[Federal Register Volume 75, Number 5 (Friday, January 8, 2010)]
[Rules and Regulations]
[Pages 1122-1178]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-30891]



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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); Final Rule

  Federal Register / Vol. 75, No. 5 / Friday, January 8, 2010 / Rules 
and Regulations  

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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: Final rule.

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SUMMARY: The U.S. Department of Energy (DOE) is adopting amended energy 
conservation standards for commercial clothes washers (CCWs). DOE has 
determined that amended energy conservation standards for these types 
of equipment would result in significant conservation of energy, and 
are technologically feasible and economically justified.

DATES: The effective date of this rule is March 9, 2010. The standards 
established in today's final rule will be applicable starting January 
8, 2013.

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

FOR FURTHER INFORMATION CONTACT: Stephen Witkowski, U.S. Department of 
Energy, Energy Efficiency and Renewable Energy, Building Technologies 
Program, EE-2J, 1000 Independence Avenue, SW., Washington, DC 20585 
Telephone: (202) 586-7463. E-mail: [email protected].
    Francine Pinto, Esq. or Betsy Kohl, Esq., U.S. Department of 
Energy, Office of General Counsel, GC-71/72, 1000 Independence Avenue, 
SW., Washington, DC 20585. Telephone: (202) 586-7432, (202) 586-7796. 
E-mail: [email protected], [email protected].

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Summary of the Final Rule and Its Benefits
    A. The Standard Levels
    B. Current Federal Standards for Commercial Clothes Washers
    C. Benefits to Consumers of Commercial Clothes Washers
    D. Impact on Manufacturers
    E. National Benefits
    F. Conclusion
II. Introduction
    A. Consumer Overview
    B. Authority
    C. Background
    1. Current Standards
    2. History of Standards Rulemaking
III. General Discussion
    A. Test Procedures
    B. Technological Feasibility
    1. General
    2. Maximum Technologically Feasible Levels
    C. Energy Savings
    D. Economic Justification
    1. Specific Criteria
    a. Economic Impact on Commercial Consumers and Manufacturers
    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
IV. Methodology and Discussion of Comments on Methodology
    A. Equipment Classes
    B. Technology Assessment
    C. Engineering Analysis
    1. Efficiency Levels
    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. Split Incentive Between CCW Consumers and Users
    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. Impacts of Standards on Shipments
    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
    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
V. Discussion of Other Comments
    A. Proposed Trial Standard Levels (TSLs) for Commercial Clothes 
Washers
    B. Proposed Standards for Commercial Clothes Washers
VI. Analytical Results and Conclusions
    A. Trial Standard Levels
    B. Significance of Energy Savings
    C. Economic Justification
    1. Economic Impacts on Commercial Customers
    a. Life-Cycle Cost and Payback Period
    b. Commercial Consumer Subgroup Analysis
    c. Rebuttable-Presumption Payback
    2. Economic Impacts on Manufacturers
    a. Industry Cash-Flow Analysis Results
    b. Cumulative Regulatory Burden
    c. Impacts on Employment
    d. Impacts on Manufacturing Capacity
    e. Impacts on Subgroups of Manufacturers
    3. National Impact Analysis
    a. Amount and Significance of Energy Savings
    b. Net Present Value of Customer Costs and Benefits
    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
    7. Other Factors
    D. Conclusion
VII. 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

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    H. Review Under the Treasury and General Government 
Appropriations Act, 1999
    I. Review Under Executive Order 12630
    J. Review Under the Treasury and General Government 
Appropriations Act, 2001
    K. Review Under Executive Order 13211
    L. Review Under the Information Quality Bulletin for Peer Review
    M. Congressional Notification
VIII. Approval of the Office of the Secretary

I. Summary of the Final Rule and Its Benefits

A. The Standard Levels

    The Energy Policy and Conservation Act \1\ (EPCA), as amended (42 
U.S.C. 6291 et seq.; EPCA), directs the Department of Energy (DOE) to 
consider amended mandatory energy conservation standards for CCWs. (42 
U.S.C. 6313(e)(2)(A)) Any such amended energy conservation standard 
must be designed to ``achieve the maximum improvement in energy 
efficiency * * * which the Secretary determines is technologically 
feasible and economically justified.'' (42 U.S.C. 6295(o)(2)(A) and 
6316(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)) The standards in today's final rule, which apply to all CCWs, 
satisfy these and other statutory criteria discussed in this notice.
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    \1\ 42 U.S.C. 6291 et seq.
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    Table I.1 shows the amended standard levels that DOE is adopting 
today. These standards will apply to all CCWs manufactured for sale in 
the United States, or imported to the United States, on or after 
January 8, 2013.

 Table I.1--Amended Energy Conservation Standards for Commercial Clothes
                                 Washers
------------------------------------------------------------------------
                                             Amended energy conservation
              Equipment class                         standards
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Top-loading commercial clothes washers....  1.60 Modified Energy Factor/
                                             8.5 Water Factor.
Front-loading commercial clothes washers..  2.00 Modified Energy Factor/
                                             5.5 Water Factor.
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B. Current Federal Standards for Commercial Clothes Washers

    EPCA, as amended by the Energy Policy Act of 2005 (EPACT 2005), 
prescribes standards for CCWs manufactured on or after January 1, 2007. 
(42 U.S.C. 6313(e)) These standards require that CCWs have a modified 
energy factor (MEF) of at least 1.26 and a water factor (WF) of not 
more than 9.5. (Id.; 10 CFR 431.156)

C. Benefits to Consumers of Commercial Clothes Washers

    Table I.2 indicates the impacts on commercial consumers of today's 
amended standards. The economic impacts of the amended CCW standards on 
commercial consumers as measured by the average life-cycle cost (LCC) 
savings are positive, even though the standards may increase some 
initial costs. For example, typical top-loading CCWs--the most common 
type currently being sold--have an average installed price of $760 and 
average lifetime operating costs (discounted) of $3,286. To meet the 
amended standards, DOE estimates that the average installed price of 
such equipment will increase by $214, which will be more than offset by 
savings of $394 in average lifetime operating costs (discounted).

                      Table I.2--Implications of Amended Standards for Commercial Consumers
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                                                                             Average      Average       Median
                                      Energy conservation       Average     installed    life-cycle    payback
         Equipment class                    standard           installed      price         cost        period
                                                               price * $    increase $   savings $      years
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Top-loading CCWs.................  1.60 Modified Energy               974          214          180          4.3
                                    Factor/8.5 Water Factor.
Front-loading CCWs...............  2.00 Modified Energy             1,365           23        ** 20       ** 0.4
                                    Factor/5.5 Water Factor.
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* For a baseline model.
** DOE estimates that 96 percent of front-loading CCW consumers would purchase a model at the standard level
  even without amended standards. The values refer to average impacts for the 4 percent of consumers who would
  be affected by the standard.

D. Impact on Manufacturers

    Using a real corporate discount rate of 7.2 percent, DOE estimates 
the industry net present value (INPV) of the CCW industry to be 
approximately $62 million in 2008$. DOE expects the impact of today's 
standards on the INPV of manufacturers of CCWs to be a loss of between 
7.8 percent and 11.4 percent of the INPV, which is approximately $5 to 
$7 million. Based on DOE's interviews with the manufacturers of CCWs, 
DOE expects possible loss of employment for one manufacturer as a 
result of the standards.

E. National Benefits

    DOE estimates that the energy conservation standards will 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, DOE estimates the standards for CCWs will save over 143 
billion gallons of cumulative water consumption over 30 years (2013-
2043).
    The national net present value (NPV) of CCW consumer benefit 
resulting from the standards, considering the impacts of equipment sold 
in 2013-2043, is $0.4 billion using a 7-percent discount rate and $0.9 
billion using a 3-percent discount rate, in 2008$. This is the 
estimated total value of future operating cost savings minus the 
estimated increased equipment costs, discounted to 2009. The NPV for 
consumers (at the 7-percent discount rate) would exceed industry 
losses, discussed above, due to energy efficiency standards by at least 
80 times.
    By 2043, DOE expects the energy savings from the standards to 
eliminate the need for approximately 18 MW of electricity generating 
capacity. The energy savings will result in cumulative greenhouse gas 
emissions reductions in 2013-2043 of approximately 5.1 million tons 
(Mt) of carbon dioxide (CO2), or an amount equal to that 
produced by approximately 5.1 million new cars in a year. Additionally, 
the standards will help alleviate air pollution by resulting in 
approximately 3.0 kilotons (kt) of cumulative nitrogen oxide 
(NOX) emission reductions and 0.0003 tons of cumulative 
mercury (Hg) emission reductions. The estimated net present monetary 
values of these emissions reductions at a 7-percent discount rate 
(discounted to 2009 and expressed in 2008$) are between $13 and $140 
million for CO2, between $0.4 and $4.2

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million for NOX, and between $0.0 and $0.6 million for Hg. 
At a 3-percent discount rate, the estimated net present values of these 
emissions reductions (discounted to 2009 and expressed in 2008$) are 
between $28 and $303 million for CO2, between $0.8 million 
and $8.4 million for NOX, and between $0.0 and $0.6 million 
for Hg.
    The benefits and costs of today's final rule can also be expressed 
in terms of annualized values. Estimates of annualized values for three 
economic growth cases are shown in Table I.3. The annualized monetary 
values are the sum of the annualized national economic value of 
operating savings benefits (energy, maintenance and repair), plus the 
monetary values of the benefits of carbon dioxide emission reductions, 
monetized using a value of $20 per metric ton of carbon dioxide. The 
$20 value is a central interim value from a recent interagency process, 
as discussed in section VI.C.6. Although summing the value of operating 
savings to the values of CO2 reductions provides a valuable 
perspective, please note the following. 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, which are meant to 
reflect the global benefits of CO2 reductions. Furthermore, 
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 
considers the impacts of equipment sold in 2013-2043. The value of 
CO2, on the other hand is meant to reflect the present value 
of all future climate-related impacts, which go well beyond the 
lifetime of the equipment sold in the forecast period.
    Using a 7-percent discount rate for the annualized cost analysis, 
the cost of the standards established in today's final rule 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.3--Annualized Benefits and Costs of Amended Standards for Commercial Clothes Washers (TSL 3)
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                                                                              Primary estimate (AEO    Low estimate (AEO low-   High estimate (AEO high-
                                                                                 reference case)            growth case)              growth case)
                  Category                                Unit             -----------------------------------------------------------------------------
                                                                                 7%           3%           7%           3%           7%           3%
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                                                                        Benefits
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Monetized Operating Cost Savings...........  Million 2008$................         60.6         72.8         54.9         65.3         66.6         80.4
Quantified Emissions Reductions............  CO2 (Mt).....................         0.14         0.16         0.14         0.16         0.14         0.16
                                             NOX (kt).....................        0.087        0.194        0.087        0.194        0.087        0.194
                                             Hg (t).......................       0.0002       0.0001       0.0002       0.0001       0.0002       0.0001
Monetized Avoided Emissions Reductions *     CO2..........................          5.1          5.9          5.1          5.9          5.1          5.9
 (Million 2008$).
                                             NOX..........................          0.2          0.3          0.2          0.3          0.2          0.3
                                             Hg...........................          0.0          0.0          0.0          0.0          0.0          0.0
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                                                                          Costs
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Monetized Incremental Product and            Million 2008$................         23.4         22.7         21.9         20.9         24.6         23.9
 Installation Costs.
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                                                                      Net Benefits
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Monetized Value............................  Million 2008$................         42.5         56.3         38.3         50.6         47.3         62.7
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* For CO2, benefits reflect value of $20/t, which is in the middle of the values considered by DOE for valuing the potential global benefits resulting
  from reduced CO2 emissions. For NOX and Hg, the benefits reflect values of $2,491/t and $17 million/t, respectively. These values are the midpoint of
  the range considered by DOE.

F. Conclusion

    The benefits (energy savings, LCC savings for CCW consumers, 
positive national NPV, and emissions reductions) to the Nation of the 
standards outweigh their costs (loss of manufacturer INPV and LCC 
increases for some CCW consumers). Today's standards also represent the 
maximum improvement in energy efficiency that is technologically 
feasible and economically justified, and will result in significant 
energy savings. At present, CCWs that meet the amended standard levels 
are commercially available.

II. Introduction

A. Consumer Overview

    DOE is amending in today's final rule energy conservation standard 
levels for CCWs as shown in Table I.1. These standards apply to 
equipment manufactured or imported on or after January 8, 2013.
    DOE research suggests that commercial consumers will see benefits 
from today's 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 (PBP) 
for the more efficient, higher-priced equipment will range from 0.2 to 
5.6 years, depending on the equipment class.

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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, the subject of this rulemaking. (42 U.S.C. 6312; 6313(e)) DOE 
publishes today's final rule pursuant to Part A-1 of Title III, which 
provides for test procedures, labeling, and energy conservation 
standards for CCWs and certain other equipment, and authorizes DOE to 
require information and reports from manufacturers. The test procedures 
for CCWs appear at 10 CFR part 430, subpart B, appendix J1 (pursuant to 
10 CFR 431.154).
    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.\2\ (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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    \2\ Under the statute, a CCW must have an MEF of at least 1.26 
and a WF of not more than 9.5.
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    EPCA provides criteria for prescribing amended standards for 
covered products and equipment.\3\ As indicated above, any amended 
standard for this equipment must be designed to achieve the maximum 
improvement in energy efficiency that is technologically feasible and 
economically justified. (42 U.S.C. 6295(o)(2)(A) and 6316(a)) 
Additionally, EPCA provides specific prohibitions on prescribing such 
standards. DOE may not prescribe an amended or new standard for any 
equipment for which DOE has not established a test procedure. (42 
U.S.C. 6295(o)(3)(A) and 6316(a)). Further, DOE may not prescribe an 
amended standard if DOE determines by rule that such standard would not 
result in ``significant conservation of energy'' or ``is not 
technologically feasible or economically justified.'' (42 U.S.C. 
6295(o)(3)(B) and 6316(a))
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    \3\ 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.
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    EPCA also provides that, in deciding whether such a standard is 
economically justified for equipment such as CCWs, DOE must, after 
receiving comments on the proposed standard, determine whether the 
benefits of the standard exceed its burdens by considering, to the 
greatest extent practicable, the following seven factors:

    (1) The economic impact of the standard on manufacturers and 
consumers of the products 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))
    In addition, EPCA, as amended (42 U.S.C. 6295(o)(2)(B)(iii) and 
6316(a)), establishes a rebuttable presumption that any standard for 
covered products is economically justified if the Secretary finds that 
``the additional cost to the consumer of purchasing a product complying 
with an energy conservation standard level will be less than three 
times the value of the energy (and as applicable, water) savings during 
the first year that the consumer will receive as a result of the 
standard, as calculated under the test procedure * * *'' in place for 
that standard. See section III.D.2.
    Furthermore, EPCA contains what is commonly known as an ``anti-
backsliding'' provision. (42 U.S.C. 6295(o)(1) and 6316(a)) 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. 
EPCA further provides that the Secretary may not prescribe an amended 
standard if interested persons have established by a preponderance of 
the evidence that the standard is ``likely to result in the 
unavailability in the United States of any product type (or class)'' 
with performance characteristics, features, sizes, capacities, and 
volumes that are substantially the same as those generally available in 
the United States at the time of the Secretary's finding. (42 U.S.C. 
6295(o)(4) and 6316(a))
    Section 325(q)(1) of EPCA is applicable to promulgating standards 
for most types or classes of equipment, including CCWs, that have two 
or more subcategories. (42 U.S.C. 6295(q)(1) and 42 U.S.C. 6316(a)) 
Under this provision, DOE must specify a different standard level than 
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)(A) and (B)) 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. (42 U.S.C. 
6295(q)(1)) Any rule prescribing such a standard must include an 
explanation of the basis on which DOE established such higher or lower 
level. (See 42 U.S.C. 6295(q)(2))
    Federal energy conservation requirements for commercial equipment, 
including CCWs, generally supersede State laws or regulations 
concerning energy conservation testing, labeling, and standards. (42 
U.S.C. 6297(a)-(c); 42 U.S.C. 6316(a)) 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); 42 U.S.C. 
6316(a)) DOE must prescribe a rule granting the petition if the 
Secretary finds that the

[[Page 1126]]

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); 42 U.S.C. 6316(a))

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
    As discussed in the supplemental notice of proposed rulemaking 
(SNOPR), 74 FR 57738 (Nov. 9, 2009) (the November 2009 SNOPR), the 
EPACT 2005 amendments to EPCA require that DOE issue a final rule by 
January 1, 2010, to determine whether standards for CCWs 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.)
    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).\4\ 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.
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    \4\ This document is available on the DOE Web site at: http://www1.eere.energy.gov/buildings/appliance_standards/commercial/clothes_washers.html.
---------------------------------------------------------------------------

    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 in this 
rulemaking. 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.

   Table II.1--Commercial Clothes Washer Energy Conservation Standards
                    Proposed in the October 2008 NOPR
------------------------------------------------------------------------
                                     Modified energy   Water factor gal/
             Equipment              factor  ft\3\/kWh        ft\3\
------------------------------------------------------------------------
Top-loading CCWs..................               1.76                8.3
Front-loading CCWs................               2.00                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 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. 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

[[Page 1127]]

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 the November 2009 
SNOPR. DOE subsequently tested the max-tech unit at an independent test 
facility, revised the max-tech level, updated the analysis, and 
published the November 2008 SNOPR to allow interested parties to 
comment on the revised efficiency level proposals. 74 FR 57738 (Nov. 9, 
2009).
    In the November 2009 SNOPR, DOE revised the proposed energy 
conservation standards for CCWs. 74 FR 57738 (Nov. 9, 2009). In 
conjunction with the November 2009 SNOPR, DOE also published on its Web 
site the complete TSD for the proposed rule, which incorporated the 
final analyses that DOE conducted, and contained technical 
documentation for each step of the analysis. The TSD included the 
engineering analysis spreadsheets, the LCC spreadsheet, and the 
national impact analysis spreadsheet. The revised energy conservation 
standards proposed in the November 2009 SNOPR for CCWs are shown in 
Table II.2.

   Table II.2--Commercial Clothes Washer Energy Conservation Standards
                   Proposed in the November 2009 SNOPR
------------------------------------------------------------------------
                                     Modified energy   Water factor gal/
             Equipment               factor ft\3\/kWh        ft\3\
------------------------------------------------------------------------
Top-loading CCWs..................               1.60                8.5
Front-loading CCWs................               2.00                5.5
------------------------------------------------------------------------

    In the November 2009 SNOPR, DOE identified issues on which it was 
particularly interested in receiving comments and views of interested 
parties. These included the following: (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 
manufacturer impacts, including the effects of manufacturer tax credits 
and competitive concerns; (5) the determination of environmental 
impacts; and (6) the newly proposed energy conservation standards. 74 
FR 57738, 57800 (Nov. 9, 2009) After the publication of the November 
2009 SNOPR, DOE also held a public meeting in Washington, DC, on 
November 16, 2009 (referred to as the ``November 2009 public 
meeting''), to hear oral comments on and solicit information relevant 
to the revised proposed rule. The November 2009 SNOPR included 
additional background information on the history of this rulemaking. 74 
FR 57738, 57742-43 (Nov. 9, 2009).
    Comments presented by interested parties during the November 2009 
public meeting and submitted in response to the November 2009 NOPR 
concerning the sensitivity of the analyses to the estimated market 
share split of CCW shipments among laundromats, multi-family housing, 
and on-premises laundry applications led DOE to conduct a sensitivity 
analysis for today's final rule. See appendix 11C of the TSD.

III. General Discussion

A. 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, 62043-44 (Oct. 17, 2008). While DOE believes 
commercial laundry practices likely differ from residential 
practices,\5\ 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. In response to the October 2008 NOPR, interested 
parties agreed with DOE's conclusion that the DOE clothes washer test 
procedure is adequate for rating CCWs. DOE did not receive any comments 
objecting to the use of the DOE clothes washer test procedure for CCWs. 
Therefore, for the November 2009 SNOPR, DOE continued to consider the 
existing DOE test procedure adequate to measure energy and water 
consumption of CCWs. 74 FR 57738, 57743 (Nov. 9, 2009).
---------------------------------------------------------------------------

    \5\ CCWs are typically used more frequently and filled with a 
larger load than RCWs.
---------------------------------------------------------------------------

    The Appliance Standards Awareness Project (ASAP) commented that DOE 
is currently reviewing its clothes washer test procedure, and noted 
that there may be revisions as a result of that rulemaking. ASAP asked 
whether, under EPACT 2005, those potential changes in the test 
procedure would apply to the determinations of compliance with this 
standard that is currently proposed for CCWs. (ASAP, Public Meeting 
Transcript, No. 67.4 at pp. 13-16 \6\) EPCA states that ``[w]ith 
respect to commercial clothes washers, the test procedures shall be the 
same as the test procedures established by the Secretary for RCWs under 
section 6295(g) of this title.'' (42 U.S.C. 6314(a)(8)) Therefore, CCWs 
will be required to be tested to the DOE clothes washer test procedure 
that is effective at the time the testing is conducted.
---------------------------------------------------------------------------

    \6\ A notation in the form ``ASAP, Public Meeting Transcript, 
No. 67.4 at pp. 13-16'' identifies an oral comment that DOE received 
during the November 16, 2009, SNOPR public meeting and which was 
recorded in the public meeting transcript in the docket for this 
rulemaking (Docket No. EE-2006-STD-0127), maintained in the Resource 
Room of the Building Technologies Program. This particular notation 
refers to a comment (1) made by the Appliance Standards Awareness 
Project (ASAP) during the public meeting, (2) recorded in document 
number 67.4, which is the public meeting transcript that is filed in 
the docket of this rulemaking, and (3) which appears on pages 13-16 
of document number 67.4.
---------------------------------------------------------------------------

B. Technological Feasibility

1. General
    As stated above, any standards that DOE establishes for CCWs must 
be technologically feasible. (42 U.S.C.

[[Page 1128]]

6295(o)(2)(A) and (o)(3)(B); 42 U.S.C. 6316(a)) DOE considers a design 
option to be technologically feasible if it is in use by the respective 
industry or if research has progressed to the development of a working 
prototype. ``Technologies incorporated in commercial products or in 
working prototypes will be considered technologically feasible.'' 10 
CFR part 430, subpart C, appendix A, section 4(a)(4)(i). 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 the November 2007 ANOPR and in chapter 4 of the 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 the November 2009 SNOPR, DOE 
did not screen 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 considered the 
same design options in the November 2009 SNOPR as those evaluated in 
the October 2008 NOPR. 74 FR 57738, 57743-44 (Nov. 9, 2009).
    This final rule considers the same design options as those 
evaluated in the November 2009 SNOPR. All the evaluated technologies 
have been used (or are being used) in commercially available equipment 
or working prototypes. DOE also has determined that there is equipment 
either in the market or in working prototypes at all of the efficiency 
levels analyzed in this notice. Therefore, DOE has determined that all 
of the efficiency levels evaluated in this final rule, 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 TSD.
2. Maximum Technologically Feasible Levels
    When DOE considers an amended 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.) For the October 2008 NOPR, DOE proposed the max-tech 
levels shown in Table III.1. 73 FR 62034, 62036 (Oct. 17, 2008).

    Table III.1--Commercial Clothes Washer Max-Tech Efficiency Levels
                    Proposed in the October 2008 NOPR
------------------------------------------------------------------------
                                               Max-tech level
          Equipment class          -------------------------------------
                                       MEF, ft 3/kW       WF, gal/ft3
------------------------------------------------------------------------
Top-Loading CCWs..................               1.76                8.3
Front-Loading CCWs................               2.35                4.4
------------------------------------------------------------------------

    DOE received comments in response to the October 2008 NOPR 
questioning the max-tech top-loading CCW efficiency rating presented in 
the November 2009 SNOPR. DOE examined the max-tech efficiency level for 
top-loading CCWs, contracting an independent testing laboratory to 
verify the performance ratings for the max-tech top-loading CCW model. 
The laboratory results (based on a 3-unit sample) suggested that the 
max-tech model achieves 1.63 MEF/8.4 WF. Based on this information, DOE 
revised the max-tech top-loading CCW level in the November 2009 SNOPR 
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 concluded in the November 
2009 SNOPR is attainable by the max-tech CCW model. For the November 
2009 SNOPR, the proposed front-loading max-tech level was the same as 
in the October 2008 NOPR, whereas the proposed top-loading max-tech 
level was revised to 1.60 MEF/8.5 WF based on the independent test 
results. 74 FR 57738, 57744 (Nov. 9, 2009).
    DOE received comments in response to the November 2009 SNOPR that 
objected to the max-tech efficiency level for top-loading CCWs based on 
lack of wash performance and consumer acceptance of the max-tech top-
loading CCW model in a commercial laundry setting. DOE agrees that 
inherent in a determination of technological feasibility is performance 
related to the equipment's primary function (i.e., cleaning clothes), 
but DOE considers as evidence of sufficient performance and consumer 
acceptance of the highest efficiency top-loading CCWs the presence on 
the market of two such models at or near the max-tech level proposed in 
the November 2009 SNOPR. Therefore, for today's final rule, the max-
tech levels for both classes are the max-tech levels identified in the 
November 2009 SNOPR. These levels are shown in Table III.2 below. For 
more details on this selection of max-tech levels, see section IV.C.1.a 
of today's final rule.

[[Page 1129]]



    Table III.2--Commercial Clothes Washer Max-Tech Efficiency Levels
------------------------------------------------------------------------
                                               Max-tech level
          Equipment class          -------------------------------------
                                      MEF, ft\3\/kW      WF, gal/ft\3\
------------------------------------------------------------------------
Top-Loading CCWs..................               1.60                8.5
Front-Loading CCWs................               2.35                4.4
------------------------------------------------------------------------

C. Energy Savings

    DOE forecasted energy savings in its national energy savings (NES) 
analysis through the use of an NES spreadsheet tool, as discussed in 
the November 2009 SNOPR. 74 FR 57738, 57744 (Nov. 9, 2009).
    One criterion that governs DOE's adoption of standards for CCWs is 
the standard must result in ``significant'' energy savings. (42 U.S.C. 
6295(o)(3)(B) and 42 U.S.C. 6316(a)) While EPCA 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, 1373 (D.C. Cir. 1985), indicated that Congress intended 
``significant'' energy savings in this context to be savings that were 
not ``genuinely trivial.'' DOE's estimates of the energy savings for 
the energy conservation standards adopted in today's final rule are 
nontrivial. Therefore, DOE considers them ``significant'' within the 
meaning of section 325 of EPCA.

