2008 
NOPR. That is, all CCW shipments (for both equipment classes) were 
estimated for the new construction, replacement and non-replacement 
markets. DOE then allocated shipments to each of the two equipment 
classes based on the market share of each class. Based on data provided 
by AHAM for the November 2007 ANOPR, DOE estimated that top-loading 
washers comprise 80 percent of the market while front-loading washers 
comprise 20 percent. DOE estimated that the equipment class market 
shares would remain unchanged over the time period 2005-2042. A 
discussion of the inputs and the changes follows below.
    The Joint Comment suggested that DOE update its equipment class 
market shares to reflect the impacts of the 2006 Federal tax incentives 
for CCWs. (Joint Comment, No. 44 at p. 5) The Joint Comment noted that 
the increased production of front-loading washers in the base-case 
would in turn lead to lower conversion costs for manufacturers and, 
therefore, make it less costly to meet higher CCW efficiency standards. 
For today's supplemental notice, DOE reviewed the SEC 10K report of the 
LVM of CCWs and determined that manufacturer tax credits in recent 
Federal legislation have resulted in significantly increased sales of 
the front-loading washers for the LVM. When accounting for the LVM's 
market share, the increase in front-loading sales results in a current 
market share of 30 percent for front-loading washers. Although tax 
credits are set to expire after 2010, DOE believes that the

[[Page 57757]]

tax credits are impacting production costs and manufacturing 
infrastructure such that front-loading washers would continue to 
comprise 30 percent of the market over the entire forecast period.
    Table III.7 below shows the inputs chosen for the Shipments 
Analysis in today's supplemental notice.

Table III.7 Approach and Data Used To Derive the Inputs to the Shipments
                                Analysis
------------------------------------------------------------------------
                                October 2008 NOPR      Changes for the
           Inputs                  description              SNOPR
------------------------------------------------------------------------
Number of Equipment Classes.  Two equipment         Updated, market
                               classes: top-         share data based on
                               loading washers and   SEC 10K report of
                               front-loading         the LVM and tax
                               washers. Shipments    credits claimed by
                               forecasts             the LVM for
                               established for all   producing high-
                               CCWs and then         efficiency CCWs.
                               disaggregated into    Market share
                               the two equipment     determined to be:
                               classes based on      70% top-loading and
                               the market share of   30% front-loading.
                               top- and front-       Equipment class
                               loading washers.      market shares held
                               Market share data     constant over
                               provided by AHAM;     forecast period.
                               80% top-loading and
                               20% frontloading.
                              Equipment class
                               market shares held
                               constant over
                               forecast period.
New Construction Shipments..  Determined by         No change in
                               multiplying multi-    approach. Housing
                               housing forecasts     forecasts updated
                               by forecasted         with EIA AEO 2009
                               saturation of CCWs    April Release
                               for new multi-        forecasts for the
                               housing. Multi-       Reference Case. AEO
                               housing forecasts     2009 March Release
                               with AEO 2008         forecasts used for
                               projections.          the High-Growth
                               Verified frozen       Case and Low-Growth
                               saturations with      Case.
                               data from the U.S.
                               Census Bureau's
                               American Housing
                               Survey (AHS) for
                               1997-2005.
Replacements................  Determined by         No change.
                               tracking total
                               equipment stock by
                               vintage and
                               establishing the
                               failure of the
                               stock using
                               retirement
                               functions from the
                               LCC and PBP
                               analysis.
                               Retirement
                               functions revised
                               to be based on
                               Weibull lifetime
                               distributions.
Retired Units not Replaced    Used to calibrate     Extended the time
 (i.e., non-replacements).     Shipments Model to    period out to 2043
                               historical            to reflect an
                               shipments data.       updated date of
                               Froze the             2013 for when the
                               percentage of non-    standard becomes
                               replacements at 15    effective.
                               percent for the
                               period
                               2007[boxh]2042 to
                               account for the
                               increased
                               saturation rate of
                               in-unit washers in
                               the multi-family
                               stock between 1997
                               and 2005 timeframe
                               shown by the AHS.
Historical Shipments........  Data sources include  No change.
                               AHAM data
                               submittal,
                               Appliance Magazine,
                               and U.S. Bureau of
                               Economic Analysis'
                               quantity index data
                               for commercial
                               laundry.
Purchase Price, Operating     Developed the         No change.
 Cost, and Household Income    ``relative price''
 Impacts due to efficiency     elasticity which
 standards.                    accounts for the
                               purchase price and
                               the present value
                               of operating cost
                               savings divided by
                               household income.
                               Used purchase price
                               and efficiency data
                               specific to
                               residential
                               refrigerators,
                               clothes washers,
                               and dishwashers
                               between 1980 and
                               2002 to determine a
                               ``relative price''
                               elasticity of
                               demand, of -0.34.
Fuel Switching..............  Not applicable......  No change.
------------------------------------------------------------------------

    DOE based its Shipments Model on the following three assumptions: 
(1) All equipment shipments for new construction are driven by the new 
multi-family housing market, (2) the relative market shares of the two 
equipment applications, laundromats and common-area laundry facilities 
in multi-family housing, are constant over time at 15 and 85 percent, 
respectively, and (3) the U.S. Census Bureau's quantity index data can 
be used to validate the shipments trend observed in the historical 
data. The Joint Comment stated that DOE's assumed 85 percent to 15 
percent split between sales for multi-family applications and sales for 
laundromat applications is not based on robust or current data. (Joint 
Comment, No. 44 at p. 5) It cited information from Alliance Laundry 
that suggests that the ratio of multi-family to laundromat shipments is 
about 36 percent to 64 percent. DOE based its market information on a 
report from the CEE,\27\ which gathered information from several 
sources. Therefore, DOE concluded that this source is more reliable 
than information from a single manufacturer, and it continued to apply 
the same multi-family/laundromat sales split used in the October 2008 
NOPR for today's SNOPR.
---------------------------------------------------------------------------

    \27\ Consortium for Energy Efficiency, Commercial Family-Sized 
Washers: An Initiative Description of the Consortium for Energy 
Efficiency (1998). This document is available at: http://www.cee1.org/com/cwsh/cwsh-main.php3.
---------------------------------------------------------------------------

    DOE received comments regarding the impacts of impending amended 
energy conservation standards for CCWs on unit sales. Alliance 
suggested that impacts to the CCW market would encourage customers to 
stock up on less efficient top-loading CCWs before the implementation 
date, and keep older machines in operation longer. These effects would 
undermine the effectiveness of the standards proposed in the October 
2008 NOPR. (Alliance, No. 45 at Attachment 2, p. 10) As discussed below 
in section III.E.2.c, DOE's shipments model uses a ``relative'' 
purchase price elasticity to determine the drop in shipments as a 
function of increased purchase price and operating cost savings. The 
model does forecast a drop in new shipments due to a high standard on 
top-loading CCWs, which is expected to result in purchase of used CCWs. 
DOE did not have sufficient information to account for possible 
stocking up on less efficient top-loading CCWs before the 
implementation date.
a. New Construction Shipments
    To determine new construction shipments, DOE used a forecast of new 
housing coupled with equipment market saturation data for new housing. 
For new housing completions and mobile home placements, DOE adopted the 
projections from EIA's AEO 2008 through 2030 for the October 2008 NOPR. 
For today's SNOPR, DOE used the projections from EIA's AEO 2009

[[Page 57758]]

April Release Reference Case. For CCWs, DOE relied on new construction 
market saturation data from the above-mentioned CEE report.
b. Replacements and Non-Replacements
    DOE estimated replacements using equipment retirement functions 
developed from equipment lifetimes. For the October 2008 NOPR and 
today's SNOPR, DOE used retirement functions based on Weibull 
distributions. For the October 2008 NOPR, DOE determined that the 
growth of in-unit washer saturations in the multi-family stock over the 
last 10 years was likely caused by conversions of rental property to 
condominiums, resulting in the gradual phase-out or non-replacement of 
failed CCWs in common-area laundry facilities. As a result, DOE used 
the average percent of non-replacements over the period between 1999 
and 2005 (18 percent) and maintained it over the entire forecast period 
(2006 to 2042 for the October 2008 NOPR and 2007 to 2043 for today's 
SNOPR). The effect of maintaining non-replacements at 18 percent 
results in forecasted CCW shipments staying relatively flat during the 
forecast period.
    Multiple interested parties commented on the shipment forecasts 
used by DOE in the October 2008 NOPR. Alliance agreed with the 
relatively flat shipment forecast. (Alliance, Public Meeting 
Transcript, No. 40.5 at p. 22; Alliance, No. 45 at p. 1) AHAM and 
Whirlpool stated that the October 2008 NOPR estimates of future 
shipments for CCWs were much more realistic than those used in the 
November 2007 ANOPR. (AHAM, Public Meeting Transcript, No. 40.5 at p. 
27; AHAM, No. 47 at p. 4; Whirlpool, Public Meeting Transcript, No 40.5 
at p. 28; Whirlpool, No. 50 at p. 3) The Joint Comment questioned DOE's 
forecast of reduced shipments for new and replacement CCWs, citing 
Alliance's SEC filing which projected ``modest growth'' in the 
installed base of commercial laundry equipment, estimated by Alliance 
to have grown at 0.9 percent annually since 1997. (Joint Comment, No. 
44 at p. 5) DOE believes that the information it used to forecast CCW 
shipments for the October 2008 NOPR is more reliable than the limited 
information provided by the Joint Comment on one manufacturer's 
statement in a single SEC filing; thus DOE maintained the approach used 
in the October 2008 NOPR for today's SNOPR.
c. Purchase Price, Operating Cost, and Income Impacts
    To estimate the combined effects on CCW shipments from increases in 
equipment purchase price and decreases in equipment operating costs due 
to amended efficiency standards, DOE conducted a literature review and 
a statistical analysis on a limited set of appliance price, efficiency, 
and shipments data for the October 2008 NOPR. DOE used purchase price 
and efficiency data specific to residential refrigerators, clothes 
washers, and dishwashers between 1980 and 2002 to conduct regression 
analyses. DOE's analysis suggests that the ``relative'' short-run price 
elasticity of demand, averaged over the three appliances, is -0.34. 
Because DOE's forecast of shipments and national impacts due to 
standards spans over 30 years, DOE also considered how the relative 
price elasticity is affected once a new standard takes effect. Past 
analyses of consumer purchase decisions for automobiles suggest that 
after the initial purchase price change, price elasticity becomes more 
inelastic over the years until it reaches a terminal value. See 
appendix 10A of the SNOPR TSD for more details on the development of 
the short-run price elasticity of demand and the long-run effects on 
the elasticity.
    For the October 2008 NOPR, DOE incorporated a relative price 
elasticity change that resulted in a terminal value of approximately 
one-third of the short-run elasticity. In other words, DOE estimated 
that consumer purchase decisions, in time, become less sensitive to the 
initial change in the equipment's relative price. MLA commented that if 
the standards result in a substantial increase in the use of front-
loading CCWs and a reduction or elimination in that of top-loading 
CCWs, consumers would see resulting price increases driven by higher 
purchase price and higher maintenance, service, and operating cost for 
front-loading CCWs compared to top-loaders. (MLA, No. 49 at pp. 3-4) In 
addition, ASAP questioned DOE's conclusion that standards more 
aggressive than the ones proposed in the October 2008 NOPR for front-
loading CCWs could lead to significant recapture of the CCW market by 
top-loading machines. (ASAP, Public Meeting Transcript, No. 40.5 at pp. 
34-35 and pp. 160-161) For its October 2008 NOPR as well as today's 
SNOPR, DOE estimated that price increases would lead to reductions in 
unit shipments for both top-loading and front-loading CCWs. DOE 
analyzed the impacts of increased purchase prices for each equipment 
class independently of the other. DOE was not able to estimate the 
cross price elasticity of demand between the two equipment classes to 
determine whether consumers would switch from one type of CCW to the 
other. But because the price impacts for more efficient top-loaders are 
higher than those for more efficient front-loaders, DOE estimated that 
top-loading CCW sales would decrease more rapidly than for front-
loaders. As a result, DOE estimated that front-loading CCWs would gain 
an additional market share of only about 2 percent. In addition, DOE 
estimated that those consumers forgoing the purchase of new top-loading 
CCWs would instead purchase used top-loading CCWs with efficiencies 
equal to baseline top-loader levels. DOE received no additional 
comments on its analysis to estimate the combined effects of increases 
in equipment purchase price and decreases in operating costs on CCW 
shipments and, therefore, retained the approach for today's SNOPR.
    Although DOE retained its approach from the October 2008 NOPR to 
estimate the impacts from changes in purchase price and operating cost, 
DOE has concerns over specific aspects of its analysis. First, because 
purchase price and efficiency data for residential appliances were used 
to develop the ``relative'' short-run price elasticity of demand, DOE 
is uncertain how applicable the price elasticity is to the commercial 
clothes washing market. Second, because estimates of the long-run price 
elasticity of demand were derived from consumer automobile purchase 
decisions, DOE is uncertain whether it can be inferred that the initial 
CCW price elasticity of demand would become more inelastic over time. 
Third, although a cross price elasticity of demand between top-loading 
and front-loading CCWs could not be developed due to the lack of 
specific data, DOE still has concern over the price interactions 
between the two types of CCWs, especially under those circumstances 
where the purchase price increase for one CCW equipment class is more 
significant than for the other. Finally, DOE is concerned over its 
assumption that consumers forgoing a top-loader CCW purchase due to a 
price increase caused by standards would instead acquire used top-
loading washers. For example, those consumers forgoing a top-loading 
CCW purchase may instead purchase a new front-loading CCW. To 
understand the interactions between the used CCW market and the new 
front-loading CCW market, the development of a cross price

[[Page 57759]]

elasticity between these two markets would be ideal.
    Due to the lack of data and information to develop both short- and 
long-run price elasticities of demand specific to CCWs as well as cross 
price elasticities between top-loading and front-loading CCWs and used 
and front-loading CCWs, DOE is seeking input and any data from 
interested parties that may assist in the development of price 
elasiticies specific to any or all of the items discussed above. This 
is identified as Issue 4 in section VII.E of today's supplemental 
notice (Issues on Which DOE Seeks Comment).
3. Other Inputs
a. Base-Case Forecasted Efficiencies
    A key input to the calculations of NES and NPV are the energy 
efficiencies that DOE forecasts for the base case (without new 
standards). The forecasted efficiencies represent the annual shipment-
weighted energy efficiency (SWEF) of the equipment under consideration 
over the forecast period (i.e., from the estimated effective date of a 
new standard to 30 years after that date).
    For the October 2008 NOPR, DOE first determined the distribution of 
equipment efficiencies currently in the marketplace to develop a SWEF 
for each equipment class for 2005. Using the SWEF as a starting point, 
DOE developed base-case efficiencies based on estimates of future 
efficiency increase. From 2005 to 2013 (2013 being the estimated 
effective date of a new standard), DOE estimated that there would be no 
change in the SWEF (i.e., no change in the distribution of equipment 
efficiencies). Because there are no historical data to indicate how 
equipment efficiencies have changed over time, DOE estimated that 
forecasted efficiencies would remain at the 2013 level until the end of 
the forecast period. DOE recognizes the possibility that equipment 
efficiencies may change over time (e.g., due to voluntary efficiency 
programs such as ENERGY STAR). But without historical information, DOE 
had no basis for estimating how much the equipment efficiencies may 
change. For today's supplemental notice, DOE maintained its estimate 
that the SWEF would remain constant from 2005 through the end of the 
forecast period.
b. Standards-Case Forecasted Efficiencies
    For its determination of each of the cases with alternative 
standard levels (``standards cases''), DOE used a ``roll-up'' scenario 
in the October 2008 NOPR to establish the SWEF for 2013. In a roll-up 
scenario, equipment efficiencies in the base case which do not meet the 
standard level under consideration are projected to roll-up to meet the 
new standard level. Further, all equipment efficiencies in the base 
case that are above the standard level under consideration are not 
affected by the standard. The same scenario is used for the forecasted 
standards-case efficiencies as for the base-case efficiencies, namely, 
that forecasted efficiencies remained at the 2013 efficiency level 
until the end of the forecast period, as DOE has no data to reasonably 
estimate how such efficiency levels might change over the next 30 
years. By maintaining the same rate of increase for forecasted 
efficiencies in the standards case as in the base case (i.e., no 
change), DOE retained a constant efficiency difference between the two 
cases over the forecast period. Although the no-change trends may not 
reflect what would happen to base-case and standards-case equipment 
efficiencies in the future, DOE believes that maintaining a constant 
efficiency difference between the base case and standards case provides 
a reasonable estimate of the impact that standards have on equipment 
efficiency. It is more important to accurately estimate the efficiency 
difference between the standards case and base case, than to accurately 
estimate the actual equipment efficiencies in the standards and base 
cases. DOE retained the approach used in the October 2008 NOPR for 
today's SNOPR. But because the effective date of the standard is now 
assumed to be 2013, DOE applied the ``roll-up'' scenario in the year 
2013 to establish the SWEF for each of the standards cases.
c. Annual Energy Consumption
    The annual energy consumption per unit depends directly on 
equipment efficiency. For the October 2008 NOPR and today's SNOPR, DOE 
used the SWEFs associated with the base case and each standards case, 
in combination with the annual energy data, to estimate the shipment-
weighted average annual per-unit energy consumption under the base case 
and standards cases. The national energy consumption is the product of 
the annual energy consumption per unit and the number of units of each 
vintage, which depends on shipments.
    As noted above in section III.D, DOE used a relative price 
elasticity to estimate standards-case shipments for CCWs. As a result, 
shipments forecasted under the standards cases are lower than under the 
base case. To avoid the inclusion of energy savings from reduced 
shipments, DOE used the standards-case shipments projection and the 
standards-case stock to calculate the annual energy consumption in the 
base case. For CCWs, any drop in shipments caused by standards is 
estimated to result in the purchase of used machines. As a result, the 
standards-case forecast explicitly accounted for the energy and water 
consumption of new standard-compliant CCWs and also used machines 
coming into the market due to the drop in new equipment shipments.
    DOE retained the use of the base-case shipments to determine the 
annual energy consumption in the base case and the approach used in the 
October 2008 NOPR for today's SNOPR.
d. Site-to-Source Conversion
    To estimate the national energy savings expected from appliance 
standards, DOE uses a multiplicative factor to convert site energy 
consumption (energy use at the location where the appliance is 
operated) into primary or source energy consumption (the energy 
required to deliver the site energy). For the October 2008 NOPR, DOE 
used annual site-to-source conversion factors based on the version of 
NEMS that corresponds to AEO 2008. For today's SNOPR, DOE updated these 
conversion factors based on the AEO 2009 March Release version of NEMS. 
These conversion factors account for natural gas losses from pipeline 
leakage and natural gas used for pumping energy and transportation 
fuel. For electricity, the conversion factors vary over time due to 
projected changes in generation sources (i.e., the power plant types 
projected to provide electricity to the country). Since the AEO does 
not provide energy forecasts that go beyond 2030, DOE used conversion 
factors that remain constant at the 2030 values throughout the 
remainder of the forecast.
    In response to a request from the DOE, Office of Energy Efficiency 
and Renewable Energy (EERE), the National Research Council (NRC) 
appointed a committee on ``Point-of-Use and Full-Fuel-Cycle Measurement 
Approaches to Energy Efficiency Standards'' to conduct a study called 
for in Section 1802 of EPACT 2005.\28\ The fundamental task before the 
committee was to evaluate the methodology used for setting energy

[[Page 57760]]

efficiency standards and to comment on whether site (point-of-use) or 
source (full-fuel-cycle) measures of energy efficiency better support 
rulemaking to achieve energy conservation goals. The NRC committee 
defined site (point-of-use) energy consumption as reflecting the use of 
electricity, natural gas, propane, and/or fuel oil by an appliance at 
the site where the appliance is operated, based on specified test 
procedures. Full-fuel-cycle energy consumption was defined as 
including, in addition to site energy use, the energy consumed in the 
extraction, processing, and transport of primary fuels such as coal, 
oil, and natural gas; energy losses in thermal combustion in power-
generation plants; and energy losses in transmission and distribution 
to homes and commercial buildings.
---------------------------------------------------------------------------

    \28\ The National Academies, Board on Energy and Environmental 
Systems, Letter to Dr. John Mizroch, Acting Assistant Secretary, 
U.S. DOE, Office of EERE from James W. Dally, Chair, Committee on 
Point-of-Use and Full-Fuel-Cycle Measurement Approaches to Energy 
Efficiency Standards, May 15, 2009.
---------------------------------------------------------------------------

    In evaluating the merits of using point-of-use and full-fuel-cycle 
measures, the NRC committee noted that DOE uses what the committee 
referred to as ``extended site'' energy consumption to assess the 
impact of energy use on the economy, energy security, and environmental 
quality. The extended site measure of energy consumption includes the 
generation, transmission, and distribution but, unlike the full-fuel-
cycle measure, does not include the energy consumed in extracting, 
processing, and transporting primary fuels. A majority of members on 
the NRC committee believe that extended site energy consumption 
understates the total energy consumed to make an appliance operational 
at the site. As a result, the NRC committee's primary general 
recommendation is for DOE to consider moving over time to use of a 
full-fuel-cycle measure of energy consumption for assessment of 
national and environmental impacts, especially levels of greenhouse gas 
emissions, and to providing more comprehensive information to the 
public through labels and other means, such as an enhanced Web site. 
For those appliances that use multiple fuels (e.g., water heaters), the 
NRC committee believes that measuring full-fuel-cycle energy 
consumption would provide a more complete picture of energy used, 
allowing comparison across many different appliances as well as an 
improved assessment of impacts. The NRC committee also acknowledged the 
complexities inherent in developing a full-fuel-cycle measure of energy 
use and stated that a majority of the committee recommended a gradual 
transition to that expanded measure and eventual replacement of the 
currently used extended site measure. To improve consumers' 
understanding, the committee recommended that DOE and the Federal Trade 
Commission could evaluate potential indices of energy use and its 
impacts and could explore various options for label design and content 
using established consumer research methods.
    DOE acknowledges that its site-to-source conversion factors do not 
capture the energy consumed in extracting, processing, and transporting 
primary fuels. DOE also agrees with the NRC committee's conclusion that 
developing site-to-source conversion factors that capture the energy 
associated with the extraction, processing, and transportation of 
primary fuels is inherently complex and difficult. As a result, DOE 
will evaluate whether moving to a full-fuel-cycle measure will enhance 
its ability to set energy-efficiency standards.
    DOE also notes that the NRC committee's recommendation to use a 
full-fuel-cycle measure was especially focused on appliances using 
multiple fuels. For single-fuel appliances, the committee recommended 
that the current practice of basing energy efficiency requirements on 
the site measure of energy consumption should be retained. Although 
CCWs utilize heated water from both electric and natural gas water 
heaters and are credited with improved performance by reducing the 
energy used in electric and gas clothes dryers, the energy efficiency 
metric with which they are regulated, the MEF, is expressed in terms of 
electrical energy usage (cubic feet per kWh). As a result, for labeling 
and enforcement purposes, CCWs are a single-fuel appliance. Therefore, 
although a full-fuel-cycle measure may provide a better assessment of 
national and environmental impacts, it is not necessary for providing 
energy use comparisons among CCW models.
e. Energy Used in Water and Wastewater Treatment and Delivery
    In the October 2008 NOPR, DOE did not include the energy required 
for water treatment and delivery. It stated that EPCA defines ``energy 
use'' to be ``the quantity of energy directly consumed by a consumer 
product at point of use, determined in accordance with test procedures 
under section 6293 of [42 U.S.C.].'' (42 U.S.C. 6291(4)) Based on the 
definition of ``energy use,'' DOE does not believe it has the authority 
to consider embedded energy (i.e., the energy required for water 
treatment and delivery) in the analysis. Furthermore, even if DOE had 
the authority, it does not believe adequate analytical tools exist to 
conduct such an evaluation.\29\
---------------------------------------------------------------------------

    \29\ An analytical tool equivalent to EIA's NEMS would be needed 
to properly account for embedded energy impacts on a national scale, 
including the embedded energy due to water and wastewater savings. 
This new version of NEMS would need to analyze spending and energy 
use in dozens, if not hundreds, of economic sectors. This version of 
NEMS also would need to account for shifts in spending in these 
various sectors to account for the marginal embedded energy 
differences among these sectors. 72 FR 64432, 64498-99 (Nov. 15, 
2007). DOE does not have access to such a tool or other means to 
accurately estimate the source energy savings impacts of decreased 
water or wastewater consumption and expenditures.
---------------------------------------------------------------------------

    The Joint Comment stated that DOE's purported legal justification 
ignores that EPCA not only provides ample authority for DOE to consider 
this impact, but actually commands its consideration in weighing the 
economic justification for efficiency standards. (Joint Comment, No. 
44, pp. 12-13) It said that DOE's position that it lacks the authority 
to consider the energy embedded in water is untenable in light of 42 
U.S.C. 6295(o)(2)(B)(i)(VII), which provides that in assessing the 
economic justification for a standard, DOE may consider any factors it 
concludes are relevant. It added that 42 U.S.C. 6295(o)(2)(B)(i)(III) 
directs DOE to consider, to the greatest extent practicable, ``the 
total projected amount of energy * * * savings likely to result 
directly from the imposition of such standard.'' It also stated that 
the plain language of EPCA thus commands that DOE assess the ``energy 
saving'' resulting from the standard, not simply the ``energy use'' of 
the covered products or equipment. Moreover, though the statute 
concerns those energy savings likely to ``result directly'' from the 
standard, that language merely requires DOE to isolate the standard's 
impact from other energy saving initiatives for purposes of the 
economic justification analysis. (Joint Comment, No. 44 at p. 12-13) 
Pacific Gas & Electric Company (PG&E) stated that because of the 
preciousness of water in California and the embodied energy in it, a 
higher standard for CCWs is merited. (PG&E, Public Meeting Transcript, 
No. 40.5 at pp. 136-137 and p. 181) Furthermore, PG&E commented that 
failing to consider energy in water due to the lack of an analytical 
tool is not acceptable. (PG&E, Public Meeting Transcript, No. 40.5 at 
pp. 178-179 and p. 183) Additional comments submitted by EJ, ASAP, and 
ACEEE, suggested that the energy embedded in the delivery and treatment 
of water and wastewater should be included in the determination of 
national energy savings from the standards proposed in the October 2008 
NOPR. (EJ, Public Meeting Transcript,

[[Page 57761]]

No. 40.5 at pp. 140-141 and p. 180; ASAP, Public Meeting Transcript, 
No. 40.5 at pp. 180-181; ACEEE, Public Meeting Transcript, No. 40.5 at 
p. 182)
    DOE continues to maintain that it only has the authority to 
consider the quantity of energy directly consumed by the equipment at 
point of use, and the energy consumed in production and delivery of 
that energy, in determining the total projected amount of energy 
savings likely to result directly from the imposition of a standard. 
Although DOE does agree with the Joint Comment that energy is consumed 
in providing water and wastewater service, this energy is not directly 
consumed by the equipment or in production and delivery of the energy. 
Inclusion of the embedded energy associated with water and wastewater 
service, would, for completeness, also require inclusion of the energy 
associated with all other aspects of the installation and operation of 
the equipment, e.g. the manufacture, distribution, and installation of 
the equipment. Furthermore, since water districts charge all costs 
related to transporting, treating, and distributing water to their 
consumers, the embedded energy is already accounted for in the LCC 
analysis. Thus, while DOE could go through the theoretical exercise of 
disaggegrating energy costs from total water costs, the LCC results 
would not change since the total cost of operating equipment would not 
change.
f. Total Installed Costs and Operating Costs
    The increase in total annual installed cost is equal to the 
difference in the per-unit total installed cost between the base case 
and standards case, multiplied by the shipments forecasted in the 
standards case. The annual operating cost savings per unit includes 
changes in energy, water, repair, and maintenance costs. DOE forecasted 
energy prices for the October 2008 NOPR based on AEO 2008; it updated 
the forecasts for today's SNOPR using data from AEO 2009 April Release. 
For today's SNOPR, DOE maintained the accounting system it used to 
develop repair and maintenance costs for more efficient CCWs in the 
October 2008 NOPR.
g. Discount Rates
    DOE multiplies monetary values in future years by the discount 
factor to determine the present value. DOE estimated national impacts 
using both a 3-percent and a 7-percent real discount rate, in 
accordance with guidance provided by the Office of Management and 
Budget (OMB) to Federal agencies on the development of regulatory 
analysis (OMB Circular A-4 (Sept.17, 2003), section E, ``Identifying 
and Measuring Benefits and Costs'').\30\ The Joint Comment stated that 
DOE should use a 2 to 3 percent real discount rate for national impact 
analyses. (Joint Comment, No. 44 at p. 11) It noted that societal 
discount rates are the subject of extensive academic research, and the 
weight of academic opinion is that the appropriate societal discount 
rate is 3 percent or less. It urged DOE to give primary weight to 
results based on the lower of the discount rates recommended by OMB. 
OMB Circular A-4 references an earlier Circular A-94, which states that 
a real discount rate of 7 percent should be used as a base case for 
regulatory analysis. The 7 percent rate is an estimate of the average 
before-tax rate of return to private capital in the U.S. economy. It 
approximates the opportunity cost of capital, and, according to 
Circular A-94, it is the appropriate discount rate whenever the main 
effect of a regulation is to displace or alter the use of capital in 
the private sector. OMB later found that the average rate of return to 
capital remains near the 7-percent rate estimated in 1992. Circular A-4 
also states that when regulation primarily and directly affects private 
consumption, a lower discount rate is appropriate. ``The alternative 
most often used is sometimes called the social rate of time preference 
* * * the rate at which ``society'' discounts future consumption flows 
to their present value.'' It suggests that the real rate of return on 
long-term government debt may provide a fair approximation of the 
social rate of time preference, and states that over the last 30 years, 
this rate has averaged around 3 percent in real terms on a pre-tax 
basis. It concludes that ``for regulatory analysis, [agencies] should 
provide estimates of net benefits using both 3 percent and 7 percent.'' 
Consistent with OMB's guidance, DOE did not give primary weight to 
results derived using a 3-percent discount rate.
---------------------------------------------------------------------------

    \30\ OMB circulars are available online at: http://www.whitehouse.gov/omb/circulars/.
---------------------------------------------------------------------------

    DOE also received comments regarding the discounting of emissions. 
The Joint Comment stated that DOE should not apply a discount rate to 
physical units of measure, such as tons of emissions or quads of 
energy. (Joint Comment, No. 44 at p. 11) Consistent with Executive 
Order 12866, ``Regulatory Planning and Review,'' 58 FR 51737 (Oct. 4, 
1993), DOE follows the guidance of OMB regarding methodologies and 
procedures for regulatory impact analysis that affect more than one 
agency. Regarding energy and environmental benefits from energy 
conservation standards, DOE reported both discounted and undiscounted 
values. DOE retained the approach used in the October 2008 NOPR for 
today's SNOPR.
h. Effects of Standards on Energy Prices
    For the October 2008 NOPR, DOE conducted an analysis of the impact 
of reduced energy demand associated with possible standards on CCWs on 
prices of natural gas and electricity. The Joint Comment stated that 
the electricity price mitigation effects of the standard proposed in 
the October 2008 NOPR should be documented and the value of reduced 
electricity bills to all consumers quantified as a benefit. (Joint 
Comment, No. 44 at p. 11) The DOE analysis found that gas and electric 
demand reductions resulting from max-tech standards for CCWs would have 
no detectable change on the U.S. average wellhead natural gas price or 
the average user price of electricity. DOE concluded that CCW standards 
will not provide additional economic benefits resulting from lower 
energy prices. Thus, for today's SNOPR DOE has made no change to its 
assumptions about the effects of standards on energy prices. See 
chapter 11 of the SNOPR TSD for more details.

F. Consumer Subgroup Analysis

    In the October 2008 NOPR, DOE analyzed the potential effects of CCW 
standards on two subgroups: (1) Consumers not served by municipal water 
and sewer providers, and (2) small businesses. For consumers not served 
by water and sewer, DOE analyzed the potential impacts of standards by 
conducting the analysis with well and septic system prices, rather than 
water and wastewater prices based on RFC/AWWA data. For small CCW 
businesses, DOE analyzed the potential impacts of standards by 
conducting the analysis with different discount rates, because small 
businesses do not have the same access to capital as larger businesses. 
DOE estimated that for businesses purchasing CCWs, the average discount 
rate for small companies is 3.5 percent higher than the industry 
average. Due to the higher costs of conducting business, as evidenced 
by their higher discount rates, the benefits of CCW standards for small 
businesses will be lower than for the general population of CCW owners. 
For today's SNOPR DOE has made no changes to its assumptions about 
benefits of CCW standards to small businesses.
    DOE received comments regarding the economic impacts of higher 
initial clothes washer costs. Alliance and MLA stated that the 
standards proposed in

[[Page 57762]]

the October 2008 NOPR would result in substantial price increases for 
customers of central area laundry rooms, especially for elderly, low-
income, college students, and disabled end-users. MLA stated that a 
majority of the 35-50 million CCW customers are low- or low-to-middle 
income people, many of whom are elderly or who suffer disabilities. 
(Alliance, No. 45 at p. 1 and Attachment 2, p. 12; MLA, No. 49 at pp. 
1-4) PG&E commented that lower-income consumers may pay higher energy 
costs in laundry rooms using older machines than those who have access 
to new machines. (PG&E, Public Meeting Transcript, No. 40.5 at p. 25) 
DOE research suggests that the end-users of CCWs are unlikely to be the 
owners of the equipment. Although low-income end-users do utilize CCWs, 
it is unknown to what affect more efficient CCWs will impact their cost 
of using the equipment. If the price of operating a CCW to an end-user 
does increase, DOE estimates that such an increase would occur only if 
the CCW owner needed to increase the price of operation to recover or 
capture its increased costs of providing more efficient equipment while 
not benefitting from the lower utility consumption. Although DOE does 
recognize that this could occur, it is equally likely that the price of 
operation to end-users would not increase as the increased expense to 
the CCW owner of providing more efficient CCWs is more than offset by 
lifetime utility bill savings from the more-efficient CCW. More details 
on the consumer subgroup analysis can be found in chapter 12 of the 
SNOPR TSD.

G. Manufacturer Impact Analysis

    DOE performed an MIA to estimate the financial impact of amended 
energy conservation standards on CCW manufacturers, and to calculate 
the impact of such standards on domestic manufacturing employment and 
capacity. The MIA has both quantitative and qualitative aspects. The 
quantitative part of the MIA primarily relies on the GRIM--an industry-
cash-flow model customized for this rulemaking. The GRIM inputs are 
data characterizing the industry cost structure, shipments, and 
revenues. The key output is the INPV. Different sets of assumptions 
(scenarios) will produce different results. The qualitative part of the 
MIA addresses factors such as equipment characteristics, 
characteristics of particular firms, and market and equipment trends, 
and it also includes an assessment of the impacts of standards on 
subgroups of manufacturers. DOE outlined its methodology for the MIA in 
the October 2008 NOPR. 73 FR 62034, 62075-81 (Oct. 17, 2008). The 
complete MIA for the October 2008 NOPR is presented in chapter 13 of 
the NOPR TSD.
    For today's supplemental notice, DOE updated the MIA results based 
on several changes to other analyses that impact the MIA. The total 
shipments and efficiency distributions were updated using the new 
estimates outlined in the SNOPR NIA. The MIA also uses the new analysis 
period in the NIA (2013-2043) and has updated the base year to 2009. As 
discussed in section III.C.2, DOE updated the manufacturer production 
costs and the capital and equipment conversion costs to 2008$ using the 
producer price index for commercial laundry equipment manufacturing 
(NAICS 333312). DOE updated the GRIM to allow the inclusion of Federal 
production tax credits. DOE discusses the assumptions and methodology 
used to calculate the Federal production tax in appendix 13C and in the 
section below. For details of the MIA, see chapter 13 of the SNOPR TSD.
    DOE also received a number of comments from interested parties in 
response to the MIA analysis presented in the October 2008 NOPR. 
Alliance stated that the top-loading CCW energy conservation standard 
proposed in the October 2008 NOPR would eliminate Alliance from the CCW 
market, and eliminate top-loading CCWs from the market as well. 
(Alliance, No. 45 at Attachment 2, p. 3) Alliance stated that, if it 
were to exit the CCW market, the CCW market would suffer significant 
competitive harm. Alliance also stated that more than 20 route 
operators and the MLA are opposed to the standard proposed in the 
October 2008 NOPR because it would result in a loss of competition. 
(Alliance, No. 45 at p. 1 and Attachment 2, pp. 6-12) Alliance stated 
that the lower CCW market competition could lead to price increases 
from Alliance's competitors, such as the combined Whirlpool and Maytag 
entities, which currently control 72 percent of the RCW market. 
Alliance predicted that these manufacturers would control about 90 
percent of the CCW market if Alliance were to stop making CCWs. 
Alliance sees this outcome as a monopoly for Whirlpool. (Alliance, 
Public Meeting Transcript, No. 40.5 at p. 24)
    Alliance stated that it cannot justify the investment necessary to 
develop the technology required to reach the top-loading energy 
conservation standard proposed in the October 2008 NOPR. Alliance cited 
a lack of resources as the LVM to justify an investment in a ``non-
traditional'' top-loader with unknown market acceptance (Alliance, No. 
45 at Attachment 2, p. 8). Alliance stated that the top-loading 
standard proposed in the October 2008 NOPR would likely result in 
significant, detrimental impacts to the LVM, as Alliance does not have 
the resources for research and development, re-configuring production 
lines, or licensing the advanced technology required to meet the 
standard. (Alliance, Public Meeting Transcript, pp. 23-24) Alliance 
believes that a top-loading energy conservation standard set at 1.42 
MEF/9.5 WF would lessen these impacts. Alliance suggested that the top-
loading CCW energy conservation standard proposed in the October 2008 
NOPR would force Alliance to cease production of CCWs due to the high 
investment costs required to design and manufacture the technology to 
meet the standard. (Alliance, Public Meeting Transcript, No. 40.5 at 
pp. 22-24 and p. 202; Alliance, No. 45 at Attachment 2, pp. 7-8) 
Alliance estimates these costs based on its belief that non-traditional 
technology will be required to meet the standard with wash performance 
that would be acceptable for commercial laundromat use.
    MLA commented that the top-loading CCW standard proposed in the 
October 2008 NOPR would most likely result in the elimination of all 
but one manufacturer of top-loading CCWs (Whirlpool) as well as the 
elimination of many route operators due to higher equipment costs 
resulting from reduced competition. (MLA, No. 49 at pp. 1-3) Finally, 
EEI suggested that DOE create a standard that will save energy and be 
market neutral, such that multiple manufacturers could meet it. (EEI, 
No. 56 at pp. 2-3)
    EPCA directs DOE to consider any lessening of competition that is 
likely to result from standards. It directs the Attorney General to 
determine the impact, if any, of any lessening of competition likely to 
result from a proposed standard and to transmit such determination to 
the Secretary, not later than 60 days after the publication of a 
proposed rule, 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)). DOE received 
a response from the Acting Assistant Attorney General on December 16, 
2008. The letter stated that the Department of Justice (DOJ) is not in 
a position to judge whether CCW manufacturers will be able to meet the 
standards proposed in the October 2008 NOPR. Nevertheless, DOJ found a 
``real risk that one or more of these manufacturers cannot meet the 
proposed standard'' for top-loading CCWs published in the October 2008

[[Page 57763]]

NOPR. (Attorney General, No. 53 at p. 2)
    In the October 2008 NOPR, DOE noted the concerns regarding the 
proposed conservation standards for top-loading CCWs in particular. 73 
FR 62034, 62103-104 (Oct. 17, 2008). DOE also included a section in 
chapter 13 of the TSD that estimated likely financial impacts for the 
LVM to meet the efficiency standards proposed in the 2008 NOPR. DOE 
continues to offer a sub-group assessment of the differential impacts 
on the LVM in chapter 13.
    In response to concerns raised by DOJ and other concerns raised by 
interested parties, DOE is proposing in today's SNOPR a 1.60 MEF/8.5 WF 
standard for top-loading CCWs. DOE believes that this proposed energy 
conservation standard will greatly ease the competitive concerns of 
Alliance, GE, MLA, and DOJ. DOE research suggests that today's proposed 
standard is within reach of all competitors in the market, since the 
max-tech unit is based on a standard RCW top-loading platform (i.e. one 
with an agitator) and that no proprietary technologies were used. DOE 
research suggests that Alliance currently produces a model with 1.5 
MEF/8.8 WF that DOE believes can be modified to meet today's proposed 
standard. As such, a dramatic decline in competition in the CCW 
industry does not seem likely since all manufacturers should be able to 
release a washer with similar technology at the present efficiency 
level. DOE requests comment on competitive concerns at today's proposed 
standard.
    Alliance and GE commented that the top-loading standard proposed in 
the October 2008 NOPR would have a detrimental impact on the CCW 
industry and labor force. (Alliance, Public Meeting Transcript, No. 
40.5 at pp. 23-24; Alliance, No. 45 at Attachment 2, p. 3; GE, Public 
Meeting Transcript, No. 40.5 at pp. 31-32) Furthermore, Alliance stated 
that no manufacturer will be willing to use an unproven non-traditional 
design in the commercial market, resulting in the elimination of top-
loading CCW production. With manufacturers like Alliance exiting the 
business, over 1,000 jobs would be lost. Alliance also stated that 
there could be spillover harm because Alliance could also exit other 
laundry market segments. (Alliance, No. 45 at Attachment 2, p. 17)
    For the October 2008 NOPR, DOE calculated the direct employment 
impacts using the GRIM and information gathered from interviews with 
manufacturers. In the October 2008 NOPR, DOE estimated that there would 
be positive employment impacts among domestic commercial clothes washer 
manufacturers for TSL 1 through TSL 5. Because production labor 
expenditures are assumed to be a fixed percentage of the Cost of Goods 
Sold (COGS) and the Manufacturing Product Costs (MPCs) increase with 
more efficient equipment, labor tracks the increased prices in the 
GRIM. The GRIM predicts a steady level of domestic employment after 
standards at a level based on the increase in relative price. Because 
the LVM had previously stated it would be eliminated from the 
commercial market, DOE also specifically investigated the LVM 
employment using its commercial washer revenues and additional 
employment estimates. DOE's scenarios included one in which the LVM 
ceased to produce soft-mount washers or standard dryers and a scenario 
with a complete closure of the LVM's domestic manufacturing plant. DOE 
estimated that the LVM's ceasing to produce soft-mount dryers and CCWs 
would result in 292 lost production jobs and that a complete closure of 
the facility would result in the dismissal of approximately 600 factory 
employees. 73 FR 60234, 62102-3 (Oct. 17, 2008). DOE believes that the 
energy conservation standard proposed in today's notice will allow the 
LVM to continue to produce top-loading CCWs, mitigating any potential 
closure of its domestic manufacturing facility. Further discussion of 
the LVM and the potential impacts on direct employment for the CCW 
industry is presented in chapter 13 of the TSD.
    DOE received comments on the likely benefits of Federal producer 
tax credits for which some CCW manufacturers could be eligible. Such 
credits accrue to manufacturers on the basis of appliance or equipment 
efficiencies as well as other eligibility requirements. The Joint 
Comment stated that DOE did not account for Federal production tax 
credits for efficient appliances produced after 2007 in the MIA and 
that the LVM is likely to disproportionately benefit from these Federal 
production tax incentives. According to the Joint Comment, the Federal 
production tax credits should substantially off-set conversion capital 
requirements and equipment conversion expenses, mitigating the 
financial impacts of higher efficiency levels. (Joint Comment, No. 44 
at pp. 7-10)
    For the October 2008 NOPR, DOE did not fully account for the 
impacts of the Federal production tax credits updated by The Energy 
Improvement and Extension Act of 2008 (Pub. L. 110-343; EIEA 2008). 
However, DOE research suggests that the Joint Comment overstates the 
potential benefits that CCW manufacturers would accumulate through the 
tax credits found in EIEA 2008. A key assumption in the Joint Comment 
analysis is that all major CCW manufacturers indentified for this 
rulemaking would be able to benefit from the tax credit (Joint Comment, 
No. 44 at pp. 8-9). According to the title III, section 305 (b)(2) from 
EIEA 2008, and title I section 1334 (c)(1)(B) from EPACT 2005, the tax 
credit is only awarded for equipment produced in the United States. 
Using market research and interviews with manufacturers, DOE believes 
that only the LVM produces qualifying CCWs. Other manufacturers offer 
washers that meet the MEFs and WF requirements, but these washers are 
either made outside the United States or are sourced from other 
domestic manufacturers, or are not sold in the commercial market. See 
appendix 13C of the SNOPR TSD for further discussion of the Federal 
production tax credit.
    According to the Joint Comment, the Federal production tax credit 
could be used by the industry to offset the conversion costs necessary 
to comply with the energy conservation standards proposed in the 
October 2008 NOPR. (Joint Comment, No. 44 at p. 7) In its analysis, the 
Joint Comment does not account for any conversion costs associated with 
a complete production transfer of top-load to front-load washers. The 
equipment conversion and capital conversion cost shown in the GRIM and 
chapter 13 take all existing front-loading washers into consideration, 
including those that qualify for the Federal production tax credit. In 
its calculation of the equipment and capital conversion costs, DOE 
considered that the LVM already had qualifying washers at both 2.0 MEF/
6.0 WF and 2.2 MEF/4.5 WF levels; hence, no additional product 
development appeared necessary to achieve these efficiency levels. 
Therefore, DOE did not include any capital or product conversion costs 
in the GRIM for the LVM at a 2.0 MEF level. However, DOE research 
suggested that the LVM would have some capital conversion costs if the 
front-loading efficiency level were raised to 2.2 MEF, because the 
production levels of such washers would have to dramatically increase 
from present shipment levels.
    DOE acknowledges that the Federal production tax credit could have 
mitigating effects in lessening the impacts due to energy conservation 
standards. However, as described above and in appendix 13C, DOE 
estimates the benefits of Federal production tax credits for CCW 
manufacturers will not greatly mitigate the impacts due amended energy 
conservation