D. 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) and 42 U.S.C. 6316(a)) The 
following sections discuss how DOE has addressed each of those seven 
factors in this rulemaking.
a. Economic Impact on Commercial Consumers and Manufacturers
    DOE considered the economic impact of the amended CCW standards on 
commercial consumers and manufacturers. For consumers, DOE measured the 
economic impact as the change in installed cost and life-cycle 
operating costs, i.e., the LCC. (See sections IV.D and IV.E and chapter 
8 of the TSD.) DOE investigated the impacts on manufacturers through 
the manufacturer impact analysis (MIA). (See sections IV.G and VI.C.2, 
and chapter 13 of the TSD.) The economic impact on commercial consumers 
and manufacturers is discussed in detail in the November 2009 SNOPR. 74 
FR 57738, 57751-55, 57761-65, 57769-77 (Nov. 9, 2009).
b. Life-Cycle Costs
    DOE considered life-cycle costs of CCWs, as discussed in the 
November 2009 SNOPR. 74 FR 57738, 57751-55 (Nov. 9, 2009). DOE 
calculated the sum of the purchase price and the operating expense--
discounted over the lifetime of the equipment--to estimate the range in 
LCC benefits that commercial consumers would expect to achieve due to 
the standards.
c. Energy Savings
    Although significant conservation of energy is a separate statutory 
requirement for imposing an energy conservation standard, EPCA also 
requires DOE, in determining the economic justification of a 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) and 42 U.S.C. 6316(a)). As in the November 2009 
SNOPR (74 FR 57738, 57755-61 (Nov. 9, 2009)), for today's final rule, 
DOE used the NIA spreadsheet results in its consideration of total 
projected savings that are directly attributable to the standard levels 
DOE considered.
d. Lessening of Utility or Performance of Equipment
    In selecting today's standard levels, DOE sought to avoid new 
standards for CCWs that would lessen the utility or performance of that 
equipment (42 U.S.C. 6295(o)(2)(B)(i)(IV) and 42 U.S.C. 6316(a)). As 
with the November 2009 SNOPR (74 FR 57738, 57745 (Nov. 9, 2009)), 
today's standards do not involve changes in equipment design or unusual 
installation requirements that would reduce the utility or performance 
of CCWs.
e. Impact of Any Lessening of Competition
    DOE considers any lessening of competition likely to result from 
standards. Accordingly, as discussed in the November 2009 SNOPR (74 FR 
57738, 57745, 57762-63 (Nov. 9, 2009)), DOE requested that the Attorney 
General transmit to the Secretary a written determination of the 
impact, if any, of lessening of competition likely to result from the 
proposed standards, together with an analysis of the nature and extent 
of such impact (42 U.S.C. 6295(o)(2)(B)(i)(V) and (B)(ii) and 42 U.S.C. 
6316(a)).
    To assist the Attorney General in making such a determination, DOE 
provided the U.S. Department of Justice (DOJ) with copies of the 
November 2009 proposed rule and the TSD for review. The Attorney 
General's response is discussed in section VI.C.5 below, and is 
reprinted at the end of this rule. Impacts on manufacturers are also 
discussed in section IV.G below.
f. Need of the Nation to Conserve Energy
    In considering standards for CCWs, the Secretary must consider the 
need of the Nation to conserve energy (42 U.S.C. 6295(o)(2)(B)(i)(VI) 
and 42 U.S.C. 6316(a)). The Secretary recognizes that energy 
conservation benefits the Nation in several important ways. The non-
monetary benefits of the standards are likely to be reflected in 
improvements to the security and reliability of the Nation's energy 
system. Today's standards will also result in environmental benefits. 
As discussed in the November 2009 SNOPR, DOE has considered these 
factors in adopting today's standards. 74 FR 57738, 57765-67 (Nov. 9, 
2009).
g. Other Factors
    In determining whether a standard is economically justified, EPCA 
directs the Secretary to consider any other factors deemed relevant (42 
U.S.C. 6295(o)(2)(B)(i)(VII) and 42 U.S.C. 6316(a)). In adopting 
today's amended standards, the Secretary found no relevant factors 
other than those identified elsewhere in today's final rule.
2. Rebuttable Presumption
    Section 325(o)(2)(B)(iii) of EPCA states that there is a rebuttable 
presumption that an energy conservation standard is economically 
justified if the additional cost to the consumer that meets the 
standard level is less than three times the value of the first-year 
energy savings resulting from the standard (and water savings in the 
case of a water efficiency standard), as calculated under the 
applicable DOE test procedure (42 U.S.C. 6295(o)(2)(B)(iii) and 42 
U.S.C. 6316(a)).

[[Page 1130]]

DOE's LCC and PBP analyses generate values that calculate the PBP for 
consumers of equipment meeting potential energy conservation standards, 
which includes, but is not limited to, the 3-year PBP contemplated 
under the rebuttable presumption test discussed above. (See chapter 8 
of the TSD.) 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) and 42 U.S.C. 6316(a). 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).

IV. Methodology and Discussion of Comments on Methodology

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

A. Equipment Classes

    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). 
DOE determined in the October 2008 NOPR that two equipment classes were 
warranted because the method of ``loading'' had been previously 
determined, under DOE rulemakings for residential clothes washers, to 
be a ``feature,'' as defined by EPCA, and because an amended standard 
for a single equipment class might set the 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. 73 FR 62034, 62049-50 (Oct. 17, 2008). This determination 
remained unchanged in the November 2009 SNOPR, 74 FR 57738, 57746-47, 
although DOE sought comment as to (1) whether the method of ``loading'' 
clothes washers, or any other characteristic commonly associated with 
traditional ``top-loading'' or ``front-loading'' clothes washers, such 
as presence or absence of agitators, ability to interrupt cycles, and 
possibly others, are ``features'' within the meaning of 42 U.S.C. 
6295(o)(4) in EPCA; and (2) whether the availability of such feature(s) 
would likely be affected by eliminating the separate classes for these 
equipment types previously established by DOE. DOE received comments in 
response to the November 2009 SNOPR both in support of and opposed to 
establishing two equipment classes for CCWs. These comments are 
described in more detail in the following paragraphs.
    The Association of Home Appliance Manufacturers (AHAM), GE Consumer 
& Industrial (GE),\7\ Whirlpool Corporation (Whirlpool), and Alliance 
Laundry Systems (Alliance) stated that they support the definition of 
separate equipment classes for top-loading and front-loading CCWs. 
(AHAM, Public Meeting Transcript, No. 67.4 at p. 33; AHAM, No. 67.12 at 
p. 2;\8\; GE, Public Meeting Transcript, No. 67.4 at p. 44; GE, No. 
67.9 at p. 1) Whirlpool, Public Meeting Transcript, No. 67.4 at p. 45; 
Whirlpool, No. 67.11 at p. 1; Alliance, Public Meeting Transcript, No. 
67.4 at p. 46. AHAM stated that EPACT 2005 allows DOE to establish 
different classes, directing DOE to create ``classes of products, 
depending on their energy use or performance characteristics.'' AHAM 
noted that there is a bimodal distribution of efficiencies between top-
loading and front-loading CCWs. According to AHAM, the standards 
proposed for the front-load equipment class in terms of MEF and WF are 
beyond the capability of a traditional, or even a non-traditional, top-
load CCW. (AHAM, Public Meeting Transcript, No. 67.4 at pp. 39-40; 
AHAM, No. 67.12 at pp. 2-3) GE, Whirlpool, and Alliance agree that DOE 
has the ability to define two CCW equipment classes. (GE, Public 
Meeting Transcript, No. 67.4 at p. 44; Whirlpool, Public Meeting 
Transcript, No. 67.4 at p. 45; Alliance, Public Meeting Transcript, No. 
67.4 at p. 46). AHAM further stated that if DOE moves forward with a 
single equipment class, top-loading CCWs would not be able to meet a 
standard that would be fairly easy for front-loaders to achieve. With 
two equipment classes, energy and water savings could be achieved by 
both top-loaders and front-loaders, albeit at a different level. 
According to AHAM, this reduces the possibility that consumers would 
repair older, less efficient top-loading CCWs, because new high 
efficiency top-loaders would be available. (AHAM, Public Meeting 
Transcript, No. 67.4 at pp. 40-41; AHAM, No. 67.12 at p. 2.)
---------------------------------------------------------------------------

    \7\ In its December 9, 2009, letter, GE states that it 
``adopt[s] by reference the comments on the SNOPR that [it] 
understand[s] will be submitted by the Association of Home Appliance 
Manufacturers (AHAM) * * * '' Therefore, comments submitted by AHAM, 
designated by comment number 67.12 in the docket for this 
rulemaking, should be interpreted as representing GE's and well as 
AHAM's views.
    \8\ A notation in the form ``AHAM, No. 67.12 at p. 2'' 
identifies a written comment (1) made by the Association of Home 
Appliance Manufacturers (AHAM), (2) recorded in document number 
67.12 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 2 of document 
number 67.12.
---------------------------------------------------------------------------

    Alliance commented that `` `top-loading' is a `feature' within the 
meaning of 42 U.S.C. 6295, because it provides consumers the 
opportunity to purchase lower cost CCWs.'' Alliance stated that 
purchase cost is a primary reason why top-loading clothes washers hold 
an approximate 65-percent market share, since consumers can choose the 
lower-cost design option of a top-loading door for a vertical-axis 
machine versus the higher-cost front-loading door design for a 
horizontal-axis machine. Alliance noted that there is one unique 
horizontal-axis design that incorporates a loading door on top that 
essentially opens a door on the side of the horizontally rotatable spin 
tub, but described this design as ``unpopular.'' Alliance commented 
that, although the cost difference between vertical-axis and 
horizontal-axis models has decreased, a comparably featured standard 
capacity top-loader remains far less costly than a standard capacity 
front-loader due to the inherent differences in components. Alliance 
listed variable speed motors, sophisticated motor electronic controls, 
heavy mass weights, and door assembly costs as the key components 
contributing to the cost of front-loading designs. More specifically, 
Alliance stated that a front-loader door must incorporate high-
temperature impact-resistant glass, a door/tub boot seal, a very 
sophisticated lock system, and a heavy-duty hinge system to withstand 
the abuse in a commercial environment. In contrast, Alliance described 
a top-loader door as a simple metal stamping

[[Page 1131]]

with a low-cost hinge and a fairly simple micro-switch to remove power 
from the basket drive mechanism during spin. Additionally, Alliance 
stated that front-loaders require a ``pedestal'' to raise the loading 
door in response to consumer objections to stooping so far down. 
Alliance estimated the retail price of such a pedestal as $250, which 
along with an estimated $250 retail price difference between a baseline 
efficiency top-loader and a comparably featured front-loader, would 
result in a top-loader costing consumers at least $500 less than a 
front-loader. Therefore, Alliance concluded that top-loading is 
``undeniably'' a feature for consumers because of its low cost. 
(Alliance, Public Meeting Transcript, No. 67.4 at pp. 46-48; Alliance, 
No. 66.4 Letter at pp. 1-2,\9\ Alliance, No. 67.8 at p. 2.) Whirlpool 
described a top-loading horizontal-axis RCW as a rare configuration 
that is not produced or sold domestically by any major manufacturers of 
laundry equipment, and one that does not effectively meet the needs of 
either top-loading or front-loading RCW consumers. According to 
Whirlpool, the openings of such units are small and prone to snagging 
of clothes. Further, Whirlpool stated that this configuration is not 
available in CCWs. (Whirlpool, No. 67.11 at p. 4.)
---------------------------------------------------------------------------

    \9\ A notation in the form ``Alliance, No. 66.4 Letter at pp. 1-
2'' identifies pages 1-2 of a written comment submitted by Alliance 
entitled ``Is Top-Loading a Feature Within the Meaning of EPCA?'' 
This letter was entered as comment number 66.4 in the docket for 
this rulemaking, along with a written comment submitted by Alliance 
entitled ``Response to DOE Commercial Clothes Washer SNOPR.''
---------------------------------------------------------------------------

    Alliance also stated that top-loading is a ``feature'' because of 
its convenience to the user. A user is not required to stoop or bend to 
load a top-loader, and according to Alliance most consumers prefer this 
convenience, though no supporting data was provided. Alliance stated 
that another convenience is the ability to add a garment to a clothes 
load in a washer which has already initiated a wash cycle. For top-
loaders, such action only requires lifting the lid to drop the item in. 
Alliance commented that most front-loaders require time to unlock the 
door and possibly drain the wash water, then require the user to stoop 
or bend to add the garment to the washer. (Alliance, Public Meeting 
Transcript, No. 67.4 at pp. 48-49; Alliance, No. 66.4 Letter at p. 2; 
Alliance, No. 67.8 at p. 2) Finally, Alliance commented that convenient 
cycle times, as defined by typical top-loading washers, are important 
to users. According to Alliance, front-loading washers have longer 
cycle times because there is less mechanical action in tumbling in a 
front-loading design than the vigorous mechanical action imparted by an 
agitator in a top-loading design. Alliance cited the February 2009 
edition of Consumer Reports magazine as stating that ``front-loader 
cycle times are getting longer; many take more than 90 minutes per 
load,'' and that the article shows that front-loader cycle times are 
70-115 minutes compared to top-loader cycle times of 30-85 minutes. 
Alliance noted that all front-loaders in the Consumer Reports article 
with cycle times less than 85 minutes scored poorly in Consumer Union's 
``wash rating'' compared to front-loaders with cycle times of 85 
minutes or longer, while top-loaders with cycle times of 55 minutes 
achieved wash ratings of ``good'' to ``very good.'' Alliance concludes 
that top-loader door location is associated with providing consumers 
with their expected good washing performance at a convenient washing 
cycle time of around 55 minutes. (Alliance, Public Meeting Transcript, 
No. 67.4 at p. 49; Alliance, No. 66.4 Letter at p. 2; Alliance, No. 
67.8 at p. 3) GE agreed that cycle time and cost to the consumer are 
very important differentiators between top-loading and front-loading 
CCWs which, along with consumer preference, counsel in favor of 
maintaining the two separate equipment classes. (GE, Public Meeting 
Transcript, No. 67.4 at pp. 44-45) AHAM provided a similar consumer 
utility rationale in support of two equipment classes, specifying level 
of vibration, ergonomic factors (bending), history, and experience of 
use, cycle interruption, and preference as consumer utilities and 
functions. (AHAM, No. 67.12 at p. 3) Whirlpool agreed that vibration, 
ergonomics, cycle time, and familiarity are factors which consumers use 
in selecting top-loading CCWs, and added configuration, noise, value 
proposition, and sour smell. (Whirlpool, No. 67.11 at p. 1) Whirlpool 
also commented that it does not believe high efficiency top-loaders are 
viable in the commercial market because clothes rollover necessary for 
effective washing and rinsing is not possible in an overloaded machine. 
Whirlpool states that overloading is a common practice by CCW users 
because they are paying by the load. (Whirlpool, No. 67.11 at p. 4) 
Alliance also commented that, for the September 21, 2009, RCW Framework 
public meeting, Whirlpool had stated that one-fifth of consumers who 
bought a front-loading washer have gone back to a top-loading washer. 
(Alliance, No. 66.4 Letter at p. 2)
    Whirlpool commented that, in addition to the impact on the user of 
a standard applicable to a single equipment class, there is also an 
impact on the route operators \10\ and multi-housing complexes, most of 
which have specialized in either top-loading or front-loading CCWs. 
According to Whirlpool, a major reinvestment in terms of technical 
training and parts inventories would be required for those companies 
that have invested in top-loading CCWs if a standard resulted in the 
phaseout of such machines. Whirlpool also stated that CCWs are often 
refurbished and moved down-market, possibly multiple times during a 
particular unit's lifetime, making CCWs available to many socioeconomic 
classes. (Whirlpool, Public Meeting Transcript, No. 67.4 at p. 45; 
Whirlpool, No. 67.11 at p. 1; see also AHAM, No. 67.12 at p. 3) AHAM 
stated that route operators have accumulated expertise on either the 
top-loading or front-loading platform. (AHAM, No. 67.12 at p. 3)
---------------------------------------------------------------------------

    \10\ Route operators supply laundry equipment and maintain 
facilities in exchange for a percentage of the laundry revenue.
---------------------------------------------------------------------------

    Whirlpool also commented that separate equipment classes would be 
consistent with energy conservation standards for refrigeration, which 
have separate classes for side-by-side, top freezer, and bottom freezer 
refrigerators, and room air conditioners, since the product classes 
reflect home configuration, consumer choice, and consumer utility. 
(Whirlpool, Public Meeting Transcript, No. 67.4 at p. 46; Whirlpool, 
No. 67.11 at pp. 1-2) Earthjustice (EJ) stated that the separation in 
EPCA of refrigerator by method of access was codified by Congress as 
two distinct standards. According to EJ, because Congress enacted a 
single standard for all CCWs, what it chose to do for refrigerators is 
not entirely applicable to the CCW rulemaking. (EJ, Public Meeting 
Transcript, No. 67.4 at pp. 49-50)
    EJ stated that Congress has provided several examples of the 
product attributes that it anticipated as constituting ``features'' 
under EPCA: ``automatic defrost, through the door ice, size of room air 
conditioners, and noise levels.'' H. Rep. 100-11, at 23 (1987). EJ 
commented that this demonstrates that Congress indicated that the fact 
of access is a feature (for example, through the door ice), but did not 
suggest that the method of access is also a feature (for example, side-
by-side versus stacked configuration refrigerators) within the meaning 
of 42 U.S.C. 6295(o)(4). (EJ, No. 67.5 at p. 5)
    EJ commented that subparagraph (B) of 42 U.S.C. 6295(q)(1) is 
permissive, and provides that DOE ``shall'' create

[[Page 1132]]

separate classes for products based on the presence of ``a capacity or 
other performance-related feature'' only if ``such feature justifies a 
[different] standard.'' According to EJ, EPCA then sets out very 
expansive criteria for DOE to apply in determining whether a given 
feature justifies a unique standard. EJ stated that, although DOE must 
consider the utility of the feature, DOE is free to supplement this 
consideration with any other factors it deems appropriate. (EJ, No. 
67.5 at p. 3)
    EJ stated that 42 U.S.C. 6295(o)(4) provides that DOE may separate 
covered equipment into distinct classes when necessary to prohibit the 
adoption of standards that eliminate certain product attributes. EJ 
further stated that DOE's authority to adopt standards that group all 
varieties of the given covered equipment into a single class is only 
barred when such a standard is likely to result in the unavailability 
of features that are substantially the same as those currently 
available; i.e., EPCA only mandates the creation of multiple equipment 
classes when the failure to do so would eliminate certain truly unique 
equipment attributes from the market. According to EJ, this statutory 
scheme forecloses an interpretation that EPCA mandates the designation 
of distinct equipment classes for top-loading and front-loading CCWs. 
(EJ, No. 67.5 at pp. 3-4) EJ provided four separate reasons why it 
believes 42 U.S.C. 6295(o)(4) prohibits DOE from adopting standards 
that would treat all CCWs as a single equipment class: (1) The method 
of loading a CCW is not a ``feature'' within the meaning of 42 U.S.C. 
6295(o)(4) \11\; (2) the ability to load a CCW from the front is 
substantially the same as the ability to load from the top; (3) 
maintaining a single CCW category is not likely to lead to the 
unavailability of top-loaders; and (4) top-loading CCWs possess no 
other attributes requiring protection under 42 U.S.C. 6295(o)(4). (EJ, 
No. 67.5 at pp. 4-8)
---------------------------------------------------------------------------

    \11\ EJ stated that the method of loading a CCW is not a feature 
because: (1) DOE research on the public's valuation of clothes 
washer characteristics, presented in a December 2000 Technical 
Support Document, shows that door placement was not among the top 
ten most important attributes, and the value of this attribute is 
likely even lower now given the increased prevalence of front-
loaders; (2) the FTC eliminated the distinction between top-loading 
and front-loading machines in its labeling requirements (65 FR 16134 
(March 27, 2000)); and (3) the legislative history supports the 
conclusion that door placement is not a feature because examples 
cited suggest that while access itself may be a feature, the method 
of access is not. (EJ No. 67.5 at 4)
---------------------------------------------------------------------------

    EJ commented that if, for the sake of argument, the method provided 
to access a CCW is a ``feature'' within the meaning of 42 U.S.C. 
6295(o)(4), it did not follow that EPCA would require separate 
equipment classes. EJ stated that, in enacting the EPCA language, 
Congress was ``careful to note'' that the ``prohibition against 
grouping all varieties of a covered product into a single product class 
was a narrow one.'' (EJ, No. 67.5 at p. 6)

    A valid standard may entail some minor loss of characteristics, 
features, sizes, etc.; for this reason, the Act requires that 
``substantially the same,'' though not necessarily identical, 
characteristics or features should continue to be available. [42 
U.S.C. 6295(o)(4)] also does not apply to trivial effects in which a 
standard might result.

H. Rep. 100-11, at 23 (1987).
    According to EJ, the inclusion of this ``substantially the same'' 
language shows that Congress did not intend the resulting 
unavailability of any and every feature to be a barrier to the 
imposition of strong efficiency standards, but rather a standard would 
be barred only if it would have a substantial impact on product 
utility. EJ stated that the ability to access the CCW from the top is 
``substantially the same'' as the ability to access the unit from the 
front because either delivers the same basic functionality of accessing 
the unit for loading and unloading. Thus EJ states that DOE is not 
barred from maintaining a single set of efficiency standards for all 
CCWs, even assuming that those standards would have the consequence of 
eliminating all top-loading CCWs from the market. (EJ, No. 67.5 at p. 
6)
    EJ also did not agree with AHAM's statement that a distinction in 
energy use between two types of CCWs would justify a separate equipment 
class. According to EJ, that would be at odds with the intent of EPCA. 
EJ stated that whenever two examples of equipment use different amounts 
of energy, the intent is for a standard to eliminate the one that uses 
too much energy. (EJ, Public Meeting Transcript, No. 67.4 at pp. 41-42)
    EJ also commented that it is sensible to adopt a strong unitary 
standard that applies to both top-loading and front-loading CCWs. EJ 
stated that it had already made the case that the method of loading is 
not a feature under 42 U.S.C. 6295(o)(4), but even if DOE did determine 
that the method of loading is a feature, a strong standard would not 
eliminate top-loading CCWs from the market. (EJ, Public Meeting 
Transcript, No. 67.4 at pp. 42-43) EJ also commented on the recent 
Ninth Circuit decision reversing DOE's denial of the California Energy 
Commission's (CEC) petition for exemption from existing energy 
efficiency standards for RCWs and remanding the petition for further 
review.\12\ EJ stated that the court, while not directly addressing the 
``features'' issue, indicated that DOE can't just look at the market 
today, but must assess what the market will be when the standard takes 
effect. EJ stated that DOE would have to find by preponderance of the 
evidence that a strong standard would eliminate top-loaders from the 
market in 2013. EJ noted that it did not believe that top-loaders would 
be eliminated at that time, based on the existence of very efficient 
top-loading RCWs currently in the market. (EJ, Public Meeting 
Transcript, No. 67.4 at p. 43; EJ, No. 67.5 at pp. 6-7)
---------------------------------------------------------------------------

    \12\ California Energy Commission versus DOE, Case No. 07-71576 
(October 28, 2009).
---------------------------------------------------------------------------

    EJ further commented that no other attributes of CCWs which DOE 
identified in the November 2009 SNOPR as possibly providing consumer 
utility, such as the presence or absence of agitators and the ability 
to interrupt cycles, require protection under 42 U.S.C. 6295(o)(4). EJ 
stated that DOE has neither explained why the presence or absence of 
agitators would provide any consumer utility, nor considered that high 
efficiency CCWs may still be equipped with an agitator. EJ also stated 
that horizontal-axis CCWs available today are often able to be 
interrupted mid-cycle. In addition, EJ commented that, although 
Alliance cited an article which discussed cycle times for top-loaders 
and front-loaders, Alliance did not contend that the variation in cycle 
time is an issue for CCWs. EJ stated that the range of cycle times for 
top-loaders and front-loaders broadly overlap, and because front-
loaders typically have a lower ending remaining moisture content (RMC) 
than top-loaders, the total washing and drying times required for top-
loading and front-loading CCWs are likely to be equivalent. (EJ, No. 
67.5 at p. 8)
    The Pacific Gas and Electric Company, Southern California Gas 
Company, and San Diego Gas Company (the California Utilities) also 
supported a single equipment class, arguing for reasons similar to 
those articulated by EJ that the method of loading and other 
characteristics commonly associated with the method of loading are not 
features, and that a single class would not likely result in the 
unavailability of top-loading CCWs. (California Utilities, No. 67.10 at 
pp. 2-3) Further, the California Utilities stated that, although CCWs 
and RCWs are similar in technologies, design, and operating 
characteristics, a ``feature'' of RCWs is not necessarily a ``feature'' 
of CCWs. (California Utilities, No. 67.10 at p. 3)

[[Page 1133]]

The California Utilities also asserted that the LCC savings of a single 
equipment class with standards at various front-loading TSLs could 
increase as much at $304 as compared to the LCC savings estimated for 
the standards proposed in the November 2009 SNOPR. According to the 
California Utilities and ASAP, American Council for an Energy-
Efficiency Economy, American Rivers, National Consumer Law Center, 
Natural Resources Defense Council, Northeast Energy Efficiency 
Partnerships, and Seattle Public Utilities (the Joint Comment), cost-
effectiveness of standards based on a single equipment class best 
serves long-term public interest. (California Utilities, No. 67.10 at 
p. 4; Joint Comment, No. 67.6 at p. 3)
    The Joint Comment commented that DOE is concerned that at the 
highest TSL, significant numbers of potential consumers of front-
loading CCWs would choose to purchase a less efficient top-loading CCW 
instead. (Joint Comment, No. 67.6 at p. 2) According to ASAP and the 
Joint Comment, this underscores the interchangeability between top-
loading and front-loading CCWs in a commercial setting and that this 
interchangeability could be so broad and substantial that it would 
facilitate potential recapture of market share by less efficient but 
less expensive top-loaders. ASAP stated that the real distinction 
between top-loaders and front-loaders is price point rather than any 
specific consumer utility. Therefore, ASAP and the Joint Comment 
recommended a single equipment class for CCWs. ASAP also stated that 
route operators are operating in a one equipment class environment 
today, and managing the issues that Whirlpool identified. (ASAP, Public 
Meeting Transcript, No. 67.4 at pp. 46, 99-102; Joint Comment, No. 67.6 
at pp. 2-3)
    ASAP and the Joint Comment stated that the standard proposed for 
front-loaders is already met by almost 97 percent of the front-loaders 
on the market, and since DOE has seldom, if ever, proposed a standard 
that has such a low impact on the marketplace, ASAP suggests there are 
some difficulties in going forward with two equipment classes. (ASAP, 
Public Meeting Transcript, No. 67.4 at pp. 53-54; Joint Comment, No. 
67.6 at p. 2) The California Utilities estimated that a single 
equipment class with standards set at 2.35 MEF/4.4 WF would achieve 50 
percent more energy savings and over 200 percent more water savings 
over the next 30 years than the standards proposed in the November 2009 
SNOPR, and that additional energy and water savings would be captured 
in future CCW rulemakings. (California Utilities, No. 67.10 at pp. 3-4)
    Regarding impacts to competition as these impacts relate to the 
equipment class issue, EJ stated that it would not agree with DOE if 
the Department determines that a single standard cannot be adopted 
because of impacts to the manufacturers and impacts on competition. EJ 
and the Joint Comment believe those impacts are overstated. (EJ, Public 
Meeting Transcript, No. 67.4 at pp. 30-31; Joint Comment, No. 67.6 at 
pp. 4-5; see also California Utilities, No. 67.10 at pp. 4-5) EJ 
asserted that it is not only the lessening in competition, but rather 
the effects of such lessening, that DOE must consider. EJ stated that 
the DOJ, in its letter to DOE on this rulemaking, failed to consider 
low barriers to entry into the CCW market in its analysis of the 
impacts to competition, and that consequently, it would be irrational 
for DOE to conclude that a single standard would result in any 
significant impact on competition in the CCW market. (EJ, No. 67.5 at 
p. 9) EJ, ASAP, and the Joint Comment also asserted that DOE must 
consider adopting a tiered standard, or granting Alliance a temporary 
waiver, as ways to minimize any impacts on competition that may result 
from imposition of a single standard. (EJ, No. 67.5 at 9-10; ASAP, 
Public Meeting Transcript, No. 67.4 at pp. 166-167; Joint Comment, No. 
67.6 at p. 6; see also California Utilities, No. 67.10 at pp. 4-5)
    In response to the above comments, DOE notes that EPCA provides the 
criteria under which DOE may define classes for covered equipment:

    A rule prescribing an energy conservation standard for a type 
(or class) of covered products shall specify a level of energy use 
or efficiency higher or lower than that which applies (or would 
apply) for such type (or class) for any group of covered products 
which have the same function or intended use, if the Secretary 
determines that covered products within such group--
     Consume a different kind of energy from that consumed 
by other covered products within such type (or class); or
     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 from that which 
applies (or will apply) to other products within such type (or 
class).
    In making a determination under this paragraph concerning 
whether a performance-related feature justifies the establishment of 
a higher or lower standard, the Secretary shall consider such 
factors as the utility to the consumer of such a feature, and such 
other factors as the Secretary deems appropriate.