[[Page 57764]]

standards. In the GRIM, DOE accounts for the Federal tax credit as a 
direct cash benefit in the base and standards cases that increases the 
INPV. This increase in industry value lessens the impacts on 
manufacturers due to amended energy conservation standards. However, 
because the benefit of the Federal production tax credit is less 
significant than calculated in the Joint Comment and mostly occurs 
outside the analysis period, the benefits do not substantially impact 
the INPV calculated by DOE.
    Because only the LVM produces qualifying CCWs, DOE based its 
estimates of the potential benefits to the CCW industry by estimating 
the potential Federal production tax credits that the LVM could 
receive. Using publically available information, recent SEC filings, 
and the information published in chapter 13 and appendix 13A of the 
October 2008 NOPR, DOE estimated the LVM's front-loading CCW shipment 
projections to 2010. These estimates suggest that the LVM could collect 
$2.8 million in Federal production tax credits from 2008-2010 from the 
provisions updated by EIEA 2008 and $4.1 million from the program from 
2007 to 2010. Based on its calculations, the LVM received the biggest 
benefit from the tax credit in 2008. According to the ENERGY STAR 
database,\31\ the LVM released a model that qualified for the $250 
Federal production tax credit on September 26, 2008, shortly before 
EIEA 2008 was enacted. Because the higher tax credits were retroactive 
for all of 2008, the LVM received a $2.4 million Federal tax credit in 
2008 because it had substantially increased production of qualifying 
front-loading CCWs. Using the LVM's SEC Form 10-Q for the quarter 
ending March 31, 2009,\32\ DOE estimates that in 2009 the LVM will 
receive $385,000 in Federal production tax credits. DOE estimates that 
the LVM is unlikely to qualify for any additional Federal production 
tax credit in 2010 even if the volume of qualifying washers increases. 
DOE has a more extensive explanation of its calculations of the Federal 
production tax credits in appendix 13C of the SNOPR TSD.
---------------------------------------------------------------------------

    \31\ ENERGY STAR Qualified Commercial Clothes Washers. Available 
online at: http://www.energystar.gov/index.cfm?fuseaction=clotheswash.display_commercial_cw.
    \32\ The Alliance 10-Q Form is available at http://sec.gov/Archives/edgar/data/1063697/000119312509107306/d10q.htm.
---------------------------------------------------------------------------

    The Joint Comment bases its analysis on manufacturers completely 
shifting production to front-loading washers. However, DOE believes 
that it is unlikely all manufacturers would shift production to 
exclusively front-loading washers in response to the Federal production 
tax credits or the energy conservation standards proposed in today's 
rule. As discussed in section III.E, in response to the Federal 
production tax credit, DOE estimates that the tax credits would 
permanently transform the market so that front-loading washers would 
continue to comprise 30 percent of the market over the entire forecast 
period. This shift towards front-loading washers has mitigating effects 
on the impacts on manufacturers due to energy conservation standards. 
However, the shift is not great enough to significantly decrease the 
impacts as the Joint Comment suggests. Using the same assumptions used 
for calculations found in appendix 13A, DOE estimates that the LVM 
increased the production of front-loading washers by approximately 
10,000 washers in 2007 and 2008. Though the estimates show that there 
were significant increases in front-loading shipments for the LVM in 
2007 and 2008, shipments for fiscal year 2009 are projected to decrease 
and hence reduce the Federal production tax credits.
    The Joint Comment acknowledges but does not account for factors 
that would offset the benefits from the Federal production tax credit 
that would accrue to CCW manufacturers. In its LVM analysis for the 
October 2008 NOPR, DOE examined the capital costs that would be 
required to create a front-loading washer facility for 100,000 annual 
unit shipments. DOE estimated that a green-field facility with all 
production equipment would cost the LVM approximately $54 million. In 
that same analysis, DOE estimated that the total tooling required would 
cost approximately $18 million. If the LVM had to invest to exclusively 
offer front-loading washers, these investments would more than offset 
the benefit calculated in the Joint Comment for all CCW manufacturers. 
In fact, the tooling alone would more than eliminate the benefit 
calculated for the entire CCW industry in the Joint Comment. The Joint 
Comment states that the LVM is in a position to disproportionately 
benefit from the Federal production tax credit. (Joint Comment, No. 44 
at p. 8) While DOE acknowledges that the LVM is the only manufacturer 
eligible to receive a Federal production tax credit in the CCW market, 
DOE research suggests that the LVM would not disproportionately benefit 
because the costs to upgrade its production facilities for higher-
volume front-loading washer manufacturing, in addition to necessary 
redesigns of its existing front-loading washers, are estimated to be 
multiples of the tax credit. For further information, see appendix 13C 
of the SNOPR TSD. The Joint Comment also states that part of the 
Federal production tax credit will need to be shared with distributors 
and customers to stimulate growth. (Joint Comment, No. 44 at p. 9) 
However, the Joint Comment does not reduce the benefit to the CCW 
industry that would occur if manufacturers did not keep all of the tax 
credit.
    DOE received comment regarding its characterization of CCW 
manufacturers and the LVM in particular. The Joint Comment argued that 
DOE should not characterize Alliance as an LVM, as the LVM reported 
revenues equivalent to approximately half of the total CCW revenue and 
claims to be the leading manufacturer of stand-alone commercial laundry 
equipment in North America. (Joint Comment, No. 44 at p. 7) For the 
October 2008 NOPR, DOE presented a separate analysis of the LVM. 73 FR 
62034, 62103-104 (Oct. 17, 2008). Although DOE agrees with the Joint 
Comment that the LVM has a significant share of the CCW industry based 
on revenues in reports filed with the SEC, DOE believes that the LVM 
does not have the same overall clothes washer manufacturing scale as 
its competitors (for both residential products and commercial 
equipment) and should be characterized as an LVM.
    In the LVM analysis, DOE notes that most CCWs on the market in the 
United States are based largely on RCW platforms that are upgraded 
selectively. Some investments (such as the controllers) are CCW-
specific but only make up part of the total unit cost. The majority of 
capital expenditures related to tooling, equipment, and other machinery 
in a plant can usually be applied to the residential as well as the 
commercial market. Thus, overall (both RCW and CCW) manufacturing scale 
has a significant impact on the cost-effectiveness of potential 
upgrades. A manufacturer with a high-volume residential line can cost 
justify much more capital-intensive solutions if they are applicable in 
both markets, in contrast to an LVM which lacks the scale to make the 
investments worthwhile. Thus, an LVM may be required to purchase 
upgrade options from third-party vendors instead of developing in-house 
solutions that reduce costs at higher volumes. In the clothes washer 
market, the most direct CCW competitor has over 60 times the overall 
shipment volumes of the LVM. This scale difference also relates to 
purchasing power. A large, diversified appliance manufacturer can use 
its production scale to achieve better prices

[[Page 57765]]

for raw materials and commonly purchased components like controllers, 
motors, belts, switches, sensors, and wiring harnesses. Even if a large 
company purchases fewer items of a certain component, its overall 
revenue relationship with a supplier may still enable it to achieve 
better pricing than a smaller competitor, even if that competitor buys 
certain components in higher quantities. Lastly, high-volume 
manufacturers benefit from being able to source their components 
through sophisticated supply chains on a worldwide basis. A low-volume 
manufacturer is unlikely to be able to compete solely on manufacturing 
cost.
    DOE seeks comment on the determination of manufacturer impacts, 
including the effects of manufacturer tax credits and competitive 
concerns. This is identified as Issue 5 in section VII.E of today's 
supplemental notice (Issues on Which DOE Seeks Comment.)

H. Employment Impact Analysis

    DOE considers employment impacts in the domestic economy as one 
factor in selecting a proposed standard. Employment impacts include 
direct and indirect impacts. Direct employment impacts are changes in 
the number of employees for manufacturers of equipment subject to 
standards, their suppliers, and related service firms. The MIA 
addresses these impacts.
    Indirect employment impacts from standards consist of the net jobs 
created or eliminated in the national economy, other than in the 
manufacturing sector being regulated, due to: (1) Reduced spending by 
end users on energy (electricity, gas (including liquefied petroleum 
gas), and oil); (2) reduced spending on new energy supply by the 
utility industry; (3) increased spending on the purchase price of new 
equipment; and (4) the effects of those three factors throughout the 
economy. DOE expects the net monetary savings from standards to be 
redirected to other forms of economic activity. DOE also expects these 
shifts in spending and economic activity to affect the demand for labor 
in the short term, as explained below.
    One method for assessing the possible effects on the demand for 
labor of such shifts in economic activity is to compare sectoral 
employment statistics developed by the BLS. The BLS regularly publishes 
its estimates of the number of jobs per million dollars of economic 
activity in different sectors of the economy, as well as the jobs 
created elsewhere in the economy by this same economic activity. Data 
from BLS indicate that expenditures in the utility sector generally 
create fewer jobs (both directly and indirectly) than expenditures in 
other sectors of the economy. There are many reasons for these 
differences, including wage differences and the fact that the utility 
sector is more capital intensive and less labor intensive than other 
sectors. (See Bureau of Economic Analysis, Regional Multipliers: A User 
Handbook for the Regional Input-Output Modeling System (RIMS II), 
Washington, DC, U.S. Department of Commerce (1992).) Efficiency 
standards have the effect of reducing consumer utility bills. Because 
reduced consumer expenditures for energy likely lead to increased 
expenditures in other sectors of the economy, the general effect of 
efficiency standards is to shift economic activity from a less labor-
intensive sector (i.e., the utility sector) to more labor-intensive 
sectors (e.g., the retail and manufacturing sectors). Thus, based on 
the BLS data alone, DOE believes net national employment will increase 
due to shifts in economic activity resulting from standards for CCWs.
    In developing the October 2008 NOPR and today's SNOPR, DOE 
estimated indirect national employment impacts using an input/output 
model of the U.S. economy called Impact of Sector Energy Technologies 
(ImSET).\33\ ImSET is a special-purpose version of the ``U.S. Benchmark 
National Input-Output'' (I-O) model designed to estimate the national 
employment and income effects of energy-saving technologies. The ImSET 
software includes a computer-based I-O model with structural 
coefficients to characterize economic flows among 188 sectors most 
relevant to industrial, commercial, and residential building energy 
use. The Joint Comment stated that DOE must consider its projections 
that an increase in employment will result from the adoption of 
standards in weighing the economic costs and benefits of strong 
efficiency standards. (Joint Comment, No. 44 at p. 13) As described in 
section V.B.3 below, DOE takes into consideration the indirect 
employment impacts estimated using ImSET when evaluating alternative 
standard levels. Direct employment impacts on the manufacturers that 
produce CCWs are analyzed in the MIA, as discussed in section III.G. 
For today's SNOPR, DOE has made no change to its method for estimating 
employment impacts. For further details, see chapter 15 of the SNOPR 
TSD.
---------------------------------------------------------------------------

    \33\ More information regarding ImSET is available online at: 
http://www.pnl.gov/main/publications/external/technical_reports/PNNL-15273.pdf.
---------------------------------------------------------------------------

I. Utility Impact Analysis

    The utility impact analysis estimates the change in the forecasted 
power generation capacity for the Nation, which would be expected to 
result from adoption of new standards. This analysis separately 
determines the changes to supply and demand as a result of natural gas, 
fuel oil, liquefied petroleum gas, or electricity residential 
consumption savings due to the standard. For the October 2008 NOPR and 
today's SNOPR, DOE calculated this change using the NEMS-BT computer 
model. NEMS-BT models certain policy scenarios such as the effect of 
reduced energy consumption per TSL by fuel type. The analysis output 
provides a forecast for the needed generation capacities at each TSL. 
The estimated net benefit of the standard for today's SNOPR is the 
difference between the forecasted generation capacities by NEMS-BT and 
the AEO 2009 April Release Reference Case. DOE obtained the energy 
savings inputs associated with electricity and natural gas consumption 
savings from the NIA. These inputs reflect the effects of efficiency 
improvement on CCW energy consumption, both fuel (natural gas) and 
electricity. Chapter 14 of the SNOPR TSD presents results of the 
utility impact analysis.
    In its October 2008 NOPR, DOE did not estimate impacts on water and 
wastewater utilities because the water and wastewater utility sector is 
more complicated than either the electric utility or gas utility 
sectors, with a high degree of geographic variability produced by a 
large diversity of water resource availability, institutional history, 
and regulatory context. 73 FR 62034, 62082 (Oct. 17, 2008). For today's 
SNOPR, for the reasons cited above, DOE did not estimate impacts to the 
water and wastewater utility sector.

J. Environmental Assessment

    Pursuant to the National Environmental Policy Act of 1969 (NEPA) 
(42 U.S.C. 4321 et seq.) 42 U.S.C. 6295(o)(2)(B)(i)(VI), DOE prepared a 
draft environmental assessment (EA) of the potential impacts of the 
proposed standards for CCWs it considered for today's supplemental 
notice which it has included as chapter 16 of the TSD for the SNOPR. 
DOE found the environmental effects associated with the standards for 
CCWs to be insignificant. 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

[[Page 57766]]

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 power sector emissions of 
CO2 and NOX using the NEMS-BT computer model. DOE 
also calculated a range of estimates for reduction in Hg emissions 
using power sector emission rates. The EA does not include the 
estimated reduction in power sector impacts of sulfur dioxide 
(SO2), because DOE has determined that any such reduction 
resulting from 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.
    NEMS-BT is run similarly to the AEO 2009 April Release NEMS, except 
that CCW energy use is reduced by the amount of energy saved (by fuel 
type) due to the TSLs. 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 a standard is the difference between 
emissions estimated by NEMS-BT and the AEO 2009 April Release Reference 
Case. The NEMS-BT tracks CO2 emissions using a detailed 
module that provides results with 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 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. In other words, with 
or without a standard, total cumulative SO2 emissions will 
always be at or near the ceiling, while there may be some timing 
differences between year-by-year forecast. Thus, it is unlikely that 
there will be reduced SO2 emissions from standards as long 
as there is enforcement of the emissions ceilings. Although there may 
not be an actual reduction in SO2 emissions, there still 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 (D.C.) are limited under the Clean Air Interstate Rule (CAIR), 
published in the Federal Register on May 12, 2005.\34\ Although CAIR 
has been remanded to EPA by the U.S. Court of Appeals for the District 
of Columbia Circuit (D.C. 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.\35\ 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.
---------------------------------------------------------------------------

    \34\ 70 FR 25162 (May 12, 2005).
    \35\ 531 F.3d 896 (D.C. Cir. 2008); see also North Carolina v. 
EPA, 550 F.3d 1176 (D.C. Cir. 2008).
---------------------------------------------------------------------------

    For the 28 eastern States and D.C. 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 that are not affected by CAIR. As a result, the NEMS-BT does 
forecast emission reductions from the CCW standards considered in 
today's supplemental notice.
    In the October 2008 NOPR, however, DOE provided a different 
estimate of NOX reductions, because DOE assumed that the 
CAIR had been vacated. 74 FR 16920, 17009-14 (April 13, 2009). This is 
because the CAIR was vacated by the D.C. Circuit in its July 11, 2008 
decision in North Carolina v. Environmental Protection Agency. 531 F.3d 
896 (D.C. Cir. 2008). Thus, for the October 2008 NOPR, DOE established 
a range of NOX reductions based on low and high emissions 
rates (in kt of NOX emitted per terawatt-hour (TWh) of 
electricity generated) derived from the AEO 2008. DOE anticipated that, 
in the absence of the CAIR's trading program, the new or amended energy 
conservation standards would reduce NOX emissions 
nationwide, not just in 22 States.
    Similar to SO2 and NOX, future emissions of 
Hg would have been subject to emissions caps under Clean Air Mercury 
Rule (CAMR) [70 FR 28606 (May 18, 2005)], which would have permanently 
capped emissions of Hg for new and existing coal-fired plants in all 
States by 2010, but the CAMR was vacated by the D.C. Circuit in its 
decision in New Jersey v. Environmental Protection Agency prior to the 
publication of the October 2008 NOPR. 517 F.3d 574 (D.C. Cir. 2008). 
However, the NEMS-BT model DOE initially used to estimate the changes 
in emissions for the proposed rule assumed that Hg emissions would be 
subject to CAMR emission caps.
    After CAMR was vacated, DOE was unable to use the NEMS-BT model to 
estimate any changes in the physical quantity of Hg emissions (anywhere 
in the country) that would result from standard levels it considered in 
the October 2008 NOPR. Instead, DOE used an Hg emission rate (in metric 
tons of Hg per energy produced) based on the AEO 2008. Because 
virtually all Hg emitted from electricity generation is from coal-fired 
power plants, DOE based the emission rate on the metric tons of Hg 
emitted per TWh of coal-generated electricity. To estimate the 
reduction in Hg emissions, DOE multiplied the emission rate by the 
reduction in coal-generated electricity associated with standards 
considered. Because the CAMR is still vacated, DOE continued to use the 
approach utilized for the October 2008 NOPR, updated for the AEO 2009 
April Release to estimate the Hg emission reductions due to standards 
for today's SNOPR.
    In addition to electricity, the operation of gas-fired CCWs results 
in emissions of CO2 and NOX at the sites where 
the appliances are used. NEMS-BT provides no means for estimating such 
emissions. Therefore, DOE calculated separate estimates of the effect 
of the potential standards on site emissions of CO2 and 
NOX based on emissions factors derived from the literature. 
Because natural gas combustion does not yield SO2 emissions, 
DOE did not report in either the October 2008 NOPR or today's SNOPR the 
effect of the proposed standards on site emissions of SO2.

K. Monetizing Carbon Dioxide and Other Emissions Impacts

    DOE also calculated the possible monetary benefit of 
CO2, NOX, and Hg reductions. Cumulative monetary 
benefits were determined using discount rates of 3 and 7 percent. DOE 
monetized reductions in CO2 emissions due to standards in 
this proposed rule

[[Page 57767]]

based on a range of monetary values drawn from studies that attempt to 
estimate the present value of the marginal economic benefits (based on 
the avoided marginal social costs of carbon) likely to result from 
reducing greenhouse gas emissions. The marginal social cost of carbon 
is an estimate of the monetary value to society of the environmental 
damages of CO2 emissions.
    Several parties provided comments regarding the economic valuation 
of CO2 for the October 2008 NOPR. Whirlpool does not support 
an attempt to value those emissions as part of this rulemaking. 
(Whirlpool, No. 50 at p. 8) EEI stated that utilities have embedded the 
cost of complying with existing environmental legislation in their 
price for electricity, and a similar approach may be reasonable for 
valuing reduced CO2 emissions. (EEI, Public Meeting 
Transcript, No. 40.5 at pp. 194-195) The Joint Comment stated that 
DOE's valuation of avoided CO2 emissions should utilize 
EIA's analysis of the Climate Security Act. The core scenario of this 
analysis yields a $17 price per ton of CO2, with an annual 
7.4 percent increase. (Joint Comment, No. 44 at p. 12) As discussed in 
section V.B.6, DOE has updated the approach described in the October 
2008 NOPR (73 FR 62034, 62107 (Oct. 17, 2008)) for its monetization of 
environmental emissions reductions for today's SNOPR.
    Although this rulemaking does not affect SO2 emissions 
or 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 consumers 
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 or amended standards for CCWs 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.
    As reported above in section III.D.4.a, the Joint Comment stated 
that to realistically depict energy prices in the future, DOE must 
consider the impact of carbon control legislation, since such 
legislation is very likely. The Joint Comment also noted that there are 
regional cap and trade programs that are in effect in the Northeast 
(Regional Greenhouse Gas Initiative (RGGI)) and the West (Western 
Climate Initiative (WCI)) that will impact the price of electricity and 
are not reflected in the AEO energy price forecasts. (Joint Comment, 
No. 44 at p. 12) EJ stated that caps will likely be in place by the 
time new standards become effective, so DOE should increase its 
electricity prices to reflect the cost of complying with emission caps. 
(EJ, Public Meeting Transcript, No. 40.5 at pp. 105-106)
    In response, DOE incorporated current trends in its analysis, but 
expressly did not include possible future legislation in this 
rulemaking. 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 RGGI, and utility 
investor reactions to the possibility of future CO2 cap and 
trade programs, all of which impact electricity prices and reduce the 
projected carbon intensity of generation. The most recent Reference 
Case, AEO 2009, is available at http://www.eia.doe.gov/oiaf/servicerpt/stimulus/index.html, and documentation of the AEO 2009 assumptions is 
available at http://www.eia.doe.gov/oiaf/aeo/assumption/index.html.
    In its October 2008 NOPR, DOE conducted a separate analysis of 
wastewater discharge impacts as part of the environmental assessment 
for commercial clothes washers. 73 FR 62034, 62112-3 (Oct. 17, 2008). 
For today's supplemental proposed rule, DOE retained the same analysis 
method for estimating wastewater discharge impacts. The results are 
presented below in section V.B.6.
    DOE seeks comment on the determination of environmental impacts. 
This is identified as Issue 6 in section VII.E of today's supplemental 
notice (Issues on Which DOE Seeks Comment).

IV. Discussion of Other Comments

A. Proposed TSLs for Commercial Clothes Washers

    For the October 2008 NOPR, DOE based the TSLs on efficiency levels 
explored in the November 2007 ANOPR, and selected the TSLs on 
consideration of economic factors and current market conditions. ASAP 
suggested that DOE set TSLs based upon industry benchmarks such as 
current and forthcoming ENERGY STAR qualification levels and pending 
Federal tax incentive performance levels. (ASAP, Public Meeting 
Transcript, No. 40.5 at p. 33 and pp. 148-149) EIEA 2008 provided an 
Energy Efficient Appliance Credit to manufacturers for any RCW or CCW 
(front-loading or top-loading) produced domestically through 2010 with 
an efficiency level of at least 2.0 MEF/6.0 WF, or a larger credit for 
one that achieves 2.2 MEF/4.5 WF. The legislation also provides a 
separate tax credit for any top-loading RCW that achieves an efficiency 
level of at least 1.72 MEF/8.0 WF or a larger credit for one that 
exceeds 1.8 MEF/7.5 WF. DOE considered the impacts of these tax credits 
on the CCW industry in detail as part of the MIA. DOE accounts for the 
Federal tax credit as a direct cash benefit in the base and standards 
cases that increases the INPV. See section III.G of today's 
supplemental notice and appendix 13C of the SNOPR TSD for further 
discussion of this issue.