42 U.S.C. 6295(q); see also 6316(a).
    As stated above, DOE concluded preliminarily in the October 2008 
NOPR and the November 2009 SNOPR that separate equipment classes for 
top-loading and front-loading CCWs were warranted because the method of 
loading had been previously determined to be a ``feature'' under 
rulemakings for RCWs and a single standard would eliminate top-loading 
CCWs from the market. DOE analysis for this final rule, including 
evaluation of comments submitted by interested parties, has identified 
at least one consumer utility related to the method of loading clothes, 
specifically for CCWs, which represents a ``feature'' for purposes of 
42 U.S.C. 6295(o)(4). Consequently, DOE has retained two equipment 
classes for CCWs for this standard.
    Specifically, DOE believes that the longer cycle times of front-
loading CCWs versus cycle times for top-loaders are likely to 
significantly impact consumer utility. In commercial and multi-housing 
settings, it is beneficial to consumers with multiple, sequential 
laundry loads to approximately match CCW cycle times to those of the 
dryers to maximize throughput and minimize wait times, and wash times 
of 70-115 minutes would be longer than most drying cycles. Because the 
longer wash cycle times for front-loaders arise from the reduced 
mechanical action of agitation as compared to top-loaders, DOE believes 
such longer cycles may be required to achieve the necessary cleaning, 
and thereby constitute a performance-related utility of front-loading 
CCWs versus top-loading CCWs under the meaning of 42 U.S.C. 6295(q).
    DOE notes that access without stooping is not a consumer utility 
that would warrant the definition of separate equipment classes. DOE 
agrees that top-loaders eliminate the need for stooping, while front-
loaders, in the absence of a pedestal, require such action. DOE further 
notes, however, that commercial clothes dryers are front-loading as 
well, so it believes that those consumers that dry their clothing loads 
are already accustomed to stooping. In addition, DOE observes that many 
laundromat and multi-housing applications have installed the CCWs on a 
platform to effect the same elevation as a manufacturer-supplied 
pedestal would, and that the cost of installing such a platform in the 
event that the owner/operator decides that preventing stooping is 
important is likely to be minimal.
    DOE is aware that a top-loading, horizontal-axis CCW had been 
available previously. Due to the inherently higher efficiency of a 
horizontal-axis platform, it is likely that such a design could achieve 
a higher MEF and lower WF than the max-tech top-loading CCW

[[Page 1134]]

efficiency level assumed for this analysis. DOE research determined, 
however, that this particular washer platform was withdrawn from the 
market based on a lack of suitability for commercial settings. However, 
even if a top-loading, horizontal-axis CCW was again marketed, it is 
likely that such washers would have cycle times similar to those of 
other horizontal-axis machines and, therefore, would not likely provide 
substantially the same consumer utility as top-loading, vertical-axis 
machines.
    DOE also does not consider first cost a ``feature'' that provides 
consumer utility for purposes of EPCA. DOE acknowledges that price is 
an important consideration to consumers, but DOE accounts for such 
consumer impacts in the LCC and PBP analyses conducted in support of 
this rulemaking.
    Given the above discussion on cycle times, DOE concludes, 
consistent with its preliminary conclusion in the October 2007 NOPR and 
November 2008 SNOPR, that top-loading involves consumer utilities that, 
in the context of CCWs, are a feature for purposes of 42 U.S.C. 
6295(o)(4). For the reasons stated in section VI.D of the preamble, DOE 
believes that the standards established for top-loading and front-
loading CCWs achieve the maximum improvements in energy efficiency that 
are technologically feasible and economically justified. DOE further 
believes that the top-loading standard, set at the max-tech efficiency 
level, can be achieved by all manufacturers by the time compliance with 
the standards is required. Therefore, DOE concludes that top-loading 
CCWs would not be eliminated from the market by the amended energy 
conservation standards.
    In response to the comments related to impacts on competition, DOE 
believes its analysis accurately describes the impacts of the various 
TSLs, including the standards established today, on the low-volume 
manufacturer (LVM). See section VI.C.2 of the preamble for further 
discussion of these impacts. In addition, EPCA does not permit DOE to 
establish a tiered standard for CCWs. 42 U.S.C. 6313(e)(2)(A)(ii) 
states that an amended standard for CCWs ``shall apply to products 
manufactured 3 years after the date on which the final amended standard 
is published.'' DOE interprets this provision to mean that the amended 
standard must apply to all CCWs manufactured 3 years after the date of 
publication of this final rule, and that imposing some intermediate 
standard at that time (i.e., 2013) and the final amended standard at 
some future date (i.e., 2015) is not authorized. In contrast, 42 U.S.C. 
6295(g)(4)(C) states in relevant part that amendments to the standards 
``shall apply to products manufactured after a date which is five years 
after'' the effective date of the previous amendment. DOE believes that 
the phrase ``after a date which is 5 years after'' (emphasis added) may 
allow more flexibility for a tiered standard. DOE also believes that 
the provisions of 42 U.S.C. 7194 that allow for the grant of an 
exemption from an energy conservation standard promulgated by DOE are 
not an appropriate justification for the promulgation of a particular 
efficiency standard in the first instance.

B. Technology Assessment

    For the technology assessment in the November 2009 NOPR analyses, 
DOE considered all RCW and CCW technology options that it was aware 
have been incorporated into working prototypes or commercially 
available clothes washers at the time of the analysis. DOE noted in the 
November 2009 SNOPR 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 \13\ has appeared previously as 
a feature in commercially available RCWs. DOE concluded in the November 
2009 SNOPR that suds-savings was an RCW feature that was appropriately 
screened out for the CCW analysis. 74 FR 57738, 57747 (Nov. 9, 2009).
---------------------------------------------------------------------------

    \13\ 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.
---------------------------------------------------------------------------

    For the November 2009 SNOPR, DOE also gathered and analyzed data 
published by CEC, CEE, and the ENERGY STAR Program to provide an 
overview of the energy efficiency levels achieved in CCWs and RCWs. DOE 
found that all front-loading CCWs on the market at that time were more 
efficient than top-loading CCW models. No top-loading CCW listed in 
these databases had an MEF greater than 1.76, whereas the majority of 
front-loading CCWs were listed as having MEFs greater than 2.0. 
Similarly, no top-loading CCWs were rated as having a WF below 8.0, 
whereas the majority of front-loading CCWs had rated WFs below 7.0. In 
contrast, DOE research suggested that the most efficient vertical-axis 
RCWs achieved efficiency levels comparable to some horizontal-axis 
CCWs.\14\ High efficiency, vertical-axis platforms that do not employ 
an agitator have been sold into the RCW market for several years, but 
have yet to be released in a CCW form. DOE noted in the November 2009 
SNOPR that it expected manufacturers would continue to introduce new 
features first in the higher-volume residential markets before 
transitioning them to commercial applications. However, DOE noted that 
it 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. DOE concluded in the 
November 2009 SNOPR that it believed it had adequately considered RCW 
technologies that may be applicable to CCWs in its technology 
assessment. 74 FR 57738, 57747-48 (Nov. 9, 2009).
---------------------------------------------------------------------------

    \14\ 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.
---------------------------------------------------------------------------

    Because DOE did not receive any comments on the technology options 
analyzed in the November 2009 SNOPR, DOE continues to conclude in 
today's final rule that it has adequately considered RCW technologies 
that may be applicable to CCWs in its technology assessment.

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. As discussed in the November 
2009 SNOPR, DOE conducted the engineering analysis for this rulemaking 
using 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. 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 engineering analysis, and

[[Page 1135]]

primary and secondary research. 74 FR 57738, 57748-51 (Nov. 9, 2009). 
Chapter 5 of the TSD contains a detailed discussion of the engineering 
analysis methodology.
1. Efficiency Levels
    In the November 2009 SNOPR, DOE proposed the following efficiency 
levels for CCWs, shown in Table IV.1, in which the max-tech top-loading 
level was designated at efficiency level 2 (1.60 MEF/8.5 WF). The top-
loading max-tech efficiency level representated a change from the max-
tech level proposed in the October 2008 NOPR, based on DOE testing and 
analysis of the max-tech top-loading CCW model. No changes were made to 
the efficiency levels proposed in the October 2008 NOPR for front-
loading CCWs in the November 2009 SNOPR.

Table IV.1--Commercial Clothes Washer Efficiency Levels Proposed for the
                           November 2009 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 noted in the November 2009 SNOPR 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 indicated that 
the max-tech CCW is based on a standard vertical-axis RCW platform 
(i.e., one with an agitator) with similar construction and components 
as the CCW models marketed by that manufacturer to commercial 
laundromats. No proprietary technologies were observed, and, thus, DOE 
stated in the November 2009 SNOPR that it believes that all CCW 
manufacturers could market vertical-axis clothes washers with similar 
performance in time for the compliance date of the proposed rule. 74 FR 
57738, 57749-50 (Nov. 9, 2009).
    DOE research, conducted as part of the November 2009 SNOPR, also 
suggested that commercial acceptance depends on wash performance. DOE 
recognized that any amended energy conservation standard could result 
in a lessening of certain equipment utility and hence interviewed 
interested parties for the November 2009 SNOPR to better understand the 
potential impacts of energy efficiency strategies that manufacturers 
might employ in their equipment. Although interested parties suggested 
that the max-tech model does not provide acceptable washing and rinsing 
performance targets, especially when overloaded, they did not submit 
evidence of such performance degradation. 74 FR 57738, 57750 (Nov. 9, 
2009).
    EJ commented that, if top-loading CCWs are required to be retained 
in the commercial market under amended standards, DOE must consider a 
third standard level based on the performance of Alliance's best-
performing top-loader.
    Alliance stated that, while no industry standard performance test 
procedure exists for CCWs, it believes wash and rinse performance would 
be affected at the top-loading max-tech level, because the max-tech 
model does not allow true hot or warm water, unlike existing 
traditional CCWs which offer site-supplied hot water typically of 120 
degrees Fahrenheit ([deg]F) and above and user-acceptable 90 [deg]F to 
110 [deg]F warm water. Alliance stated that the max-tech top-loading 
model only provides 108 [deg]F to 112 [deg]F water when the hot setting 
is selected, which Alliance considers to be warm water. Similarly, 
Alliance stated that when the user selects a warm setting on the max-
tech top-loader, the unit only provides 71 [deg]F to 73 [deg]F wash 
water, which Alliance considers to be cold water. Alliance believes 
that CCW users that pay for hot water should receive hot water. 
Otherwise, CCW users could not clean clothes as well as consumers with 
access to RCWs. Further, Alliance commented that rinsing is minimal for 
the max-tech top-loader, unlike typical complete submersion of the 
clothes load that would allow sand, heavy sediment, or suds trapped 
between the layers to be properly removed. Alliance stated that the 
max-tech top-loading model has received almost no acceptance by the 
industry, based on comments it received from its top 20 multi-housing 
customers, and that DOE has not tested its ability to clean clothes. 
Therefore, Alliance believes that max-tech top-loader model is not 
appropriate for the commercial laundry market. (Alliance, Public 
Meeting Transcript, No. 67.4 at pp. 22-23, 29); Alliance, No. 66.4 at 
pp. 4, 7, 9; Alliance, No. 67.8 at p. 3).
    Alliance stated that the front-loading max-tech efficiency level 
should have a WF of 5.0 rather than 4.4. Alliance stated that it tested 
a competitive front-loading CCW model that had a WF of 4.5 and found 
that it did not wet the center of the clothes load during the wash 
tumble portion of the cycle. Therefore, Alliance stated that consumer 
utility would be negatively affected. (Alliance, Public Meeting 
Transcript, No. 67.4 at pp. 139-140; Alliance, No. 67.8 at p. 3). 
Alliance further stated that consumer utility in a CCW must go beyond 
just getting clothes wetted, applying some mechanical action and then 
extraction of the moisture. Alliance commented that DOE did not assess 
if the proposed max-tech CCW cleans clothes to user expectations. 
According to Alliance, the ability of a CCW to clean clothes 
sufficiently is a central issue in this rulemaking, and stated that ``A 
rulemaking will be overturned as arbitrary and capricious if `the 
[agency] has failed to respond to specific challenges that are 
sufficiently central to its decision.' '' Horsehead Resource Dev. Co. 
v. Browner, 16 F.3d 1246, 1263 (DC Cir 1994) (citations omitted). 
(Alliance, No. 66.4 at pp. 6-7).
    GE commented that, while it supports the standards proposed in the 
November 2009 SNOPR for top-loading and front-loading CCWs, it is 
concerned that the max-tech top-loading CCW model is designed for on-
premises laundry, which is a relatively limited segment of the 
commercial market. GE stated that the max-tech model has not been shown 
to be viable in the harsher laundromat environment where CCWs are 
subject to tougher conditions such as overloading. GE also requested 
DOE's test data on the max-tech top-loader model. (GE, Public

[[Page 1136]]

Meeting Transcript, No. 67.4 at p. 58; GE, No. 67.9 at pp. 1-2).
    Whirlpool stated that a top-loading CCW max-tech level of 1.76 MEF/
8.3 WF can be attained with sufficient investment of financial and 
human capital. However, Whirlpool considers this level a considerable 
stretch target that it has not achieved even in a prototype platform. 
Whirlpool believes that the front-loading CCW max-tech level could be 
slightly higher, since the CEE database lists a model at 2.23 MEF/4.3 
WF. Whirlpool believes this level is at or near the capabilities of 
known technologies that are viable in the commercial environment. 
(Whirlpool, No. 67.11 at p. 2). Northwest Power and Conservation 
Council (NPCC) asked whether, because the max-tech top-loading CCW 
model did not meet its rated MEF and WF, DOE would consider testing 
units at other levels, particularly high-efficiency models, to make 
sure the performance is as advertised. (NPCC, Public Meeting 
Transcript, No. 67.4 at pp. 57-59).
    In response, DOE notes that, in the absence of an accepted, 
standardized test procedure for CCW wash and rinse performance, it 
cannot evaluate the cleaning capabilities of various considered max-
tech models. DOE agrees that proper wetting and distribution of the 
detergent and rinse water in the machine is critical for cleaning 
performance. However, DOE did not receive any evidence that the max-
tech top-loading model does not achieve such action, only the inference 
that, because the unit employs spray rinse, that it would not exhibit 
acceptable rinse performance. DOE further notes that it did not receive 
any evidence that somewhat reduced water temperatures at hot and cold 
settings would preclude acceptable cleaning performance. DOE notes the 
existence of multiple wash and rinse performance standards such as AHAM 
HLW-1, but the industry has yet to come to a consensus regarding the 
minimum wash and rinse performance that an RCW or CCW should achieve. 
In the interim, DOE relies on manufacturers to market and sell only 
those products that they feel perform adequately.
    DOE concluded for the November 2009 SNOPR that the performance of 
the top-loading CCW model was 1.63 MEF/8.4 MEF instead of the rated 
value of 1.76 MEF/8.3 WF on which the max-tech level for the October 
2008 NOPR was based. DOE does not have evidence to suggest that any 
other CCWs currently on the market can achieve 1.76 MEF/8.3 WF, nor 
that technology exists to do so without significantly impacting 
cleaning performance. DOE based the selection of the top-loading max-
tech level at efficiency level 2 on test results for the max-tech model 
and its belief that 1.60 MEF/8.5 WF represented the maximum CCW 
performance achievable by all manufacturers without material harm. At 
the time of the analysis, Alliance's highest efficiency top-loading CCW 
was rated at 1.55 MEF/8.6 WF. DOE believes that Alliance's model and 
the max-tech model incorporate similar technologies, and that the 
energy and water usage of the two models are not sufficiently different 
as to warrant the inclusion of an additional efficiency level slightly 
below the max-tech level. Given the constraints of the rulemaking 
schedule, DOE cannot evaluate an undetermined number of CCW models in 
order to confirm that no other unit which is rated at lower 
efficiencies than the proposed max-tech model could in actuality 
achieve higher performance, nor does DOE have any evidence, 
particularly regarding durability, to demonstrate that the max-tech 
top-loading CCW model, while designed for on-premises laundry 
applications, cannot be utilized successfully in other commercial 
laundry facilities such as laundromats or multi-family housing 
settings. Therefore, DOE has retained the max-tech top-loader 
efficiency level for today's final rule based on the max-tech top-
loading CCW model proposed in the November 2009 SNOPR.
    ASAP suggested that DOE should not limit consideration of max-tech 
models to CCWs, but that DOE should also consider clothes washer 
products from the residential market. According to ASAP, the 
distinctive nature of the CCW market has been characterized by the need 
for durability and resistance to overloading and misuse, which is 
typical of laundromats and multi-housing laundry rooms. But CCWs for 
on-premises laundry facilities are also being considered in this 
rulemaking, and they typically are subject to less harsh conditions 
than models destined for laundromats and multi-family housing, Thus, 
ASAP questioned why RCWs would not be considered for the max-tech 
levels if CCWs designed for on-premises laundry are. (ASAP, Public 
Meeting Transcript, No. 67.4 at pp. 61-62, 64-65) Southern California 
Gas Company (SCG) commented that DOE should consider durability as well 
as efficiency in selecting the max-tech models. (SCG, Public Meeting 
Transcript, No. 67.4 at p. 63) Additional comments regarding the 
applicability of RCWs in CCW application were received (along with 
other comments) from 20 route operators: All Valley Washer Services, 
Inc; Angel Coin Service, Inc.; Automatic Industries; Automatic Laundry 
Services Co., Inc.; B&H Coin Laundry Service; Caldwell and Gregory, 
LLC; CALECO; Cincinnati Coin Laundry, Inc.; Coin Meter Company; 
Commercial Laundries, Inc.; Continental Laundry Systems Incorporated; 
Excalibur Laundries, Inc.; F&B Coin Laundry Route; Family Pride 
Laundries; FMB Laundry, Inc.; Jetz Service Co., Inc.; Launderama, LLC; 
Laundry Equipment Corp.; National Coin Washer and Service Company, 
Inc.; and San Diego Laundry Equipment Co. (the Multiple Route 
Operators). These comments were originally sent to DOJ in response to 
the October 2008 NOPR, and were resubmitted by Alliance along with its 
own comments in response to the November 2009 SNOPR. Ninety-five 
percent of all route operators who commented on the November 2009 SNOPR 
stated that they did not consider RCWs suitable for CCW applications. 
The principal reasons given were the lack of durability, lack of 
resistance to vandalism, and other specified and unspecified 
performance issues. Most of the Multiple Route Operators expressed 
reluctance to try high efficiency top-loading clothes washers due to 
perceived wash performance issues. Additionally, several of the 
Multiple Route Operators stated that had tried out such washers and 
replaced them with regular top-loading clothes washers due to consumer 
complaints regarding wash performance and other issues. (Multiple Route 
Operators, No. 67.8, pp. 1-3 \15\)
---------------------------------------------------------------------------

    \15\ The Multiple Route Operators' letters were attached to the 
Alliance letter, comment number 67.8, in response to the November 
2009 SNOPR. A notation in the form ``Multiple Route Operators, No. 
67.8 at pp. 1-3'' identifies a written comment (1) made by some or 
all of the Multiple Route Operators, (2) recorded in document number 
67.8 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 pages 1-3 of each of 
the letters submitted by the Multiple Route Operators.
---------------------------------------------------------------------------

    DOE notes that multiple manufacturers stated during interviews that 
high efficiency RCWs utilize technologies that are not suitable in 
harsher commercial settings such as laundromats and multi-family 
housing due to environmental factors such as overloading and abuse. 
Among these manufacturers were suppliers of high efficiency top-loading 
RCWs, i.e., manufacturers that would face the lowest conversion costs 
in the industry to modify a given RCW model for CCW use. Additionally, 
DOE considered the comments submitted by the Multiple Route Operators 
with experience

[[Page 1137]]

utilizing high efficiency top-loading clothes washers in a commercial 
setting. Lastly, DOE received no evidence that all the technologies 
used in a max-tech top-loading RCW can be expected to be ready for 
inclusion in CCWs by the compliance date of today's final rule while 
offering similar or better wash performance, given the very different 
operational environments (short wash cycles, among other factors). 
Hence, DOE concludes that high efficiency top-loading RCW models should 
not be considered representative of the efficiency levels that top-
loading CCWs can achieve until the technologies required to achieve 
such efficiency levels have been successfully demonstrated in CCWs.
    For front-loaders, DOE observes that multiple models from several 
manufacturers, including Alliance, are rated with a WF of 4.5 or lower. 
DOE believes that the presence of these CCW models on the commercial 
market suggests that sufficient cleaning performance is able to be 
achieved at such WF levels. Further, DOE did not receive any evidence 
that the max-tech model, rated at a 4.4 WF, could not demonstrate wash 
performance on par with consumer utility requirements, nor if, in fact, 
it did not, that a WF of 5.0 would provide wash performance that would 
be deemed suitable, DOE notes that the max-tech level proposed in the 
November 2009 SNOPR had approximately 5 percent higher MEF and 2 
percent higher WF than the model that Whirlpool suggests. While the 
proposed max-tech level therefore was slightly less stringent in terms 
of water consumption than the level Whirlpool suggested, DOE believes 
that the higher energy consumption of the proposed level is the primary 
factor to consider in defining a max-tech level. Therefore, DOE 
concluded that the max-tech levels proposed in the November 2009 SNOPR 
are technologically feasible, and it has retained the efficiency levels 
shown in Table IV.1 for today's final rule.
    DOE received comments in response to the October 2008 NOPR that 
front-loading CCWs with electric heaters have an MEF of 1.96, which 
would not meet the proposed front-loading standards. According to these 
comments, consumers 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. 
DOE indicated in the November 2009 SNOPR that it had received no data 
on the extent or size of this impact or of the affected population. DOE 
sought comment, including population and efficiency impact data, to 
describe this issue. 74 FR 57738, 57750 (Nov. 9, 2009)
    Alliance and NPCC discussed whether a water heating CCW would be 
measured as having higher water heating energy consumption under the 
DOE clothes washer test procedure than a non-water heating CCW, given 
the inlet water temperature requirements. Alliance stated that the test 
procedure would require measurement of energy consumption with the 
heater on. (Alliance, Public Meeting Transcript, No. 67.4 at pp. 66-72)
    Whirlpool stated that it does not produce any water heating CCWs 
and does not believe this is a significant segment of the market. In 
the absence of further data on the affected population or efficiency 
impacts, DOE is adopting energy conservation standards for front-
loading CCWs both with and without electric heaters for the reasons 
discussed in section VI.D.
    DOE did not receive further information regarding the market share 
or efficiency impact of water heating CCWs, but agrees that it likely 
does not represent a significant segment of the CCW market. In the 
absence of additional data, DOE determined that it will retain the max-
tech front-loading CCW level that was proposed in the November 2009 
SNOPR.
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, 62055-56 
(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 an 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.\16\ 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 in 
response to the October 2008 NOPR 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. 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. 74 
FR 57738, 57762 (Nov. 9, 2009).
---------------------------------------------------------------------------

    \16\ SEC documents pertaining to the LVM are available online at 
http://sec.gov/.
---------------------------------------------------------------------------

    DOE research, conducted as part of the November 2009 SNOPR, 
suggests that the proposed 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 
received no further comments on the manufacturing cost curves. For the 
November 2009 SNOPR, DOE 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) between 2007 and 
2008 to update the costs in the October 2008 NOPR to 2008$.\17\ These 
are shown in Table IV.2.
---------------------------------------------------------------------------

    \17\ PPI data is maintained by the Bureau of Labor Statistics 
and is available at http://www.bls.gov/ppi/

[[Page 1138]]



      Table IV.2--Commercial Clothes Washer Incremental Manufacturing Costs Proposed in November 2009 SNOPR
----------------------------------------------------------------------------------------------------------------
                                              Modified energy factor ft\3\/kWh/        Incremental cost $
                                                   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
----------------------------------------------------------------------------------------------------------------

    Because DOE did not receive any new information on the 
manufacturing cost curves, DOE retained all the incremental 
manufacturing costs presented in the November 2009 SNOPR at the 
retained efficiency levels for today's final rule. Table IV.3 shows 
these costs.

                      Table IV.3--Commercial Clothes Washer Incremental Manufacturing Costs
----------------------------------------------------------------------------------------------------------------
                                              Modified energy factor ft\3\/kWh/        Incremental cost $
                                                   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 on CCW 
consumers. This section of the notice describes these analyses. DOE 
conducted the analysis using a spreadsheet model developed in Microsoft 
(MS) Excel for Windows 2007.
    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.
    Commenting on DOE's use of LCC and PBP results to evaluate the 
economic impacts of possible amended energy conservation standards on 
CCW consumers, Mr. Gayer stated that if the private benefits to 
consumers of a more efficient CCW outweigh the private costs of a more 
efficient CCW, then there will be a market for high efficiency CCWs and 
regulation would not be necessary. He added that if consumers are 
unwilling to purchase a high efficiency CCW without the regulation, 
then this suggests they are not willing to pay the higher CCW price in 
order to accrue lower future energy costs. (Gayer, No. 67.7 at p. 1)
    DOE agrees with the observation that many CCW purchasers are 
unwilling to pay the higher cost of a more efficient CCW in the face of 
potential operating savings benefits. DOE disagrees that this implies 
that it is using the wrong cost of capital in its analysis. DOE does 
not in general assume in its analysis that unregulated markets will 
equilibrate to a state where consumer decisions are perfectly aligned 
with private benefits and costs. DOE estimated the cost of capital 
based on information regarding the cost of borrowing and the 
opportunity cost of investment for CCW owners. Based on this cost of 
capital, DOE found that the operating cost benefits for many CCWs 
exceed the burden of increased initial costs for more efficient CCWs 
for many consumers who are currently using low-cost, low-efficiency 
CCWs. There are several possible reasons for the disparity between 
observed consumer behavior and the results of DOE's consumer financial 
analysis which may include: (1) Limited consumer information and 
information processing capabilities and (2) the high transaction costs 
of fully evaluating LCC and other characteristics of available CCWs 
prior to purchase or lease. In addition, there remain a number of 
environmental externalities that are not currently reflected in energy 
and water prices, which cannot be considered by consumers and which are 
not included in DOE's LCC and PBP analyses.. DOE did not receive or 
obtain sufficient information to provide a detailed explanation of why 
CCW purchasers tend to minimize first costs in the face of financially 
feasible gains that are likely to accrue from increased energy 
efficiency. DOE believes that its use of LCC and PBP results to 
evaluate the economic impacts of possible amended energy conservation 
standards on CCW consumers is appropriate given the information that is 
available.
    DOE was unable to develop a survey-based consumer sample for CCWs 
because the U.S. Energy Information Administration's (EIA) Commercial 
Building Energy Consumption Survey (CBECS) does not provide the 
necessary

[[Page 1139]]

data to develop one.\18\ 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.
---------------------------------------------------------------------------

    \18\ Available online at:  http://www.eia.doe.gov/emeu/cbecs/.
---------------------------------------------------------------------------

    Table IV.4 summarizes the approaches and data DOE used to derive 
the inputs to the LCC and PBP calculations for the November 2009 SNOPR. 
For today's final rule, DOE did not introduce changes to either the LCC 
and PBP analyses methodology described in the November 2009 SNOPR or 
the inputs to the analysis. Chapter 8 of the TSD contains detailed 
discussion of the methodology utilized for the LCC and PBP analyses as 
well as the inputs developed for the analyses.

  Table IV.4--Summary of Inputs and Key Assumptions in the LCC and PBP
                                Analyses
------------------------------------------------------------------------
                                                        Changes for the
            Inputs               November 2009 SNOPR       final rule
------------------------------------------------------------------------
                        Affecting Installed Costs
------------------------------------------------------------------------
Equipment Price...............  Derived by             No change.
                                 multiplying
                                 manufacturer cost by
                                 manufacturer,
                                 distributor markups,
                                 and sales tax.
Installation Cost.............  Baseline cost updated  No change
                                 with RS Means
                                 Mechanical Cost
                                 Data, 2008.
------------------------------------------------------------------------
                        Affecting Operating Costs
------------------------------------------------------------------------
Annual Energy and Water Use...  Per-cycle energy and   No change.
                                 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\19\
                                 and the Coin Laundry
                                 Association\20\
                                 (CLA). Different use
                                 cycles determined
                                 for multi-family and
                                 laundromat equipment
                                 applications.
Energy and Water/Wastewater     Electricity: Updated   No change.
 Prices.                         using EIA's 2007
                                 Form 861 data.
                                Natural Gas: Updated   .................
                                 using EIA's 2007
                                 Natural Gas Monthly.
                                Water/Wastewater:      .................
                                 Updated using RFC/
                                 AWWA's 2006 Water
                                 and Wastewater
                                 Survey.
                                Variability: Regional  .................
                                 energy prices
                                 determined for 13
                                 regions; regional
                                 water/wastewater
                                 price determined for
                                 four regions.
Energy and Water/Wastewater     Energy: Reference      No change.
 Prices Trends.                  Case forecast
                                 updated with EIA's
                                 AEO 2009 April
                                 Release. High-Growth
                                 and Low-Growth
                                 forecasts updated
                                 with EIA's AEO 2009
                                 March Release.
                                Water/Wastewater:      .................
                                 Linear extrapolation
                                 of 1970-2008
                                 historical trends in
                                 national water price
                                 index. 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 Costs..  Estimated annualized   No change.
                                 repair costs for
                                 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.\21\
------------------------------------------------------------------------
                 Affecting Installed and Operating Costs
------------------------------------------------------------------------
Effective Date of New Standard  2013.................  No change.
Base-Case Efficiency            Analyzed as two        No change.
 Distributions.                  equipment classes:
                                 top-loading and
                                 front-loading.
                                 Distributions for
                                 both classes based
                                 on the number of
                                 available models at
                                 the efficiency
                                 levels.
                                Top-Loading: 64.8% at  .................
                                 1.26 MEF/9.5 WF;
                                 33.8% at 1.42 MEF/
                                 9.5 WF; 1.4% at 1.60
                                 MEF/8.5 WF.
                                Front-Loading: 3.5%    .................
                                 at 1.72 MEF/8.0 WF;
                                 0.0% at 1.80 MEF/7.5
                                 WF; 73.7% at 2.00
                                 MEF/5.5 WF; 22.8% at
                                 2.20 MEF/5.1 WF;
                                 0.0% at 2.35 MEF/4.4
                                 WF.
------------------------------------------------------------------------
\19\ Please see the following Web site for further information: http://www.mla-online.com/.
\20\ Please see the following Web site for further information: http://www.coinlaundry.org/.
\21\ Please see the following Web site for further information: http://
  pages.stern.nyu.edu/~adamodar/.

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 final rule 
that were developed

[[Page 1140]]

for the November 2009 SNOPR. See chapter 7 of the TSD for additional 
information. To calculate the final installed prices, DOE added 
installation cost to the equipment prices.
2. Installation Cost
    Installation costs include labor, overhead, and any miscellaneous 
materials and parts. For the November 2009 SNOPR and today's final 
rule, DOE used data from the RS Means Mechanical Cost Data, 2008 on 
labor requirements to estimate installation costs for CCWs.\22\ DOE 
estimates that installation costs do not increase with equipment 
efficiency.
---------------------------------------------------------------------------

    \22\ 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 November 2009 SNOPR, 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 
final rule, DOE maintained the same 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.
    For the November 2009 SNOPR and today's final rule, DOE estimated 
commercial electricity prices for each of the 13 geographic areas based 
on 2007 data from EIA Form 861, Annual Electric Power Industry 
Report.\23\ DOE calculated an average commercial electricity price by 
first estimating an average commercial price for each utility, and then 
calculated a regional average price by weighting each utility with 
consumers in a region by the number of commercial consumers served in 
that region.
---------------------------------------------------------------------------

    \23\ Available online at: http://www.eia.doe.gov/cneaf/electricity/page/eia861.html.
---------------------------------------------------------------------------

    For the November 2009 SNOPR and today's final rule, DOE estimated 
average commercial natural gas prices in each of the 13 geographic 
areas based on 2007 data from the EIA publication Natural Gas Monthly. 
\24\ 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.
---------------------------------------------------------------------------

    \24\ 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 November 2009 SNOPR and today's final rule, DOE used the price 
forecasts in the AEO 2009 April Release.\25\ To arrive at prices in 
future years, DOE multiplied the average prices described above by the 
forecast of annual average price changes. 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.
---------------------------------------------------------------------------

    \25\ 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 the November 2009 
SNOPR and today's final rule, DOE used the AEO 2009 March Release high-
growth case or low-growth forecasts to estimate high-growth and low-
growth price trends.
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 November 2009 SNOPR and today's final rule, DOE used the 2006 Water 
and Wastewater Rate Survey.\26\ 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.
---------------------------------------------------------------------------

    \26\ 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. For the SNOPR, DOE continued to 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. Beyond the 4-year time period, DOE used the extrapolated trend to 
forecast prices out to the year 2043. DOE continued to use the above 
approach for today's final rule.
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. DOE was 
unable to gather any empirical data specific to CCWs to estimate repair 
and maintenance cost. For the October 2008 NOPR and the November 2009 
SNOPR, 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.\27\ This algorithm 
calculates annualized repair costs by dividing half of the equipment 
retail price over the equipment lifetime. In the absence of better 
data, DOE retained its approach from the November 2009 SNOPR for 
today's final rule.
---------------------------------------------------------------------------

    \27\ 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 November 2009 SNOPR and today's final rule, 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.

[[Page 1141]]

7. Discount Rates
    To establish discount rates for CCWs for the November 2009 SNOPR 
and today's final rule, 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.
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 November 
2009 SNOPR, DOE expected 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. For today's final rule, DOE used 
the same date for compliance. DOE calculated the LCC for CCW 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 IV.A, DOE decided to analyze CCWs 
with two equipment classes--top-loading CCWs and front-loading CCWs. 
For the November 2009 SNOPR and today's final rule, DOE used the number 
of available models within each equipment class to establish the base-
case efficiency distributions. Table IV.5 presents the market shares of 
the efficiency levels in the base case for CCWs. See chapter 8 of the 
TSD for further details on the development of CCW base-case market 
shares.

                                             Table IV.5--Commercial Clothes Washers: Base Case Market Shares
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    Top-loading                                                                 Front-loading
--------------------------------------------------------------------------------------------------------------------------------------------------------
          Standard level                  MEF             WF        Market share %     Standard level           MEF             WF        Market share %
--------------------------------------------------------------------------------------------------------------------------------------------------------
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. Split Incentive Between CCW Consumers and Users
    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. Such a situation exists in segments of the CCW market. In 
comments on the October 2008 NOPR, Whirlpool and Alliance stated that 
those who own CCWs (usually route operators) often do not incur the 
operating costs as do, generally, laundromats and owners of multi-
family dwellings. 73 FR 62067 (Oct. 17, 2008). Recognizing this, DOE 
evaluated the ability of CCW consumers to pass on the higher purchase 
costs of more expensive CCWs and concluded that few route operators 
would allow themselves to be held to a lease agreement that would 
prevent them from recovering the cost of more efficient CCW equipment. 
That is, DOE believes that these CCW consumers would be able to realize 
a significant share of the operating cost savings from more-efficient 
equipment. The Joint Comment stated that contracts between route 
operators and multi-housing property owners are subject to revision and 
renewal, and that the division of coin-box revenue may be renegotiated 
to allow for the savings achieved by more-efficient CCWs to be 
equitably shared between the purchasers/owners of the machines (route 
operators) and the parties responsible for paying electric, gas, water, 
and sewer bills (property owners). (Joint Comment, No. 67.6 at p. 3) 
DOE agrees with the above comment, and continues to conclude that CCW 
consumers would be able to realize a significant share of the operating 
cost savings from more-efficient equipment.
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 indicates that there is no rebound 
effect for RCWs, although the consumer may choose to purchase larger 
models with more features that would result in higher energy use.\28\ 
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 RCWs, DOE did not include a rebound effect in its 
analysis of CCW standards.
---------------------------------------------------------------------------

    \28\ 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 
consumer for each efficiency level and the annual (first-

[[Page 1142]]

year) operating expenditures for each efficiency level. For the 
November 2009 SNOPR and today's final rule, 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.

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 and equipment efficiency trends. Table IV.6 summarizes the 
approach and data DOE used to derive the inputs to the NES and NPV 
analyses for the November 2009 SNOPR. DOE made no changes to the 
analyses for today's final rule. (See chapter 11 of the final rule TSD 
for further details.)

 Table IV.6--Approach and Data Used to Derive the Inputs to the National
                     Energy Savings and NPV Analyses
------------------------------------------------------------------------
                                    2009 SNOPR     Changes for the final
            Inputs                 Description              rule
------------------------------------------------------------------------
Shipments.....................  Annual shipments   No change.
                                 from Shipments
                                 Model.
Effective Date of Standard....  2013.............  No change.
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 per   Annual weighted-   No change.
 Unit.                           average values
                                 as a function of
                                 SWEF.
Total Installed Cost per Unit.  Annual weighted-   No change.
                                 average values
                                 as a function of
                                 SWEF.
Energy and Water Cost per Unit  Annual weighted-   No change.
                                 average values
                                 as a function of
                                 the annual
                                 energy
                                 consumption per
                                 unit and energy
                                 (and water)
                                 prices.
Repair Cost and Maintenance     Incorporated       No change.
 Cost per Unit.                  changes in
                                 repair costs as
                                 a function of
                                 efficiency.
Escalation of Energy and Water/ Energy Prices:
 Wastewater Prices.              Updated to AEO
                                 2009 April
                                 Release
                                 forecasts for
                                 the Reference
                                 Case. AEO 2009
                                 April Release
                                 does not provide
                                 High-Growth and
                                 Low-Growth
                                 forecasts; used
                                 AEO 2009 March
                                 Release High-
                                 Growth and Low-
                                 Growth forecasts
                                 to estimate high-
                                  and low-growth
                                 price trends.
                                Water/Wastewater   No change.
                                 Prices: Linear
                                 extrapolation of
                                 1970-2008
                                 historical
                                 trends in
                                 national water
                                 price index. 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 Energy   Determined but     No change.
 Prices.                         found not to be
                                 significant.
Discount Rate.................  3% and 7% real...  No change.
Present Year..................  Future expenses    No change.
                                 discounted to
                                 year 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 IV.7 summarizes the approach and data DOE used to derive the 
inputs to the shipments analysis for the November 2009 SNOPR, and the 
changes it made for today's final rule. The general approach for 
forecasting CCW shipments for today's final rule remains unchanged from 
the November 2009 SNOPR. 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. For the 
November 2009 SNOPR, DOE estimated that top-loading washers comprise 70 
percent of the market while front-loading washers

[[Page 1143]]

comprise 30 percent. DOE estimated that the equipment class market 
shares would remain unchanged over the time period 2005-2043.

                Table IV.7--Approach and Data Used To Derive the Inputs to the Shipments Analysis
----------------------------------------------------------------------------------------------------------------
                                                                                          Changes for the  final
                Inputs                              2009 SNOPR description                         rule
----------------------------------------------------------------------------------------------------------------
Number of Equipment Classes..........  Two: top-loading washers and front-loading        No change.
                                        washers. Shipments forecasts established for
                                        all CCWs and then disaggregated into the two
                                        equipment classes based on the market share of
                                        top- and front-loading washers. Updated market
                                        share data based on SEC 10K report of the LVM
                                        and tax credits claimed by the LVM for
                                        producing high-efficiency CCWs. Market share
                                        determined to be 70% top-loading and 30% front-
                                        loading. Equipment class market shares held
                                        constant over forecast period.
New Construction Shipments...........  Determined by multiplying multi-housing           No change.
                                        forecasts by forecasted saturation of CCWs for
                                        new multi-housing. Multi-housing forecasts with
                                        AEO 2009 April Release forecasts for the
                                        Reference Case. Verified frozen saturations
                                        with data from the U.S. Census Bureau's
                                        American Housing Survey (AHS) for 1997-2005.
Replacements.........................  Determined by tracking total equipment stock by   No change.
                                        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 (i.e., non- Used to calibrate Shipments Model to historical   No change.
 replacements).                         shipments data. Froze the percentage of non-
                                        replacements at 15 percent for the period
                                        2007[boxh]2043 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 AHAM data submittal,         Conducted a sensitivity
                                        Appliance Magazine, and U.S. Bureau of Economic   analysis based on
                                        Analysis' quantity index data for commercial      relative market shares
                                        laundry. Relative market shares of the two        of 66 percent for
                                        equipment applications, common-area laundry       multi-family housing
                                        facilities in multi-family housing and            and a 34-percent share
                                        laundromats, estimated to be over time at 85      for laundromats.
                                        and 15 percent, respectively.
Purchase Price, Operating Cost, and    Developed the ``relative price'' elasticity       No change.
 Household Income Impacts due to        which accounts for the purchase price and the
 efficiency standards.                  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 for CCWs 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, common-area laundry 
facilities in multi-family housing and laundromats, are constant over 
time at 85 and 15 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, and 
understates the energy, water, and dollar savings that would be 
achieved by all of the standard levels under consideration. It cited 
information from Alliance's Form 10-K for 2008, which, the Joint 
Comment asserted, suggested that the ratio of multi-family to 
laundromat shipments is about 40 percent to 60 percent. It noted that 
because some laundromats purchase a limited number of larger capacity 
washers not found in multi-family settings, the commenters believe a 
split of roughly 45 percent for multi-family venues and 55 percent for 
laundromats is reasonable, and should be evaluated by DOE for the final 
rule. (Joint Comment, No. 67.6 at p. 3) Whirlpool commented that it 
believes the industry mix is not nearly as heavily weighted toward the 
multi-family channel as DOE assumed. (Whirlpool, No. 67.11 at p. 4). In 
contrast, Alliance stated that it believes that the split of the 
distribution channels of laundromat versus multi-family housing common-
area laundry rooms of 15 percent and 85 percent respectively is 
generally representative of the industry. (Alliance, No. 67.8 at p. 2)
    In response, DOE believes that the interpretation by the Joint 
Comment of information from Alliance's Form 10-K for 2008 understates 
the importance of equipment other than CCWs. The total 2008 revenues 
from Alliance's sales to the commercial laundry industry are $338 
million, and sales to laundromats and multi-family housing amount to 
$240 million. However, based on data gathered for its MIA, DOE 
estimated that the total sales of CCWs by Alliance amount to only $73 
million. Therefore, it seems evident that a large fraction of the sales 
to laundromats and multi-family housing are accounted for by equipment 
other than CCWs. This unaccounted-for equipment would include clothes 
dryers in addition to washer-extractors and tumblers, which are large-
capacity, higher-performance washing machines, and matching large-
capacity dryers, respectively. Laundromats account for much more of the 
larger equipment than multi-family housing, and this type of equipment 
is more expensive than CCWs. Therefore, the laundromat share of sales 
to the North American commercial laundry industry by Alliance is as 
high as it is primarily due to sales of larger equipment. Thus, the 
revenue share between the multi-family and laundromat markets is not a 
good indicator of the share of laundromats in sales of CCWs.
    The CCW unit shipment shares of 85 percent for multi-family housing 
and 15 percent for laundromats used in the SNOPR were based upon the 
input of industry experts consulted in a comprehensive study conducted 
by the Consortium for Energy Efficiency in

[[Page 1144]]

1998.\29\ Although the report was conducted over 10 years ago, it was 
the most reliable data source for developing a market split for CCW 
shipments that was available. DOE notes that Alliance believes that 
this split is generally representative of the industry. However, 
because the assumed shares of laundromats and multi-family housing in 
shipments have a significant effect on the NIA results, DOE conducted a 
sensitivity analysis in which it used the data in Alliance's 2008 10K 
report, coupled with a number of assumptions and input from Whirlpool, 
to estimate the shares of laundromats and multi-family housing in 
shipments of CCWs in 2008. The analysis, which is described in appendix 
11C of the final rule TSD, yields an estimate of a 66 percent share for 
multi-family housing and a 34 percent share for laundromats. Using 
these shares increases national energy savings by approximately 9 
percent (compared to the savings when using the 15 percent and 85 
percent shares), and increases the NPV of consumer benefit by 
approximately 12 percent under TSLs 3, 4, and 5.
---------------------------------------------------------------------------

    \29\ 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.
---------------------------------------------------------------------------

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 2009 April Release Reference Case through 
2030 for the November 2009 SNOPR and today's final rule. 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 November 2009 SNOPR and 
today's final rule, DOE used retirement functions based on Weibull 
distributions. 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. The effect of 
maintaining non-replacements at 18 percent results in forecasted CCW 
shipments staying relatively flat during the forecast period.
c. Impacts of Standards on Shipments
    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 relied on a literature review and 
a statistical analysis that it has conducted on a limited set of 
appliance price, efficiency, and shipments data. 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 impacts 
due to standards spans over 30 years, DOE also considered how the 
relative price elasticity is affected once a new standard takes effect. 
After the purchase price change, price elasticity becomes more 
inelastic over the years until it reaches a terminal value. DOE 
incorporated a change in relative price elasticity change that resulted 
in a terminal value of approximately one-third of the short-run 
elasticity. In other words, DOE determined that consumer purchase 
decisions, in time, become less sensitive to the initial change in the 
equipment's relative price.
    NPCC suggested that it might be useful for DOE to compare the 
relative price elasticity approach used for CCWs with the shipments 
model that was used in the previous rulemaking for RCWs. (NPCC, Public 
Meeting Transcript, No. 67.4 at pp. 97-98) The approach that was used 
in the previous rulemaking for RCWs modeled consumer purchase decisions 
in terms of probabilities that typically depend on the type of stock, 
the age of the clothes washer, the incremental cost of the decision, 
and market conditions. The dependence of decision probabilities on 
price and market conditions was given by a standard econometric logic 
equation. In the present rulemaking for CCWs, DOE did not use such an 
approach, in part because it requires detailed information on consumer 
decision making, which is not available in the case of CCWs.
    For its November 2009 SNOPR as well as today's final rule, DOE 
estimated that price increases due to standards 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. Because the price impacts 
for more efficient top-loaders are higher than those for more efficient 
front-loaders, DOE estimated that sales would decrease more for top-
loading CCWs than for front-loaders.
    DOE did not explicitly model potential switching between top-
loaders and front-loaders due to lack of information on the appropriate 
cross-price elasticity. Whirlpool commented that there are considerable 
between-class switching costs which would act against class switching 
by purchasers of commercial clothes washers. (Whirlpool, No. 67.11 at 
p. 2) DOE notes the comment by Whirlpool but it believes that there is 
uncertainty regarding the extent of switching that could result from 
changes in the price differential between top-loaders and front-
loaders.
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 November 2009 SNOPR, 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 final rule, DOE maintained its estimate that the 
SWEF would remain constant from 2005 through the end of the forecast 
period.

[[Page 1145]]

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 November 2009 SNOPR 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 November 2009 SNOPR for 
today's final rule.
c. Annual Energy Consumption
    The annual energy consumption per unit depends directly on 
equipment efficiency. For the November 2009 SNOPR and today's final 
rule, 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 IV.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 
November 2009 SNOPR for today's final rule.
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 November 2009 SNOPR and 
today's final rule, DOE used annual site-to-source conversion factors 
based on the version of NEMS that corresponds to the AEO 2009 March 
Release version. 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.\30\ The fundamental task before the 
committee was to evaluate the methodology used for setting energy 
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.
---------------------------------------------------------------------------

    \30\ 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

[[Page 1146]]

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 and the November 2009 SNOPR, DOE did not 
include the energy required for water treatment and delivery in its 
analysis. 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 concluded that it does not have the authority to 
consider embedded energy (i.e., the energy required for water treatment 
and delivery) in the analysis. It added that, even if DOE had the 
authority, it does not believe adequate analytical tools exist to 
conduct such an evaluation.\31\
---------------------------------------------------------------------------

    \31\ 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.
---------------------------------------------------------------------------

    In response, the California Utilities stated that DOE should 
account for energy savings associated with energy embedded in water. 
(California Utilities, No. 67.10 at p. 5) For the reason stated above, 
DOE did not include the energy required for water treatment and 
delivery in its analysis of energy savings from amended CCW standards.
    EJ commented that two of the additional rationales provided by DOE 
for not including the energy required for water treatment and delivery 
in its analysis were not convincing. In reference to DOE's statement 
that ``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;'' EJ stated that DOE has offered no 
explanation for why consideration of the energy embedded in the water 
used in equipment's operation would mandate this much wider expansion 
of the Department's analysis. Regarding DOE's contention that its 
analysis already reflects the cost of the energy embedded in water 
because the cost of the energy used in treating and delivering water is 
a component of the cost of water for clothes washer consumers, EJ 
stated that the outcome of the life-cycle cost analysis is not the only 
factor DOE must consider in determining whether a standard level is 
economically justified, and DOE must consider, to the maximum extent 
practicable, ``the total projected amount of energy * * * savings 
likely to result directly from the imposition of the standard.'' 42 
U.S.C. 6295(o)(2)(B)(i)(III). (EJ, No. 67.5 at p. 12)
    In response, DOE notes that neither of the additional rationales on 
which EJ commented is central to its conclusion that it does not have 
the authority to consider the energy required for water treatment and 
delivery in the analysis. In the first instance, DOE was simply 
pointing out that it is difficult to select what should be included 
once one deviates from the aforementioned EPCA definition of ``energy 
use.'' In the second instance, DOE was noting that its analysis does 
include some aspects of the energy embedded in water delivered to CCWs. 
DOE agrees that the outcome of the life-cycle cost analysis is not the 
only factor DOE must consider in determining whether a standard level 
is economically justified; however, it believes that in considering the 
energy savings likely to result directly from the imposition of the 
standard, the appropriate course is to follow the EPCA definition of 
``energy use.''
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. For the 
November 2009 SNOPR and today's final rule, DOE forecasted energy 
prices using data from AEO 2009 April Release. For today's final rule, 
DOE maintained the approach it used to develop repair and maintenance 
costs for more efficient CCWs in the November 2009 SNOPR.
    Commenting on valuation of energy savings, the California Utilities 
urged DOE to assess the energy impacts from the proposed standard such 
that the analysis captures the value of energy over time. It noted that 
California has developed an energy costing analysis for standards, 
called Time-Dependent Valuation of savings (TDV), which places a high 
value on energy savings that occur during high-cost times of the day 
and year. It added that water and wastewater can also have time-
dependent values, which should be accounted for in DOE's analysis. 
(California Utilities, No. 67.10 at p. 6) In response, DOE acknowledges 
that the approach suggested by the California Utilities has merits, but 
it believes that the amount of effort and time required to develop 
time-dependent values of energy savings (as well as water and 
wastewater savings) at a diversity of locations across the nation would 
it make it impossible to implement this approach within the context of 
the present rulemaking.
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

[[Page 1147]]

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'').\32\
---------------------------------------------------------------------------

    \32\ OMB circulars are available online at: http://www.whitehouse.gov/omb/circulars/.
---------------------------------------------------------------------------

    The California Utilities stated that DOE should give primary weight 
to calculations based on the 3-percent discount rate for its national 
impact analysis. (California Utilities, No. 67.10 at p. 6) In response, 
DOE notes that 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. Circular A-4 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.
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 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. Therefore, DOE 
concluded that CCW standards will not provide additional economic 
benefits resulting from lower energy prices. For today's final rule, 
DOE has made no change to its conclusions about the effects of CCW 
standards on energy prices.

F. Consumer Subgroup Analysis

    For the November 2009 SNOPR and today's final rule, 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 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.
    More details on the consumer subgroup analysis can be found in 
chapter 12 of the final rule 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 the November 2009 SNOPR, 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 SNOPR MIA also used the same 
analysis period as in the NIA (2013-2043) and updated the base year to 
2009. DOE also 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). Additionally, DOE updated the GRIM to allow the inclusion of 
Federal production tax credits. 74 FR 57738, 57762 (Nov. 9, 2009).
    For today's final rule, DOE continued to use the GRIM and revised 
the MIA results from the November 2009 SNOPR. For details of the MIA, 
see chapter 13 of the TSD. The following sections describe the 
revisions made to the MIA for today's final rule.
    For the November 2009 SNOPR, DOE used publicly available 
information, recent SEC filings, and the information published in 
chapter 13 and appendix 13A of the October 2008 NOPR to estimate the 
likely Federal production tax credits for which the CCW industry would 
be eligible. 74 FR 57738, 57764 (Nov. 9, 2009). For today's final rule, 
DOE used tax and earnings information published in SEC filings for the 
LVM and the same methodology described in appendix 13C to revise the 
estimated Federal production tax credits for 2009 and 2010. For details 
on the Federal production tax credits, see appendix 13C of the TSD.
    For the November 2009 SNOPR, DOE received a number of comments from 
interested parties in response to the distribution and usage patterns 
for commercial laundry, which affect the shipment analysis. In 
response, DOE modeled a sensitivity analysis to account for the 
slightly different shipment results. Shipments affect MIA results 
because they directly influence the value of the INPV estimated in the 
GRIM. For today's final rule, the GRIM was revised to include an 
alternative shipment scenario based on the sensitivity analysis. See 
appendix 11C for details on the sensitivity analysis, including the 
INPV results from the analysis.
    DOE received a number of comments from interested parties in 
response to the MIA analysis presented in the November 2009 SNOPR. At 
the SNOPR public meeting and in its written comments, Alliance stated 
that DOE's belief that all manufacturers can achieve

[[Page 1148]]

a top-loading standard greater than or equal to 1.60 MEF and a water 
factor less than or equal to 8.5 is flawed. (Alliance, No. 66.4 at p. 5 
\33\; Alliance, Public Meeting Transcript, No. 67.4 at pp. 24, 57) SCG 
also inquired if manufacturers can comply with the revised standard 
proposed in the November 2009 SNOPR. (SCG, Public Meeting Transcript, 
No. 67.4 at p. 57) Alliance stated that while it currently markets a 
top-loading CCW that is close to meeting the proposed top-loading 
standard in the November 2009 SNOPR, that model was developed to allow 
some customers to earn an ENERGY STAR rating and a CEE rebate. Alliance 
stated that this model is not accepted by all customers, as some reject 
the water-saving features required to achieve its rated efficiency 
level. Since all CCWs currently marketed at or near the proposed top-
loading energy conservation standard use similar water-saving 
techniques, Alliance stated that it would not be appropriate to set a 
minimum efficiency standard at the level proposed in the November 2009 
SNOPR and proposed setting the standard at 1.42 MEF/9.5 WF for top-
loading CCWs instead. (Alliance, Public Meeting Transcript, No. 67.4 at 
p. 139; Alliance, No. 66.4 at p. 9) Whirlpool and GE stated that they 
are supportive of all standard levels proposed for CCWs in the November 
2009 SNOPR. However, Whirlpool also stated that energy and water 
consumption levels more restrictive than 1.60 MEF/8.5 WF for top-
loading CCWs and 2.20 MEF/5.5 WF for front-loading CCWs would likely 
lead to poor wash performance, poor rinse performance, or both. GE 
noted that its max-tech top-loading CCW (which meets the proposed top-
loading standard) was designed for the on-premise laundry market, a 
relatively small sub-segment of the CCW market and said that model has 
not yet demonstrated viability in laundromats. (Whirlpool, No. 67.11 at 
p. 3 and GE, No. 67.9 at p. 1) Many of the Multiple Route Operators 
stated opposition to any efficiency level above the baseline for CCWs 
on the basis of poor wash performance. Additionally, most of the 
Multiple Route Operators stated that they had experimented with high 
efficiency top-loading CCWs (i.e., agitator-less models) and 
encountered sufficient operational and wash performance issues to 
abandon such models and replace them with traditional top-loading CCWs. 
Additionally, most of the Multiple Route Operators stated that they 
would be reluctant to utilize high efficiency top-loading CCWs based on 
reports of consumer dissatisfaction with such units. Lastly, the 
Multiple Route Operators strongly oppose the top-loading standard level 
proposed in the October 2008 NOPR (i.e., 1.76 MEF/8.3 WF) (Multiple 
Route Operators, No. 67.8 at pp. 1-3).
---------------------------------------------------------------------------

    \33\ A notation in the form ``Alliance, No. 66.4 at p. 5'' 
identifies page 5 of a written comment submitted by Alliance 
entitled ``Response to DOE Commercial Clothes Washer SNOPR.'' This 
document was entered as comment number 66.4 in the docket for this 
rulemaking, along with a letter submitted by Alliance entitled ``Is 
Top-Loading a Feature Within the Meaning of EPCA?''
---------------------------------------------------------------------------