B. Proposed Standards for Commercial Clothes Washers

    For the October 2008 NOPR, DOE made the preliminary determination 
that the standards for top-loading and front-loading CCWs listed in 
Table II.1 are technologically feasible and economically justified, and 
invited comment on these proposed standard levels.
    In response, Alliance stated that it would likely exit the clothes 
washer market if standards based on a single CCW equipment class were 
enacted, which would result in domestic job losses, a CCW market 
disruption, and/or loss of competition in the CCW market. (Alliance, 
No. 45 at Attachment 2, pp. 6-12) Alliance and GE urged DOE to consider 
TSL 1 from the October 2008 NOPR (1.42 MEF/9.5 WF) as the appropriate 
standard for top-loading CCWs. (Alliance, Public Meeting Transcript, 
No. 40.5 at pp. 23-24; GE No. 48 at p. 5) Alliance believes that TSL 1 
would result in energy savings while being technically feasible and 
economically justified. Alliance also stated standards at TSL 1 would 
avoid or lessen harm to Alliance and, hence,

[[Page 57768]]

reduce significant consumer impacts that would be associated with 
Alliance likely ceasing production. (Alliance, No. 45 at Attachment 2, 
p. 18)
    GE opposed the top-loading standard proposed in the October 2008 
NOPR due to small market size (1.3 percent) for coin-operated, top-
loading CCWs and the potential 31-percent decrease in industry cash 
flows due to the proposed standards. GE commented that adoption of the 
standards would essentially regulate the top-loading equipment class 
out of the marketplace. GE also stated that the max-tech level for top-
loading CCWs is not yet justified as being sustainable in the harsher 
consumer environment of laundromats, where units are subject to much 
tougher conditions such as overloading. GE agreed with Alliance's 
proposed standards for top-loaders of TSL 1 from the October 2008 NOPR 
(1.42 MEF/9.5 WF), which would also make the CCW WF consistent with the 
EISA 2007 standards for RCWs. (GE, Public Meeting Transcript, No. 40.5 
at pp. 31-32; GE, No. 48 at pp. 4-5) MLA opposed the proposed October 
2008 NOPR standard for top-loading CCWs, because there is currently no 
commercially acceptable top-loading CCW that can meet it. MLA believes 
the only way to comply with the top-loading CCW standard proposed in 
the October 2008 NOPR is to produce machines with poor washing and 
rinsing performance, high maintenance costs, and increased 
manufacturing costs. (MLA, No. 49 at pp.1 and 4)
    Whirlpool commented that it supports both the proposed top-loading 
and front-loading standards in the October 2008 NOPR, though it 
acknowledged industry support is not consistent. Both standards, it 
said, are technologically feasible and enable substantial water and 
energy savings, although it agreed with DOE that front-loading CCWs can 
reach efficiency levels generally not attainable by top-loaders. 
Whirlpool stated that it has yet to field a top-loading CCW that can 
meet the proposed October 2008 NOPR standard, but that it believes 
technology exists to develop such equipment by early 2012 without 
violating intellectual property, provided that engineering and capital 
resources are available. (Whirlpool, Public Meeting Transcript, No. 
40.5 at p. 28; Whirlpool, No. 50 at pp. 2-3) Whirlpool identified risks 
associated with the standards proposed in the October 2008 NOPR, 
including higher unit, capital, and development costs; lower 
reliability or perceived reliability due to the complexity of the 
technology needed to meet the standard; lack of market acceptance for 
lid locks on top-loading CCWs using spray rinse technology to meet the 
standard; and durability and resistance to breakage under overloading 
conditions. (Whirlpool, No. 50 at p. 3)
    PG&E and EJ stated that adopting a single standard for all CCW 
classes would result in the largest potential savings for consumers. 
(EJ, Public Meeting Transcript, No. 40.5 at p. 200; PG&E, Public 
Meeting Transcript, No. 40.5 at p. 201) The Joint Comment suggested 
that a single standard based on efficiency achieved by front loaders 
available in the market today would achieve 32 percent more energy 
savings, 192 percent more water savings, and 78 percent more consumer 
savings in present value terms than the standards proposed in the 
October 2008 NOPR that treat top-loading and front-loading CCWs 
separately. (Joint Comment, No. 44 at p. 1)
    ASAP commented that the previous analyses leading up to the October 
2008 NOPR [the analyses in the November 2007 ANOPR] clearly indicated 
that there are tremendous life-cycle cost savings presented by high-
efficiency CCWs, and those are available to all sectors of the market. 
ASAP believes that, for what appears to be a lack of a relatively small 
amount of capital, recognizing that amount of capital is significant 
for one manufacturer, hundreds of millions of dollars of consumer 
savings are going to be foregone. ASAP also commented that DOE did not 
substantiate its concerns about potential recapture of market share by 
less efficient top-loaders when reducing the proposed standard for 
front-loading CCWs from the level that would maximize life-cycle cost 
savings to the standards proposed in the October 2008 NOPR. (ASAP, 
Public Meeting Transcript, No. 40.5 at pp. 34-35)
    In considering standards for today's supplemental notice, DOE first 
notes that it has retained separate equipment classes for top-loading 
and front-loading CCWs, for reasons discussed in section III.A. For 
top-loading CCW standards, DOE has revised its analysis due to a re-
evaluation of the max-tech efficiency level, which resulted in the max-
tech level from the October 2008 NOPR being eliminated from 
consideration as an efficiency level for today's supplemental notice 
(see section III.C.1.a.) DOE did not change the engineering analysis 
for front-loading CCWs from those presented in the October 2008 NOPR. 
DOE has thus evaluated standards for both equipment classes, including 
impacts to the consumer, manufacturer, and Nation, based on the 
analyses outlined in section III, and presents the approach and results 
for proposed standard levels for today's SNOPR in section V.

V. Analytical Results

A. Trial Standard Levels

    DOE analyzed the benefits and burdens of a number of TSLs for the 
CCWs that are the subject of today's supplemental proposed rule. As 
discussed in section IV.A, for the October 2008 NOPR, DOE based the 
TSLs on efficiency levels explored in the November 2007 ANOPR, and 
selected the TSLs on consideration of economic factors and current 
market conditions. As also discussed previously in section III.C.1.a, 
DOE eliminated the maximum technologically efficiency level of 1.76 
MEF/8.3 WF for the top-loading equipment class. Accordingly, for 
today's supplemental proposed rule, DOE modified the TSLs it considered 
for the October 2008 NOPR.
    Table V.1 shows the TSLs for CCWs. TSLs consist of a combination of 
MEF and WF for each equipment class. In all, DOE has considered five 
TSLs. TSL 1 corresponds to the first candidate standard level from each 
equipment class and represents the efficiency level for each class with 
the least significant design change. TSL 2 represents the second 
candidate standard level for front-loading washers while keeping top-
loading washers at its first candidate standard level. Over 96 percent 
of the front-loading CCW equipment Stock Keeping Units (SKUs) currently 
on the market either meets or exceeds the second candidate standard 
level for front-loading washers. In the case of the second candidate 
standard level for top-loading washers, a significant percent of the 
market, over 35 percent, also meets or exceeds this efficiency level. 
Therefore, TSL 2 corresponds to the candidate standard levels for each 
equipment class that still represent a significant share of the market. 
TSL 3 represents the second candidate standard level for top-loading 
washers (the maximum efficiency level for this class), and keeps front-
loading washers at the second candidate standard level. For TSL 3, 
front-loading washers were held to the second candidate standard level 
in order to minimize the equipment price difference between the two 
equipment classes. For TSL 4, top-loading washers are retained at their 
maximum efficiency level while front-loading washers are incremented to 
their third candidate standard level. Finally, TSL 5 corresponds to the 
maximum technologically feasible level for each equipment class. In 
progressing

[[Page 57769]]

from TSL 1 to TSL 5, the LCC savings, NES, and NPV all increase. TSL 5 
represents the level with the minimum LCC and maximum NES and NPV.

                         Table V.1--Trial Standard Levels for Commercial Clothes Washers
----------------------------------------------------------------------------------------------------------------
                                       TSL 1           TSL 2           TSL 3           TSL 4           TSL 5
----------------------------------------------------------------------------------------------------------------
Top-Loading:
    MEF.........................            1.42            1.42            1.60            1.60            1.60
    WF..........................            9.5             9.5             8.5             8.5             8.5
Front-Loading:
    MEF.........................            1.80            2.00            2.00            2.20            2.35
    WF..........................            7.5             5.5             5.5             5.1             4.4
----------------------------------------------------------------------------------------------------------------

B. Economic Justification and Energy Savings

1. Economic Impacts on Consumers
a. Life-Cycle Cost and Payback Period
    To evaluate the net economic impact of standards on consumers, DOE 
conducted LCC and PBP analyses for each TSL. In general, higher 
efficiency equipment would affect consumers in two ways: (1) Annual 
operating expense would decrease; and (2) purchase price would 
increase. Section III.D of this notice discusses the inputs DOE used 
for calculating the LCC and PBP.
    The key outputs of the LCC analysis are a mean LCC savings relative 
to the baseline equipment design, as well as a probability distribution 
or likelihood of LCC reduction or increase, for each TSL and equipment 
class. The LCC analysis also estimates the fraction of consumers for 
which the LCC will decrease (net benefit), increase (net cost), or 
exhibit no change (no impact) relative to the base-case equipment 
forecast. No impacts occur when the equipment efficiencies of the base-
case forecast already equal or exceed the considered TSL efficiency.
    Table V.2 and Table V.3 show the LCC and PBP results for both CCW 
equipment applications for the top-loading class while Table V.4 and 
Table V.5 show the LCC and PPB results for the front-loading equipment 
class. For example, in the case of the multi-family application for 
front-loading washers (Table V.4), TSL 2 (2.00 MEF/5.50 WF) shows an 
average LCC savings of $19. Note that for TSL 2, 96.3 percent of 
consumers in 2013 are assumed to already be using a front-loading CCW 
in the base case at TSL 2 and, thus, have zero savings due to the 
standard. If one compares the LCC of the baseline at 1.72 MEF/8.00 WF 
($4220) to TSL 2 ($3690), then the difference in the LCCs is $530. 
However, since the base case includes a significant number of consumers 
that are not impacted by the standard, the average savings over all of 
the consumers is actually $19, not $530. DOE determined the median and 
average values of the PBPs shown below by excluding the percentage of 
households not impacted by the standard. For example, in the case of 
TSL 2 for front-loading washers in a multi-family application, 96.3 
percent of the consumers did not factor into the calculation of the 
median and average PBP.
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[[Page 57771]]


b. Consumer Subgroup Analysis
    Using the LCC spreadsheet model, DOE determined the impact of the 
standards on the following CCW consumer subgroups: small business 
owners and consumers without municipal water and sewer.
    The results for consumers without municipal water and sewer 
indicate that the LCC impacts and payback periods for this subgroup are 
similar to the LCC impacts and payback periods on the full sample of 
CCW consumers. But for small business owners, the LCC impacts and 
payback periods are different from those associated with the general 
population. For the top-loading equipment class, Table V.6 and Table 
V.7 show the LCC impacts and payback periods for small multi-family 
property owners and small laundromats, respectively, while Table V.8 
and Table V.9 show the same but for the front-loading equipment class. 
For all TSLs for both equipment classes, both sets of small business 
owners, on average, realize LCC savings similar to the general 
population. The difference between the small business population and 
the general population occurs in the percentage of each population that 
realizes LCC savings from standards. With the exception of TSL 1 for 
top-loading washers, an overwhelming majority of the small business and 
general populations benefit from standards at each TSL. But for both 
equipment classes, a larger percentage of the general population 
benefits from standards than small business owners. This occurs because 
small businesses do not have the same access to capital as larger 
businesses. As a result, smaller businesses have a higher average 
discount rate than the industry average. Because of the higher discount 
rates, smaller businesses do not value future operating costs savings 
from more efficient CCWs as much as the general population. But to 
emphasize, in spite of the higher discount rates, a majority of small 
businesses still benefit from higher CCW standards at all TSLs, with 
the exception of TSL 1 for the top-loading equipment class.

[[Page 57772]]

[GRAPHIC] [TIFF OMITTED] TP09NO09.001

BILLING CODE 6450-01-C
c. Rebuttable-Presumption Payback
    As discussed above, EPCA establishes a rebuttable presumption that 
an energy conservation standard is economically justified if the 
increased purchase cost for equipment that meets the standard is less 
than three times the value of the first-year energy savings resulting 
from the standard. (42 U.S.C. 6295(o)(2)(B)(iii)) DOE calculated a 
rebuttable-presumption payback period for each TSL to determine whether 
DOE could presume that a standard at that level is economically 
justified. Table V.10 shows the rebuttable-presumption payback periods 
for CCWs. Because only a single, average value is necessary for 
establishing the rebuttable-presumption payback period, rather than 
using distributions for input values, DOE used discrete values. As 
required by EPCA, DOE based the

[[Page 57773]]

calculation on the assumptions in the DOE test procedures for CCWs. (42 
U.S.C. 6295(o)(2)(B)(iii)) As a result, DOE calculated a single 
rebuttable-presumption payback value, and not a distribution of payback 
periods, for each TSL.

                Table V.10--Rebuttable-Presumption Payback Periods for Commercial Clothes Washers
----------------------------------------------------------------------------------------------------------------
                                                                       Payback period, years
                                                 ---------------------------------------------------------------
                                                            Top-loading                    Front-loading
                       TSL                       ---------------------------------------------------------------
                                                   Multi-family     Laundromat     Multi-family     Laundromat
                                                    application     application     application     application
----------------------------------------------------------------------------------------------------------------
1...............................................            >100            >100               0               0
2...............................................            >100            >100             1.2             1.3
3...............................................            24.0            >100             1.2             1.3
4...............................................            24.0            >100             9.4            17.3
5...............................................            24.0            >100            10.0            17.6
----------------------------------------------------------------------------------------------------------------

    With the exception of TSLs 1 to 3 for front-loading CCWs, the TSLs 
in Table V.10 do not have rebuttable-presumption payback periods of 
less than 3 years. As stated above, in addition to calculating the 
rebuttable-presumption payback period DOE routinely conducts a thorough 
economic analysis that considers the full range of impacts, including 
those to consumers, manufacturers, the Nation, and the environment, as 
required under 42 U.S.C. 6295(o)(2)(B)(i). The results of this full 
analysis serve as the basis for DOE to definitively determine the 
economic justification for a potential standard level (thereby 
supporting or rebutting the results of any preliminary determination of 
economic justification). Section V.C provides a complete discussion of 
how DOE considered the range of impacts to select the standards 
proposed in today's SNOPR.
2. Economic Impacts on Manufacturers
    For the October 2008 NOPR, DOE used the INPV in the MIA to compare 
the financial impacts of different TSLs on CCW manufacturers. 73 FR 
62034, 62099-104 (Oct. 17, 2008). The INPV is the sum of all net cash 
flows discounted by the industry's cost of capital (discount rate). DOE 
used the GRIM to compare the INPV of the base case (no new energy 
conservation standards) to that of each TSL for the CCW industry. To 
evaluate the range of cash-flow impacts on the CCW industry, DOE 
constructed different scenarios using different assumptions for 
shipments that correspond to the range of anticipated market responses. 
Each scenario results in a unique set of cash flows and corresponding 
industry value at each TSL. These steps allowed DOE to compare the 
potential impacts on the industry as a function of TSLs in the GRIM. 
The difference in INPV between the base case and the standards case is 
an estimate of the economic impacts that implementing that standard 
level would have on the entire industry. For today's supplemental 
notice, DOE continues to use the above methodology and presents the 
results in the subsequent sections. See chapter 13 for additional 
information on MIA methodology and results.
a. Industry Cash-Flow Analysis Results
    The major source of uncertainty voiced by all manufacturers during 
MIA interviews is the impact of higher standards on the number of CCWs 
sold. Future equipment sales are particularly important considering the 
high capital costs (particularly design, tooling, and product 
verification costs) on the basis of the low volumes of equipment sold. 
In light of the concern over future shipments, DOE modeled two MIA 
scenarios, based on two shipment projections from the NIA.
    To assess the lower end of the range of the potential impacts on 
the CCW industry, DOE considered a scenario in which total CCW 
shipments will not be negatively impacted at higher energy conservation 
standards; this scenario is called the base-case shipments scenario. To 
assess the higher end of the range of potential impacts for the CCW 
industry, DOE considered a scenario in which total industry shipments 
would decrease due to the combined effects of increases in purchase 
price and decreases in operating costs due to new energy conservation 
standards; this scenario is called the price elasticity of demand 
scenario. In both scenarios, it is assumed that manufacturers will be 
able maintain the same gross margins (as a percentage of revenues) that 
are currently obtained in the base case.
    As discussed in section III.G of today's supplemental notice, DOE 
also considered the impact of Federal production tax credits on the CCW 
industry. DOE does not include the benefit of these tax credits in its 
results shown below. DOE includes these results in appendix 13C of the 
TSD. DOE estimated that the total benefit of these Federal production 
tax credits to the CCW industry from 2007 through 2010 would be 
approximately $4.1 million. Because DOE discounts the industry cash 
flows to the 2009 base year, in this scenario the base case INPV 
increases by approximately $400,000 if the benefit from the Federal 
production tax credits are included. As previously stated, although the 
base-case and standards-case INPV increase as a result of Federal 
production tax credits, the benefits do not significantly mitigate 
possible impacts due to standards. For additional information on the 
assumptions and calculations of Federal production tax credits for 
CCWs, see appendix 13C of the TSD.
    Table V.11 and Table V.12 show the MIA results for each TSL using 
both shipment scenarios described above for CCW manufacturers.

[[Page 57774]]

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[[Page 57775]]


[GRAPHIC] [TIFF OMITTED] TP09NO09.003

    At TSL 1, the impact on INPV and cash flow varies depending on the 
manufacturers' ability to maintain revenues as shipments decrease due 
to the price elasticity. DOE estimated the impacts in INPV at TSL 1 to 
range from positive $3.7 million to positive $2.8 million, or a change 
in INPV of 5.97 percent to 4.50 percent. At this level, the industry 
cash flow does not decrease from the base-case value of $3.8 million in 
the year leading up to the standards. Since all manufacturers currently 
make or source top-loading and front-loading CCWs with efficiency 
levels above this level, DOE assumed that there would be no equipment 
or capital conversion costs.
    At TSL 2, DOE estimated the impacts in INPV to range from positive 
$1.4 million to positive $0.5 million, or a change in INPV of 2.24 
percent to 0.76 percent. At this level, the industry cash flow 
decreases by approximately 27.7 percent, to $2.8 million, compared to 
the base-case value of $3.8 million in the year leading up to the 
standards. Since all manufacturers of top-loading washers already sell 
equipment that exceeds the efficiency requirements proposed at this 
TSL, DOE assumed that there would be no equipment or capital conversion 
costs for top-loading washers at this TSL. Over 95 percent of all 
currently-sold front-loading CCW SKUs have efficiency levels that 
achieve or exceed this level and all manufacturers sell front-loading 
washers that achieve or exceed this level. Accordingly, DOE estimated 
that the industry would incur relatively small equipment and capital 
conversion costs at this TSL.
    At TSL 3, DOE estimated the impacts in INPV to range from -$4.8 
million to -$7.0 million, or a change in INPV of -7.81 percent to -
11.39 percent. At this level, the industry cash flow decreases by 
approximately 158 percent, to -$2.2 million, compared to the base case 
value of $3.8 million in the year leading up to the standards. Only one 
manufacturer currently markets a single top-loading CCW SKU at this 
TSL. DOE estimates that at least one manufacturer will need to redesign 
and retool a line of top-loading CCWs to meet the efficiency 
requirements of TSL 3. For top-loading CCWs, multiple manufacturers 
stated that customers could see a reduction in wash quality or reject 
new designs based on a perceived reduction in wash quality or rinse 
performance at TSL 3. Over 95 percent of currently-sold front-loading 
CCW SKUs have efficiency ratings that meet or exceed this level. Hence, 
DOE estimated relatively small equipment and capital conversion costs 
for these washers.
    At TSL 4, DOE estimated the impacts in INPV at TSL 4 to range from 
-$7.8 million to -$10.2 million, or a change in INPV of -12.73 percent 
to -16.57 percent. At this level, the industry cash flow decreases by 
approximately 206 percent, to -$4.1 million, compared to the base-case 
value of $3.8 million in the year leading up to the standards. As with 
TSL 3, the top-loading standard remains at max-tech at TSL 4, and the 
impacts previously stated for this equipment class remain. Currently, 
77 percent of front-loading washers shipped do not meet TSL 4, 
resulting in multiple manufacturers having to redesign existing front-
loading equipment to conform cost-effectively to the standard. The $8.4 
million in equipment and capital conversion costs estimated for this 
TSL to redesign and retool for the front-loading standard, while not 
appearing substantial on a nominal basis, are significant for 
manufacturers due to low volumes of front-loading washers. Adjusting 
for shipment volumes, investing $8.4 million in front-loading washers 
is equivalent to investing over $18.5

[[Page 57776]]

million in top-loading washers. These investment costs are also high 
compared to the industry value of $29 million for front-loading 
washers. Consequently, it could be difficult for manufacturers to 
justify the investments necessary to reach TSL 4 for front-loading 
washers.
    At TSL 5, DOE estimated the impacts in INPV to range from -$20.4 
million to -$23.0 million, or a change in INPV of -33.09 percent to -
37.30 percent. At this level, the industry cash flow decreases by 
approximately 371 percent, to -$10.3 million, compared to the base-case 
value of $3.8 million in the year leading up to the standards. The top-
loading standard remains at max-tech at TSL 5. DOE estimates for TSL 5 
that manufacturers would have to invest $24.4 million in front-loading 
washer in an industry valued at $29 million. It likely would be 
difficult for manufacturers to justify the investments necessary to 
reach max-tech for both top-loading and front-loading washers.
b. Impacts on Employment
    To quantitatively assess the impacts of energy conservation 
standards on CCW manufacturing employment, DOE used the GRIM to 
estimate the domestic labor expenditures and number of employees in the 
base case and at each TSL from 2009 through 2043 for the CCW industry. 
DOE used statistical data from the U.S. Census Bureau's 2006 Annual 
Survey of Manufactures \36\ (2006 ASM) and 2006 Current Industry Report 
\37\ (2006 CIR), the results of the engineering analysis, and 
interviews with manufacturers to estimate the inputs necessary to 
calculate industry-wide labor expenditures and domestic employment 
levels. Labor expenditures are a function of the labor intensity of the 
equipment, the sales volume, and an implicit assumption that wages 
remain fixed in real terms over time. DOE notes that the MIA's analysis 
detailing impacts on employment focuses specifically on the production 
workers manufacturing the covered products or equipment, rather than a 
manufacturer's broader operations. Thus, the estimated number of 
impacted employees in the MIA is separate and distinct from the total 
number of employees used to determine whether a manufacturer is a small 
business for purposes of analysis under the Regulatory Flexibility Act.
---------------------------------------------------------------------------

    \36\ The 2006 Annual Survey of Manufactures is available online 
at: http://www.census.gov/mcd/asmhome.html.
    \37\ The 2006 Current Industry Report is available online at: 
http://www.census.gov/cir/www/alpha.html.
---------------------------------------------------------------------------

    The estimates of production workers in this section only cover 
workers up to and including the line-supervisor level that are directly 
involved in fabricating and assembling equipment within the original 
equipment manufacturer (OEM) facility. In addition, workers that 
perform services that are closely associated with production operations 
are included. Employees above the working-supervisor level are excluded 
from the count of production workers. Thus, the labor associated with 
non-production functions (e.g., advertisement, sales) is explicitly not 
covered.\38\ In addition, DOE's estimates only account for production 
workers that manufacture the specific equipment covered by this 
rulemaking. For example, a worker on a clothes dryer production line 
would not be included in the estimate of the number of CCW production 
workers. Finally, this analysis also does not factor in the dependence 
by some manufacturers on production volume to make their operations 
viable. For example, should a major line of business cease to operate 
or move to a geographic region, a production facility may no longer 
have the manufacturing scale to obtain volume discounts on its 
purchases nor be able to justify maintaining major capital equipment. 
Thus, the impact on a manufacturing facility due to a line closure may 
affect more employees than just the production workers, but again this 
analysis focuses on the production workers directly impacted.
---------------------------------------------------------------------------

    \38\ The 2006 ASM provides the following definition: ``The 
`production workers' number includes workers (up through the line-
supervisor level) engaged in fabricating, processing, assembling, 
inspecting, receiving, storing, handling, packing, warehousing, 
shipping (but not delivering), maintenance, repair, janitorial and 
guard services, product development, auxiliary production for 
plant's own use (e.g., power plant), recordkeeping, and other 
services closely associated with these production operations at the 
establishment covered by the report. Employees above the working-
supervisor level are excluded from this item.''
---------------------------------------------------------------------------

    Using the GRIM, DOE calculates that there are 188 U.S. production 
workers in the CCW industry. Using the CIR data, DOE estimates that 
approximately 81 percent of CCWs sold in the United States are 
manufactured domestically. Today's supplemental notice estimates the 
impacts on U.S. production workers in the CCW industry impacted by 
energy conservation standards as shown in Table V.13.

  Table V.13--Change in Total Number of Domestic Production Employees in 2012 in the Commercial Clothes Washer
                                                    Industry
----------------------------------------------------------------------------------------------------------------
                                                           Baseline   TSL 1    TSL 2    TSL 3    TSL 4    TSL 5
----------------------------------------------------------------------------------------------------------------
Total Number of Domestic Production Workers in 2012.....        188      204      204      222      224      228
Change in Total Number of Domestic Production Workers in  .........       16       16       33       36       40
 2012...................................................
----------------------------------------------------------------------------------------------------------------

    DOE expects that there would be positive employment impacts among 
domestic CCW manufacturers for TSL 1 through TSL 5. Because production 
employment expenditures are assumed to be a fixed percentage of COGS 
and the MPCs increase with more efficient equipment, labor tracks the 
increased prices in the GRIM. The GRIM predicts a steady level of 
domestic employment after standards at a level based on the increase in 
relative price.
    DOE reached this conclusion independent of the employment impacts 
from the broader U.S. economy, which are documented in chapter 15 of 
the TSD accompanying this notice. The employment conclusions do not 
account for the possible relocation of domestic jobs to lower-labor-
cost countries because the potential relocation of U.S. jobs is 
uncertain and highly speculative. The GRIM shows the employment levels 
rising at higher TSLs. If all standards-compliant CCWs are produced in 
the United States, the employment levels would be expected to be 
reasonably accurate, as more efficient washers are more complex and 
require more labor.
    The actual impacts on domestic employment after standards depend on 
whether any U.S. manufacturer decided to shift more U.S. production to 
lower-cost countries. Due to the uncertainty in the business decisions 
of where to manufacture washers after standards, DOE presents a range 
of potential employment impacts if the potential for relocation is 
considered. Today's proposed standards could result in adding 33 
production workers (if all manufacturers continue to produce washers in 
their existing U.S. facilities) to losing 188 production workers (if 
all

[[Page 57777]]

U.S. manufacturers source or shift standards-compliant washers 
production abroad).
    Based on the CCW revenues reported in appendix 13A and using the 
employment assumptions in section III.H, DOE estimates there are 
approximately 150 production workers at the LVM manufacturing equipment 
directly covered by this rulemaking. DOE estimates that there are an 
additional 20 non-production employees attributable to CCWs at the 
facility. The domestic facility also manufactures residential top-
loading washers, standard dryers, front-loading residential washers, 
washer-extractors, and tumbler dryers. If the LVM decided to no longer 
produce any soft-mount washers or standard dryers at the facility 
because it could not sell dryers without selling washers, approximately 
292 production and 40 non-production jobs would be lost. Including all 
production workers involved in covered and non-covered equipment, the 
closure of the LVM domestic manufacturing plant would equate to a loss 
of approximately 600 factory employees.
    A further discussion of the LVM and the potential impacts of 
relocation on employment for the CCW industry at other TSLs are 
presented in chapter 13 of the TSD.
c. Impacts on Manufacturing Capacity
    According to the majority of CCW manufacturers, new energy 
conservation standards could potentially impact manufacturers' 
production capacity depending on the efficiency level required. 
Necessary redesigns of front-loading and top-loading CCWs will not 
change the fundamental assembly of the equipment or cause a drastic 
increase in the volume requirements of front-loading washers. Thus, DOE 
believes manufacturers will be able to maintain manufacturing capacity 
levels and continue to meet market demand under new energy conservation 
standards as long as manufacturers continue to offer top-loading and 
front-loading washers.
    However, a very high efficiency standard for top-loading clothes 
washers could potentially cause one or more manufacturer(s) to abandon 
further manufacture of top-loading clothes washers after the effective 
date (due to concerns about wash quality, for example). Instead of 
manufacturing top-loading clothes washers, manufacturers could elect to 
switch their entire production over to front-loading clothes washers. 
Since top-loading and front-loading clothes washers share few, if any 
parts, are built on completely separate assembly lines, and are built 
at very different production volumes, a manufacturer may not be able to 
make a platform switch from top-loading to front-loading washers 
without significant impacts on equipment development and capital 
expenses, along with capacity constraints. However, DOE believes that 
the energy conservation standard proposed in today's supplemental 
notice for top-loading CCWs mitigates much of that risk.
    Multiple manufacturers stated during interviews that front-loading 
CCWs represent a relatively small segment of their total production 
volumes. Depending on the manufacturer, front-loading production 
capacity may need to be substantially expanded to meet the demand that 
top-loading production lines currently meet. This expansion could 
possibly affect capacity until new production lines come on-line to 
service demand. In addition, manufacturers stated that the higher 
prices of front-loading washers could lead to a decrease in shipments. 
This could lead to a permanently lower production capacity as machines 
are repaired and the equipment lifetime of existing washers is 
extended. DOE research suggests that the proposed efficiency standards 
can be achieved by all manufacturers using existing platforms and 
technologies; hence, there appears little reason for the market to 
wholly transition to front-loading CCWs.
d. Impacts on Subgroups of Manufacturers
    Using average cost assumptions to develop an industry cash flow 
estimate is not adequate for assessing differential impacts among 
subgroups of manufacturers. Lower-volume manufacturers, niche players, 
or manufacturers exhibiting a cost structure that differs significantly 
from the industry average could be affected differently than their 
competitors. DOE used the results of the industry characterization to 
group manufacturers exhibiting similar characteristics.
    As outlined earlier, an LVM that concentrates on building laundry 
equipment will be affected disproportionately by any energy efficiency 
regulation regarding CCWs. This business is focused on the commercial 
laundry market segment and its total production volume is many times 
lower than its diversified competitors. Due to this combination of 
market concentration and size, it is at risk of material harm to its 
business, depending on the TSL chosen.
    The LVM indicated that it could not manufacture top-loading CCWs 
above an MEF of 1.42 (TSL 1). If DOE sets a standard above TSL 1, the 
LVM would be forced to design a new top-loading washer, offer only 
front-loading washers, or choose to exit the CCW market altogether. Due 
to its small size, the investment required for the LVM to design a more 
efficient top-loading washer would put the company at a competitive 
disadvantage. If the LVM no longer were to offer a top-loading washer 
and would have to expand its front-loading production lines, it would 
likely cease CCW production altogether, resulting in significant 
impacts to the industry. Currently, the LVM's top-loading washers 
account for 70 percent of its CCW shipments. Shifting all top-loading 
CCWs to front-loading washers at current production volumes would 
require substantial investments that the company may not be able to 
justify. In addition, the LVM historically derived over 85 percent of 
its total clothes washer revenue from CCWs, so its sales in the RCW 
market would be too low to justify continuing any top-loading clothes 
washer manufacturing. While the LVM currently manufactures a front-
loading clothes washer, it does so at a cost disadvantage compared to 
its competitors. The potential investment and risk required to develop 
a cost-competitive clothes washer that deviates significantly from its 
traditional top-loader agitator design could be too great for the LVM's 
current owners. The LVM could decide to exit the market rather than 
take this risk, which could cause employment impacts in the CCW 
industry. As stated in section III.G, DOE reevaluated the CCW energy 
conservation standards proposed in the October 2008 NOPR in response to 
comments received from interested parties. DOE believes that the energy 
conservation standards proposed in today' supplemental notice greatly 
lessens the potential disadvantages faced by the LVM. Further details 
of the separate analysis of the impacts on the LVM are found in chapter 
13 of the TSD accompanying this supplemental notice.
3. National Impact Analysis
a. Significance of Energy Savings
    To estimate the energy savings through 2043 that would be expected 
to result from amended energy conservation standards, DOE compared the 
energy consumption of equipment under the base case to energy 
consumption of this equipment under the TSLs. Table V.14 shows the 
forecasted national energy savings at each TSL for CCWs. Summing the 
energy savings for all equipment classes across each TSL considered in 
this rulemaking would result in significant energy and water savings, 
with the

[[Page 57778]]

amount of savings increasing with higher efficiency standards. Chapter 
11 of the TSD accompanying this supplemental notice provides additional 
details on the NES values reported below, as well as discounted NES 
results (and discounted national water savings results) based on 
discount rates of 3 and 7 percent. DOE reports both undiscounted and 
discounted values of energy savings. Discounted energy savings 
represent a policy perspective wherein energy savings farther in the 
future are less significant than energy savings closer to the 
present.\39\
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    \39\ Consistent with Executive Order 12866, ``Regulatory 
Planning and Review,'' 58 FR 51735 (Oct. 4, 1993), DOE follows the 
guidance of OMB regarding methodologies and procedures for 
regulatory impact analysis that affect more than one agency. In 
reporting energy and environmental benefits from energy conservation 
standards, DOE will report both discounted and undiscounted (i.e., 
zero discount-rate) values.

       Table V.14--Summary of Cumulative National Energy and Water Savings for Commercial Clothes Washers
----------------------------------------------------------------------------------------------------------------
                                           Top-loading              Front-loading                 Total
                                   -----------------------------------------------------------------------------
                                                   National                  National                  National
                TSL                   National      water       National      water       National      water
                                       energy      savings       energy      savings       energy      savings
                                      savings     (trillion     savings     (trillion     savings     (trillion
                                      (quads)      gallons)     (quads)      gallons)     (quads)      gallons)
----------------------------------------------------------------------------------------------------------------
1.................................         0.04         0.00         0.00         0.00         0.04         0.00
2.................................         0.04         0.00         0.00         0.01         0.04         0.01
3.................................         0.10         0.14         0.00         0.01         0.10         0.14
4.................................         0.10         0.14         0.01         0.03         0.11         0.16
5.................................         0.10         0.14         0.02         0.07         0.12         0.21
----------------------------------------------------------------------------------------------------------------

b. Net Present Value
    The NPV analysis is a measure of the cumulative benefit or cost of 
energy conservation standards to the Nation. In accordance with the 
OMB's guidelines on regulatory analysis (OMB Circular A-4, section E, 
Sept. 17, 2003), DOE calculated NPV using both a 7-percent and a 3-
percent real discount rate. The 7-percent rate is an estimate of the 
average before-tax rate of return on private capital in the U.S. 
economy, and reflects the returns on 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 rate to 
capture the potential effects of standards on private consumption 
(e.g., through higher prices for equipment and the 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 (i.e., yield on Treasury notes minus annual rate of change in the 
Consumer Price Index), which has averaged about 3 percent on a pre-tax 
basis for the last 30 years. Table V.15 shows the forecasted NPV at 
each TSL for CCWs.

                                   Table V.15--Summary of Cumulative Net Present Value for Commercial Clothes Washers
                                                       [Impacts for units sold from 2013 to 2043]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                            NPV (billion 2008$)
                                           -------------------------------------------------------------------------------------
                                                       Top-loading                      Front-loading                              7%  Discount      3%
                    TSL                    --------------------------------------------------------------------                        rate       Discount
                                              7%  Discount     3%  Discount     7%  Discount     3%  Discount        Total                          rate
                                                  rate             rate             rate             rate
------------------------------------------------------------------------------------------------------------------------------------------------ ----------
1.........................................             0.01             0.07             0.00             0.01             0.01             0.08
2.........................................             0.01             0.07             0.01             0.03             0.02             0.10
3.........................................             0.34             0.86             0.01             0.03             0.36             0.89
4.........................................             0.34             0.86             0.07             0.17             0.41             1.03
5.........................................             0.34             0.86             0.17             0.39             0.51             1.25
--------------------------------------------------------------------------------------------------------------------------------------------------------

    c. Impacts on Employment
    In addition to considering the direct employment impacts for the 
manufacturers of equipment covered by this rulemaking (discussed 
above), DOE develops estimates of the indirect employment impacts of 
proposed standards in the economy in general. As noted previously, DOE 
expects energy conservation standards for equipment subject of this 
rulemaking to reduce energy bills for consumers, with the resulting net 
savings being redirected to other forms of economic activity. DOE also 
realizes that these shifts in spending and economic activity could 
affect the demand for labor. To estimate these effects, DOE used an 
input/output model of the U.S. economy using BLS data (described in 
section III.H). (See the TSD accompanying this supplemental notice, 
chapter 15.)
    This input/output model suggests today's proposed standards are 
likely to slightly increase the net demand for labor in the economy. 
Neither the BLS data nor the input/output model DOE uses includes the 
quality or wage level of the jobs. As Table V.16 shows, DOE estimates 
that net indirect employment impacts from today's proposed standards 
are likely to be small. 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.

[[Page 57779]]



  Table V.16--Net National Change in Indirect Employment at Commercial
                      Clothes Washer Manufacturers
------------------------------------------------------------------------
                                                          Net national
                         TSL                           change in jobs in
                                                        2043 (thousands)
------------------------------------------------------------------------
1....................................................               0.07
2....................................................               0.08
3....................................................               0.46
4....................................................               0.52
5....................................................               0.62
------------------------------------------------------------------------

4. Impact on Utility or Performance of Equipment
    For the reasons stated above in section II.G.1.d, DOE believes that 
for purposes of 42 U.S.C. 6295(o)(2)(B)(i)(IV), none of the efficiency 
levels considered in this notice reduces the utility or performance of 
equipment under consideration in this rulemaking.
5. Impact of Any Lessening of Competition
    In weighing the promulgation of any proposed standards, DOE is 
required to consider any lessening of competition that is likely to 
result from the adoption of those standards. The determination of the 
likely competitive impacts stemming from a proposed standard is made by 
the Attorney General, who transmits this determination, along with an 
analysis of the nature and extent of the impact, to the Secretary of 
Energy. (See 42 U.S.C. 6295(o)(2)(B)(i)(VI) and (B)(ii).)
    DOE carefully considered the determination received from DOJ in 
response to the October 2008 NOPR, and accordingly chose efficiency 
levels for this SNOPR that appear achievable by all CCW manufacturers 
using existing equipment platforms and technologies. As such, there 
should be minimal impact on the CCW market and hence its manufacturers. 
To assist the Attorney General in making a determination for this 
SNOPR, DOE has provided DOJ with copies of this notice and the TSD for 
review. DOE will consider DOJ's comments on today's SNOPR in preparing 
the final rule.
    DOE notes that if, based on the public comments received and its 
further consideration of this issue, it were to establish a single 
equipment class in setting standards for CCWs, DOE intends to give 
considerable weight to the potential adverse effects of a single 
equipment class efficiency standard on competition in the CCW market. 
That is, DOE does not intend to set a standard that produced 
significant adverse impacts on competition in this market.
6. Need of the Nation To Conserve Energy
    Improving the energy efficiency of CCWs, where economically 
justified, would likely improve the security of the Nation's energy 
system by reducing overall demand for energy. Reduced electricity 
demand may also improve the reliability of the electricity system. As a 
measure of this reduced demand, DOE expects the energy savings from the 
adopted standards to eliminate the need for approximately 0.010 
gigawatts (GW) of generating capacity by 2043.
    Enhanced energy savings from higher standards for CCWs also 
produces environmental benefits in the form of reduced emissions of air 
pollutants and greenhouse gases associated with energy production, and 
with building use of fossil fuels at sites where CCWs are used. Table 
V.17 provides DOE's estimate of cumulative CO2, 
NOX, and Hg emissions reductions that would result from the 
TSLs considered in this rulemaking. The expected energy savings from 
new standards for CCWs may also reduce the cost of maintaining 
nationwide emissions standards and constraints. In the environmental 
assessment (chapter 16 of the TSD accompanying this supplemental 
notice), DOE reports estimated annual changes in CO2, 
NOX, and Hg emissions attributable to each TSL.

                   Table V.17--Summary of Emissions Reductions for Commercial Clothes Washers
                                [Cumulative for Equipment Sold from 2013 to 2043]
----------------------------------------------------------------------------------------------------------------
                                                                               TSL
                   Emissions                    ----------------------------------------------------------------
                                                      1            2            3            4            5
----------------------------------------------------------------------------------------------------------------
CO2 (Mt).......................................         2.36         2.39         5.07         5.66         6.11
NOX (kt).......................................         1.43         1.45         3.04         3.39         3.66
Hg (t).........................................       0-0.01       0-0.01       0-0.03       0-0.03       0-0.03
----------------------------------------------------------------------------------------------------------------
Mt = million metric tons.
kt = thousand metric tons.
t = metric tons.

    As discussed in section III.J of this supplemental notice, DOE does 
not report SO2 emissions reductions from power plants 
because reductions from an energy conservation standard would not 
affect the overall level of SO2 emissions in the United 
States due to the emissions caps for SO2.
    NOX emissions from 28 eastern States and D.C. are 
limited under CAIR, Although CAIR has been remanded to EPA by the D.C. 
Circuit, it will remain in effect until it is replaced by a rule 
consistent with the Court's December 23, 2008, opinion in North 
Carolina v. EPA. North Carolina v. EPA, 550 F.3d 1176 (D.C. Cir. 2008). 
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 D.C. 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 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 that are not 
affected by CAIR. As a result, the NEMS-BT does forecast NOX 
emissions reductions from energy sources in those 22 States from the 
CCW standards considered in today's SNOPR.

[[Page 57780]]

    In the October 2008 NOPR, however, DOE provided a different 
estimate of NOX reductions because DOE assumed that the CAIR 
rule had been vacated. This is because the CAIR rule was vacated by the 
D.C. Circuit in its July 11, 2008 decision in North Carolina v. 
Environmental Protection Agency. 531 F.3d 896 (D.C. Cir. 2008). As 
noted above, the D.C. Circuit, in a December 23, 2008, opinion, decided 
to allow the CAIR rule to remain in effect until it is replaced by a 
rule consistent with the court's earlier opinion, but this decision 
came well after the publish date of the October 2008 NOPR..Thus, for 
the October 2008 NOPR, DOE established a range of NOX 
reductions based on low and high emission rates (in kt of 
NOX emitted per TWh of electricity generated) derived from 
the AEO 2008. DOE anticipated that, in the absence of the CAIR's 
trading program, the new or amended conservation standards would reduce 
NOX emissions nationwide, not just in 22 States.
    As noted in section III.J, 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 as an integral part of 
today's rulemaking does not estimate Hg emissions 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. As with SO2 and 
NOX, DOE assumed that under such a system, energy 
conservation standards would have resulted in no physical effect on 
these 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 D.C. Circuit issued its decision in New 
Jersey v. Environmental Protection Agency to vacate CAMR. 517 F.3d 574 
(D.C. Cir. 2008). In light of this development and because the NEMS-BT 
model could not be used to directly calculate Hg emissions reductions, 
DOE used the Hg emission rates discussed below to calculate emissions 
reductions in the October 2008 NOPR. This same methodology is used for 
today's SNOPR as well due to the continued fluid environment ``* * * 
with many States planning to enact new laws or make existing laws more 
stringent.'' EIA AEO 2009 (March 2009), p. 18. The NEMS-BT has only 
rough estimates of Hg 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 rates to estimate the Hg emissions that could be reduced 
through standards. DOE's low estimate assumed that future standards 
would displace electrical generation only from natural gas-fired power 
plants, thereby resulting in an effective emission rate of zero. (Under 
this scenario, coal-fired power plant generation would remain 
unaffected.) The low-end emission rate is zero because natural gas-
fired power plants have virtually zero Hg emissions associated with 
their operation.
    DOE's high estimate, which assumed that standards would displace 
only coal-fired power plants, was based on a nationwide Hg emission 
rate from AEO 2008 for the October 2008 NOPR. (Under this scenario, 
gas-fired power plant generation would remain unaffected and that no 
future reductions in the rate of Hg emissions from such sources would 
occur.) Because power plant emission rates are a function of local 
regulation, scrubbers, and the Hg content of coal, it is extremely 
difficult to identify a precise high-end emission rate. Therefore, the 
most reasonable estimate is based on the assumption that all displaced 
coal generation would have been emitting at the average emission rate 
for coal generation as specified by the April update to AEO 2009. 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 0.03 to 0.27 percent of the national base-case emissions forecast 
by NEMS-BT, depending on the TSL.
    In the October 2008 NOPR, DOE proposed accounting for the monetary 
value of CO2 emission reductions associated with standards. 
DOE proposed to use the range $0 to $20 per ton for reductions in the 
year 2007 in 2007$. 73 FR 62034, 62110 (Oct. 17, 2008). These estimates 
were intended 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 SNOPR, DOE is relying on a new set of values recently 
developed by an interagency process that conducted a 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 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 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/t CO2 and a

[[Page 57781]]

global SCC value of $33/t CO2 (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 considerations.
    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).
    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 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

[[Page 57782]]

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 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 V18. These estimates are reported 
separately

[[Page 57783]]

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 t CO2 at a 3-
percent discount rate and $5 per t CO2 with a 5-percent 
discount rate.

 Table V.18--Global Social Cost of Carbon (SCC) Estimates ($/t CO2 in 2007 (2006$)), Based on 3% and 5% Discount
                                                     Rates*
----------------------------------------------------------------------------------------------------------------
                                          Model                Study           Climate scenario     3%      5%
----------------------------------------------------------------------------------------------------------------
1................................  FUND...............  Anthoff et al. 2009  FUND default.......       6      -1
2................................  FUND...............  Anthoff et al. 2009  SRES A1b...........       1      -1
3................................  FUND...............  Anthoff et al. 2009  SRES A2............       9      -1
4................................  FUND...............  Link and Tol 2004..  No THC.............      12       3
5................................  FUND...............  Link and Tol 2004..  THC continues......      12       2
6................................  FUND...............  Guo et al. 2006....  Constant PRTP......       5      -1
7................................  FUND...............  Guo et al. 2006....  Gollier discount 1.      14       0
8................................  FUND...............  Guo et al. 2006....  Gollier discount 2.       7      -1
                                                                             FUND Mean..........    8.25       0
9................................  PAGE...............  Wahba & Hope 2006..  A2-scen............      57       7
10...............................  PAGE...............  Hope 2006..........  ...................  ......       7
11...............................  DICE...............  Nordhaus 2008......  ...................  ......       8
----------------------------------------------------------------------------------------------------------------
                                  Summary                                    Model-weighted Mean      33       5
----------------------------------------------------------------------------------------------------------------
* 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.

    DOE has conducted analyses at $33 and $5 per ton 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 V.19 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 V.19--Global Social Cost of Carbon Estimates ($/t CO2 in 2007 in 2006$),* Using Newell & Pizer Adjustment for Future Discount Rate Uncertainty**
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                         Random-walk     Mean-reverting
                                                                                                                            model             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
                                                                                            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
--------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 57784]]

 
                                          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, DOE 
also conducted analyses with the value of the SCC set at $10 and $55.
    In summary, DOE considered in its decision process for this notice 
of proposed rulemaking 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 $1.14 per metric ton. All of these unit values 
represent emissions that are valued in 2007$. The final net present 
values for cumulative emissions reductions are reported in 2008$ so 
that they can be compared with other rulemaking analyses in the same 
dollar units.
    Table V. and Table V.21 present the resulting estimates of the 
potential range of NPV benefits associated with reducing CO2 
emissions.