    DOE proposed a 1.60 MEF/8.5 WF standard for top-loading CCWs in the 
November 2009 SNOPR in response to these and other concerns voiced by 
interested parties. For the November 2009 SNOPR, DOE stated it believed 
the proposed top-loading level could be met by all competitors because 
the unit would be based on a standard top-loading platform that uses a 
traditional agitator and no proprietary technology. 74 FR 57738, 57762-
63 (Nov. 9, 2009). The model that the LVM references in its comment 
meets a 1.55 MEF/8.6 WF, and DOE research suggests that this model 
could be modified to meet the amended energy conversation standard. DOE 
notes that the LVM has not refuted that this model could be modified to 
meet the amended energy conservation standard, and while a manufacturer 
may develop higher efficiency models in order to qualify for energy 
star, tax credits, and similar rebates, DOE believes it is unlikely 
that a manufacturer would purposely risk its reputation and release a 
non-functional product onto the market. DOE has noted throughout the 
rulemaking that the heavy concentration of earnings from CCWs relative 
to its total clothes washer business, its overall focus on commercial 
laundry, and its relatively low revenue base compared to its principal 
CCW competitors would lead to the LVM being impacted disproportionately 
by any amended efficiency standard for CCWs. DOE also notes that TSL 3 
avoids requiring manufacturers, including the LVM, to make concurrent, 
substantial investments in both top-loading and front-loading 
platforms. DOE continues to believe that the benefits of the amended 
energy conservation standard outweigh the burdens, including the 
negative impacts on manufacturers (see section VI.D).
    Alliance stated that its most recent SEC 10-Q for the quarter 
ending September 30, 2009, shows that its long-term debt bank covenants 
limit additional borrowing to $19.2 million, that its current credit 
facility must be refinanced before January 27, 2011, and that it 
expects tighter credit terms. Alliance estimates that an $18.4 million 
investment would be required to modify its facilities to manufacture 
top-loading CCWs at the max-tech efficiency level, double the total 
annual capital expenditures for the entire company. Alliance stated 
that, even if the funds were available for a dramatic redesign of its 
top-loading CCWs, it would not be approved for funding by its investors 
regardless of the method used to calculate the financial payback 
because the equipment does not meet customers' minimum requirements. 
(Alliance, No. 66.4 at p. 5; Alliance, Public Meeting Transcript, No. 
67.4 at pp. 24-25) Alliance also stated that it would need to redesign 
the inner and outer tubs to match the max-tech top-loading CCW's larger 
capacity. These changes might not be possible to its existing tub 
fabrication cells while simultaneously meeting demand, and could 
require a new building due to lack of space to ``shoe-horn'' 
fabrication and to avoid shutting down. Alliance stated that its 
customers do not want larger capacity washers because its tub size has 
been designed to match commercial laundry users' needs and load sizes, 
as evidenced by decades of sales and customer experience. (Alliance, 
No. 67.8 at p. 4)
    DOE estimates that the total conversion costs for the industry to 
meet the top-loading amended energy conservation standard will be 
approximately $16.6 million. DOE research thus suggests that the LVM's 
production facilities could be modified at a more modest cost than 
projected by the LVM to make a sufficient number of top-loading CCWs 
that would meet the amended energy conservation standards. DOE 
estimates that the majority of the conversion costs will consist of 
product development, engineering, testing, marketing, and other costs 
required to make equipment designs comply with energy conservation 
standards while addressing consumer acceptance issues raised by the 
LVM. As of December 31, 2008, Alliance stated in its SEC filings that 
its principal line of credit was limited to an additional $16.2 million 
of borrowing and that a substantial portion of its long term debt is 
due concurrently with the compliance date of the final rule. DOE agrees 
with the LVM that the company's current debt structure makes it more 
difficult to finance additional product development and capital 
expense. In response to these and other concerns voiced by the LVM, DOE 
revised the proposed top-loading CCW energy conservation standard to a 
level which a current top-loading LVM model

[[Page 1149]]

almost attains. Thus, the negative impacts on the LVM have been weighed 
in DOE's consideration of the amended energy conservation standard.
    Alliance stated that the standards proposed in the November 2009 
SNOPR place 292 union laborers in its Ripon, WI plant at risk of losing 
their jobs. Of these 292 laborers, 150 union laborers are attributed to 
CCW production and 142 laborers are associated with companion 
commercial clothes dryers. The standards proposed in the November 2009 
SNOPR could also eliminate an additional 40 non-production jobs. 
(Alliance, Public Meeting Transcript, No. 67.4 at p. 25; Alliance, No. 
66.4 at p. 8)
    For the October 2008 NOPR, DOE calculated the direct employment 
impacts using the GRIM and information gathered from interviews with 
manufacturers. DOE estimated that there would be positive employment 
impacts among domestic CCW manufacturers for TSL 1 through TSL 5. 
Because the LVM had previously stated it could be eliminated from the 
commercial market, DOE also specifically investigated the LVM 
employment using its CCW revenues and additional employment estimates. 
DOE estimated that if the LVM ceased to produce soft-mount dryers and 
CCWs that this would lead to a loss of 292 production jobs. DOE 
estimated that a complete closure of the Ripon, WI facility would 
result in the dismissal of approximately 600 factory employees. 73 FR 
60234, 62102-03 (Oct. 17, 2008). For the November 2009 SNOPR, DOE 
stated that it believes that the proposed energy conservation standard 
would allow the LVM to continue to produce top-loading CCWs, mitigating 
any potential closure of its domestic manufacturing facility. 74 FR 
57738, 57763 (Nov. 9, 2009). DOE did not receive any additional 
comments that suggest technical barriers would prevent manufacturers 
from meeting the energy conservation standards and notes that two 
competitors support the proposed amended energy conservation standards 
for top-loading CCWs. Thus, for today's final rule, DOE estimates that 
the LVM would be able to continue to produce top-loading CCWs, and that 
significant impacts on LVM manufacturing employment due to today's 
final rule are hence unlikely. Further discussion of the LVM and the 
potential impacts on direct employment for the CCW industry is 
presented in chapter 13 of the TSD.
    ASAP stated that much of the SNOPR analysis was driven by DOE's 
concern for the precarious position of the LVM. ASAP stated that it 
remains somewhat unconvinced that the numbers are as stark as presented 
in the revised MIA. (ASAP, Public Meeting Transcript, No. 67.4 at p. 
33) ASAP and the Joint Comment questioned DOE's estimates of the 
potential impacts on the LVM if the market were to shift entirely to 
front-loading CCWs. ASAP and the Joint Comment stated that the green-
field assumption in this analysis was not valid, especially considering 
that the LVM is already making a substantial number of front-loading 
washers, and since new buildings are costly and depreciate over a much 
longer schedule than new equipment. The Joint Comment argues that these 
assumptions disproportionately increase the annualized financial cost 
of conversion. (ASAP, Public Meeting Transcript, No. 67.4 at pp. 140-
142; Joint Comment, No. 67.6 at pp. 5-6) ASAP also inquired if a shift 
to only front-loading production would involve a green-field 
manufacturing facility even if top-loading production is ceasing. 
(ASAP, Public Meeting Transcript, No. 67.4 at p. 143) ASAP and the 
Joint Comment stated that a shift to only front-loading washer 
production would not force the LVM to completely redesign washers nor 
incur expenses such as research and development. Both ASAP and the 
Joint Comment argue that, because front-loading washers currently 
represent 25 to 30 percent of the LVM's unit shipments, the LVM will 
have the operating experience to gradually reduce production costs and 
improve production designs without a complete redesign. (ASAP, Public 
Meeting Transcript, No. 67.4 at p. 146; Joint Comment, No. 67.6 at p. 
5)
    DOE research confirms that the LVM has been gradually increasing 
its production of front-loading CCWs. However, the LVM's production of 
top-loading CCWs still heavily outweighs its production of front-
loading CCWs. DOE believes a complete shift to front-loading CCWs would 
represent a radical departure from the much more gradual market 
transition that has been occurring. As illustrated in chapter 13 of the 
TSD, such a market disruption would disproportionately impact the LVM 
since the LVM would have to increase front-loader manufacturing 
capacity by multiples, while its competitors would have to increase 
their overall front-loader manufacturing capacity by less than 5 
percent to fully transition their CCW production to only front-loading 
washers. Since top-loaders and front-loaders share few parts and 
require separate assembly lines, sub-assembly stations, etc., DOE 
concluded that the LVM would have to build an annex to house the 
expanded front-loader fabrication and assembly lines as long as top-
loading clothes washer production continues. For example, the LVM could 
continue to manufacture top-loading RCWs even after ceasing top-loading 
CCW production. While some equipment and space could potentially be re-
purposed towards fabricating front-loader components (i.e., large 
presses, machining centers, etc.), DOE research suggests that much of 
the space currently occupied by hard-tooled top-loading clothes washer 
assembly lines in the LVM facility will remain unavailable until the 
LVM ceases to produce top-loading clothes washers altogether. DOE 
expects the LVM to continue to produce top-loading clothes washers as 
long as it can to fulfill customer demand. Consequently, the space 
currently occupied by the top-loading clothes washer lines will likely 
continue to be occupied on the compliance date of today's final rule, 
necessitating an annex in which to house expanded front-loader assembly 
and fabrication. Alliance agreed that its existing facility could not 
accommodate the new equipment for front-loading production and continue 
to produce its current volumes of top-loading washers. (Alliance, 
Public Meeting Transcript, No. 67.4 at pp. 145-146) As illustrated in 
chapter 13 of the TSD, a complete transition to front-loading CCWs 
would likely lead to a market disruption since switching costs for 
customers would be minimized. Consequently, DOE research suggests that 
the LVM would be required to redesign its front-loader platform to 
become more cost-competitive.
    In appendix 13C of the SNOPR TSD, DOE estimated that the LVM would 
be eligible for about $4.1 million in Federal production tax credits 
between 2007 and 2010. ASAP and the Joint Comment questioned DOE's 
conclusion that additional tax credits in 2010 are unlikely. The Joint 
Comment estimated that additional credits in 2010 are likely as 
production of front-loaders ramps up further (ASAP, Public Meeting 
Transcript, No. 67.4 at pp. 126-129; Joint Comment, No. 67.6, at p. 6) 
ASAP questioned if DOE believed that the LVM was reaching a limit on 
the number of front-loading washers that it could sell or produce. 
(ASAP, Public Meeting Transcript, No. 67.4 at pp. 126-129) ASAP also 
asked if there was an analysis to support the estimate of the cap on 
machines that would qualify for the Federal production tax credit, and 
if such tax credits for 2007 were included in the analysis. (ASAP, 
Public Meeting Transcript, No. 67.4 at p. 129, 135)

[[Page 1150]]

Finally, the Joint Comment stated that, even though DOE's analysis of 
the Federal production tax credits has relatively little impact on the 
industry as a whole, the Federal production tax credits will mitigate a 
significant portion of the conversion costs borne by the LVM to convert 
their entire production to front-loading washers. (Joint Comment, No. 
67.6 at p. 6). Alliance stated, while it has earned tax credits for 
qualifying washers, these tax credits have not been used for a cash 
benefit. (Alliance, No. 67.8 at p. 4)
    For the November 2009 SNOPR, DOE accounted 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). 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 publicly 
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 and 
calculated the Federal production tax credits for qualifying shipments. 
In the November 2009 SNOPR, DOE estimated that the LVM would likely not 
qualify for any Federal production tax credits in 2010. 74 FR 57738, 
57763-64 (Nov. 9, 2009) DOE's estimate was not based on a cap on the 
number of qualifying washers the LVM could sell or produce; rather, it 
was based on statements in the LVM's 10-Q filing for the quarter ending 
March 31, 2009. The 10-Q at that time suggested that the LVM's front-
loading production in 2010 would not increase significantly to qualify 
for additional Federal production tax credits.
    For today's final rule, DOE updated its estimates using the most 
recent, publicly available information to calculate the likely benefit 
to the LVM from the tax credit provisions. DOE updated the assumptions 
for the estimated Federal production tax credit for 2009 and 2010 based 
on the LVM's recent SEC filings. The LVM's 10-Q filing for the quarter 
ending September 30, 2009, reported higher tax benefits from the energy 
efficiency tax program compared to the 10-Q filing for the quarter 
ending March 31, 2009. DOE revised its figures for 2009 based on this 
new information and used the LVM's most recent historical estimate for 
the growth rate of the commercial laundry industry to estimate LVM 
shipments for 2010.\34\ The revised estimates suggest that the LVM will 
collect approximately $4.0 million in Federal production tax credits 
from 2008-2010 from the provisions updated by EIEA 2008 and a total of 
$5.3 million from the program from 2007-2010. The revised estimate for 
today's final rule is approximately $1.2 million higher than the 
estimate published in the November 2009 SNOPR.
---------------------------------------------------------------------------

    \34\ See http://www.comlaundry.com/investors/relations/sec-filings.asp for a list of Alliance Laundry System's SEC filings.
---------------------------------------------------------------------------

    In the GRIM, DOE accounts for the Federal production tax credit as 
a direct cash benefit in the base and standards cases that directly 
increases INPV. Because 2009 is the base year to which industry cash 
flows are discounted, any Federal production tax credit from 2007 and 
2008 is not counted towards the INPV analysis because it falls outside 
the analysis period. However, any tax benefit in 2009 and 2010 falls 
within the analysis period and hence increases industry value 
(potentially decreasing the impacts on manufacturers due to energy 
conservation standards). DOE's revised Federal production tax credit 
estimates for the LVM are approximately $1.2 million and $0.4 million 
for 2009 and 2010, respectively. These revised figures do not 
significantly impact the INPV calculated by DOE nor do they come close 
to paying for a facility conversion to front-load only CCW production. 
DOE estimates that a wholesale conversion to only front-loading CCW 
production would cost the LVM approximately 12 times the total Federal 
production tax credit benefit DOE expects the LVM to collect over the 
life of the program. (See chapter 13 of the TSD for further details.) 
While DOE research suggests that Federal production tax credits could 
help the LVM implement gradual changes to its production facilities, 
such tax credits would not substantially defray wholesale plant 
conversion costs.
    Whirlpool commented that the ability of a manufacturer to use an 
earned tax credit is a function of the earnings situation for that 
manufacturer and that many manufacturers cannot use earned tax credits 
in some years due to current economic conditions. (Whirlpool, No. 67.11 
at p. 3) Because the LVM reported earnings from the tax credit and 
stated that it expected to earn a benefit from the tax credits in 2009, 
DOE calculated the expected tax credits for the LVM in 2009 and 2010 
and assumed that the LVM would benefit in those years. Whirlpool agreed 
with DOE's conclusion that the past tax credits have only offset a 
small fraction of the costs necessary to produce high efficiency 
equipment. Whirlpool also stated that if tax credits were offered in 
between the issuance of the final rule and the compliance date, they 
could have an impact on the ability of individual manufacturers to make 
the capital investment in new product platforms. (Whirlpool, No. 67.11 
at p. 3)
    DOE agrees that tax credits that were effective between the 
issuance of the final rule and the compliance date of the amended 
standards could have an impact on the ability of manufacturers to fund 
capital investments. However, because most of the benefit from the EIEA 
2008 takes place outside of the analysis period, DOE believes it is 
unlikely that manufacturers could use the credits to fund much of their 
capital conversion costs.
    EJ recommended that DOE review its Federal production tax credit 
projections for 2010 if it adopts a strong standard that applies to all 
CCWs. EJ added that such a standard would likely cause manufacturers to 
ramp up production of qualifying washers over time, not just beginning 
in 2013. (EJ, Public Meeting Transcript, No. 67.4 at pp. 137-138)
    For today's final rule, DOE revised its Federal production tax 
credit projections for 2010 using the LVM's most recent SEC filings. 
Based on the LVM's 10-Q for the quarter ending September 30, 2009, DOE 
revised its estimates to include Federal production tax credits for 
2010. DOE continues to believe that it is unlikely that manufacturers 
would shift their clothes washer production to exclusively manufacture 
front-loading washers in response to the Federal production tax credits 
or the energy conservation standards in today's final rule. Thus, DOE 
relied on the forward-looking projections published by the LVM to 
estimate CCW sales that qualify for the production tax credits.
    Alliance and White & Case (W&C) cited DOJ's letter in response to 
the October 2008 NOPR that stated there appeared to be a real risk that 
at least one manufacturer could not meet the proposed amended energy 
conservation standard for top-loading CCWs. Both Alliance and W&C 
stated that DOE's response in the November 2009 SNOPR ignored DOJ's 
conclusion that DOE should consider keeping the existing standard in 
place for top-loading CCWs to maintain competition. (Alliance, No. 66.4 
at p. 3; W&C, Public Meeting Transcript, No. 67.4 at pp. 26-27) 
Alliance stated that DOJ's recommendation to keep the existing standard 
in place for top-loading CCWs was the appropriate course of action for

[[Page 1151]]

this rulemaking. (Alliance, No. 66.4 at p. 9; Alliance, Public Meeting 
Transcript, No. 67.4 at pp. 29-30) In addition, Multiple Route 
Operators stated they were concerned that the standards proposed in the 
October 2008 NOPR could force Alliance to exit the manufacture of top-
loading CCWs, which would cause them significant harm because they 
would pay more for washers. Multiple Route Operators urged DOE to adopt 
a standard that would enable Alliance to remain the lowest-cost CCW 
provider. (Multiple Route Operators, No. 67.8 at pp. 1-3)
    In the October 2008 NOPR, DOE proposed amended standards of 1.76 
MEF/8.3 WF for top-loading CCWs. 73 FR 62034, 62036 (Oct. 17, 2008). In 
response, DOJ found that there was a real risk that one or more CCW 
manufacturers could not meet the proposed standard for top-loading 
CCWs. DOJ stated that it was concerned that meeting the proposed 
standards could require substantial investment in the development of 
new technology that some suppliers of top-loading CCWs might not find 
economically justifiable. 74 FR 57738, 57802 (Nov. 9, 2009). In 
response to the concerns raised by DOJ and other concerns raised by 
interested parties, DOE proposed a top-loading CCW standard of 1.60 
MEF/8.5 WF in the November 2009 SNOPR. 74 FR 57738, 57763 (Nov. 9, 
2009). In today's final rule, DOE determined that 1.60 MEF/8.5 WF is 
the maximum top-loading CCW efficiency level that is economically 
justified and technologically feasible while being sensitive to 
concerns raised by DOJ and the LVM.
    EJ stated that DOE failed to consider the low barriers to entry in 
the CCW market in its analysis of the competition issue. While there 
are currently only three CCW manufacturers, if the departure of any of 
these manufacturers increases markups significantly, higher profits 
would allow RCW manufacturers or small players to expand into the 
commercial market. EJ asserted that, because these manufacturers would 
not have to design completely new equipment or construct a new 
manufacturing facility to begin selling CCWs, it would be 
``irrational'' for DOE to contend that there would be any significant 
adverse impact on competition in the commercial market. EJ stated that 
DOE must explain why new entrants would be unable to gain a foothold in 
the CCW market by taking advantage of this disturbance in the status 
quo if one manufacturer exited the market. (EJ, No. 67.5 at. pp. 8-9; 
Public Meeting Transcript, No. 67.4 at p. 138) Multiple Route Operators 
believe they would face higher prices if Alliance were eliminated from 
the market. (Multiple Route Operators, No. 67.8 at pp. 1-3)
    In response to the October 2008 NOPR, DOJ found that there was a 
real risk that one or more of the manufacturers could not meet the 
proposed standard for top-loading CCWs. 74 FR 57738, 57802 (Nov. 9, 
2009) DOE revised its proposed standards in part to ease these 
competitive concerns raised by the DOJ and other interested parties. 74 
FR 57738, 57763 (Nov. 9, 2009).
    In chapter 13 of the TSD, DOE offers multiple reasons why it 
believes the LVM has succeeded in the CCW market despite low overall 
production volumes: (1) Well-depreciated machinery and legacy design; 
(2) effective customer and service networks; (3) a large installed base 
of top-loading CCWs; and (4) stock of repair parts that ensures a large 
market for replacement machines. Multiple Route Operators confirmed 
many of these advantages, stating that they believe Alliance offers 
CCWs with the lowest total cost of ownership because its washers have 
the longest functional life. In addition, Multiple Route Operators 
stated that the quality, service, and unique products with CCW features 
separate Alliance from other manufacturers. (Multiple Route Operators, 
No. 67.8 at pp. 1-3) DOE believes that route operators' and 
distributors' large inventory of service parts and repair knowledge 
represent a significant switching cost, discouraging customers from 
adopting rival platforms. As long as the LVM can continue to produce 
replacement top-loading CCWs, DOE does not believe the LVM will be 
placed at a substantial disadvantage relative to its larger 
competitors. However, due to the relatively small stock of front-
loading clothes washers installed in the CCW market, DOE believes that 
a wholesale conversion of the CCW market to front-loading machines 
would eliminate most of the LVM's advantages that have allowed it to 
remain competitive.
    DOE research suggests that, while the cost of entering the CCW 
market may be construed as low, statements by multiple manufacturers 
indicate that actual success in the CCW market depends on many factors. 
For example, DOE notes that a top-loading, horizontal-axis clothes 
washer used to be marketed into the CCW market but that it was 
withdrawn for a number of reasons. Additionally, converting residential 
platforms for commercial use is not as simple as adding a coin box; 
substantial investments are required to integrate a variety of payment 
systems. Custom user interfaces are required, both for compliance with 
the Americans with Disabilities Act, and to facilitate consumer 
education. Resultant conversion costs have to be amortized across a 
much lower production volume than is typically found in the residential 
market, and critical parts and service personnel have to be present in 
the territory of any route operator that is going to consider a rival. 
Hence, while entering the CCW market may not represent significant 
technical hurdles, the operational and financial challenges are 
sufficient to limit the market to a small number of competitors.
    DOE also received comment regarding its characterization of 
Alliance as an LVM. The Joint Comment argued that DOE's 
characterization of Alliance as an LVM is a significant misnomer, as 
the LVM reported revenues equivalent to approximately half of the total 
CCW industry revenue and claims to be the leading manufacturer of 
stand-alone commercial laundry equipment in North America. (Joint 
Comment, No. 67.6 at p. 5)
    For the October 2008 NOPR, DOE presented a separate analysis of the 
LVM. 73 FR 62034, 62103-04 (Oct. 17, 2008). Although DOE continues to 
agree with the Joint Comment that the LVM has a significant share of 
the CCW industry based on reported revenues, DOE maintains 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 hence be characterized as an LVM in the context 
of this rulemaking. 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 comprise part of the total unit cost. The majority of 
capital expenditures related to tooling, equipment, and other machinery 
in a plant can typically 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 
platform upgrades. A manufacturer with a high-volume residential line 
can cost justify much more capital-intensive solutions if they are 
applicable in both markets, whereas an LVM could lack the scale and 
capital to make such investments. 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 CCW 
market, the most direct competitor to the LVM has over 60 times the 
overall shipment

[[Page 1152]]

volumes of the LVM. This scale difference also affects purchasing power 
because a large, diversified appliance manufacturer can use its 
production scale to achieve better prices for raw materials and 
commonly purchased components such as 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. Therefore, DOE 
concludes that an LVM is unlikely to be able to compete solely on 
manufacturing cost.

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 November 2009 SNOPR, DOE estimated indirect 
national employment impacts using an input/output model of the U.S. 
economy called Impact of Sector Energy Technologies (ImSET).\35\ 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 VI.C.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 IV.G. For today's final rule, DOE 
has made no change to its method for estimating employment impacts. For 
further details, see chapter 15 of the final rule TSD.
---------------------------------------------------------------------------

    \35\ 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 that would be expected to 
result from adoption of new standards. For the November 2009 SNOPR and 
today's final rule, DOE calculated this change using the NEMS-BT 
computer model. NEMS-BT models certain policy scenarios such as the 
effect of reduced energy consumption by fuel type. The analysis output 
provides a forecast for the needed generation capacities at each TSL. 
The estimated net benefit of the standard in today's final rule 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 efficiency improvement on CCW energy 
consumption electricity and natural gas from the NIA. These inputs 
reflect the effects of both fuel (natural gas) and electricity 
consumption savings. Chapter 14 of the final rule TSD presents results 
of the utility impact analysis.
    In its November 2009 SNOPR, DOE did not estimate impacts on water 
and wastewater utilities because the water and wastewater utility 
sector exhibits 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). EJ 
commented that given the water supply and water and wastewater 
infrastructure concerns that are affecting and will continue to affect 
many parts of the country, it would be arbitrary and capricious for the 
Department to fail to address the impact on water and wastewater 
utilities of reduced water consumption resulting from commercial 
clothes washer standards. (EJ, No. 67.5 at p. 13)
    In response, DOE refers again to the diversity of the water and 
wastewater utility sector. Whereas in the case of the electric utility 
sector DOE has a tool and data set that allows estimation of impacts on 
infrastructure (in terms of installed generation capacity), DOE does 
not have (and is not aware of) a comparable tool and data set that 
would allow estimation of impacts on infrastructure in the water and 
wastewater utility sector resulting from commercial clothes washer 
standards. Therefore, for today's final rule, DOE did not estimate 
impacts to the water and wastewater utility sector.

[[Page 1153]]

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 
standards for CCWs in today's final rule, which it has included as 
chapter 16 of the TSD. DOE found that the environmental effects 
associated with the standards for CCWs were not significant. Therefore, 
DOE is issuing a Finding of No Significant Impact (FONSI), pursuant to 
NEPA, the regulations of the Council on Environmental Quality (40 CFR 
parts 1500-1508), and DOE's regulations for compliance with NEPA (10 
CFR part 1021). The FONSI is available in the docket for this 
rulemaking.
    In the EA, DOE estimated the reduction in power sector emissions of 
CO2, NOX, and Hg using the NEMS-BT computer 
model. Because the on-site operation of CCWs requires use of fossil 
fuels and results in emissions of CO2 and NOX, 
DOE also accounted for the reduction in these emissions due to the 
standards.
    In the EA, NEMS-BT is run similarly to the AEO 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; the output is the forecasted physical emissions. The 
estimated net benefit of the standard in today's final rule is the 
difference between the forecasted emissions by NEMS-BT at each TSL and 
the AEO 2009 April Release Reference Case. NEMS-BT tracks 
CO2 emissions using a detailed module that provides results 
with broad coverage of all sectors and inclusion of interactive 
effects.
    DOE has determined that sulfur dioxide (SO2) emissions 
from affected Electric Generating Units (EGUs) are subject to 
nationwide and regional emissions cap and trading programs that create 
uncertainty about the impact of energy conservation standards on 
SO2 emissions. Title IV of the Clean Air Act sets an annual 
emissions cap on SO2 for all affected EGUs. SO2 
emissions from 28 eastern States and the District of Columbia (D.C.) 
are also limited under the Clean Air Interstate Rule (CAIR, published 
in the Federal Register on May 12, 2005; 70 FR 25162 (May 12, 2005), 
which creates an allowance-based trading program that will gradually 
replace the Title IV program in those States and D.C. (The recent legal 
history surrounding CAIR is discussed below.) The attainment of the 
emissions caps is flexible among EGUs and is enforced through the use 
of emissions allowances and tradable permits. Energy conservation 
standards could lead EGUs to trade allowances and increase 
SO2 emissions that offset some or all SO2 
emissions reductions attributable to the standard. DOE is not certain 
that there will be reduced overall SO2 emissions from the 
standards. The NEMS-BT modeling system that DOE uses to forecast 
emissions reductions currently indicates that no physical reductions in 
power sector emissions would occur for SO2. The above 
considerations prevent DOE from estimating SO2 reductions 
from standards at this time.
    Even though DOE is not certain that there will be reduced overall 
emissions from the standard, there may be an economic benefit from 
reduced demand for SO2 emission allowances. Electricity 
savings from standards decrease the generation of SO2 
emissions from power production, which can lessen the need to purchase 
emissions allowance credits, and thereby decrease the costs of 
complying with regulatory caps on emissions.
    Much like SO2 emissions, NOX emissions from 
28 eastern States and the District of Columbia (D.C.) are limited under 
the CAIR. 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. 531 F.3d 896 
(D.C. Cir. 2008); see also North Carolina v. EPA, 550 F.3d 1176 (D.C. 
Cir. 2008). These court positions were taken into account in the 
November 2009 SNOPR and in today's final rule. Because all States 
covered by CAIR opted to reduce NOX emissions through 
participation in cap and trade programs for electric generating units, 
emissions from these sources are capped across the CAIR region.
    In the 28 eastern States and D.C. where CAIR is in effect, DOE's 
forecasts indicate that no NOX emissions reductions will 
occur due to energy conservation standards because of the permanent 
cap. Energy conservation standards have the potential to produce an 
economic impact in the form of lower prices for NOX 
emissions allowances, if their impact on electricity demand is large 
enough. However, DOE has concluded that the standards in today's final 
rule will not have such an effect because the estimated reduction in 
electricity demand in States covered by the CAIR cap would be too small 
to affect allowance prices for NOX under the CAIR.
    New or amended energy conservation standards would reduce 
NOX emissions in those 22 States that are not affected by 
the CAIR. DOE used the NEMS-BT to forecast emission reductions from the 
CCW standards in today's final rule.
    Similar to emissions of SO2 and NOX, future 
emissions of Hg would have been subject to emissions caps. The Clean 
Air Mercury Rule (CAMR) would have permanently capped emissions of Hg 
from new and existing coal-fired plants in all States beginning in 2010 
(70 FR 28606). 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. Thus, after CAMR was vacated, DOE was 
unable to use the NEMS-BT model to estimate any changes in the physical 
quantity of Hg emissions 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 the standard 
levels considered. DOE continued to use the above approach, updated for 
the AEO 2009 April Release, to estimate the Hg emission reductions due 
to standards for the SNOPR. For today's final rule, however, DOE used 
the latest version of NEMS-BT, which reflects CAMR being vacated and 
does not incorporate CAMR emission caps, to estimate the reduction in 
Hg emissions.
    In addition to electricity generation, 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 November 
2009 SNOPR or today's final rule the effect of the proposed standards 
on site emissions of SO2.
    For its November 2009 SNOPR, DOE conducted a separate analysis of 
wastewater discharge impacts as part of

[[Page 1154]]

the environmental assessment for commercial clothes washers. 73 FR 
62034, 62112-13 (Oct. 17, 2008). For today's final rule, DOE retained 
the same analysis method for estimating wastewater discharge impacts.
    EJ commented that given the water supply concerns that are 
affecting and will continue to affect many parts of the country, it 
would be arbitrary and capricious for the Department to fail to address 
the environmental benefits of reduced water consumption resulting from 
commercial clothes washer standards. (EJ, No. 67.5 at p. 13) In 
response, DOE notes that the environmental impacts of reduced water use 
are highly variable across the country. DOE has neither an analytical 
tool that could estimate such impacts nor sufficient information to 
draw definitive conclusions about such impacts. Therefore, it was not 
able to account for potential environmental benefits of reduced water 
consumption resulting from the commercial clothes washer standards 
considered for today's final rule.