       Table V.20--Estimates of Value of CO2 Emissions Reductions Under Commercial Clothes Washer Trial Standard Levels at 7-Percent Discount Rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                          Value of CO2 emission reductions (million 2008$)
                                                               Estimated   -----------------------------------------------------------------------------
                                                            cumulative CO2    Domestic                                Global
                            TSL                                emission    -----------------------------------------------------------------------------
                                                              reductions     $1.14/ton
                                                                 (Mt)           CO2       $5/ton CO2  $10/ton CO2  $19/ton CO2  $33/ton CO2  $55/ton CO2
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.........................................................            2.36            1            6           12           22           39           65
2.........................................................            2.39            1            6           12           23           40           66
3.........................................................            5.07            3           13           25           48           84          140
4.........................................................            5.66            3           14           28           54           93          156
5.........................................................            6.11            3           15           31           58          101          168
--------------------------------------------------------------------------------------------------------------------------------------------------------


       Table V.21--Estimates of Value of CO2 Emissions Reductions under Commercial Clothes Washer Trial Standard Levels at 3-Percent Discount Rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                          Value of CO2 emission reductions (million 2008$)
                                                               Estimated   -----------------------------------------------------------------------------
                                                            cumulative CO2    Domestic                                Global
                            TSL                                emission    -----------------------------------------------------------------------------
                                                              reductions     $1.14/ton
                                                                 (Mt)           CO2       $5/ton CO2  $10/ton CO2  $19/ton CO2  $33/ton CO2  $55/ton CO2
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.........................................................            2.36            3           13           26           49           84          141
2.........................................................            2.39            3           13           26           49           86          143
3.........................................................            5.07            6           28           55          105          182          303
4.........................................................            5.66            7           31           61          117          202          337
5.........................................................            6.11            8           33           66          126          219          364
--------------------------------------------------------------------------------------------------------------------------------------------------------

    DOE is well aware that scientific and economic knowledge about the 
contribution of CO2 and other GHG emissions to changes in 
the future global climate and the potential resulting damages to the 
world economy continues to evolve rapidly. Thus, any value placed in 
this rulemaking on reducing CO2 emissions is subject to 
likely change.
    DOE, together with other Federal agencies, is reviewing various 
methodologies for estimating the monetary value of reductions in 
CO2 and other GHG emissions. This review will consider the 
comments on this subject that are part of the public record for this 
and other rulemakings, as well as other methodological assumptions and 
issues, such as whether the appropriate values should represent 
domestic U.S. benefits, as well as global benefits (and costs). Given 
the complexity of the many issues involved, this review is ongoing. 
However, consistent with DOE's legal obligations,

[[Page 57785]]

and taking into account the uncertainty involved with this particular 
issue, DOE has included in today's SNOPR the most recent values and 
analyses employed in a rulemaking by another Federal agency.
    DOE also investigated the potential monetary benefit of reduced 
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 CAIR. In the 
presence of these caps, DOE concluded that negligible physical 
reductions in power sector emissions would occur, but that the 
standards could put downward pressure on the prices of emissions 
allowances in cap and trade markets. Estimating this effect is very 
difficult because of factors such as credit banking, which can change 
the trajectory of prices. DOE has concluded that the effect from energy 
conservation standards on SO2 allowance prices is likely to 
be negligible, based on runs of the NEMS-BT model. See chapter 16 of 
the SNOPR TSD for further details.
    As noted above, standards would not produce an economic impact in 
the form of lower prices for NOX emissions allowance credits 
in the 28 eastern States and D.C. covered by the CAIR cap. However, new 
or amended energy conservation standards would reduce NOX 
emissions in those 22 States that are not affected by CAIR. DOE 
estimated the monetized value of NOX emissions reductions 
resulting from each of the TSLs considered for today's SNOPR 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 per ton 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 SNOPR based on 
environmental damage estimates from the literature. DOE determined that 
the impact of Hg emissions from power plants on humans is considered 
highly uncertain. However, DOE identified two estimates of the 
environmental damage of Hg based on two estimates of the adverse impact 
of childhood exposure to methyl mercury on IQ for American children, 
and subsequent loss of lifetime economic productivity resulting from 
these IQ losses. The high-end estimate is based on an estimate of the 
current aggregate cost of the loss of IQ in American children that 
results from exposure to Hg of U.S. power plant origin ($1.3 billion 
per year in year 2000$), which works out to $32.6 million per ton 
emitted per year (2007$).\40\ The low-end estimate is $0.66 million per 
ton emitted (in 2004$) or $0.73 million per ton in 2007$. DOE derived 
this estimate from an evaluation of mercury control that used different 
methods and assumptions from the first study but was also based on the 
present value of the lifetime earnings of children exposed.\41\
---------------------------------------------------------------------------

    \40\ Trasande, L., et al., ``Applying Cost Analyses to Drive 
Policy that Protects Children,'' 1076 Ann. N.Y. Acad. Sci. 911 
(2006).
    \41\ Ted Gayer and Robert Hahn, ``Designing Environmental 
Policy: Lessons from the Regulation of Mercury Emissions,'' 
Regulatory Analysis 05-01, AEI-Brookings Joint Center for Regulatory 
Studies, Washington, DC (2004). A version of this paper was 
published in the Journal of Regulatory Economics in 2006. The 
estimate was derived by back-calculating the annual benefits per ton 
from the net present value of benefits reported in the study.
---------------------------------------------------------------------------

    Table V.22 and Table V.23 present the resulting estimates of the 
potential range of present value benefits associated with reduced 
national NOX and Hg emissions from the TSLs DOE considered. 
The final net present values for cumulative emissions reductions are 
reported in 2008$ so that they can be compared with other rulemaking 
analyses in the same dollar units.

                   Table V.22--Estimates of Value of Reductions of Hg and NOX Under Trial Standard Levels at a 7-Percent Discount Rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                            Estimated
                                          cumulative NOX       Value of estimated NOX          Estimated cumulative Hg         Value of estimated Hg
     Commercial clothes washer TSL           emission       emission  reductions (million      emission reductions (t)      emission reductions (million
                                         reductions (kt)               2008$)                                                          2008$)
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.....................................               1.43  0.19 to 1.96..................  0 to 0.013....................  0 to 0.12.
2.....................................               1.45  0.19 to 1.99..................  0 to 0.013....................  0 to 0.12.
3.....................................               3.04  0.41 to 4.17..................  0 to 0.029....................  0 to 0.27.
4.....................................               3.39  0.45 to 4.64..................  0 to 0.032....................  0 to 0.30.
5.....................................               3.66  0.49 to 5.01..................  0 to 0.035....................  0 to 0.33.
--------------------------------------------------------------------------------------------------------------------------------------------------------


                   Table V.23--Estimates of Value of Reductions of Hg and NOX Under Trial Standard Levels at a 3-Percent Discount Rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                            Estimated
                                          cumulative NOX       Value of estimated NOX          Estimated cumulative Hg         Value of estimated Hg
     Commercial clothes washer TSL           emission       emission  reductions (million      emission reductions (t)      emission reductions (million
                                         reductions (kt)               2008$)                                                          2008$)
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.....................................               1.43  0.38 to 3.92..................  0 to 0.013....................  0 to 0.25.
2.....................................               1.45  0.39 to 3.98..................  0 to 0.013....................  0 to 0.26.
3.....................................               3.04  0.81 to 8.36..................  0 to 0.029....................  0 to 0.56.
4.....................................               3.39  0.91 to 9.31..................  0 to 0.032....................  0 to 0.63.
5.....................................               3.66  0.98 to 10.04.................  0 to 0.035....................  0 to 0.68.
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 57786]]


  Table V.24--Estimates of Adding NPV of Customer Savings to NPV of Low- and High-End Global Monetized Benefits
            from CO2 NOX, and Hg Emissions Reductions for All TSLs at 3- and 7-Percent Discount Rates
----------------------------------------------------------------------------------------------------------------
                                                    CO2 value of $5/metric ton      CO2 value of $55/metric ton
                                                    CO2* billion 2008$ and  low    CO2* billion 2008$ and  high
                                                      values for NOX and Hg**        values for NOX and Hg***
                       TSL                       ---------------------------------------------------------------
                                                     7-percent       3-percent       7-percent       3-percent
                                                   discount rate   discount rate   discount rate   discount rate
----------------------------------------------------------------------------------------------------------------
1...............................................            0.03            0.17            0.09            0.30
2...............................................            0.05            0.21            0.11            0.34
3...............................................            0.73            1.81            0.86            2.09
4...............................................            0.83            2.09            0.98            2.41
5...............................................            1.04            2.53            1.20            2.87
----------------------------------------------------------------------------------------------------------------
* These values per ton represent the global negative externalities of CO2. The unit values are in 2007$ while
  cumulative NPV is in 2008$.
** Low Value corresponds to a value of $432 per ton of NOX emissions in 2007$ and no effect on Hg emissions. The
  unit values are in 2007$ while cumulative NPV is in 2008$.
*** High Value corresponds to a value of $4,441 per ton of NOX emissions in 2007$ and $32.6 million per ton of
  Hg emissions in 2007$. The unit values are in 2007$ while cumulative NPV is in 2008$.


 Table V.25--Estimates of Adding NPV of Customer Savings to NPV of Low- and High-End Monetized Benefits from CO2
                      Emissions Reductions for All TSLs at 3- and 7-Percent Discount Rates
----------------------------------------------------------------------------------------------------------------
                                                    CO2 value of $5/metric ton      CO2 value of $55/metric ton
                                                        CO2* billion 2008$              CO2* billion 2008$
                       TSL                       ---------------------------------------------------------------
                                                     7-percent       3-percent       7-percent       3-percent
                                                   discount rate   discount rate   discount rate   discount rate
----------------------------------------------------------------------------------------------------------------
1...............................................            0.02            0.09            0.08            0.22
2...............................................            0.03            0.11            0.09            0.24
3...............................................            0.37            0.92            0.50            1.19
4...............................................            0.42            1.06            0.57            1.37
5...............................................            0.53            1.28            0.68            1.61
----------------------------------------------------------------------------------------------------------------
* These values per ton represent the global negative externalities of CO2. The unit values are in 2007$ while
  cumulative NPV is in 2008$.

    The NPV of the monetized benefits associated with emissions 
reductions can be viewed as a complement to the NPV of the consumer 
savings calculated for each TSL considered in this rulemaking. Table 
V.24 presents the NPV values for CCWs that would result if DOE were to 
apply the low- and high-end estimates of the potential benefits 
resulting from reduced CO2, NOX and Hg emissions 
to the NPV of consumer savings calculated for each TSL considered in 
this rulemaking, at both a 7- and 3-percent discount rate. Table V.24 
presents the NPV values for CCWs that would result if DOE were to apply 
the low- and high-end estimates of the potential global benefits 
resulting from reduced CO2 emissions only to the NPV of 
consumer savings calculated for each TSL considered in this rulemaking, 
at both a 7- and 3-percent discount rate. For CO2, only the 
range of global benefit values are used, $5 and $55 in 2007$, although 
the actual benefit estimates are provided in 2008$.
    Although comparing the value of consumer savings to the values of 
emission reductions provides a valuable perspective, please note the 
following: (1) The national consumer savings are domestic U.S. consumer 
monetary savings found in market transactions while the values of 
emission reductions are based on ranges of estimates of imputed 
marginal social costs, which, in the case of CO2, are meant 
to reflect global benefits; and (2) the assessments of consumer savings 
and emission-related benefits are performed with different computer 
models, leading to different time frames for the analyses. The present 
value of national consumer savings is measured for the period 2015-2065 
(31 years from 2015 to 2045 inclusive, plus the longest lifetime of the 
equipment shipped in the 31st year). However, the timeframes of the 
benefits associated with the emission reductions differ. For example, 
the value of CO2 emission reductions is meant to reflect the 
present value of all future climate related impacts, even those beyond 
2065.
    DOE seeks comment on the above presentation of NPV values and on 
the consideration of GHG emissions in future energy efficiency 
standards rulemakings, including alternative methodological approaches 
to including GHG emissions in its analysis. More specifically, DOE 
seeks comment on both how it integrates monetized GHG emissions or 
Social Cost of Carbon values, as well as other monetized benefits or 
costs, into its analysis and models, and also on suggested alternatives 
to the current approach.
    Table V.26 presents the estimated wastewater discharge reductions 
due to the TSLs for CCWs. In chapter 16 of the TSD accompanying this 
notice, DOE reports annual changes in wastewater discharge attributable 
to each TSL.

[[Page 57787]]



                             Table V.26--Summary of Wastewater Discharge Reductions
                          [Cumulative Reductions for Equipment Sold from 2013 to 2043]
----------------------------------------------------------------------------------------------------------------
                                                                               TSL
                                                ----------------------------------------------------------------
                                                      1            2            3            4            5
----------------------------------------------------------------------------------------------------------------
Wastewater Discharge Reduction (trillion                0.00         0.01         0.14         0.16         0.21
 gallons)......................................
----------------------------------------------------------------------------------------------------------------

C. Proposed Standards

1. Overview
    Under 42 U.S.C. 6295(o)(2)(A) and 6316(a), EPCA requires that any 
new or amended energy conservation standard for any type (or class) of 
covered product or equipment be designed to achieve the maximum 
improvement in energy efficiency that the Secretary determines is 
technologically feasible and economically justified. In determining 
whether a standard is economically justified, the Secretary must 
determine whether the benefits of the standard exceed its burdens to 
the greatest extent practicable, in light of the following seven 
factors:
    (1) The economic impact of the standard on manufacturers and 
consumers of the products or equipment subject to the standard;
    (2) The savings in operating costs throughout the estimated average 
life of the covered products or equipment in the type (or class) 
compared to any increase in the price, initial charges, or maintenance 
expenses for the covered products or equipment that are likely to 
result from the imposition of the standard;
    (3) The total projected amount of energy (or, as applicable, water) 
savings likely to result directly from the imposition of the standard;
    (4) Any lessening of the utility or the performance of the covered 
products or equipment likely to result from the imposition of the 
standard;
    (5) The impact of any lessening of competition, as determined in 
writing by the Attorney General, that is likely to result from the 
imposition of the standard;
    (6) The need for national energy and water conservation; and
    (7) Other factors the Secretary considers relevant.

(42 U.S.C. 6295(o)(2)(B)(i) and 6316(a))

    The new or amended standard also must ``result in significant 
conservation of energy.''

(42 U.S.C. 6295(o)(3)(B) and 6316(a))

    In selecting the proposed energy conservation standards for CCWs 
for consideration in today's SNOPR, DOE started by examining the 
maximum technologically feasible levels, and determined whether those 
levels were economically justified. If DOE determined that the maximum 
technologically feasible level was not justified, DOE then analyzed the 
next lower TSL to determine whether that level was economically 
justified. DOE repeated this procedure until it identified an 
economically justified TSL.
    To aid the reader in understanding the benefits and/or burdens of 
each TSL, the following tables summarize the quantitative analytical 
results for each TSL, based on the assumptions and methodology 
discussed above. These tables present the results--or, in some cases, a 
range of results--for each TSL. The range of values reported in these 
tables for industry impacts represents the results for the different 
markup scenarios that DOE used to estimate manufacturer impacts.
    In addition to the quantitative results, DOE also considers other 
burdens and benefits that affect economic justification.
    In sum, today's proposed standard levels for the equipment that is 
the subject of this rulemaking reflect DOE's careful balancing of the 
relevant statutory factors under EPCA. After considering public 
comments on this SNOPR, DOE will publish a final rule that either 
adopts the proposed TSL, one of the higher or lower TSLs, or some value 
in between.
2. Conclusion
    Table V.27 presents a summary of the quantitative results for each 
CCW TSL.
BILLING CODE 6450-01-P

[[Page 57788]]

[GRAPHIC] [TIFF OMITTED] TP09NO09.004


[[Page 57789]]


[GRAPHIC] [TIFF OMITTED] TP09NO09.005

BILLING CODE 6450-01-C
    First, DOE considered TSL 5, the max-tech level. TSL 5 would likely 
save 0.12 quads of energy and 0.21 trillion gallons of water through 
2043, an amount DOE

[[Page 57790]]

considers significant. For the Nation as a whole, DOE projects that TSL 
5 would result in a net increase of $0.51 billion in NPV, using a 
discount rate of 7 percent. The emissions reductions at TSL 5 are 6.11 
Mt of CO2, 3.66 kt of NOX, and 0 t to 0.03 t of 
Hg. At TSL 5, the estimated benefit of reducing CO2 
emissions based on global estimates of the value of CO2 
ranges from $15 million to $168 million at a 7-percent discount rate 
and $33 million to $364 million at a 3-percent discount rate. Total 
generating capacity in 2043 is estimated to decrease compared to the 
reference case by 0.012 GW under TSL 5.
    At TSL 5, DOE projects that the average top-loading CCW consumer 
would experience a decrease in LCC of $179 in multi-family applications 
and $190 in laundromats. DOE also estimates an LCC decrease for an 
overwhelming majority of consumers in the Nation that purchase top-
loading CCWs--85 percent of consumers in multi-family applications and 
96 percent of consumers in laundromats. The median payback period of 
the average consumer at TSL 5 in multi-family applications and in 
laundromats is projected to be 4.6 years and 2.8 years, respectively.
    At TSL 5, DOE projects that the average front-loading CCW consumer 
would experience a decrease in LCC of $203 in multi-family applications 
and $216 in laundromats. DOE also estimates an LCC decrease for an 
overwhelming majority of consumers that purchase front-loading CCWs--99 
percent of consumers in multi-family applications and 100 percent of 
consumers in laundromats. The median payback period of the average 
consumer at TSL 5 in multi-family applications and in laundromats is 
projected to be 2.9 years and 1.6 years, respectively.
    At TSL 5, DOE estimated the projected change in INPV ranges from a 
total decrease of $20.4 million for both equipment classes to a total 
decrease of $23.0 million. At TSL 5, DOE recognizes the risk of very 
large negative impacts if manufacturers' expectations about reduced 
shipments are realized. TSL 5 could result in a net loss as high as 
37.3 percent in INPV to CCW manufacturers. Also, DOE is especially 
sensitive to the potentially severe impacts to the LVM of CCWs. Because 
the LVM's clothes washer revenue is so dependent on CCW sales, DOE is 
concerned that TSL 5 will cause material harm to the LVM.
    Although DOE recognizes the increased economic benefits that could 
result from TSL 5, DOE has tentatively concluded that the benefits of a 
Federal standard at TSL 5 would be outweighed by the potential for 
disincentivizing consumers from purchasing more efficient front-loading 
CCWs. At TSL 5, front-loading CCWs are highly efficient but have a 
purchase price estimated to be $497 more expensive than top-loading 
CCWs. With such a large price differential between the two types of 
CCWs, and with less than 2 percent of the front-loading market at TSL 
5, DOE is concerned that significant numbers of potential consumers of 
front-loading CCWs would choose to purchase a less efficient top-
loading unit.
    As described in section III.E.2.c, DOE did analyze the impacts of 
increased purchase prices for each equipment class but independently of 
the other. Because the price impacts for more efficient top-loaders are 
higher than those for more efficient front-loaders, DOE estimated that 
top-loading CCW sales would decrease slightly more rapidly than for 
front-loaders. But DOE was not able to estimate the cross price 
elasticity of demand between the two equipment classes to determine 
whether consumers of front-loading CCWs would switch to less expensive 
top-loaders.
    If potential front-loading CCW consumers did decide to switch to 
less expensive top-loading washers, the NES and NPV realized from TSL 5 
would be diminished. DOE notes that in developing the energy savings 
and water savings estimates for TSL 5, the agency effectively held 
constant the ratio of front-loading to top-loading CCW shipments across 
the various TSLs. Particularly at TSL 3 to TSL 5, the differences in 
these estimates are small, especially at a 7-percent discount rate. DOE 
requests comment as to whether it should account for the cross price 
elasticity of demand between the two equipment classes when calculating 
the anticipated energy and water savings at the different TSLs. DOE 
also seeks relevant data or other information on this topic. DOE 
believes that the values currently in Table V.27 represent the high end 
of the potential energy and water savings for these TSLs. Taking into 
account price elasticity of demand could affect the anticipated energy 
and water savings of the various TSLs, and it could potentially result 
in a change in the TSL with the highest projected energy/water savings 
level.
    In addition, TSL 5 would adversely impact manufacturers' INPV to a 
significant extent. Not only does the industry face a potential, 
significant loss in industry INPV, but manufacturers would also need to 
make significant capital investments for both types of CCWs in order to 
produce both top-loading and front-loading washers at the maximum 
technologically feasible levels. After carefully considering the 
analysis and weighing the benefits and burdens of TSL 5, the Secretary 
has reached the following initial conclusion: At TSL 5, the benefits of 
energy savings, economic benefit, and emissions reductions would be 
outweighed by the potential for giving consumers less incentive to 
purchase high efficiency front-loading CCWs and the large capital 
conversion costs that could result in a substantial reduction in INPV 
for manufacturers.
    Next, DOE considered TSL 4. TSL 4 would likely save 0.11 quads of 
energy and 0.16 trillion gallons of water through 2043, an amount DOE 
considers significant. For the Nation as a whole, DOE projects that TSL 
4 would result in a net increase of $0.41 billion in NPV, using a 
discount rate of 7 percent. The emissions reductions at TSL 4 are 5.66 
Mt of CO2, 3.39 kt of NOX, and 0 t to 0.03 t of 
Hg. At TSL 4, the estimated benefits of reducing CO2 
emissions based on global estimates of the value of CO2 
ranges from $14 million to $156 million at a 7-percent discount rate 
and $31 million to $337 million at a 3-percent discount rate. Total 
generating capacity in 2043 is estimated to decrease compared to the 
reference case by 0.011 GW under TSL 4.
    At TSL 4, top-loading CCWs have the same efficiency as at TSL 5. 
Therefore, top-loading CCW consumers will experience the same LCC 
impacts and payback periods as TSL 5. At TSL 4 for front-loading CCWs, 
DOE projects that the average front-loading CCW consumer would 
experience a decrease in LCC of $91 in multi-family applications and 
$93 in laundromats. DOE also estimates an LCC decrease for an 
overwhelming majority of consumers that purchase front-loading CCWs--76 
percent of consumers in multi-family applications and 77 percent of 
consumers in laundromats. The median payback period of the average 
consumer at TSL 4 in multi-family applications and in laundromats is 
projected to be 3.0 years and 1.8 years, respectively.
    DOE estimated the projected change in INPV ranges from a decrease 
of $7.8 million to a decrease of $10.2 million. At TSL 4, DOE 
recognizes the risk of very large negative impacts if manufacturers' 
expectations about reduced shipments are realized. TSL 4 could result 
in a net loss as high as 16.6 percent in INPV to CCW manufacturers. 
Also, DOE is especially sensitive to the potentially severe impacts to 
the LVM. Since the LVM's clothes washer revenue is so dependent on CCW 
sales, DOE is concerned that TSL 4 will materially harm the LVM.