K. Monetizing Carbon Dioxide and Other Emissions Impacts

    For the November 2009 SNOPR, DOE 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 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 cost 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.
    In the October 2008 NOPR, DOE used the range $0 to $20 per ton 
CO2 for reductions in the year 2007 in 2007$. 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 the 
November 2009 SNOPR and today's final rule, 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 turn out to be significant in the sense that they 
may mean that the best current estimates are too low. Third, 
controversial ethical judgments, including those involving the 
treatment of future generations, play a role in judgments about the SCC 
(see in particular the discussion of the discount rate, below).
    To date, regulations have used a range of values for the SCC. For 
example, a regulation proposed by the U.S. Department of Transportation 
(DOT) in 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 global 
SCC value of $33/t CO2 (with sensitivity analysis at $80/t 
CO2), increasing at 2.4 percent per year thereafter.
    In recent months, a variety of agencies have worked to develop an 
objective methodology for selecting a range of interim SCC estimates to 
use in regulatory analyses until improved SCC estimates are developed. 
The following summary reflects the initial results of these efforts and 
proposes ranges and values for interim social costs of carbon used in 
this rule. It should be emphasized that the analysis described below is 
preliminary. These complex issues are of course undergoing a process of 
continuing review. Relevant agencies will be evaluating and seeking 
comment on all of the scientific, economic, and ethical issues before 
establishing final estimates for use in future rulemakings.
    The interim judgments resulting from the recent interagency review 
process can be summarized as follows: (a) DOE and other Federal 
agencies should consider the global benefits associated with the 
reductions of CO2 emissions resulting from efficiency 
standards and other similar rulemakings, rather than continuing the 
previous focus on domestic benefits; (b) these global benefits should 
be based on SCC estimates (in 2007$) of $55, $33, $19, $10, and $5 per 
ton of CO2 equivalent emitted (or avoided) in 2007 (in 
calculating the benefits reported in this notice, DOE has escalated the 
2007$ values to 2008$ for consistency with other dollar values 
presented in this notice); (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

[[Page 1155]]

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 $1/t CO2 (2007 
value, 2007$), 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 to5 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 S. J. Tol's, ``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 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,

[[Page 1156]]

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 Standard & Poor's 
500 Index). 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 a 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, ``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 IV.8. These estimates are 
reported separately using 3-percent and 5-percent discount rates. The 
cells are empty in rows 10 and 11 because these studies did not report 
estimates of the SCC at a 3-percent discount rate. The model-weighted 
means are reported in the final or summary row; they are $33 per t 
CO2 at a 3-percent discount rate and $5 per t CO2 
with a 5-percent discount rate.

Table IV.8--Global Social Cost of Carbon (SCC) Estimates ($/t CO2 in 2007 in 2007$), 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
----------------------------------------------------------------------------------------------------------------

[[Page 1157]]

 
                                  Summary                                   Model-weighted           33        5
                                                                             mean.
----------------------------------------------------------------------------------------------------------------
* The sample includes all peer reviewed, non-equity-weighted estimates included in Tol (2008), Nordhaus (2008),
  Hope (2008), and Anthoff et al. (2009), that are based on the most recent published version of FUND, PAGE, or
  DICE and use business-as-usual climate scenarios. All values are based on the best available information from
  the underlying studies about the base year and year dollars, rather than the Tol (2008) assumption that all
  estimates included in his review are 1995 values in 1995$. All values were updated to 2007 using a 3-percent
  annual growth rate in the SCC, and adjusted for inflation using GDP deflator.

    DOE used the model-weighted mean values of $33 and $5 per ton 
(2007$), 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. These values were then 
escalated to 2008$ and rounded to $34 and $5. Thus, DOE has also 
included--and centered its current attention on--the average of the 
estimates associated with these discount rates, which is approximately 
$20 (in 2008$). (Based on the $20 global value, the domestic value 
would be approximately $1 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 IV.9 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 IV.9--Global Social Cost of Carbon Estimates ($/t CO2 in 2007 in 2007$),* 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.      FUND default......       10        0        7       -1
                                       2009.
2...............  FUND..............  Anthoff et al.      SRES A1b..........        2        0        1       -1
                                       2009.
3...............  FUND..............  Anthoff et al.      SRES A2...........       15        0       10       -1
                                       2009.
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
----------------------------------------------------------------------------------------------------------------
                         Summary                          Model-weighted           55       10       36        6
                                                           mean.
----------------------------------------------------------------------------------------------------------------
* The sample includes all peer reviewed, non-equity-weighted estimates included in Tol (2008), Nordhaus (2008),
  Hope (2008), and Anthoff et al. (2009), that are based on the most recent published version of FUND, PAGE, or
  DICE and use business-as-usual climate scenarios. All values are based on the best available information from
  the underlying studies about the base year and year dollars, rather than the Tol (2008) assumption that all
  estimates included in his review are 1995 values in 1995$. All values were updated to 2007 using a 3-percent
  annual growth rate in the SCC, and adjusted for inflation using GDP deflator.
** 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 
$36 (2007$). Since the random walk model has greater support from the 
data, DOE also used the SCC values of $10 and $55 (2007$). When 
escalated to 2008$, these values are approximately $10 and $56.

[[Page 1158]]

    In summary, in considering the potential global benefits resulting 
from reduced CO2 emissions, DOE used values based on a 
social cost of carbon of approximately $5, $10, $20, $34 and $56 per 
metric ton avoided in 2007 (values expressed in 2008$). DOE also 
calculated the domestic benefits based on a value of approximately $1 
per metric ton avoided in 2007. To value the CO2 emissions 
reductions expected to result from amended standards for CCWs in 2013-
2043, DOE escalated the above values for 2007 using a 3-percent 
escalation rate. As indicated in the discussion above, estimates of SCC 
are assumed to increase over time since future emissions are expected 
to produce larger incremental damages as physical and economic systems 
become more stressed as the magnitude of climate change increases. 
Although most studies that estimate economic damages caused by 
increased GHG emissions in future years produce an implied growth rate 
in the SCC, neither the rate itself nor the information necessary to 
derive its implied value is commonly reported. However, applying a rate 
of 3 percent per year is consistent with the range recommended by IPCC 
(2007).
    DOE also investigated the potential monetary benefit of reduced 
NOX and Hg emissions from the TSLs it considered. As noted 
above, new or amended energy conservation standards would reduce 
NOX emissions in those 22 States that are not affected by 
CAIR, in addition to the reduction in site NOX emissions 
nationwide. DOE estimated the monetized value of NOX 
emissions reductions resulting from each of the TSLs considered for 
today's final rule based on environmental damage estimates from the 
literature. Available estimates suggest a very wide range of monetary 
values for NOX emissions, ranging from $370 per ton to 
$3,800 per ton of NOX from stationary sources, measured in 
2001$ (equivalent to a range of $442 to $4,540 per ton in 2008$). Refer 
to the OMB, Office of Information and Regulatory Affairs, ``2006 Report 
to Congress on the Costs and Benefits of Federal Regulations and 
Unfunded Mandates on State, Local, and Tribal Entities,'' Washington, 
DC, for additional information.
    For Hg emissions reductions, DOE estimated the national monetized 
values resulting from the TSLs considered for today's rule based on 
environmental damage estimates from the literature. The impact of 
mercury emissions from power plants on humans is considered highly 
uncertain. However, DOE identified two estimates of the environmental 
damage of Hg based on 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 of $1.3 billion per year in 2000$ (which works 
out to $33.3 million per ton emitted per year in 2008$) 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.\36\ DOE's low-end estimate of $0.66 million per ton emitted in 
2004$ ($0.745 million per ton in 2008$) was derived 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 to Hg.\37\
---------------------------------------------------------------------------

    \36\ Trasande, L., et al., ``Applying Cost Analyses to Drive 
Policy that Protects Children,'' 1076 Ann. N.Y. Acad. Sci. 911 
(2006).
    \37\ 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.
---------------------------------------------------------------------------

    As previously stated, DOE's analysis assumed the presence of 
nationwide emission caps on SO2 and caps on NOX 
emissions in the 28 States covered by CAIR. In the presence of these 
caps, the NEMS-BT modeling system that DOE used to forecast emissions 
reduction indicated that no physical reductions in power sector 
emissions would occur (although there remains uncertainty about whether 
physical reduction of SO2 will occur), but that the 
standards could put slight downward pressure on the prices of emissions 
allowances in cap-and-trade markets. Estimating this effect is very 
difficult because factors such as credit banking can change the 
trajectory of prices. From its modeling to date, DOE is unable to 
estimate a benefit from energy conservation standards on the prices of 
emissions allowances at this time. See the environmental assessment in 
the final rule TSD for further details.

V. Discussion of Other Comments

    Since DOE opened the docket for this rulemaking, it has received 
more than 44 written comments from a diverse set of parties, including 
manufacturers and their representatives, wholesalers and distributors, 
energy conservation advocates, State officials and agencies, and 
electric utilities. Section IV of this preamble discusses comments DOE 
received on the analytic methodologies it used. Additional comments DOE 
received in response to the November 2009 SNOPR addressed the burdens 
and benefits associated with new energy efficiency standards, the 
information DOE used in its analyses, results of and inferences drawn 
from the analyses, impacts of standards, the merits of the different 
TSLs and standards options DOE considered, other issues affecting 
adoption of standards for CCWs, and the DOE rulemaking process. DOE 
addresses these comments in this section.

A. Proposed Trial Standard Levels (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 IV.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 November 2009 SNOPR, 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 opposes the standard proposed 
for top-loading CCWs, noting that it is based on a ``residential 
construction'' product with almost no acceptance in the marketplace, 
instead of a true ``commercial construction'' product meeting the needs 
of the U.S.

[[Page 1159]]

commercial clothes washer market segment. It stated that the proposed 
standard is inappropriate because equipment meeting the standard would 
not provide true hot water (120 [deg]F or greater), true warm water (80 
[deg]F to 120 [deg]F), or adequate rinsing. Alliance commented that WEB 
Service Company, California's largest multi-housing route operator, 
deployed an all-spray-rinse top-loading CCW in the late 1990's and was 
forced to take back all deployed units because they didn't meet the 
needs of the users. It stated that it could support a top-loading class 
standard of MEF >= 1.42/WF <= 9.5 (TSL 2), and that it supports the 
proposed standard for front-loading CCWs. (Alliance, No. 66.4 at p. 4; 
Alliance, No. 67.8 at pp. 1, 4)
    Whirlpool commented that it supports both the top-loading and 
front-loading standards proposed in the November 2009 SNOPR. It stated 
that energy and water consumption levels that are more restrictive than 
these will likely lead to poor wash performance, poor rinse 
performance, or both. (Whirlpool, No. 67.11 at p. 3) AHAM and GE stated 
support for the proposed MEF and water factor levels that DOE proposed 
for front-loading CCWs. (AHAM, No. 67.12 at p. 3; GE, No. 67.9 at p. 1) 
GE added that it supports DOE's proposed MEF and WF requirements for 
front-load commercial clothes washers. In addition, GE expressed 
support for DOE's proposed MEF and WF requirements for top-load 
commercial clothes washers, but stated its concern that the max-tech 
model on which this level is based is designed for a relatively limited 
segment of the market (the on-premises laundry commercial segment), and 
that this model has not yet been demonstrated as sustainable in the 
harsher environment of laundromats, where the units are subject to 
tougher conditions such as overloading. (GE, No. 67.9 at p. 1)
    EJ and the California Utilities advocated adoption of a single set 
of energy and water efficiency standards for all commercial clothes 
washers, which will deliver greater energy and water savings than 
separate standards for top-loading and front-loading commercial 
washers. The California Utilities stated that its preliminary analysis 
suggests that over the next 30 years, DOE could save as much as 50 
percent more in energy savings and over 200 percent more in water 
savings with a single equipment class standard (set at levels of MEF 
2.35/WF 4.4) than the standard that DOE has proposed in the SNOPR. (EJ, 
No. 67.5 at pp. 10-11; California Utilities, No. 67.10 at pp. 3-4) EJ 
stated that the proposed separate standards for front-loaders would 
increase the installed price differential between front-loaders and 
top-loaders, which could result in increased energy and water 
consumption to the extent that the increased installed price 
differential would encourage the market to shift from front-loaders to 
less efficient top-loaders. It noted that the modest energy and water 
savings that DOE has estimated for its proposed separate front-loader 
standards could be exceeded by that standard's impact on the relative 
shipments of top-loading and front-loading washers. It added that if 
DOE's standards were to necessitate design changes to top-loaders 
exclusively, the resulting increase in installed costs for top-loaders 
would foster the market's transition to front- loaders, increasing the 
net energy and water savings produced by the standard. (EJ, No. 67.5 at 
pp. 10-11)
    EJ and the California Utilities also noted the availability of 
flexible regulatory approaches that would facilitate adoption of a 
strong, uniform set of standards for all commercial washers and also 
minimize any adverse impacts on competition. They stated that DOE could 
adopt a tiered approach to standards, maintaining a 2013 compliance 
date for initial energy and water efficiency standards, while phasing 
in stronger requirements later. This approach, they said, would give 
the LVM (Alliance) and other manufacturers additional time to raise 
needed capital and to optimize product designs and manufacturing 
processes to meet strong standards at a lower cost. (EJ, No. 67.5 at 
pp. 9-10; California Utilities, No. 67.10 at pp. 4-5) EJ added that 
alternatively, DOE could accommodate Alliance's key concerns by 
granting a temporary waiver from compliance with revised standards. 
This would enable DOE to adopt effective standards while giving 
Alliance an extended compliance period in which to raise needed capital 
and optimize its product designs and manufacturing processes. (EJ, No. 
67.5 at p. 9-10)
    The Joint Comment stated that DOE's proposed rule establishing two 
product classes for CCWs is not satisfactory for either of the proposed 
classes, as it would require manufacturers to make substantial 
investments to achieve modest improvements in the efficiency of a 
protected class of inherently less-efficient top-loaders, while 
establishing a standard for front-loaders that 97 percent of the front-
loading models on the market today already meet. It noted that a 
stronger standard for front-loaders would widen the price differential 
between front-loaders and top-loaders, which would encourage a portion 
of the market to shift from front-loaders back to less efficient top-
loaders. The Joint Comment recommended that a standard be set for CCWs 
as a single product class, with performance levels that are readily 
achievable by today's high-efficiency front-loading washers. It stated 
that the highest standard level identified for front-loaders (MEF 2.35/
WF 4.4) maximizes energy and life-cycle cost savings when applied to 
all commercial washers, and thus should be the strongest candidate for 
adoption. Regarding the problems that the recommended standards could 
pose for the LVM (i.e., Alliance), the Joint Comment stated that the 
standard should take effect in stages, allowing most capital conversion 
costs to be deferred for an additional two years. It added that the 
manufacturer hardship waiver process in current law remains open to 
Alliance should unforeseen circumstances arise making compliance 
impossible. (Joint Comment, No. 67.6 at p. 1)
    In considering standards for today's final rule, DOE first notes 
that it has retained separate equipment classes for top-loading and 
front-loading CCWs, for reasons discussed in section IV.A. DOE has 
retained the analyses of standards for both equipment classes that it 
conducted for the SNOPR, which are described in section IV. Section VI 
presents a discussion of DOE's reasons for adopting the standard levels 
in today's final rule.

VI. Analytical Results and Conclusions

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 final 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 in section IV.C.1.a, DOE eliminated the 
maximum technologically efficiency level of 1.76 MEF/8.3 WF for the 
top-loading equipment class in the November 2009 SNOPR. For today's 
final rule, DOE considered the same TSLs it considered for the November 
2009 SNOPR.
    Table VI.1 presents the TSLs analyzed for today's final rule and 
the efficiency levels (consisting of a combination of MEF and WF) 
within each TSL for each class of equipment. 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

[[Page 1160]]

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 meet or exceed the second candidate 
standard level for front-loading washers. In the case of the second 
candidate standard level for top-loading washers, a significant 
percentage 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 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 VI.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. Significance of Energy Savings

    To estimate the energy savings through 2043 due to amended energy 
conservation standards, DOE compared the energy consumption of 
equipment under the base case to energy consumption of this equipment 
under each TSL that DOE considered for CCWs. Table VI.2 shows DOE's NES 
estimates (and national water savings results) for each TSL. The table 
also shows the magnitude of the savings if they are discounted at 7-
percent and 3-percent discount rates. Discounted energy savings 
represent a policy perspective where energy savings further in the 
future are less significant than energy savings closer to the present. 
Each TSL considered in this rulemaking would result in significant 
energy savings, and the amount of savings increases with higher energy 
conservation standards (ranging from an estimated 0.04 quads to 0.12 
quads, undiscounted, for TSLs 1 through 5).

                                      Table VI.2--Summary of Cumulative National Energy and Water Savings for CCWs
                                                       [Savings for Units Sold from 2013 to 2043]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Undiscounted                    3% Discounted                   7% Discounted
                                                         -----------------------------------------------------------------------------------------------
                                                                          National water                  National water                  National water
                  Trial standard level                       National        savings,        National        savings,        National        savings,
                                                              energy         trillion         energy         trillion         energy         trillion
                                                          savings, quads      gallons     savings, quads      gallons     savings, quads      gallons
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.......................................................            0.04            0.00            0.02            0.00            0.01            0.00
2.......................................................            0.04            0.01            0.02            0.00            0.01            0.00
3.......................................................            0.10            0.14            0.06            0.08            0.03            0.04
4.......................................................            0.11            0.16            0.06            0.09            0.03            0.04
5.......................................................            0.12            0.21            0.07            0.11            0.03            0.06
--------------------------------------------------------------------------------------------------------------------------------------------------------

C. Economic Justification

1. Economic Impacts on Commercial Customers
a. Life-Cycle Cost and Payback Period
    To evaluate the net economic impact of standards on CCW customers, 
DOE conducted LCC and PBP analyses for each TSL. More efficient CCWs 
affect customers in two ways: (1) Purchase price is expected to 
increase; and (2) annual operating expense is expected to decrease. DOE 
analyzed the net effect by calculating the LCC. Inputs used for 
calculating the LCC include total installed costs, annual energy 
savings, average electricity prices, energy price trends, repair and 
maintenance costs, equipment lifetime, and discount rates.
    Table VI.3 and Table VI.4 show the LCC and PBP results for each CCW 
application for the top-loading equipment class, and Table VI.5 and 
Table VI.6 show the results for the front-loading equipment class. 
DOE's LCC and PBP analyses provided five outputs for each considered 
TSL. The first three outputs are the percentages of standard-compliant 
machine purchases that would result in (1) a net LCC increase, (2) no 
impact, or (3) a net LCC savings for the customer. The fourth output is 
the average net LCC savings from standard-compliant equipment. The 
fifth output is the average PBP for the customer purchasing a design 
that complies with the TSL.
    For the top-loading equipment class, the highest average LCC 
savings and shortest PBP occur at TSLs 3, 4, and 5. At these TSLs, 85 
percent of multi-family customers have a net benefit, and 96 percent of 
laundromat customers have a net benefit. For the front-loading 
equipment class, the highest average LCC savings occur at TSL 5, and 
the PBP is lower than at TSL 4. TSLs 1 through 3 have little impact 
because most of the market is already at or above this level in the 
base case.

[[Page 1161]]



                Table VI.3--Commercial Clothes Washers, Top-Loading, Multi-Family Application: Life-Cycle Cost and Payback Period Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Life-cycle cost                    Life-cycle cost savings           Payback period years
                                                      --------------------------------------------------------------------------------------------------
                                                                                                            Customers with
                    TSL                       MEF/WF    Average    Average    Average    Average  ---------------------------------
                                                       installed  operating    LCC $    savings $   Net cost  No impact     Net       Median    Average
                                                        price  $   cost  $                             %          %      benefit %
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline..................................  1.26/9.50        760      3,263      4,023  .........  .........  .........  .........  .........  .........
1, 2......................................  1.42/9.50        883      3,153      4,036       -8.1       43.3       35.3       21.5       11.7       17.3
3, 4, 5...................................  1.60/8.50        974      2,873      3,847      178.6       13.8        1.2       85.0        4.6        5.6
--------------------------------------------------------------------------------------------------------------------------------------------------------


                 Table VI.4--Commercial Clothes Washers, Top-Loading, Laundromat Application: Life-Cycle Cost and Payback Period Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Life-cycle cost                    Life-cycle cost savings           Payback period years
                                                      --------------------------------------------------------------------------------------------------
                                                                                                            Customers with
                    TSL                       MEF/WF    Average    Average    Average    Average  ---------------------------------
                                                       installed  operating    LCC $    savings $   Net cost  No impact     Net       Median    Average
                                                        price  $   cost  $                             %          %      benefit %
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline..................................  1.26/9.50        760      3,422      4,182  .........  .........  .........  .........  .........  .........
1, 2......................................  1.42/9.50        883      3,326      4,209      -17.7       51.4       35.3       13.3        7.9        9.1
3, 4, 5...................................  1.60/8.50        974      3,025      3,999      190.0        2.9        1.2       95.9        2.8        3.0
--------------------------------------------------------------------------------------------------------------------------------------------------------


               Table VI.5--Commercial Clothes Washers, Front-Loading, Multi-Family Application: Life-Cycle Cost and Payback Period Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Life-cycle cost                    Life-cycle cost savings           Payback period years
                                                      --------------------------------------------------------------------------------------------------
                                                                                                            Customers with
                    TSL                       MEF/WF    Average    Average    Average    Average  ---------------------------------
                                                       installed  operating    LCC $    savings $   Net cost  No impact     Net       Median    Average
                                                        price  $   cost  $                             %          %      benefit %
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline..................................  1.72/8.00      1,365      2,855      4,220  .........  .........  .........  .........  .........  .........
1.........................................  1.80/7.50      1,365      2,855      4,091        4.7        0.0       96.3        3.7        0.0        0.0
2, 3......................................  2.00/5.50      1,388      2,726      3,690       19.5        0.0       96.3        3.7        0.4        0.4
4.........................................  2.20/5.10      1,428      2,302      3,596       91.5        1.4       23.1       75.5        3.0        3.2
5.........................................  2.35/4.40      1,470      2,168      3,484      202.7        1.1        0.0       98.9        2.9        3.1
--------------------------------------------------------------------------------------------------------------------------------------------------------


                Table VI.6--Commercial Clothes Washers, Front-Loading, Laundromat Application: Life-Cycle Cost and Payback Period Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Life-cycle cost                    Life-cycle cost savings           Payback period years
                                                      --------------------------------------------------------------------------------------------------
                                                                                                            Customers with
                    TSL                       MEF/WF    Average    Average    Average    Average  ---------------------------------
                                                       installed  operating    LCC $    savings $   Net cost  No impact     Net       Median    Average
                                                        price  $   cost  $                             %          %      benefit %
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline..................................  1.72/8.00      1,365      2,014      4,380  .........  .........  .........  .........  .........  .........
1.........................................  1.80/7.50      1,365      3,014      4,240        5.2        0.0       96.3        3.7        0.0        0.0
2, 3......................................  2.00/5.50      1,388      2,874      3,787       22.0        0.0       96.3        3.7        0.2        0.2
4.........................................  2.20/5.10      1,428      2,400      3,695       93.4        0.0       23.1       76.9        1.8        1.9
5.........................................  2.35/4.40      1,470      2,267      3,572      216.1        0.0        0.0      100.0        1.6        1.7
--------------------------------------------------------------------------------------------------------------------------------------------------------

b. Commercial Consumer Subgroup Analysis
    Using the LCC spreadsheet model, DOE estimated the impact of the 
considered TSLs on the following CCW customer subgroups: (1) Small 
business owners, and (2) customers without municipal water and sewer.
    For customers without municipal water and sewer, the LCC impacts 
and PBPs are similar to the LCC impacts and PBPs for the full sample of 
CCW customers. But for small business owners (small multi-family 
property owners and small laundromats), the LCC impacts and PBPs are 
different from those associated with the general population.
    For the top-loading equipment class, Table VI.7 shows the LCC 
impacts and PBPs for small multi-family property owners and small 
laundromats, while Table VI.8 shows the same 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

[[Page 1162]]

standards than do 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.

                Table VI.7--Commercial Clothes Washers, Top-Loading: Life-Cycle Cost and Payback Period Results for Small Business Owners
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Life-cycle cost                    Life-cycle cost savings              Payback period
                                                      -----------------------------------------------------------------------------         years
                                                                                                           Households with         ---------------------
                    TSL                       MEF/WF    Average    Average               Average  ---------------------------------
                                                       installed  operating   Average    savings                            Net
                                                        price  $   cost  $     LCC  $       $       Net cost  No impact   benefit     Median    Average
                                                                                                       $           %         %
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                Multi-Family Application
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline..................................  1.26/9.50        760      2,659      3,419  .........  .........  .........  .........  .........  .........
1, 2......................................  1.42/9.50        883      2,569      3,452     (22.0)       50.7       35.6       13.7       11.7       17.7
3, 4, 5...................................  1.60/8.50        974      2,341      3,315      112.6       21.2        1.5       77.4        4.5        5.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                 Laundromat Application
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline..................................  1.26/9.50        760      2,963      3,723  .........  .........  .........  .........  .........  .........
1, 2......................................  1.42/9.50        883      2,880      3,764     (26.1)       58.6       35.6        5.8        7.8        9.2
3, 4, 5...................................  1.60/8.50        974      2,620      3,594      140.9        5.6        1.5       92.9        2.8        3.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Numbers in parentheses indicate negative values.