[[Page 57791]]

    Although DOE recognizes the increased economic benefits that could 
result from TSL 4, DOE has the same concerns regarding TSL 4 as for TSL 
5. Namely, DOE has concerns as to the potential of TSL 4 to give 
consumers less incentive to purchase more efficient front-loading 
washers. At TSL 4, front-loading CCWs are highly efficient but have a 
purchase price estimated to be $454 more expensive than top-loading 
washers. With such a price differential between the two types of CCWs, 
and with less than 4 percent of the front-loading market currently 
meeting TSL 4, DOE is concerned that a significant number of potential 
consumers of front-loading CCWs would be more likely choose to purchase 
a top-loading CCW, which is less efficient. If potential front-loading 
CCW consumers did decide to switch to top-loading models, the NES and 
NPV realized from TSL 4 would be diminished. In addition, TSL 4 would 
adversely impact manufacturers' INPV to a significant extent. Not only 
does the industry face a potential loss in industry INPV, but 
manufacturers would also need to make significant capital investments 
for both types of CCWs in order to produce both top-loading washers at 
the maximum technologically feasible level and front-loading washers at 
a level which only 3 percent of the market currently meets. After 
carefully considering the analysis and weighing the benefits and 
burdens of TSL 4, the Secretary has reached the following initial 
conclusion: At TSL 4, the benefits of energy savings, economic benefit, 
and emissions reductions would be outweighed by the potential for 
giving consumers less incentive to purchase high efficiency front-
loading CCWs and the large capital conversion costs that could result 
in a substantial reduction in INPV for manufacturers.
    Next, DOE considered TSL 3. TSL 3 would likely save 0.10 quads of 
energy and 0.14 trillion gallons of water through 2043, an amount DOE 
considers significant. For the Nation as a whole, DOE projects that TSL 
3 would result in a net increase of $0.36 billion in NPV, using a 
discount rate of 7 percent. The emissions reductions at TSL 3 are 5.07 
Mt of CO2, 3.04 kt of NOX, and 0 t to 0.03 t of 
Hg. The estimated benefits of reducing CO2 emissions based 
on global estimates of the value of CO2 ranges from $13 
million to $140 million at a 7-percent discount rate and $28 million to 
$303 million at a 3-percent discount rate. Total generating capacity in 
2043 is estimated to decrease compared to the reference case by 0.010 
GW under TSL 3.
    At TSL 3, top-loading CCWs have the same efficiency as at TSL 5. 
Therefore, top-loading CCW consumers would experience the same LCC 
impacts and payback periods as TSL 5. At TSL 3 for front-loading CCWs, 
DOE projects that the average front-loading CCW consumer would 
experience a decrease in LCC of $19 in multi-family applications and 
$22 in laundromats. DOE also estimates an LCC decrease for all 
consumers that do not already purchase front-loading CCWs with an 
efficiency meeting TSL 3. The median payback period of the average 
consumer at TSL 3 in multi-family applications and in laundromats is 
projected to be 0.4 years and 0.2 years, respectively.
    DOE estimated the projected change in INPV ranges from a decrease 
of $4.8 million to a decrease of $7.0 million. At TSL 3, DOE recognizes 
the risk of very large negative impacts if manufacturers' expectations 
about reduced shipments are realized. In TSL 3 could result in a net 
loss as high as 11.4 percent in INPV to CCW manufacturers. Also, DOE is 
especially sensitive to the potential adverse impacts to the LVM. Since 
the LVM's clothes washer revenue is so dependent on CCW sales, DOE is 
concerned that TSL 3 could disproportionately impact the LVM.
    DOE recognizes the increased economic benefits that could result 
from TSL 3. DOE still has concerns of the potential for giving 
consumers less incentive to purchase more efficient front-loading 
washers, but at TSL 3, the price difference between front-loading and 
top-loading CCWs drops to $414. However, given that DOE projects that 
the average front-loading CCW consumer would experience an LCC savings 
at TSL 3, DOE believes that most front-loading CCW consumers not 
already purchasing washers at TSL 3 would likely continue to purchase a 
front-loading unit if standards are set at TSL 3. DOE notes that TSL 3 
adversely impacts manufacturers' INPV, but because such a large percent 
of the front-loading market is at TSL 3, manufacturers would likely not 
need to make significant capital investments for front-loading CCWs. 
Product development and conversion expenses and capital investments 
would only be required in order to produce higher efficiency top-
loading washers at TSL 3.
    After considering the analysis and weighing the benefits and the 
burdens, DOE has tentatively concluded that the benefits of a TSL 3 
standard outweigh the burdens. In particular, the Secretary has 
tentatively concluded that TSL 3 saves a significant amount of energy 
and is technologically feasible and economically justified. Therefore, 
DOE today proposes to adopt the energy conservation standards for CCWs 
at TSL 3. Table V.28 lists today's proposed energy conservation 
standards for CCWs. DOE's proposal to amend energy conservation 
standards for CCWs at TSL 3 reflects its tentative conclusion that this 
standard level would minimize the potential adverse impacts on the LVM 
and, therefore, would also minimize the adverse impacts on CCW market 
competition. However, DOE will carefully consider DOJ's review of 
today's proposed standards for CCWs and any public comment received on 
these impacts before issuing its final rule for this equipment. It is 
DOE's intent to set a standard that will not produce significant 
adverse impacts on competition in this market. In proposing the 
standards in today's notice, DOE has also taken into consideration 
DOJ's determination on the standards proposed in the October 2008 NOPR.

    Table V.28--Proposed Energy Conservation Standards for Commercial
                             Clothes Washers
------------------------------------------------------------------------
                                           Proposed energy conservation
            Equipment class                         standards
------------------------------------------------------------------------
Top-loading............................  1.60 Modified Energy Factor/8.5
                                          Water Factor.
Front-loading..........................  2.00 Modified Energy Factor/5.5
                                          Water Factor.
------------------------------------------------------------------------

    DOE seeks comment on the proposed standards. This is identified as 
Issue 7 in section VII.E of today's supplemental notice (Issues on 
Which DOE Seeks Comment.)
    DOE also calculated the annualized values for certain benefits and 
costs at the various TSLs. Table V.29 shows the annualized values. DOE 
used a two-step calculation process to convert the time-series of costs 
and benefits into annualized values. First, DOE calculated a present 
value for the time-series of costs and benefits using a discount rate 
of either three or seven percent. From the present value, DOE then 
calculated the fixed annual payment over the analysis time period (2013 
to 2043) that yielded the same present value. The fixed annual payment 
is the annualized value. Although DOE calculated annualized values, 
this does not imply that the time-series of cost and benefits from 
which the annualized values were determined are a steady stream of 
payments.
BILLING CODE 6450-01-P

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[GRAPHIC] [TIFF OMITTED] TP09NO09.007


[[Page 57793]]


[GRAPHIC] [TIFF OMITTED] TP09NO09.008

BILLING CODE 6450-01-C

VI. Procedural Issues and Regulatory Review

A. Review Under Executive Order 12866

    Today's regulatory action has been determined to be a ``significant 
regulatory action'' under section 3(f)(1) of Executive Order 12866, 
``Regulatory Planning and Review.'' 58 FR 51735 (Oct. 4, 1993). 
Accordingly, this action was subject to review under the Executive 
Order by the Office of Information and Regulatory Affairs (OIRA) in the 
Office of Management and Budget.
    The Executive Order requires each agency to identify 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 to assess the significance of that problem in 
evaluating whether any new regulation is warranted. E.O. 12866, section 
1(b)(1).
    The October 2008 NOPR evaluated the market failure that the 
proposed rule would address. 73 FR 62034, 62122-23 (Oct. 17, 2008). 
DOE's analysis for CCWs explicitly quantifies and accounts for the 
percentage of consumers that already purchase more efficient equipment 
and takes these consumers into account when determining the national 
energy savings associated with various TSLs. The analysis suggests that 
accounting for the market value of energy savings alone (i.e., 
excluding any possible additional ``externality'' benefits such as 
those noted below) would produce enough benefits to yield net benefits 
across a wide array of equipment and circumstances. In the October 2008 
NOPR, DOE requested additional data (including the percentage of 
consumers purchasing more efficient CCWs and the extent to which 
consumers will continue to purchase more efficient equipment), in order 
to test the existence and extent of these consumer actions. 73 FR 
62034, 62123 (Oct. 17, 2008). DOE received no such data from interested 
parties in response to the October 2008 NOPR.
    DOE believes that there is a lack of consumer information and/or 
information processing capability about energy efficiency opportunities 
in the home appliance market. If this is the case, DOE would expect the 
energy efficiency for CCWs to be randomly distributed across key 
variables such as

[[Page 57794]]

energy prices and usage levels. DOE has estimated the percentage of 
consumers that already purchase more efficient CCWs. However, DOE does 
not correlate the consumer's usage pattern and energy price with the 
efficiency of the purchased equipment. In the October 2008 NOPR, DOE 
sought data on the efficiency levels of existing CCWs by how often they 
are used (e.g., how many times or hours the equipment is used) and 
their associated energy prices (and/or geographic regions of the 
country). Id. DOE received no such data from interested parties in 
response to the October 2008 NOPR. Therefore, DOE was unable to test 
for today's supplemental rule the extent to which purchasers of CCWs 
behave as if they are unaware of the costs associated with their energy 
consumption.
    A related issue is asymmetric information (one party to a 
transaction has more and better information than the other) and/or high 
transactions costs (costs of gathering information and effecting 
exchanges of goods and services). In many instances, the party 
responsible for an appliance purchase may not be the one who pays the 
cost to operate it. For example, home builders in large-scale 
developments often make decisions about appliances without input from 
home buyers and do not offer options to upgrade those appliances. Also, 
apartment owners normally make decisions about appliances, but renters 
often pay the utility bills. If there were no transactions costs, it 
would be in the home builders' and apartment owners' interest to 
install appliances that buyers and renters would choose. For example, 
one would expect that a renter who knowingly faces higher utility bills 
from low efficiency appliances would be willing to pay less in rent, 
and the apartment owner would indirectly bear the higher utility cost. 
However, this information is not readily available, and it may not be 
in the renter's interest to take the time to develop it, or, in the 
case of the landlord who installs a high efficiency appliance, to 
convey that information to the renter.
    To the extent that asymmetric information and/or high transactions 
costs are problems, one would expect to find certain outcomes for 
appliance energy efficiency. For example, all things being equal, one 
would not expect to see higher rents for apartments with high 
efficiency appliances. Conversely, if there were symmetric information, 
one would expect appliances with higher energy efficiency in rental 
units where the rent includes utilities compared to those where the 
renter pays the utility bills separately. Similarly, for single-family 
homes, one would expect higher energy efficiency levels for replacement 
units than for appliances installed in new construction. Within the new 
construction market, one would expect to see appliances with higher 
energy efficiency levels in custom-built homes (where the buyer has 
more say in appliance choices) than in comparable homes built in large-
scale developments.
    The above issues pertaining to asymmetric information and/or high 
transaction costs seem to be less relevant to the CCW market. For 
example, as discussed in section III.D.10, DOE concluded that a split 
incentive is unlikely between route operators and multi-family property 
owners. Because split incentives are likely not applicable to the CCW 
market, the probability that asymmetric information exists where one 
party (e.g., a route operator) has more and better information than the 
other (e.g., a multi-family property owner) is low. Further, because 
DOE received no data from interested parties in response to the October 
2008 NOPR on the issue of asymmetric information and/or high 
transactions costs, DOE was unable to conclusively determine for 
today's supplemental notice the extent to which asymmetric information 
and/or high transaction costs are a market failure in the CCW market.
    In addition, this rulemaking is likely to yield certain external 
benefits resulting from improved energy efficiency of CCWs that are not 
captured by the users of such equipment. These benefits include 
externalities related to environmental protection and energy security 
that are not reflected in energy prices, such as reduced emissions of 
greenhouse gases. The TSLs which DOE evaluated resulted in 
CO2, NOX, and Hg emissions reductions. DOE also 
determined a range of possible monetary benefits associated with the 
emissions reductions. DOE considered both the emissions reductions and 
their possible monetary benefit in determining the economic feasibility 
of the TSLs.
    DOE conducted a regulatory impact analysis (RIA) for review by the 
Office of Information and Regulatory Affairs (OIRA) at OMB. DOE 
presented to OIRA the draft supplemental notice and other documents 
prepared for this rulemaking, including the RIA, and has included these 
documents in the rulemaking record. They 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) 586-9127, 
between 9:00 a.m. and 4:00 p.m., Monday through Friday, except Federal 
holidays.
    The RIA is contained as chapter 17 in the TSD prepared for the 
rulemaking. 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 proposed 
standards. DOE performed an RIA solely for CCWs for today's 
supplemental notice.
    The RIA calculates the effects of feasible policy alternatives to 
energy conservation standards for CCWs and provides a quantitative 
comparison of the impacts of the alternatives. DOE evaluated each 
alternative in terms of its ability to achieve significant energy 
savings at reasonable costs, and compared it to the effectiveness of 
today's proposed standards. DOE analyzed these alternatives using a 
series of regulatory scenarios as input to the NIA spreadsheets for the 
two equipment classes, which it modified to allow inputs for voluntary 
measures. For more details on how DOE modified the NIA spreadsheets to 
determine the impacts due to the various non-regulatory alternatives to 
standards, refer to chapter 17 of the TSD accompanying this notice.
    As shown in Table VI.1 below, DOE identified the following major 
policy alternatives for achieving increased energy efficiency in 
conventional CCWs:
    (1) No new regulatory action;
    (2) Financial incentives;
    (3) Consumer rebates;
    (4) Consumer tax credits;
    (5) Manufacturer tax credits;
    (6) Voluntary energy efficiency targets;
    (7) Bulk government purchases;
    (8) Early replacement; and
    (9) Today's proposed approach (national performance and 
prescriptive standards).

[[Page 57795]]



                 Table VI.1--Non-Regulatory Alternatives to Commercial Clothes Washer Standards
----------------------------------------------------------------------------------------------------------------
                                                                                   Net present value**  (billion
                                                      Energy       Water savings              2008$)
               Policy alternatives                   savings*        (trillion   -------------------------------
                                                      (quads)        gallons)       7% Discount     3% Discount
                                                                                       rate            rate
----------------------------------------------------------------------------------------------------------------
No new regulatory action........................            0               0               0               0
Consumer rebates................................            0.06            0.07            0.18            0.47
Consumer tax credits............................            0.01            0.01            0.03            0.08
Manufacturer tax credits........................            0.00            0.01            0.02            0.06
Voluntary energy efficiency targets***..........            0.02            0.02            0.06            0.15
Early replacement...............................            0.01            0.01            0.11            0.17
Bulk government purchases***....................            0.00            0.01            0.02            0.04
Today's standards at TSL 3......................            0.10            0.14            0.36            0.89
----------------------------------------------------------------------------------------------------------------
* Energy savings are in source quads.
** Net present value is the value in the present of a time series of costs and savings. DOE determined the net
  present value from 2013 to 2043 in billions of 2008 dollars.
*** Voluntary energy efficiency target and bulk government purchase alternatives are not considered for front-
  loading washers because the percentage of the market at TSL 3 (today's proposed standard) is well over the
  market adoption target level that each alternative strives to attain.

    The net present value amounts shown in Table VI.1 refer to the NPV 
for consumers. The costs to the government of each policy (such as 
rebates or tax credits) are not included in the costs for the NPV 
since, on balance, consumers would be both paying for (through taxes) 
and receiving the benefits of the payments. The following paragraphs 
discuss each of the policy alternatives listed in Table VI.1. (See the 
chapter 17 of the SNOPR TSD.)
    No New Regulatory Action. The case in which no regulatory action is 
taken with regard to CCWs constitutes the ``base case'' (or ``No 
Action'') scenario. In this case, between 2013 and 2043, CCWs are 
expected to use 0.97 quads of primary energy along with 2.2 trillion 
gallons of water. Since this is the base case, energy savings and NPV 
are zero by definition.
    Consumer Rebates. Consumer rebates cover a portion of the 
incremental installed cost difference between equipment meeting 
baseline efficiency levels and those meeting higher efficiency levels, 
which generally result in a higher percentage of consumers purchasing 
more efficient models. DOE utilized market penetration curves from a 
study that analyzed the potential of energy efficiency in 
California.\42\ The penetration curves are a function of benefit-cost 
ratio (i.e., lifetime operating costs savings divided by increased 
total installed costs) to estimate the increased market share of more 
efficient equipment given incentives by a rebate program. Using 
specific rebate amounts, DOE calculated, for the considered equipment, 
the benefit-cost ratio of the more efficient appliance with and without 
the rebate to project the increased market penetration of the equipment 
due to a rebate program.
---------------------------------------------------------------------------

    \42\ Rufo, M. and F. Coito, California's Secret Energy Surplus: 
The Potential for Energy Efficiency (prepared for The Energy 
Foundation and The Hewlett Foundation by Xenergy, Inc.) (2002).
---------------------------------------------------------------------------

    For CCWs meeting TSL 3, DOE estimated that the percentage of 
consumers purchasing the more efficient equipment due to consumer 
rebates would increase annually by 49.0 percent for top-loading washers 
and 4.0 percent for front-loading washers. DOE selected the rebate 
amount using data from rebate programs for CCWs conducted by 24 gas, 
electric, and water utilities and other agencies. DOE estimated that 
the impact of this policy would be to permanently transform the market 
so that the increased market share seen in the first year of the 
program would be maintained throughout the forecast period. At the 
estimated participation rates, consumer rebates would be expected to 
provide 0.06 quads of national energy savings, 74 billion gallons of 
national water savings, and an NPV of $0.18 billion (at a 7-percent 
discount rate).
    Although DOE estimated that consumer rebates would provide national 
benefits for CCW consumers, these benefits would be smaller than the 
benefits resulting from national performance standards at today's 
proposed levels. Thus, DOE rejected consumer rebates as a policy 
alternative to national performance standards.
    Consumer Tax Credits. Consumer tax credits cover a percentage of 
the incremental installed cost difference between equipment meeting 
baseline efficiency levels and those with higher efficiencies. Consumer 
tax credits are considered a viable non-regulatory market 
transformation program as evidenced by the inclusion of Federal 
consumer tax credits in EPACT 2005 for various residential appliances. 
(Section 1333 of EPACT 2005; codified at 26 U.S.C. 25C) DOE reviewed 
the market impact of tax credits offered by the Oregon Department of 
Energy (ODOE) (ODOE, No. 35 at p. 1) and Montana Department of Revenue 
(MDR) (MDR, No. 36 at p. 1) to estimate the effect of a national tax 
credit program. To help estimate the impacts from such a program, DOE 
also reviewed analyses prepared for the California Public Utilities 
Commission,\43\ the Northwest Energy Efficiency Alliance,\44\ and the 
Energy Foundation/Hewlett Foundation.\45\ For each the equipment 
considered for this rulemaking, DOE estimated that the market effect of 
a tax credit program would gradually increase over a time period until 
it reached its maximum impact. Once the tax credit program attained its 
maximum effect, DOE assumed the impact of the policy would be to 
permanently transform the market at this level.
---------------------------------------------------------------------------

    \43\ Itron and KEMA, 2004/2005 Statewide Residential Retrofit 
Single-Family Energy Efficiency Rebate Evaluation (prepared for the 
California Public Utilities Commission, Pacific Gas And Electric 
Company, San Diego Gas and Electric Company, Southern California 
Edison, Southern California Gas Company, CPUC-ID 1115-04) 
(2007).
    \44\ KEMA, Consumer Product Market Progress Evaluation Report 3 
(prepared for Northwest Energy Efficiency Alliance, Report 
07-174) (2007).
    \45\ Rufo, M., and F. Coito, op. cit.
---------------------------------------------------------------------------

    For CCWs, DOE estimated that consumer tax credits would induce an 
increase of 1.3 percent in 2013 in the purchase of equipment meeting 
TSL 3 and eventually increase to a maximum of 5.8 percent in 2020 for 
both top-loading and front-loading washers.\46\ At the estimated 
participation rates, consumer tax credits would be expected to provide 
0.01 quads of national energy

[[Page 57796]]

savings, 13 billion gallons of national water savings, and an NPV of 
$0.03 billion (at a 7-percent discount rate).
---------------------------------------------------------------------------

    \46\ Because DOE was not able to identify consumer tax credit 
programs specific to CCWs, increased market penetrations for 
residential clothes washers were used to estimate the impact from a 
tax credit program providing incentives for more efficient CCWs.
---------------------------------------------------------------------------

    DOE estimated that while consumer tax credits would yield national 
benefits for CCW consumers, these benefits would be much smaller than 
the benefits from today's proposed national performance standards. 
Thus, DOE rejected consumer tax credits as a policy alternative to 
national performance standards.
    Manufacturer Tax Credits. Manufacturer tax credits are considered a 
viable non-regulatory market transformation program as evidenced by the 
inclusion of Federal tax credits in EPACT 2005 for manufacturers of 
residential appliances. (Section 1334 of EPACT 2005; codified at 26 
U.S.C. 45M) Similar to consumer tax credits, manufacturer tax credits 
would effectively result in lower equipment prices to consumers by an 
amount that covered part of the incremental price difference between 
equipment meeting baseline efficiency levels and those meeting higher 
efficiency levels. Because these tax credits go to manufacturers 
instead of consumers, research indicates that fewer consumers would be 
affected by a manufacturer tax credit program than by consumer tax 
credits.\47\ \48\ Although consumers would benefit from price 
reductions passed through to them by the manufacturers, research 
demonstrates that approximately half the consumers who would benefit 
from a consumer tax credit program would be aware of the economic 
benefits of more efficient technologies included in an appliance 
manufacturer tax credit program. In other words, research estimates 
that half of the effect from a consumer tax credit program is due to 
publicly available information or promotions announcing the benefits of 
the program. This effect, referred to as the ``announcement effect,'' 
is not part of a manufacturer tax credit program. Therefore, DOE 
estimated that the effect of a manufacturer tax credit program would be 
only half of the maximum impact of a consumer tax credit program.
---------------------------------------------------------------------------

    \47\ K. Train, Customer Decision Study: Analysis of Residential 
Customer Equipment Purchase Decisions (prepared for Southern 
California Edison by Cambridge Systematics, Pacific Consulting 
Services, The Technology Applications Group, and California Survey 
Research Services) (1994).
    \48\ Lawrence Berkeley National Laboratory, End-Use Forecasting 
Group. Analysis of Tax Credits for Efficient Equipment (1997). 
Available at http://enduse.lbl.gov/Projects/TaxCredits.html. (Last 
accessed April 24, 2008.)
---------------------------------------------------------------------------

    As described earlier in section III.E.2 on the NIA, DOE analyzed 
the impact of recent Federal manufacturer tax credits on increased 
sales of high efficiency CCWs. DOE determined that the tax credits have 
increased the market share of front-loading washers from approximately 
20 percent in the year 2005 to its current market share of 30 percent. 
For purposes of conducting the NIA, DOE estimated that the tax credits 
would permanently transform the market so that front-loading washers 
would continue to comprise 30 percent of the market over the entire 
forecast period, even though the tax credits are set to expire after 
2010. For purposes of analyzing the impact of manufacturer tax credits 
for the RIA, DOE estimated the percentage of consumers purchasing 
equipment at TSL 3 would be expected to increase by 2.9 percent for 
both top-loading and front-loading washers. This additional increase of 
2.9 percent is relative to the base case (i.e., the case without new 
efficiency standards) which is comprised of a 30 percent market share 
of front-loading washers and a 70 percent market share of top-loading 
washers. DOE assumed that the impact of the manufacturer tax credit 
policy would be to permanently transform the market so that the 
increased market share seen in the first year of the program would be 
maintained throughout the forecast period.
    At the above estimated participation rates, manufacturer tax 
credits would provide 0.005 quads of national energy savings, 9 billion 
gallons of national water savings, and an NPV of $0.02 billion (at a 7-
percent discount rate) for CCWs.
    DOE estimated that while manufacturer tax credits would yield 
national benefits for CCW consumers, these benefits would be much 
smaller than the benefits from national performance standards. Thus, 
DOE rejected manufacturer tax credits as a policy alternative to 
today's proposed national performance standards.
    Voluntary Energy Efficiency Targets. DOE estimated the impact of 
voluntary energy efficiency targets by reviewing the historical and 
projected market transformation performance of past and current ENERGY 
STAR programs.
    To estimate the impacts from a voluntary energy efficiency program 
targeting the adoption of top-loading CCWs meeting TSL 3, DOE evaluated 
the potential impacts of expanding the Federal government's existing 
ENERGY STAR program for CCWs. DOE modeled the voluntary efficiency 
program based on the ENERGY STAR program's experience with RCWs.\49\ 
\50\ Over the period spanning 2007-2025, ENERGY STAR projected that the 
market share of RCWs meeting target efficiency levels due to ENERGY 
STAR will increase to a maximum of 28 percent. DOE estimated that an 
expanded voluntary program would increase their market share by half of 
these projected annual amounts for the existing ENERGY STAR program, 
reaching a maximum of 14 percent increased market share. For CCWs, DOE 
assumed that the impacts of the existing ENERGY STAR program were 
already incorporated in the base case, and applied the same pattern of 
market share increase from an expanded voluntary program to CCWs 
beginning in 2013. After attaining its maximum market share of 14 
percent in the year 2030, DOE's analysis maintained that market share 
throughout the remainder of the forecast period. DOE estimated that an 
expanded program of voluntary energy efficiency targets would be 
expected to provide 0.02 quads of national energy savings, 24 billion 
gallons of national water savings, and an NPV of $0.06 billion (at a 7-
percent discount rate). Although this program would provide national 
benefits, they were estimated to be smaller than the benefits resulting 
from today's proposed national performance standards. Thus, DOE 
rejected the use of voluntary energy efficiency targets as a policy 
alternative to national performance standards.
---------------------------------------------------------------------------