               Table VI.8--Commercial Clothes Washers, Front-Loading: Life-Cycle Cost and Payback Period Results for Small Business Owners
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Life-cycle cost                    Life-cycle cost savings              Payback period
                                                      -----------------------------------------------------------------------------         years
                                                                                                           Households with         ---------------------
                    TSL                       MEF/WF    Average    Average               Average  ---------------------------------
                                                       installed  operating   Average    savings                            Net
                                                        price  $   cost  %     LCC  $       $       Net cost  No impact   benefit     Median    Average
                                                                                                       %           %         %
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                Multi-Family Application
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline..................................  1.72/8.00      1,365      2,327      3,693  .........  .........  .........  .........  .........  .........
1.........................................  1.80/7.50      1,365      2,327      3,587        3.7        0.0       96.4        3.6        0.0        0.0
2, 3......................................  2.00/5.50      1,388      2,222      3,265       14.9        0.0       96.4        3.6        0.4        0.5
4.........................................  2.20/5.10      1,428      1,877      3,196       69.1        4.1       22.2       73.7        3.0        3.2
5.........................................  2.35/4.40      1,470      1,768      3,113      151.7        4.2        0.0       95.8        2.9        3.1
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                 Laundromat Application
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline..................................  1.72/8.00      1,365      1,643      3,977  .........  .........  .........  .........  .........  .........
1.........................................  1.80/7.50      1,365      2,611      3,855        4.2        0.0       96.4        3.6        0.0        0.0
2, 3......................................  2.00/5.50      1,388      2,490      3,467       17.6        0.0       96.4        3.6        0.2        0.2
4.........................................  2.20/5.10      1,428      2,079      3,392       75.9        0.0       22.2       77.7        1.8        1.9
5.........................................  2.35/4.40      1,470      1,964      3,291      176.4        0.0        0.0      100.0        1.6        1.7
--------------------------------------------------------------------------------------------------------------------------------------------------------

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 PBP for each TSL to determine whether DOE could 
presume that a standard at that level is economically justified. Table 
VI.9 shows the rebuttable-presumption PBPs for CCWs. As required by 
EPCA, DOE based the 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 PBPs, for each TSL.

                Table VI.9--Rebuttable-Presumption Payback Periods for Commercial Clothes Washers
----------------------------------------------------------------------------------------------------------------
                                                                 Payback period, years
                                     ---------------------------------------------------------------------------
                                                   Top-loading                          Front-loading
                 TSL                 ---------------------------------------------------------------------------
                                         Multi-family       Lauundromat        Multi-family        Laundromat
                                         application        application        application        application
----------------------------------------------------------------------------------------------------------------
1...................................               >100               >100                  0                  0
2...................................               >100               >100                1.2                1.3

[[Page 1163]]

 
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 VI.9 do not have rebuttable-presumption PBPs of less than 3 
years. As stated above, in addition to calculating the rebuttable-
presumption PBP 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 
IV.D provides a complete discussion of how DOE considered the range of 
impacts to select the standards in today's final rule.
2. Economic Impacts on Manufacturers
    For the November 2009 SNOPR, DOE used the INPV in the MIA to 
compare the financial impacts of different TSLs on CCW manufacturers. 
74 FR 57738, 57773-76 (Nov. 9, 2009). 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 
final rule notice, DOE continues to use the above methodology and 
presents the results in the subsequent sections. See chapter 13 of the 
TSD for additional information on MIA methodology and results.
a. Industry Cash-Flow Analysis Results
    Using scenarios based on two shipment projections from the NIA, DOE 
estimated the impact of amended energy conservation standards for CCWs 
on the INPV of the CCW industry. The impact consists of the difference 
between INPV in the base case and INPV in the standards case. INPV is 
the primary metric used in the MIA, and represents one measure of the 
fair value of the industry in today's dollars. DOE calculated the INPV 
by summing all of the net cash flows, discounted at the CCW industry's 
cost of capital or discount rate.
    As discussed in section IV.G of today's final rule, 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 $5.3 million. Because DOE discounts the industry cash 
flows to the 2009 base year, DOE estimates that approximately $1.6 
million of the total benefit from the tax credits will occur during the 
analysis period. In the scenario that considers the benefits of the tax 
credits, the base case INPV increases by approximately $1.6 million. 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.
    Also discussed in section IV.G of today's final rule, DOE 
incorporated a sensitivity analysis from the NIA that impacts shipments 
in the MIA. The methodology and subsequent INPV results from the 
sensitivity analysis are found in appendix 11C of the TSD.
    To assess the lower end of the range of potential impacts for the 
CCW industry, DOE considered a scenario wherein unit shipments will not 
be impacted regardless of new 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 to 
maintain the same gross margins (as a percentage of revenues) that are 
currently obtained in the base case. Table VI.10 through Table VI.11 
show the changes in INPV that DOE estimates would result from the TSLs 
DOE considered for this final rule.

Table VI.10--Manufacturer Impact Analysis for Commercial Clothes Washers With Base-Case Shipments. Not Including
                                DOE's Estimates of Federal Production Tax Credits
                    [Preservation of gross margin percentage markup with base-case shipments]
----------------------------------------------------------------------------------------------------------------
                                                                            Trial standard level
                                    Units       Base case ------------------------------------------------------
                                                               1          2          3          4          5
----------------------------------------------------------------------------------------------------------------
INPV.........................  2008$ millions.         62         65         63         57         54         41
Change in INPV...............  2008$ millions*  .........          4          1        (5)        (8)       (20)

[[Page 1164]]

 
                               %..............  .........       5.97       2.24      -7.81     -12.73     -33.09
Amended Energy Conservation    2008$ millions.  .........       0.00       3.12      18.72      22.56      35.87
 Standards Equipment
 Conversion Expenses.
Amended Energy Conservation    2008$ millions.  .........       0.00       0.62       1.66       2.44       5.09
 Standards Capital
 Investments.
Total Investment Required....  2008$ millions.  .........        0.0        3.7       20.4       25.0       41.0
----------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative (-) values.


 Table VI.11--Manufacturer Impact Analysis for Commercial Clothes Washers with Base-Case Shipments. Preservation
                           of Gross Margin Percentage Markup with Base-Case Shipments
                        [Not including DOE's estimates of Federal production tax credits]
----------------------------------------------------------------------------------------------------------------
                                                                            Trial standard level
                                    Units       Base case ------------------------------------------------------
                                                               1          2          3          4          5
----------------------------------------------------------------------------------------------------------------
INPV.........................  2008$ millions.         62         64         62         55         51         39
Change in INPV...............  2008$ millions*  .........        2.8        0.5      (7.0)     (10.2)     (23.0)
                               %..............  .........       4.50       0.76     -11.39     -16.57     -37.30
Amended Energy Conservation    2008$ millions.  .........       0.00       3.12      18.72      22.56      35.87
 Standards Equipment
 Conversion Expenses.
Amended Energy Conservation    2008$ millions.  .........       0.00       0.62       1.66       2.44       5.09
 Standards Capital
 Investments.
Total Investment Required....  2008$ millions.  .........        0.0        3.7       20.4       25.0       41.0
----------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative (-) values.

    The November 2009 SNOPR discusses the estimated impact of amended 
CCW standards on INPV for each equipment class. 74 FR 57738, 57775-76 
(Nov. 9, 2009). See chapter 13 of the TSD for details.
b. Cumulative Regulatory Burden
    While any one regulation may not impose a significant burden on 
manufacturers, the combined effects of several regulations may have 
serious consequences for some manufacturers, groups of manufacturers, 
or an entire industry. Assessing the impact of a single regulation may 
overlook this cumulative regulatory burden.
    DOE recognizes that each regulation can significantly affect 
manufacturers' financial operations. Multiple regulations affecting the 
same manufacturer can reduce manufacturers' profits and possibly cause 
manufacturers to exit from the market. DOE did not identify any 
additional DOE regulations that would affect the manufacturers of CCW 
apart from the ones discussed in the October 2008 NOPR. 73 FR 62034, 
62104 (Oct. 17, 2008). These included other DOE regulations, State 
regulations, and international standards. For further information about 
the cumulative regulatory burden on the CCW industry, see chapter 13 of 
the TSD.
c. 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 \38\ (2006 ASM) and 2006 Current Industry Report 
\39\ (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.
---------------------------------------------------------------------------

    \38\ The 2006 Annual Survey of Manufactures is available online 
at: http://www.census.gov/mcd/asmhome.html.
    \39\ The 2006 Current Industry Report is available online at: 
http://www.census.gov/cir/www/alpha.html.
---------------------------------------------------------------------------

    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 final rule estimates the impacts on 
U.S. production workers in the CCW industry impacted by energy 
conservation standards as shown in Table VI.12.

  Table VI.12--Change in Total Number of Domestic Production Employees in 2013 in the Commercial Clothes Washer
                                                    Industry
----------------------------------------------------------------------------------------------------------------
                                                           Baseline   TSL 1    TSL 2    TSL 3    TSL 4    TSL 5
----------------------------------------------------------------------------------------------------------------
Total Number of Domestic Production Workers in 2013.....        188      204      204      222      224      228
Change in Total Number of Domestic Production Workers in  .........       16       16       33       36       40
 2013...................................................
----------------------------------------------------------------------------------------------------------------


[[Page 1165]]

    The November 2009 SNOPR discussed the estimated impacts of amended 
CCW standards on manufacturing employment. 74 FR 57738, 57776-77 (Nov. 
9, 2009). A further discussion of the potential impacts of amended 
energy conservation standards on manufacturing employment for the CCW 
industry at each TSLs are presented in chapter 13 of the TSD.
d. Impacts on Manufacturing Capacity
    According to the majority of CCW manufacturers, amended energy 
conservation standards could potentially impact manufacturers' 
production capacity depending on the efficiency level required. For 
today's final rule, DOE continues to believe manufacturers will be able 
to maintain manufacturing capacity levels and continue to meet market 
demand under amended energy conservation standards as long as 
manufacturers can continue to offer top-loading and front-loading CCWs.
    As stated in the November 2009 SNOPR, a very high efficiency 
standard for top-loading CCWs could potentially cause one or more 
manufacturer(s) to abandon further manufacture of top-loading CCWs 
after the compliance date (due to concerns about wash quality, for 
example). Instead of manufacturing top-loading CCWs, manufacturers 
could elect to switch their entire production over to front-loading 
CCWs. Since top-loading and front-loading CCWs 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 CCWs without 
significant impacts on equipment development and capital expenses, 
along with capacity constraints. 74 FR 57738, 57777 (Nov. 9, 2009). 
However, for today's final rule, DOE estimates that the energy 
conservation standard in today's final rule for top-loading CCWs 
mitigates that risk.
    As reported in the November 2009 SNOPR, 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. 74 FR 57738, 57777 (Nov. 9, 
2009). DOE research continues to suggest that the energy conservation 
standards in today's final rule 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.
    A further discussion of the potential impacts of amended energy 
conservation standards on manufacturing capacity for the CCW industry 
is presented in chapter 13 of the TSD.
e. Impacts on Subgroups of Manufacturers
    As discussed in the November 2009 SNOPR, 74 FR 57738, 57777 (Nov. 
9, 2009), DOE evaluated the impacts of amended energy conservation 
standards on subgroups of manufacturers. As outlined earlier, an LVM 
that concentrates on building laundry equipment will be affected 
disproportionately by any energy efficiency regulation regarding CCWs. 
The LVM's business is focused mostly 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, the LVM is at greater risk of material harm to 
its business due to any regulation that affects commercial laundry 
products than its competitors, regardless of the TSL chosen.
    For today's final rule, DOE reevaluated the CCW energy conservation 
standards proposed in the November 2009 SNOPR in response to comments 
received from interested parties. DOE continues to believe that the 
energy conservation standards adopted in today's final rule greatly 
lessen 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.
3. National Impact Analysis
a. Amount and Significance of Energy Savings
    To estimate the energy savings through 2043 that would be expected 
to result from amended CCW energy conservation standards, DOE compared 
the projected energy consumption of CCWs under the base case to energy 
consumption of this equipment under each of the considered TSLs. The 
energy consumption calculated in the NIA takes into account energy 
losses in the generation and transmission of electricity as discussed 
in section VI.B.
    Table VI.13 and Table VI.14 show the forecasted national energy and 
water savings at each TSL for top-loading and front-loading CCWs, 
respectively. In addition to undiscounted savings, the tables show the 
magnitude of the estimated energy and water savings if the savings are 
discounted at 7-percent and 3-percent discount rates. Each TSL 
considered in this rulemaking would result in significant energy and 
water savings, and the amount of savings increases with higher energy 
conservation standards. See chapter 11 of the TSD for details of the 
NIA.

             Table VI.13--Summary of Cumulative National Energy and Water Savings for Top-Loading Commercial Clothes Washers (2013 to 2043)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Undiscounted                  Discounted at 3%                Discounted at 7%
                                                         -----------------------------------------------------------------------------------------------
                                                                          National water                  National water                  National water
                  Trial standard level                       National        savings,        National        savings,        National        savings,
                                                              energy         trillion         energy         trillion         energy         trillion
                                                          savings, quads      gallons     savings, quads      gallons     savings, quads      gallons
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.......................................................            0.04            0.00            0.02            0.00            0.01            0.00
2.......................................................            0.04            0.00            0.02            0.00            0.01            0.00
3.......................................................            0.10            0.14            0.05            0.08            0.03            0.04
4.......................................................            0.10            0.14            0.05            0.08            0.03            0.04
5.......................................................            0.10            0.14            0.05            0.08            0.03            0.04
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 1166]]


                  Table VI.14--Cumulative National Energy and Water Savings for Front-Loading Commercial Clothes Washers (2013 to 2043)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Undiscounted                    3% Discounted                   7% Discounted
                                                         -----------------------------------------------------------------------------------------------
                                                                          National water                  National water                  National water
                  Trial standard level                       National        savings,        National        savings,        National        savings,
                                                              energy         trillion         energy         trillion         energy         trillion
                                                          savings, quads      gallons     savings, quads      gallons     savings, quads      gallons
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.......................................................            0.00            0.00            0.00            0.00            0.00            0.00
2.......................................................            0.00            0.01            0.00            0.00            0.00            0.00
3.......................................................            0.00            0.01            0.00            0.00            0.00            0.00
4.......................................................            0.01            0.03            0.01            0.01            0.00            0.01
5.......................................................            0.02            0.07            0.01            0.04            0.01            0.02
--------------------------------------------------------------------------------------------------------------------------------------------------------

b. Net Present Value of Customer Costs and Benefits
    The NPV of customer costs and benefits is a measure of the 
cumulative impact of energy conservation standards. In accordance with 
the OMB's guidelines on regulatory analysis (OMB Circular A-4, section 
E, Sept. 17, 2003), DOE calculated an estimated 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 VI.15 shows the forecasted NPV at each TSL for CCWs. At both 
7-percent and 3-percent discount rates, TSLs 1 through 5 show positive 
cumulative NPVs. The highest NPV is provided by TSL 5: $0.51 billion 
with 7-percent discount rate, and $1.25 billion with 3-percent discount 
rate.

             Table VI.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                       Total
                           TSL                           -----------------------------------------------------------------------------------------------
                                                            7% Discount     3% Discount     7% Discount     3% Discount     7% Discount     3% Discount
                                                               rate            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 CCWs to reduce energy bills 
for commercial customers, with the resulting net savings being 
redirected to other forms of economic activity. The impacts concern a 
variety of businesses not directly involved in the decision to make, 
operate, or pay the utility bills for CCWs. Thus, they are 
``indirect.''
    To estimate these indirect employment impacts, DOE used an input/
output model of the U.S. economy using BLS data (described in section 
IV.H). In this input/output model, the spending of the money saved on 
utility bills when more efficient CCWs are deployed is centered in 
economic sectors that create more jobs than are lost in electric 
utilities when spending is shifted from electricity to other products 
and services. As Table VI.16 shows, DOE estimates that net indirect 
employment impacts from the considered TSLs are likely to be very 
small. Furthermore, neither the BLS data nor the input/output model DOE 
uses include the quality or wage level of the jobs.

 Table VI.16--Net National Indirect Employment Impacts Under Commercial
                           Clothes Washer TSLs
------------------------------------------------------------------------
                                                           Net national
                                                          change in jobs
                           TSL                               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
    As indicated in section II.G.1.d of the November 2009 SNOPR, the 
amended standards DOE is adopting today will not lessen the utility or 
performance of equipment under consideration in this

[[Page 1167]]

rulemaking. 74 FR 57738, 57745 (Nov. 9, 2009).
5. Impact of Any Lessening of Competition
    As discussed in the November 2009 SNOPR, 74 FR 57738, 57779 (Nov. 
9, 2009), and in section III.D.1.e of this preamble, DOE considers any 
lessening of competition likely to result from standards. The Attorney 
General determines the impact, if any, of any lessening of competition.
    DOE carefully considered the determination received from DOJ in 
response to the October 2008 NOPR, and accordingly chose efficiency 
levels for the November 2009 SNOPR that appear achievable by all CCW 
manufacturers using existing equipment platforms and technologies. As 
such, DOE stated that there should be minimal impact on the CCW market 
and hence its manufacturers. To assist the Attorney General in making a 
determination for the November 2009 SNOPR, DOE provided DOJ with copies 
of the supplemental notice and the TSD for review. The DOJ did not 
provide a response to the November 2009 SNOPR. Therefore, DOE considers 
the impact of any lessening of competition for today's final rule 
based, in part, on the Attorney General's earlier response, which is 
reprinted at the end of today's rulemaking.
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, potentially reducing the 
Nation's reliance on foreign sources of energy. Reduced electricity 
demand would also likely improve the reliability of the electricity 
system, particularly during peak-load periods. As a measure of this 
reduced demand, DOE expects the energy savings from the adopted 
standards to eliminate the need for approximately 0.010 gigawatts (GW) 
of generating capacity by 2043.
    The energy savings from the standards for CCWs also produce 
environmental benefits in the form of reduced emissions of air 
pollutants and greenhouse gases associated with energy production, and 
with use of fossil fuels at sites where CCWs are used. Table VI.17 
provides DOE's estimate of cumulative CO2, NOX, 
and Hg emissions reductions that would result from the TSLs considered 
in this rulemaking. In the environmental assessment (chapter 16 of the 
TSD), DOE reports estimated annual changes in CO2, 
NOX, and Hg emissions attributable to each TSL.

       Table VI.17--Cumulative Emissions Reductions Under Commercial Clothes Washer TSLs (in 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..........................................       0.0002       0.0002       0.0003       0.0004       0.0004
----------------------------------------------------------------------------------------------------------------
Mt = million metric tons.
kt = thousand metric tons.
t = metric tons.

    As discussed in section IV.J of this final rule, DOE does not 
report SO2 emissions reductions from power plants because 
there is uncertainty about the effect of energy conservation standards 
on the overall level of SO2 emissions in the United States 
due to SO2 emissions caps. DOE also did not include 
NOX emissions reduction from power plants in States subject 
to CAIR because an energy conservation standard would likely not affect 
the overall level of NOX emissions in those States due to 
the emissions caps mandated by CAIR.
    Table VI.18 presents the estimated wastewater discharge reductions 
due to the TSLs for CCWs. In chapter 16 of the TSD, DOE reports annual 
changes in wastewater discharge attributable to each TSL.

                      Table VI.18--Cumulative Wastewater Discharge Reductions Under Commercial Clothes Washer Trial Standard Levels
                                                                  [For 2013[boxh]2043]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                             TSL
                                                                    ------------------------------------------------------------------------------------
                                                                            1                2                3                4                5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Wastewater Discharge Reduction, trillion gallons...................            0.00             0.01             0.14             0.16             0.21
--------------------------------------------------------------------------------------------------------------------------------------------------------

    As discussed in section IV.J of this final rule, DOE estimated the 
cumulative monetary value of the economic benefits associated with 
CO2 emissions reductions expected to result from amended 
standards for CCWs. In considering the potential global benefits 
resulting from reduced CO2 emissions, DOE used values based 
on a social cost of carbon of approximately $5, $10, $20, $34 and $56 
per metric ton avoided in 2007 (values expressed in 2008$). DOE also 
calculated the domestic benefits based on a value of approximately $1 
per metric ton avoided in 2007. To value the CO2 emissions 
reductions expected to result from amended standards for CCWs in 2013-
2043, DOE escalated the above values for 2007 using a 3-percent 
escalation rate. Table VI.19 and Table VI.20 present the cumulative 
monetary value for each TSL using 7-percent and 3-percent discount 
rates, respectively.

[[Page 1168]]



      Table VI.19--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    Domestic                                Global
                             TSL                                   CO2     -----------------------------------------------------------------------------
                                                                 emission    CO2 Value    CO2 Value    CO2 Value    CO2 Value    CO2 Value    CO2 Value
                                                               reductions,   $1/metric    $5/metric    $10/metric   $20/metric   $34/metric   $56/metric
                                                                    Mt        ton CO2      ton CO2      ton CO2      ton CO2      ton CO2      ton CO2
--------------------------------------------------------------------------------------------------------------------------------------------------------
1............................................................         2.36            1            6           12           22           39           65
2............................................................         2.39            1            6           12           23           40           66
3............................................................         5.07            3           13           25           48           84          140
4............................................................         5.66            3           14           28           54           93          156
5............................................................         6.11            3           15           31           58          101          168
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Unit values are approximate and are based on escalating 2007$ to 2008$ for consistency with other values presented in this notice.


      Table VI.20--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    Domestic                                Global
                             TSL                                   CO2     -----------------------------------------------------------------------------
                                                                 emission    CO2 Value    CO2 Value    CO2 Value    CO2 Value    CO2 Value    CO2 Value
                                                               reductions,   $1/metric    $5/metric    $10/metric   $20/metric   $34/metric   $56/metric
                                                                    Mt        ton CO2      ton CO2      ton CO2      ton CO2      ton CO2      ton CO2
--------------------------------------------------------------------------------------------------------------------------------------------------------
1............................................................         2.36            3           13           26           49           84          141
2............................................................         2.39            3           13           26           49           86          143
3............................................................         5.07            6           28           55          105          182          303
4............................................................         5.66            7           31           61          117          202          337
5............................................................         6.11            8           33           66          126          219          364
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Unit values are approximate and are based on escalating 2007$ to 2008$ for consistency with other values presented in this notice.

    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 
change. DOE, together with other Federal agencies, will continue to 
review various methodologies for estimating the monetary value of 
reductions in CO2 and other GHG emissions. This ongoing 
review will consider the comments on this subject that are part of the 
public record for this and other rulemakings, as well as other 
methodological assumptions and issues. However, consistent with DOE's 
legal obligations, and taking into account the uncertainty involved 
with this particular issue, DOE has included in this rule the most 
recent values and analyses resulting from the ongoing interagency 
review process.
    DOE also estimated a range for the cumulative monetary value of the 
economic benefits associated with NOX and Hg emissions 
reductions anticipated to result from amended standards for CCWs. The 
dollar per ton values that DOE used are discussed in section IV.J of 
this final rule. Table VI.21 and Table VI.22 present the estimates 
calculated using 7-percent and 3-percent discount rates, respectively.

   Table VI.21--Estimates of Value of Reductions of NOX and Hg Emissions Under Commercial Clothes Washer Trial
                                  Standard Levels at a 7-Percent Discount Rate
----------------------------------------------------------------------------------------------------------------
                                                    Value of NOX
                                 Cumulative NOX       emission       Cumulative Hg       Value of Hg emission
Commercial clothes washer TSL       emission        reductions,         emission       reductions, million 2008$
                                 reductions, kt    million 2008$     reductions, t
----------------------------------------------------------------------------------------------------------------
1............................               1.43  0.19 to 1.96...             0.0002  0.00 to 0.03.
2............................               1.45  0.19 to 1.99...             0.0002  0.00 to 0.03.
3............................               3.04  0.41 to 4.17...             0.0003  0.00 to 0.06.
4............................               3.39  0.45 to 4.64...             0.0004  0.00 to 0.07.
5............................               3.66  0.49 to 5.01...             0.0004  0.00 to 0.08.
----------------------------------------------------------------------------------------------------------------


   Table VI.22--Estimates of Value of Reductions of NOX and Hg Emissions Under Commercial Clothes Washer Trial
                                  Standard Levels at a 3-Percent Discount Rate
----------------------------------------------------------------------------------------------------------------
                                                    Value of NOX
                                 Cumulative NOX       emission       Cumulative Hg       Value of Hg emission
Commercial clothes washer TSL       emission        reductions,         emission       reductions, million 2008$
                                 reductions, kt    million 2008$     reductions, t
----------------------------------------------------------------------------------------------------------------
1............................               1.43  0.38 to 3.92...             0.0002  0.00 to 0.03.

[[Page 1169]]

 
2............................               1.45  0.39 to 3.98...             0.0002  0.00 to 0.03.
3............................               3.04  0.81 to 8.36...             0.0003  0.00 to 0.06.
4............................               3.39  0.91 to 9.31...             0.0004  0.00 to 0.07.
5............................               3.66  0.98 to 10.04..             0.0004  0.00 to 0.07.
----------------------------------------------------------------------------------------------------------------

    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 
VI.23 presents the NPV values for CCWs that would result if DOE were to 
add the low-end 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-percent and 3-percent discount rate. For 
CO2, only the low and high global benefit values are used 
for these tables ($5 and $56 in 2008$).
    Although adding 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 
emissions 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. For CCWs, 
the present value of national consumer savings is measured for the 
period in which units shipped from 2013 to 2043 continue to operate. 
However, the time frames of the benefits associated with the emission 
reductions differ. For example, the value of CO2 emissions 
reductions is meant to reflect the present value of all future climate-
related impacts, even those beyond 2065.

 Table VI.23--Estimates of Adding NPV of Consumer Savings to NPV of Low- and High-End Global Monetized Benefits
              From CO2, NOX, and Hg Emissions Reductions at All TSLs for Commercial Clothes Washers
----------------------------------------------------------------------------------------------------------------
                                                     CO2 Value of $56/metric ton CO2 * and high values for NOX and
                                  CO2 Value of $5/                       Hg *** billion 2008$
                                  metric ton CO2 * ----------------------------------------------------------------
               TSL                 and low values                                                            3-
                                   for NOX and Hg       7-percent         3-percent         7-percent      percent
                                  ** billion 2008$    discount rate     discount rate     discount rate   discount
                                                                                                            rate
-------------------------------------------------------------------------------------------------------- ----------
1...............................             0.02              0.09              0.08              0.22
2...............................             0.03              0.11              0.09              0.25
3...............................             0.37              0.92              0.50              1.20
4...............................             0.42              1.06              0.57              1.38
5...............................             0.53              1.28              0.68              1.62
----------------------------------------------------------------------------------------------------------------
* These values per ton represent the global negative externalities of CO2.
** Low Values correspond to $442 per ton of NOX emissions and $0.745 million per ton of Hg emissions.
*** High Values correspond to $4,540 per ton of NOX emissions and $33.3 million per ton of Hg emissions.

7. Other Factors
    EPCA allows the Secretary of Energy, in determining whether a 
standard is economically justified, to consider any other factors that 
the Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII) 
and 6316(a)) In adopting today's amended standards, the Secretary found 
no relevant factors other than those identified elsewhere in today's 
final rule.

D. Conclusion

    EPCA contains criteria for prescribing new or amended energy 
conservation standards. It provides that any such standard for CCWs 
must be designed to achieve the maximum improvement in energy 
efficiency that the Secretary determines is technologically feasible 
and economically justified. (42 U.S.C. 6295(o)(2)(A) and 42 U.S.C. 
6316(a)) As stated above, in determining whether a standard is 
economically justified, the Secretary must determine whether the 
benefits of the standards exceed its burdens considering the seven 
factors discussed in section II.B. A determination of whether a 
standard level is economically justified is not made based on any one 
of these factors in isolation. The Secretary must weigh each of these 
seven factors in total in determining whether a standard is 
economically justified. Further, the Secretary may not establish an 
amended standard if such standard would not result in ``significant 
conservation of energy,'' or ``is not technologically feasible or 
economically justified.'' (42 U.S.C. 6295(o)(3)(B) and 42 U.S.C. 
6316(a))
    In selecting today's energy conservation standards for CCWs, 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, Table VI.24 summarizes the quantitative analytical results 
for each TSL, based on the assumptions and methodology

[[Page 1170]]

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 standard levels for the equipment that is the 
subject of this rulemaking reflect DOE's careful balancing of the 
relevant statutory factors under EPCA.

                                             Table VI.24--Summary of Results for Commercial Clothes Washers
--------------------------------------------------------------------------------------------------------------------------------------------------------
                              Category                                    TSL 1            TSL 2            TSL 3            TSL 4            TSL 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Primary Energy Saved, quads........................................             0.04             0.04             0.10             0.11             0.12
    7% Discount Rate...............................................             0.01             0.01             0.03             0.03             0.03
    3% Discount Rate...............................................             0.02             0.02             0.06             0.06             0.07
Primary Water Saved, trillion gallons..............................             0.00             0.01             0.14             0.16             0.21
    7% Discount Rate...............................................             0.00             0.00             0.04             0.04             0.06
    3% Discount Rate...............................................             0.00             0.00             0.08             0.09             0.11
Generation Capacity Reduction, gigawatts **........................            0.005            0.005            0.010            0.011            0.012
NPV of Customer Benefit, 2008$ billion:
    7% Discount Rate...............................................             0.01             0.02             0.36             0.41             0.51
    3% Discount Rate...............................................             0.08             0.10             0.89             1.03             1.25
Industry Impacts:
    Industry NPV, 2008$ million....................................              4-3              1-0          (5)-(7)         (8)-(10)        (20)-(23)
    Industry NPV, % change.........................................          6.0-4.5          2.2-0.8     (7.8)-(11.4)    (12.7)-(16.6)    (33.1)-(37.3)
Emissions Impacts: [dagger]
    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..........................................................           0.0002           0.0002           0.0003           0.0004           0.0004
Value of Emission Reductions:
    CO2, 2008$ million:[dagger][dagger]
        7% Discount Rate...........................................             6-65             6-66           13-140           14-156           15-168
        3% Discount Rate...........................................           13-141           13-143           28-303           31-337           33-364
    NOX, 2008$ million:
        7% Discount Rate...........................................          0.2-2.0          0.2-2.0          0.4-4.2          0.5-4.6          0.5-5.0
        3% Discount Rate...........................................          0.4-3.9          0.4-4.0          0.8-8.4          0.9-9.3         1.0-10.0
    Hg, 2008$ million:
        7% Discount Rate...........................................        0.00-0.03        0.00-0.03        0.00-0.06        0.00-0.07        0.00-0.08
        3% Discount Rate...........................................        0.00-0.03        0.00-0.03        0.00-0.06        0.00-0.07        0.00-0.07
Wastewater Discharge Impacts, trillion gallons.....................             0.00             0.01             0.14             0.16             0.21
Mean LCC Savings,* 2008$:
    Top-Loading, Multi-Family......................................            (8.1)            (8.1)              179              179              179
    Top-Loading, Laundromat........................................           (17.7)           (17.7)              190              190              190
    Front-Loading, Multi-Family....................................              4.7             19.5             19.5               91              203
    Front-Loading, Laundromat......................................              5.2             22.0             22.0               93              216
Median PBP, years:
    Top-Loading, Multi-Family......................................             11.7             11.7              4.6              4.6              4.6
    Top-Loading, Laundromat........................................              7.9              7.9              2.8              2.8              2.8
    Front-Loading, Multi-Family....................................              0.0              0.4              0.4              3.0              2.9
    Front-Loading, Laundromat......................................              0.0              0.2              0.2              1.8              1.6
LCC Customer Impacts:
    Top-Loading:
        Multi-Family:
            Net Cost, %............................................             43.3             43.3             13.8             13.8             13.8
            No Impact, %...........................................             35.3             35.3              1.2              1.2              1.2
            Net Benefit, %.........................................             21.5             21.5             85.0             85.0             85.0
        Laundromat:
            Net Cost, %............................................             51.4             51.4              2.9              2.9              2.9
            No Impact, %...........................................             35.3             35.3              1.2              1.2              1.2
            Net Benefit, %.........................................             13.3             13.3             95.9             95.9             95.9
    Front-Loading:
        Multi-Family:
            Net Cost, %............................................              0.0              0.0              0.0              1.4              1.1
            No Impact, %...........................................             96.3             96.3             96.3             23.1              0.0
            Net Benefit, %.........................................              3.7              3.7              3.7             75.5             98.9
        Laundromat:
            Net Cost, %............................................              0.0              0.0              0.0              0.0              0.0
            No Impact, %...........................................             96.3             96.3             96.3             23.1              0.0
            Net Benefit, %.........................................              3.7              3.7              3.7             76.9            100.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative (-) values. For LCCs, a negative value means an increase in LCC by the amount indicated.
** Changes in installed generation capacity by 2043 based on AEO 2009 April Release Reference Case.
[dagger] Emissions impacts include physical reductions at power plants and at buildings where the appliance is being used.
[dagger][dagger] Range of the economic value of CO2 reductions based on global estimates of the benefit of reduced CO2 emissions.


[[Page 1171]]

    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 considers significant. DOE projects that TSL 5 
would result in a net increase of $0.51 billion in NPV of customer 
benefits using a discount rate of 7 percent, and of $1.25 billion using 
a discount rate of 3 percent. The emissions reductions at TSL 5 are 
6.11 Mt of CO2, 3.66 kt of NOX, and 0.0004 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 customer 
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 customers that purchase top-loading CCWs--85 
percent of customers in multi-family applications and 96 percent of 
customers in laundromats. The median PBP 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 customers that purchase front-loading CCWs--99 
percent of customers in multi-family applications and 100 percent of 
customers in laundromats. The median PBP 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 concluded that the benefits of a standard at 
TSL 5 would be outweighed by the potential for disincentivizing 
customers 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 customers of front-loading CCWs 
would choose to purchase a less efficient top-loading unit.
    As described in section IV.E.2.c, DOE did analyze the impacts of 
increased purchase prices for each equipment class, but considered each 
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 did not have 
sufficient data to estimate the cross-price elasticity of demand 
between the two equipment classes to determine the extent to which 
customers of front-loadings CCWs would switch to less expensive top-
loaders.
    If potential front-loading CCW customers 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, it 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 
believes that the values in Table VI.24 represent the high end of the 
potential energy and water savings for these TSLs. Taking into account 
cross-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 
conclusion: At TSL 5, the benefits of energy savings, economic benefit, 
and emissions reductions would be outweighed by the potential for 
giving customers 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. DOE projects that TSL 4 would result in a net 
increase of $0.41 billion in NPV of customer benefits using a discount 
rate of 7 percent, and of $1.03 billion using a discount rate of 3 
percent. The emissions reductions at TSL 4 are 5.66 Mt of 
CO2, 3.39 kt of NOX, and 0.0004 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 customers will experience the same LCC 
impacts and PBPs 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 customers that purchase front-loading CCWs--76 percent of 
customers in multi-family applications and 77 percent of customers in 
laundromats. The median PBP 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

[[Page 1172]]

is so dependent on CCW sales, DOE is concerned that TSL 4 will 
materially harm the LVM.
    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 
customers 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 
customers of front-loading CCWs would be more likely to purchase a top-
loading CCW, which is less efficient. If potential front-loading CCW 
customers 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 
conclusion: At TSL 4, the benefits of energy savings, economic benefit, 
and emissions reductions would be outweighed by the potential for 
giving customers 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. DOE projects that TSL 3 would result in a net 
increase of $0.36 billion in NPV of customer benefits using a discount 
rate of 7 percent, and of $0.89 billion using a discount rate of 3 
percent. The emissions reductions at TSL 3 are 5.07 Mt of 
CO2, 3.04 kt of NOX, and 0.0003 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 customers would experience the same LCC 
impacts and PBPs 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 customers that 
do not already purchase front-loading CCWs with an efficiency meeting 
TSL 3. The median PBP 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. 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 
customers 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. 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 customers 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 
percentage of the front-loading market is already 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 concluded that the benefits of a TSL 3 standard 
outweigh the burdens. In particular, the Secretary has concluded that 
TSL 3 saves a significant amount of energy and is technologically 
feasible and economically justified. Further, benefits from carbon 
dioxide reductions (at a central value of $20) would increase NPV by 
$48 million (2008$) at a 7% discount rate and $105 million at a 3% 
discount rate. These benefits from carbon dioxide emission reductions, 
when considered in conjunction with the consumer savings NPV and other 
factors described above support DOE's conclusion that TSL 3 is 
economically justified. Therefore, DOE establishes TSL 3 as the energy 
conservation standards for CCWs in this final rule. Table VI.25 lists 
today's energy conservation standards for CCWs. DOE's amended energy 
conservation standards for CCWs at TSL 3 reflect its 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.

                Table VI.25--Amended Energy Conservation Standards for Commercial Clothes Washers
----------------------------------------------------------------------------------------------------------------
            Equipment class                               Amended energy conservation standards
----------------------------------------------------------------------------------------------------------------
Top-Loading...........................  1.60 Modified Energy Factor/8.5 Water Factor.
Front-Loading.........................  2.00 Modified Energy Factor/5.5 Water Factor.
----------------------------------------------------------------------------------------------------------------

    DOE also calculated the annualized values for certain benefits and 
costs under the considered TSLs. The annualized values refer to 
consumer operating cost savings, consumer incremental product and 
installation costs, the quantity of emissions reductions for 
CO2, NOX, and Hg, and the monetary value of 
CO2 emissions reductions (using a value of $20/t 
CO2, which is in the middle of the values considered by DOE 
for valuing the

[[Page 1173]]

potential global benefits resulting from reduced CO2 
emissions).
    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 3 or 7 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.
    Table VI.26 presents the annualized values for each TSL considered 
for CCWs. The tables also present the annualized net benefit resulting 
from summing the two monetary benefits and subtracting the consumer 
incremental product and installation costs. Although summing the value 
of operating savings with the value of CO2 reductions 
provides a valuable perspective, please note the following. The 
operating cost savings are domestic U.S. consumer monetary savings 
found in market transactions while the CO2 value is based on 
an estimate of imputed marginal SCC, which is meant to reflect the 
global benefits of CO2 reductions. In addition, the SCC 
value considers a longer time frame than the period considered for 
operating cost savings.

                            Table VI.26--Annualized Benefits and Costs for Commercial Clothes Washers by Trial Standard Level
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                          Primary estimate      Low estimate (AEO    High estimate (high
                                                                                        (AEO reference case)    low  growth case)       growth case)
         TSL                    Category                           Unit                -----------------------------------------------------------------
                                                                                            7%         3%         7%         3%         7%         3%
--------------------------------------------------------------------------------------------------------------------------------------------------------
1....................                                                               Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
                       Monetized Operating Cost    Million 2008$......................     12.75      15.32      11.25      13.46      14.63      17.70
                        Savings.
                       Quantified Emissions        CO2, Mt............................      0.07       0.07       0.07       0.07       0.07       0.07
                        Reductions.
                                                   NOX, kt............................      0.041      0.044      0.041      0.044      0.041      0.044
                                                   Hg, t..............................      0.000      0.000      0.000      0.000      0.000      0.000
                       Monetized Avoided CO2       Million 2008$......................      2.35       2.73       2.35       2.73       2.35       2.73
                        Value (at $20/t).
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                     Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
                       Monetized Incremental       Million 2008$......................     11.44      11.06      10.67      10.19      12.01      11.65
                        Product and Installation
                        Costs.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  Net Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
                       Monetized Value...........  Million 2008$......................      3.66       6.99       2.93       6.01       4.97       8.79
--------------------------------------------------------------------------------------------------------------------------------------------------------
2....................                                                               Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
                       Monetized Operating Cost    Million 2008$......................     13.98      16.79      12.43      14.86      15.90      19.23
                        Savings.
                       Quantified Emissions        CO2, Mt............................      0.07       0.07       0.07       0.07       0.07       0.07
                        Reductions.
                                                   NOX, kt............................      0.042      0.045      0.042      0.045      0.042      0.045
                                                   Hg, t..............................      0.000      0.000      0.000      0.000      0.000      0.000
                       Monetized Avoided CO2       Million 2008$......................      2.38       2.77       2.38       2.77       2.38       2.77
                        Value (at $20/t).
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                     Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
                       Monetized Incremental       Million 2008$......................     11.49      11.11      10.72      10.23      12.06      11.70
                        Product and Installation
                        Costs.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  Net Benefits
                      ----------------------------------------------------------------------------------------------------------------------------------
                       Monetized Value...........  Million 2008$......................      4.87       8.45       4.09       7.40       6.22      10.30
--------------------------------------------------------------------------------------------------------------------------------------------------------
3....................                                                               Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
                       Monetized Operating Cost    Million 2008$......................     60.62      72.82      54.87      65.33      66.59      80.43
                        Savings.
                       Quantified Emissions        CO2, Mt............................      0.14       0.16       0.14       0.16       0.14       0.16
                        Reductions.
                                                   NOX, kt............................      0.087      0.094      0.087      0.094      0.087      0.094
                                                   Hg, t..............................      0.001      0.001      0.001      0.001      0.001      0.001
                       Monetized Avoided CO2       Million 2008$......................      5.05       5.88       5.05       5.88       5.05       5.88
                        Value (at $20/t).
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                     Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
                       Monetized Incremental       Million 2008$......................     23.44      22.67      21.85      20.87      24.61      23.87
                        Product and Installation
                        Costs.
                      ----------------------------------------------------------------------------------------------------------------------------------
                                                                                  Net Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 1174]]

 
                       Monetized Value...........  Million 2008$......................     42.23      56.04      38.07      50.34      47.04      62.44
--------------------------------------------------------------------------------------------------------------------------------------------------------
4....................                                                               Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
                       Monetized Operating Cost    Million 2008$......................     68.83      82.66      62.65      74.62      75.33      90.94
                        Savings.
                       Quantified Emissions        CO2, Mt............................      0.16       0.17       0.16       0.17       0.16       0.17
                        Reductions.
                                                   NOX, kt............................      0.097      0.105      0.097      0.105      0.097      0.105
                                                   Hg, t..............................      0.001      0.001      0.001      0.001      0.001      0.001
                       Monetized Avoided CO2       Million 2008$......................      5.63       6.56       5.63       6.56       5.63       6.56
                        Value (at $20/t).
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                     Costs
                      ----------------------------------------------------------------------------------------------------------------------------------
                       Monetized Incremental       Million 2008$......................     25.45      24.62      23.81      22.75      26.67      25.87
                        Product and Installation
                        Costs.
                      ----------------------------------------------------------------------------------------------------------------------------------
                                                                                  Net Benefits
                      ----------------------------------------------------------------------------------------------------------------------------------
                       Monetized Value...........  Million 2008$......................     49.01      64.60      44.47      58.43      54.29      71.63
--------------------------------------------------------------------------------------------------------------------------------------------------------
5....................                                                               Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
                       Monetized Operating Cost    Million 2008$......................     81.19      97.52      74.46      88.77      88.24     106.51
                        Savings.
                       Quantified Emissions        CO2, Mt............................      0.17       0.19       0.17       0.19       0.17       0.19
                        Reductions.
                                                   NOX, kt............................      0.105      0.113      0.105      0.113      0.105      0.113
                                                   Hg, t..............................      0.001      0.001      0.001      0.001      0.001      0.001
                       Monetized Avoided CO2       Million 2008$......................      6.08       7.08       6.08       7.08       6.08       7.08
                        Value (at $20/t).
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                     Costs
                      ----------------------------------------------------------------------------------------------------------------------------------
                       Monetized Incremental       Million 2008$......................     28.19      27.26      26.47      25.30      29.47      28.57
                        Product and Installation
                        Costs.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  Net Benefits
                      ----------------------------------------------------------------------------------------------------------------------------------
                       Monetized Value...........  Million 2008$......................     59.08      77.34      54.08      70.55      64.86      85.02
--------------------------------------------------------------------------------------------------------------------------------------------------------

VII. Procedural Issues and Regulatory Review

A. Review Under Executive Order 12866

    Executive Order 12866 requires that each agency identify in writing 
the problem the agency intends to address that warrants new agency 
action (including, where applicable, the failures of private markets or 
public institutions), as well as assess the significance of that 
problem to determine whether any new regulation is necessary. Executive 
Order 12866, section 1(b)(1).
    Because today's regulatory action is a ``significant regulatory 
action'' under section 3(f)(1) of Executive Order 12866, section 
6(a)(3) of the Executive Order requires DOE to prepare and submit for 
review to the Office of Information and Regulatory Affairs (OIRA) in 
OMB an assessment of the costs and benefits of today's rule. 
Accordingly, DOE presented to the Office of Information and Regulatory 
Affairs (OIRA) in the Office of Management and Budget for review the 
draft final rule and other documents prepared for this rulemaking, 
including a regulatory impact analysis (RIA). These documents are 
included in the rulemaking record and are available for public review 
in the Resource Room of the Building Technologies Program, 950 L'Enfant 
Plaza, SW., 6th Floor, Washington, DC, 20024, (202) 586-2945, between 9 
a.m. and 4 p.m. Monday through Friday, except Federal holidays.
    The 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).
    DOE believes that there is a lack of consumer information and/or 
information processing capability about energy efficiency opportunities 
in the CCW market. If this is the case, DOE would expect the energy 
efficiency for CCWs to be randomly distributed across key variables 
such as energy prices and usage levels. DOE is not able to correlate 
the consumer's usage pattern and energy price with the efficiency of 
the purchased equipment, however. In the October 2008 NOPR, DOE sought 
data on the efficiency levels of existing CCWs by how often they are 
used and their associated energy prices (and/or geographic regions of 
the country). 73 FR 62034, 62123 (Oct. 17, 2008). DOE received no such 
data from interested parties. Therefore, DOE was unable to test for 
today's final rule the extent to which purchasers of CCWs behave as if 
they lack information about the costs associated with CCW energy

[[Page 1175]]

consumption and/or the benefits of more-efficient equipment.
    In addition, this rulemaking addresses the problem that certain 
external benefits resulting from improved energy efficiency of CCWs are 
not captured by the users of such equipment and thus may not play a 
role in their purchase decisions. These benefits include externalities 
related to environmental protection and energy security, such as 
reduced emissions of greenhouse gases. The TSLs that 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.
    The November 2009 SNOPR contained a summary of the RIA, which 
evaluated the extent to which major alternatives to standards for CCWs 
could achieve significant energy savings at reasonable cost, as 
compared to the effectiveness of the proposed rule. The complete RIA 
(Regulatory Impact Analysis for Proposed Energy Conservation Standards 
for Commercial Clothes Washers) is contained in the TSD prepared for 
today's rule. The RIA consists of (1) a statement of the problem 
addressed by this regulation, and the mandate for government action; 
(2) a description and analysis of the feasible policy alternatives to 
this regulation; (3) a quantitative comparison of the impacts of the 
alternatives; and (4) the national economic impacts of today's 
standards.
    As shown in Table VII.1 below, DOE identified the following major 
policy alternatives for achieving increased energy efficiency in 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 approach (national performance standards).

                 Table VII.1--Non-Regulatory Alternatives to Commercial Clothes Washer Standards
----------------------------------------------------------------------------------------------------------------
                                                                                           Net present value**
                                                                 Energy       Water           billion 2008$
                     Policy alternatives                       savings,*     savings,  -------------------------
                                                                 quads       trillion   7% Discount  3% Discount
                                                                             gallons        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.
** DOE determined the net present value for shipments in 2013-2043.
*** 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 is well over the market adoption target level
  that each alternative strives to attain.

    The net present value amounts shown in Table VII.1 refer to the NPV 
for CCW 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. As explained in detail in 
section VI of the November 2009 SNOPR, none of the alternatives DOE 
examined would save as much energy or have an NPV as high as the 
proposed standards. The same conclusion applies to the standards in 
today's rule. Also, several of the alternatives would require new 
enabling legislation, because DOE does not have authority to implement 
those alternatives. Additional detail on the regulatory alternatives is 
found in the RIA chapter in the TSD.

B. Review Under the Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires 
preparation of an initial regulatory flexibility analysis (IRFA) for 
any rule that by law must be proposed for public comment, and a final 
regulatory flexibility analysis (FRFA) for any such rule that an agency 
adopts as a final rule, unless the agency certifies that the rule, if 
promulgated, will not have a significant economic impact on a 
substantial number of small entities. A regulatory flexibility analysis 
examines the impact of the rule on small entities and considers 
alternative ways of reducing negative impacts. Also, as required by 
Executive Order 13272, Proper Consideration of Small Entities in Agency 
Rulemaking, 67 FR 53461 (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.
    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.pdf. 
Because all CCW manufacturers also produce RCWs, limits for both 
categories are presented in Table VII.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 1176]]



         Table VII.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
----------------------------------------------------------------------------------------------------------------

    As explained in the November 2009 SNOPR, 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 November 2009 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 final rule will 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 or the November 
2009 SNOPR, and, as with the proposed rule, today's final rule imposes 
no information and recordkeeping requirements. Therefore, DOE has taken 
no further action in this rulemaking with respect to the Paperwork 
Reduction Act.

D. Review Under the National Environmental Policy Act

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

E. Review Under Executive Order 13132

    DOE reviewed this rule pursuant to Executive Order 13132, 
``Federalism,'' 64 FR 43255 (Aug. 4, 1999), which imposes certain 
requirements on agencies formulating and implementing policies or 
regulations that preempt State law or that have Federalism 
implications. In accordance with DOE's statement of policy describing 
the intergovernmental consultation process it will follow in the 
development of regulations that have federalism implications, 65 FR 
13735 (March 14, 2000), DOE examined the November 2009 proposed rule 
and 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. 74 FR 57738, 57798 (Nov. 9, 2009). DOE 
received no comments on this issue in response to the November 2009 
SNOPR, and its conclusions on this issue are the same for the final 
rule as they were for the proposed rule. Therefore, DOE has taken no 
further action in today's final rule with respect to Executive Order 
13132.

F. Review Under Executive Order 12988

    With respect to the review of existing regulations and the 
promulgation of new regulations, section 3(a) of Executive Order 12988, 
``Civil Justice Reform'' (61 FR 4729 (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 final regulations meet the relevant standards 
of Executive Order 12988.

G. Review Under the Unfunded Mandates Reform Act of 1995

    As indicated in the November 2009 SNOPR, DOE reviewed the proposed 
rule under title II of the Unfunded Mandates Reform Act of 1995 (Pub. 
L. 104-4) (UMRA), which imposes requirements on Federal agencies when 
their regulatory actions will have certain types of impacts on State, 
local and Tribal governments and the private sector. 74 FR 57738, 
57798-99 (Nov. 9, 2009). 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 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 final rule 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

[[Page 1177]]

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 final rule 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 final rule.

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 November 
2009 SNOPR, and, therefore, takes no further action in today's final 
rule with respect to this provision.

I. Review Under Executive Order 12630

    DOE determined, under Executive Order 12630, ``Governmental Actions 
and Interference with Constitutionally Protected Property Rights,'' 53 
FR 8859 (March 18, 1988), that today's rule would not result in any 
takings 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 or November 2009 SNOPR, and, therefore, has taken no further 
action in today's final rule with respect to this Executive Order.

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

    Section 515 of the Treasury and General Government Appropriations 
Act, 2001 (44 U.S.C. 3516 note) provides for agencies to review most 
disseminations of information to the public under guidelines 
established by each agency pursuant to general guidelines issued by 
OMB. 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 today's final rule under the OMB and DOE guidelines and 
has concluded that it is consistent with applicable policies in those 
guidelines.

K. Review Under Executive Order 13211

    Executive Order 13211, ``Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use,'' 66 FR 28355 
(May 22, 2001) requires Federal agencies to prepare and submit to 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 final rule 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 final 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 November 2009 SNOPR, this includes influential 
scientific information related to agency regulatory actions, such as 
the analyses in this rulemaking. 74 FR 57738, 57799 (Nov. 9, 2009).
    As more fully set forth in the November 2009 SNOPR, 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 
rule, and issued a report on these peer reviews. The report is 
available at http://www.eere.energy.gov/buildings/appliance_standards/peer_review.html. Id.

M. Congressional Notification

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

VIII. Approval of the Office of the Secretary

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

List of Subjects in 10 CFR Part 431

    Administrative practice and procedure, Energy conservation, 
Household appliances.

    Issued in Washington, DC, on December 18, 2009.
Cathy Zoi,
Assistant Secretary, Energy Efficiency and Renewable Energy.

0
For the reasons stated in the preamble, chapter II, subchapter D, of 
title 10 of the Code of Federal Regulations, part 431 is amended to 
read as set forth below:

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

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

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


0
2. 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 January 8, 2013, shall have a 
modified

[[Page 1178]]

energy factor no less than and a water factor no greater than:

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

Appendix

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

DEPARTMENT OF JUSTICE
Antitrust Division

DEBORAH A. GARZA
Acting Assistant Attorney General

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

December 16, 2008.

Warren Belmar, Esq., Deputy General Counsel for Energy Policy, 
Department of Energy, Washington, DC 20585.

    Dear Deputy General Counsel Belmar: I am responding to your 
October 1, 2008, letter seeking the views of the Attorney General 
about the potential impact on competition of proposed amended energy 
conservation standards for residential kitchen ranges and ovens, 
microwave ovens, and commercial clothes washers (CCWs). Your request 
was submitted under Section 325(0)(2)(B)(i)(V) of the Energy Policy 
and Conservation Act, as amended, (``ECPA''), 42 U.S.C. Sec.  
6295(0)(B)(i)(V), which requires the Attorney General to make a 
determination of the impact of any lessening of competition that is 
likely to result from the imposition of proposed energy conservation 
standards. The Attorney General's responsibility for responding to 
requests from other departments about the effect of a program on 
competition has been delegated to the Assistant Attorney General for 
the Antitrust Division in 28 CFR Sec.  0.40(g).
    In conducting its analysis the Antitrust Division examines 
whether a proposed standard may lessen competition, for example, by 
substantially limiting consumer choice, leaving consumers with fewer 
competitive alternatives, placing certain manufacturers of a product 
at an unjustified competitive disadvantage compared to other 
manufacturers, or by inducing avoidable inefficiencies in production 
or distribution of particular products.
    We have reviewed the proposed standards contained in the Notice 
of Proposed Rulemaking (73 Fed. Reg. 62034, October 17, 2008) and 
supplementary information submitted to the Attorney General. We also 
attended the November 13 public meeting on the proposed standards 
and conducted interviews with industry members. Based on this 
review, we have determined that legitimate issues arise as to 
whether the proposed standards adversely effect competition and 
consumer choice with respect to (1) gas cooking products with 
standing pilot lights and (2) top-loading CCWs.
    The proposed standards would extend the ban on constant burning 
pilot lights, currently applicable to cooking appliances equipped 
with electrical supply cords, to appliances that are not equipped 
with electrical supply cords. As the notice regarding the proposed 
standards recognizes, certain consumers, including those with 
religious and cultural practices that prohibit the use of line 
electricity, those without access to line electricity, and those 
whose kitchens do not have appropriate electrical outlets, rely on 
gas cooking appliances with standing pilots in lieu of electrical 
ignition devices. For these consumers, gas cooking appliances with 
electronic ignition are not a reasonable substitute. The notice 
states that gas cooking appliances may become available with 
technological options such as battery-powered ignition to replace a 
standing pilot light. However, it is unclear whether such battery-
powered devices have been tested for indoor use and whether they are 
in compliance with safety standards for such use. If these options 
prove not to be feasible, then the proposed standard could 
substantially limit consumer choice by eliminating the cooking 
appliance that most closely meets these consumers' needs.
    As to top-loading CCWs, it appears that meeting the proposed 
standards may require substantial investment in the development of 
new technology that some suppliers of top-loading CCWs may not find 
it economical to make. CCWs are used primarily in multi-housing 
laundries, with top-loading machines accounting for approximately 80 
percent of machines in these locations. The remaining 20 percent are 
front-loading machines, which are more energy efficient but 
significantly more expensive than top-loading models. There are only 
three manufacturers of top-loading CCWs selling in the United 
States. It appears that there is a real risk that one or more of 
these manufacturers cannot meet the proposed standard. In such a 
case, CCW purchasers would have fewer competitive alternatives for 
top-loading machines, potentially resulting in purchasers facing 
higher prices from the remaining top-loading manufacturer or 
manufacturers.
    Although the Department of Justice is not in a position to judge 
whether manufacturers will be able to meet the proposed standards, 
we urge the Department of Energy to take into account these possible 
impacts on competition and the availability of options to consumers 
in determining its final energy efficiency standard for CCWs and 
residential gas cooking appliances with constant burning pilots. To 
maintain competition, the Department of Energy should consider 
keeping the existing standard in place for top-loading CCWs. The 
Department of Energy may wish to consider setting a ``no standard'' 
standard for residential gas cooking products with constant burning 
pilots to address the potential for certain customers to be stranded 
without an economical product alternative.
    The Department of Justice does not believe that the proposed 
standards for other products listed in the NOPR would likely lead to 
an adverse effect on competition.

Sincerely,
Deborah A. Garza.
[FR Doc. E9-30891 Filed 1-7-10; 8:45 am]
BILLING CODE 6450-01-P