    \49\ Data were not available on the market impacts of the CCW 
program.
    \50\ Sanchez et al., op. cit.
---------------------------------------------------------------------------

    DOE did not analyze the potential impacts of voluntary energy 
efficiency targets for front-loading CCWs because a vast majority of 
equipment already meets today's proposed standards. In the case of 
front-loading CCWs, over 96 percent of the market meets TSL 3. The 
ENERGY STAR program typically targets equipment where a maximum of 
approximately 25 percent of the existing market meets the target 
efficiency level.\51\ Since the market for front-loading CCWs is well 
above the 25 percent threshold, DOE did not consider this approach for 
this equipment class.
---------------------------------------------------------------------------

    \51\ Sanchez, M. and A. Fanara, ``New Product Development: The 
Pipeline for Future ENERGY STAR Growth,'' Proceedings of the 2000 
ACEEE Summer Study on Energy Efficiency in Buildings (2000) Vol 6, 
pp 343-354.
---------------------------------------------------------------------------

    Early Replacement. The early replacement policy alternative 
envisions a program to replace old, inefficient units with models 
meeting efficiency levels higher than baseline equipment. Under an 
early replacement program, State governments or electric and gas 
utilities would provide financial incentives to consumers to retire the 
appliance early in order to hasten the adoption of more efficient 
equipment. For all of the considered equipment,

[[Page 57797]]

DOE modeled this policy by applying a 4-percent increase in the 
replacement rate above the natural rate of replacement for failed 
equipment. DOE based this percentage increase on program experience 
with the early replacement of appliances in the State of 
Connecticut.\52\ DOE assumed the program would continue for as long as 
it would take to ensure that the eligible existing stock in the year 
that the program began (2013) was completely replaced.
---------------------------------------------------------------------------

    \52\ Nexus.and RLW Analytics, Impact, Process, and Market Study 
of the Connecticut Appliance Retirement Program: Overall Report, 
Final. (Submitted to Northeast Utilities--Connecticut Light and 
Power and the United Illuminating Company by Nexus Market Research, 
Inc. and RLW Analytics, Inc.) (2005).
---------------------------------------------------------------------------

    For CCWs, this policy alternative would replace old, inefficient 
top-loading and front-loading units with models meeting the efficiency 
levels in TSL 3. DOE estimated that such an early replacement program 
would be expected to provide 0.01 quads of national energy savings, 9 
billion gallons of national water savings, and an NPV of $0.11 billion 
(at a 7-percent discount rate).
    Although DOE estimated that the above early replacement programs 
for CCWs would provide national benefits, they would be much smaller 
than the benefits resulting from national performance standards. Thus, 
DOE rejected early replacement incentives as a policy alternative to 
national performance standards.
    Bulk Government Purchases. Under this policy alternative, the 
government sector would be encouraged to shift their purchases to 
equipment that meets the target efficiency levels above baseline 
levels. Aggregating public sector demand could provide a market signal 
to manufacturers and vendors that some of their largest customers 
sought suppliers with equipment that met an efficiency target at 
favorable prices. This program also could induce ``market pull'' 
impacts through manufacturers and vendors achieving economies of scale 
for high-efficiency equipment. Under such a program, DOE would assume 
that Federal, State, and local government agencies would administer it. 
At the Federal level, such a program would add more efficient equipment 
for which the Federal Energy Management Program (FEMP) has energy 
efficient procurement specifications.
    For CCWs, this program would encourage the government sector to 
shift its purchases to top-loading units that meet the efficiency 
levels in TSL 3. DOE estimated that this policy would apply to multi-
family buildings that are government-owned. Based on a technology 
review prepared for FEMP by Pacific Northwest National Laboratory 
(PNNL), approximately 7000 CCWs (representing a 3.2 percent market 
share) were purchased in the year 2000 for Federal buildings.\53\ Based 
on research of the effectiveness of bulk government purchasing 
programs, DOE estimated that the market share of more efficient CCWs in 
Federally owned multi-family buildings would increase at a rate of 8 
percent per year over a 10-year period (2013-2022) and remain at the 
2022 level for the remainder of the forecast period. DOE estimated that 
bulk government purchases would be expected to provide 0.003 quads of 
national energy savings, 7 billion gallons of national water savings, 
and an NPV of $0.02 billion (at a 7-percent discount rate), benefits 
which would be much smaller than those estimated for today's proposed 
national performance standards. Thus, DOE rejected bulk government 
purchases as a policy alternative to national performance standards.
---------------------------------------------------------------------------

    \53\ Pacific Northwest National Laboratory, Assessment of High-
Performance, Family-Sized Commercial Clothes Washers (DOE/EE-
0218)(2000).
---------------------------------------------------------------------------

    DOE did not analyze the potential impacts of bulk government 
purchases for front-loading CCWs because the vast majority of equipment 
already meets today's proposed standards. In the case of front-loading 
CCWs, over 96 percent of the market meets TSL 3. FEMP procurement 
specifications typically promote equipment in the top 25 percent of the 
existing equipment offerings in terms of efficiency. Since most of the 
front-loading CCWs sold in the base case already comply with such 
specifications, DOE was not able to consider this program as a source 
of data for top-loading CCWs.
    National Performance Standards (TSL 3). As indicated in the 
paragraphs above, none of the alternatives DOE examined would save as 
much energy as today's proposed energy conservation standards. 
Therefore, DOE will adopt the efficiency levels listed in section V.C.

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 for any rule 
that by law must be proposed for public comment, unless the agency 
certifies that the rule, if promulgated, will not have a significant 
economic impact on a substantial number of small entities. As required 
by Executive Order 13272, Proper Consideration of Small Entities in 
Agency Rulemaking, 67 FR 53461 (Aug. 16, 2002), DOE published 
procedures and policies on February 19, 2003, to ensure that the 
potential impacts of its rules on small entities are properly 
considered during the rulemaking process. 68 FR 7990. DOE has made its 
procedures and policies available on the Office of General Counsel's 
Web site: http://www.gc.doe.gov.
    DOE reviewed today's supplemental notice under the provisions of 
the Regulatory Flexibility Act and the procedures and policies 
published on February 19, 2003. 68 FR 7990. A regulatory flexibility 
analysis examines the impact of the rule on small entities and 
considers alternative ways of reducing negative impacts. DOE identified 
producers of all equipment covered by this rulemaking that have 
manufacturing facilities located within the United States. DOE then 
looked at publicly available data and contacted manufacturers, where 
needed, to determine if they meet the SBA's definition of a small 
manufacturing facility.
    For the manufacturers of equipment covered by this rulemaking, the 
SBA has set two size thresholds that define which entities are ``small 
businesses'' for the purposes of the statute. See http://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf. Because 
all CCW manufacturers also produce RCWs, limits for both categories are 
presented in Table VI.2. DOE used these small business definitions 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 NAICS code and industry description.

[[Page 57798]]



         Table VI.2--SBA and NAICS Classification of Small Businesses Potentially Affected by This Rule
----------------------------------------------------------------------------------------------------------------
                      Industry description                         Revenue limit  Employee limit       NAICS
----------------------------------------------------------------------------------------------------------------
Residential Laundry Equipment Manufacturing.....................             N/A           1,000          335224
Commercial Laundry Equipment Manufacturing......................             N/A             500          333312
----------------------------------------------------------------------------------------------------------------

    The CCW industry consists of three principal competitors that make 
up almost 100 percent of the market share. Two of them are high-volume, 
diversified appliance manufacturers, while the third is a focused 
laundry equipment manufacturer. Before issuing this SNOPR, DOE 
interviewed all major CCW manufacturers. Because all CCW manufacturers 
also make RCWs, DOE also considered whether a CCW manufacturer could be 
considered a small business entity in that industry. None of the CCW 
manufacturers fall into any small business category. As a result, DOE 
certifies that today's SNOPR would not have a significant impact on a 
substantial number of small entities and that a regulatory flexibility 
analysis is not required.

C. Review Under the Paperwork Reduction Act

    DOE stated in the October 2008 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.). 73 FR 62034, 62130 (Oct. 17, 2008). DOE received no 
comments on this in response to the October 2008 NOPR. Therefore, for 
today's supplemental notice DOE has concluded that Office of Management 
and Budget clearance is not required under the PRA.

D. Review Under the National Environmental Policy Act

    DOE has prepared a draft environmental assessment (EA) of the 
impacts of the supplemental notice pursuant to the National 
Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.), the 
regulations of the Council on Environmental Quality (40 CFR Parts 1500-
1508), and DOE's regulations for compliance with the National 
Environmental Policy Act (10 CFR part 1021). This assessment includes 
an examination of the potential effects of emission reductions likely 
to result from the rule in the context of global climate change, as 
well as other types of environmental impacts. The draft EA has been 
incorporated into the TSD; the environmental impact analyses are 
contained primarily in chapter 16 of that document. Before issuing a 
final rule for CCWs, DOE will consider public comments and, as 
appropriate, determine whether to issue a finding of no significant 
impact as part of a final EA or to prepare an environmental impact 
statement (EIS) for this rulemaking.

E. Review Under Executive Order 13132

    Executive Order 13132, ``Federalism,'' 64 FR 43255 (Aug. 4, 1999) 
imposes certain requirements on agencies formulating and implementing 
policies or regulations that preempt State law or that have Federalism 
implications. The Executive Order requires agencies to examine the 
constitutional and statutory authority supporting any action that would 
limit the policymaking discretion of the States and to carefully assess 
the necessity for such actions. The Executive Order also requires 
agencies to have an accountable process to ensure meaningful and timely 
input by State and local officials in the development of regulatory 
policies that have Federalism implications. On March 14, 2000, DOE 
published a statement of policy describing the intergovernmental 
consultation process it will follow in the development of such 
regulations. 65 FR 13735. DOE has examined today's supplemental notice 
and has determined that it would not have a substantial direct effect 
on the States, on the relationship between the national government and 
the States, or on the distribution of power and responsibilities among 
the various levels of government. EPCA governs and prescribes Federal 
preemption of State regulations as to energy conservation for the 
equipment that is the subject of today's supplemental notice. States 
can petition DOE for exemption from such preemption to the extent, and 
based on criteria, set forth in EPCA. (42 U.S.C. 6297(d) and 
6316(b)(2)(D)) No further action is required by Executive Order 13132.

F. Review Under Executive Order 12988

    With respect to the review of existing regulations and the 
promulgation of new regulations, section 3(a) of Executive Order 12988, 
``Civil Justice Reform'' (61 FR 4729 (Feb. 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, today's supplemental notice meets the relevant 
standards of Executive Order 12988.

G. Review Under the Unfunded Mandates Reform Act of 1995

    DOE reviewed this regulatory action under title II of the Unfunded 
Mandates Reform Act of 1995 (Pub. L. 104-4) (UMRA), which requires each 
Federal agency to assess the effects of Federal regulatory actions on 
State, local and Tribal governments and the private sector. For a 
proposed regulatory action likely to result in a rule that may cause 
the expenditure by State, local, and Tribal governments, in the 
aggregate, or by the private sector of $100 million or more in any one 
year (adjusted for inflation), section 202 of UMRA requires an agency 
to publish a written statement assessing the costs, benefits, and other 
effects of the rule on the national economy. (2 U.S.C. 1532(a), (b)) 
The UMRA also requires a Federal agency to develop an effective process 
to permit timely input by elected officers of State, local, and Tribal 
governments on a proposed ``significant intergovernmental mandate,'' 
and requires an agency plan for giving notice and opportunity for 
timely input to potentially affected small governments before 
establishing any requirements that might significantly or uniquely 
affect small

[[Page 57799]]

governments. On March 18, 1997, DOE published a statement of policy on 
its process for intergovernmental consultation under UMRA (62 FR 12820) 
(also available at http://www.gc.doe.gov). Although today's 
supplemental notice does not contain a Federal intergovernmental 
mandate, it may impose expenditures of $100 million or more on the 
private sector, although DOE believes such expenditures are likely to 
be less than $50 million.
    Section 202 of UMRA authorizes an agency to respond to the content 
requirements of UMRA in any other statement or analysis that 
accompanies the supplemental notice. 2 U.S.C. 1532(c). The content 
requirements of section 202(b) of UMRA relevant to a private sector 
mandate substantially overlap the economic analysis requirements that 
apply under section 325(o) of EPCA and Executive Order 12866. The 
Supplementary Information section of this supplemental notice and the 
``Regulatory Impact Analysis'' section of the SNOPR TSD respond to 
those requirements.
    Under section 205 of UMRA, DOE is obligated to identify and 
consider a reasonable number of regulatory alternatives before 
promulgating a rule for which a written statement under section 202 is 
required. DOE is required to select from those alternatives the most 
cost-effective and least burdensome alternative that achieves the 
objectives of the rule unless DOE publishes an explanation for doing 
otherwise or the selection of such an alternative is inconsistent with 
law. As required by 42 U.S.C. 6295(h) and (o), 6313(e), and 6316(a), 
today's supplemental notice would establish energy conservation 
standards for CCWs that are designed to achieve the maximum improvement 
in energy efficiency that DOE has determined to be both technologically 
feasible and economically justified. A full discussion of the 
alternatives considered by DOE is presented in the ``Regulatory Impact 
Analysis'' section of the TSD for today's supplemental notice.

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 October 
2008 NOPR, and, therefore, takes no further action in today's 
supplemental notice 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 the October 2008 NOPR would not result 
in any takings which might require compensation under the Fifth 
Amendment to the U.S. Constitution. 73 FR 62034, 62131 (Oct. 17, 2008). 
DOE received no comments concerning Executive Order 12630 in response 
to the October 2008 NOPR, and, today's supplemental notice, which 
adopts no new requirements, also would not result in any takings which 
might require compensation under the Fifth Amendment. Therefore, DOE 
takes no further action in today's supplemental notice 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. The OMB guidelines were published at 67 FR 8452 (Feb. 22, 2002), 
and DOE's guidelines were published at 67 FR 62446 (Oct. 7, 2002). DOE 
has reviewed this notice under the OMB and DOE guidelines and has 
concluded that it is consistent with applicable policies in those 
guidelines.

K. Review Under Executive Order 13211

    Executive Order 13211, ``Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use,'' 66 FR 28355 
(May 22, 2001) requires Federal agencies to prepare and submit to the 
OIRA a Statement of Energy Effects for any significant energy action. 
For the October 2008 NOPR, DOE determined that the proposed rule, which 
set energy conservation standards for commercial clothes washers, was 
not a ``significant energy action'' within the meaning of Executive 
Order 13211. 73 FR 62034, 62132 (Oct. 17, 2008). The rule was also not 
designated as such by OIRA. Accordingly, it did not prepare a Statement 
of Energy Effects on that proposed rule. DOE received no comments on 
this issue in response to the October 2008 NOPR. As with the October 
2008 NOPR, DOE has concluded that today's supplemental notice is not a 
significant energy action within the meaning of Executive Order 13211, 
and OIRA has not designated the rule as such. As a result, DOE has not 
prepared a Statement of Energy Effects on the rule.

L. Review Under the Information Quality Bulletin for Peer Review

    On December 16, 2004, the OMB, in consultation with the Office of 
Science and Technology, issued its Final Information Quality Bulletin 
for Peer Review (the Bulletin). 70 FR 2664 (Jan. 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 October 2008 NOPR, this includes influential 
scientific information related to agency regulatory actions, such as 
the analyses in this rulemaking. 73 FR 62034, 62132 (Oct. 17, 2008).
    As more fully set forth in the October 2008 NOPR, DOE held formal 
in-progress peer reviews of the types of analyses and processes that 
DOE has used to develop the energy conservation standards in today's 
supplemental notice, and issued a report on these peer reviews. Id.

VII. Public Participation

A. Attendance at Public Meeting

    DOE will hold a public meeting on November 16, 2009 from 9 a.m. 
until 5 p.m., in Washington, DC. The public meeting will be held at 
Room 1E-245. To attend the public meeting, please notify Ms. Brenda 
Edwards at (202) 586-2945 or [email protected]. As explained in 
the ADDRESSES section, foreign nationals visiting DOE Headquarters are 
subject to advance security screening procedures. Any foreign national 
wishing to participate in the meeting should advise DOE of this fact as 
soon as possible by contacting Ms. Brenda Edwards to initiate the 
necessary procedures.

B. Procedure for Submitting Requests To Speak

    Any person who has an interest in this notice, or who is a 
representative of a group or class of persons that has an interest in 
these issues, may request an opportunity to make an oral presentation. 
Such persons may hand-deliver requests to speak, along with a compact 
disc (CD) in WordPerfect, Microsoft Word, PDF, or text (ASCII) file 
format to the address shown in the

[[Page 57800]]

ADDRESSES section at the beginning of this SNOPR between the hours of 9 
a.m. and 4 p.m., Monday through Friday, except Federal holidays. 
Requests may also be sent by mail or e-mail to: 
[email protected].
    Persons requesting to speak should briefly describe the nature of 
their interest in this rulemaking and provide a telephone number for 
contact. DOE requests persons scheduled to be heard to submit an 
advance copy of their statements at least two weeks before the public 
meeting. At its discretion, DOE may permit any person who cannot supply 
an advance copy of their statement to participate, if that person has 
made advance alternative arrangements with the Building Technologies 
Program. The request to give an oral presentation should ask for such 
alternative arrangements.

C. Conduct of Public Meeting

    DOE will designate a DOE official to preside at the public meeting 
and may also use a professional facilitator to aid discussion. The 
meeting will not be a judicial or evidentiary-type public hearing, but 
DOE will conduct it in accordance with section 336 of EPCA, 42 U.S.C. 
6306. A court reporter will be present to record the proceedings and 
prepare a transcript. DOE reserves the right to schedule the order of 
presentations and to establish the procedures governing the conduct of 
the public meeting. After the public meeting, interested parties may 
submit further comments on the proceedings as well as on any aspect of 
the rulemaking until the end of the comment period.
    The public meeting will be conducted in an informal, conference 
style. DOE will present summaries of comments received before the 
public meeting, allow time for presentations by participants, and 
encourage all interested parties to share their views on issues 
affecting this rulemaking. Each participant will be allowed to make a 
prepared general statement (within time limits determined by DOE), 
before the discussion of specific topics. DOE will permit other 
participants to comment briefly on any general statements.
    At the end of all prepared statements on a topic, DOE will permit 
participants to clarify their statements briefly and comment on 
statements made by others. Participants should be prepared to answer 
questions by DOE and by other participants concerning these issues. DOE 
representatives may also ask questions of participants concerning other 
matters relevant to this rulemaking. The official conducting the public 
meeting will accept additional comments or questions from those 
attending, as time permits. The presiding official will announce any 
further procedural rules or modification of the above procedures that 
may be needed for the proper conduct of the public meeting.
    DOE will make the entire record of this proposed rulemaking, 
including the transcript from the public meeting, available for 
inspection at the U.S. Department of Energy, Resource Room of the 
Building Technologies Program, 950 L'Enfant Plaza, SW., Suite 600, 
Washington, DC, 20024, (202) 586-2945, between 9 a.m. and 4 p.m., 
Monday through Friday, except Federal holidays. Any person may buy a 
copy of the transcript from the transcribing reporter.

D. Submission of Comments

    DOE will accept comments, data, and information regarding the 
proposed rule before or after the public meeting, but no later than the 
date provided at the beginning of this SNOPR. Information submitted 
should be identified by docket number EE-2006-STD-0127 and/or RIN 1904-
AB93. Comments, data, and information submitted to DOE's e-mail address 
for this rulemaking should be provided in WordPerfect, Microsoft Word, 
PDF, or text (ASCII) file format. Interested parties should avoid the 
use of special characters or any form of encryption and, wherever 
possible, comments should carry the electronic signature of the author. 
Comments, data, and information submitted to DOE via mail or hand 
delivery/courier should include one signed original paper copy. No 
telefacsimiles (faxes) will be accepted.
    Pursuant to 10 CFR 1004.11, any person submitting information that 
he or she believes to be confidential and exempt by law from public 
disclosure should submit two copies: One copy of the document including 
all the information believed to be confidential, and one copy of the 
document with the information believed to be confidential deleted. DOE 
will make its own determination about the confidential status of the 
information and treat it according to its determination.
    Factors of interest to DOE when evaluating requests to treat 
submitted information as confidential include: (1) A description of the 
items; (2) whether and why such items are customarily treated as 
confidential within the industry; (3) whether the information is 
generally known by or available from other sources; (4) whether the 
information has previously been made available to others without 
obligation concerning its confidentiality; (5) an explanation of the 
competitive injury to the submitting person which would result from 
public disclosure; (6) when such information might lose its 
confidential character due to the passage of time; and (7) why 
disclosure of the information would be contrary to the public interest.

E. Issues on Which DOE Seeks Comment

    DOE is particularly interested in receiving comments and views of 
interested parties concerning:
    (1) Whether the method of ``loading'' clothes washers, or any other 
characteristic commonly associated with traditional ``top-loading'' or 
``front-loading'' clothes washers, are ``features'' within the meaning 
of 42 U.S.C. 6295(o)(4) in EPCA and whether the availability of such 
feature(s) would likely be affected by eliminating the separate classes 
for these equipment types previously established by DOE;
    (2) The revised efficiency levels, including the revised max-tech 
level for top-loading CCWs;
    (3) Technological feasibility of the proposed max-tech CCW, 
including washing and rinsing performance measures for CCWs and 
population data for water heating CCWs;
    (4) The determination of short- and long-run price elasticities of 
demand and cross price elasticities for top-loading vs. front-loading 
CCWs and used vs. front-loading CCWs;
    (5) The determination of manufacturer impacts, including the 
effects of manufacturer tax credits and competitive concerns;
    (6) The determination of environmental impacts; and
    (7) The newly proposed energy conservation standards.

VIII. Approval of the Office of the Secretary

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

List of Subjects in 10 CFR Part 430

    Administrative practice and procedure, Energy conservation, 
Household appliances.

    Issued in Washington, DC, on October 27, 2009.
Cathy Zoi,
Assistant Secretary, Energy Efficiency and Renewable Energy.

    For the reasons stated in the preamble, chapter II, subchapter D, 
of title 10 of the Code of Federal Regulations, part 431 is proposed to 
be amended to read as set forth below:

[[Page 57801]]

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

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

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

    2. Section 431.156 of subpart I is revised to read as follows:


Sec.  431.156  Energy and water conservation standards and effective 
dates.

    Each CCW manufactured on or after [INSERT DATE 3 YEARS AFTER FINAL 
RULE FEDERAL REGISTER PUBLICATION], shall have a modified energy factor 
no less than and a water factor no greater than:

------------------------------------------------------------------------
                                                  Modified
                                                   energy       Water
                Equipment class                 factor (cu.     factor
                                                  ft./kWh/    (gal./cu.
                                                   cycle)     ft./cycle)
------------------------------------------------------------------------
Top-Loading...................................         1.60          8.5
Front-Loading.................................         2.00          5.5
------------------------------------------------------------------------

     [The following letter from the Department of Justice will not 
appear in the Code of Federal Regulations.]
BILLING CODE 6450-01-P
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[FR Doc. E9-26544 Filed 11-2-09; 4:15 pm]
BILLING CODE 6450-01-C