[Federal Register Volume 80, Number 160 (Wednesday, August 19, 2015)]
[Proposed Rules]
[Pages 50462-50538]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-19919]



[[Page 50461]]

Vol. 80

Wednesday,

No. 160

August 19, 2015

Part III





Department of Energy





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10 CFR Parts 429 and 431





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

  Federal Register / Vol. 80 , No. 160 / Wednesday, August 19, 2015 / 
Proposed Rules  

[[Page 50462]]


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DEPARTMENT OF ENERGY

10 CFR Parts 429 and 431

[Docket Number EERE-2013-BT-STD-0022]
RIN 1904-AD00


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

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

ACTION: Notice of proposed rulemaking (NOPR) and announcement of public 
meeting.

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SUMMARY: The Energy Policy and Conservation Act of 1975 (EPCA), as 
amended, prescribes energy conservation standards for various consumer 
products and certain commercial and industrial equipment, including 
refrigerated bottled or canned beverage vending machines (beverage 
vending machine). EPCA also requires the U.S. Department of Energy 
(DOE) to periodically determine whether more-stringent, amended 
standards would be technologically feasible and economically justified, 
and would save a significant amount of energy. In this NOPR, DOE 
proposes amended energy conservation standards for Class A and Class B 
beverage vending machines. DOE is also proposing to amend the 
definition for Class A equipment to more clearly differentiate Class A 
and Class B equipment, as well as to amend the definition of 
combination vending machine. In addition, DOE proposes to establish 
definitions and new energy conservations standards for Combination A 
and Combination B classes of beverage vending machines. This NOPR also 
announces a public meeting to receive comment on these proposed 
standards and associated analyses and results, and announces the 
availability of the NOPR technical support document (TSD).

DATES: DOE will hold a public meeting on Tuesday, September 29, 2015, 
from 10 a.m. to 3 p.m., in Washington, DC. The meeting also will be 
broadcast as a webinar. See section VII of this NOPR, ``Public 
Participation,'' for webinar registration information, participant 
instructions, and information about the capabilities available to 
webinar participants.
    DOE will accept comments, data, and information regarding this NOPR 
before and after the public meeting, but no later than October 19, 
2015. See section VII of this NOPR, ``Public Participation,'' for 
details.
    Comments regarding the likely competitive impact of the proposed 
standard should be sent to the Department of Justice contact listed in 
the ADDRESSES section before September 18, 2015.

ADDRESSES: The public meeting will be held at the U.S. Department of 
Energy, Forrestal Building, Room 8E-089, 1000 Independence Avenue SW., 
Washington, DC 20585.
    Any comments submitted must identify the NOPR for Energy 
Conservation Standards for Beverage Vending Machines, and provide 
docket number EERE-2013-BT-STD-0022 and/or regulatory information 
number (RIN) number 1904-AD00. Comments may be submitted using any of 
the following methods:
    1. Federal eRulemaking Portal: www.regulations.gov. Follow the 
instructions for submitting comments.
    2. Email: [email protected]. Include the docket number and/
or RIN in the subject line of the message.
    3. Postal Mail: Ms. Brenda Edwards, U.S. Department of Energy, 
Building Technologies Office, Mailstop EE-5B, 1000 Independence Avenue 
SW., Washington, DC 20585-0121. If possible, please submit all items on 
a compact disc (CD), in which case it is not necessary to include 
printed copies.
    4. Hand Delivery/Courier: Ms. Brenda Edwards, U.S. Department of 
Energy, Building Technologies Program, 950 L'Enfant Plaza SW., Suite 
600, Washington, DC 20024. Telephone: (202) 586-2945. If possible, 
please submit all items on a CD, in which case it is not necessary to 
include printed copies.
    Written comments regarding the burden-hour estimates or other 
aspects of the collection-of-information requirements contained in this 
proposed rule may be submitted to the Office of Energy Efficiency and 
Renewable Energy through the methods listed above and by email to 
[email protected].
    For detailed instructions on submitting comments and additional 
information on the rulemaking process, see section VII of this NOPR 
(Public Participation).
    Docket: The docket, which includes Federal Register notices, public 
meeting attendee lists and transcripts, comments, and other supporting 
documents/materials, is available for review at www.regulations.gov. 
All documents in the docket are listed in the www.regulations.gov 
index. However, some documents listed in the index, such as those 
containing information that is exempt from public disclosure, may not 
be publicly available.
    A link to the docket Web page can be found at: http://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/73 . This Web page contains a link to the docket for this NOPR 
on the www.regulations.gov site. The www.regulations.gov Web page 
contains simple instructions on how to access all documents, including 
public comments, in the docket. See section VII of this NOPR, ``Public 
Participation,'' for further information on how to submit comments 
through www.regulations.gov.
    EPCA requires the Attorney General to provide DOE a written 
determination of whether the proposed standard is likely to lessen 
competition. The U.S. Department of Justice Antitrust Division invites 
input from market participants and other interested persons with views 
on the likely competitive impact of the proposed standard. Interested 
persons may contact the Division at [email protected] 
before September 18, 2015. Please indicate in the ``Subject'' line of 
your email the title and Docket Number of this rulemaking notice.

FOR FURTHER INFORMATION CONTACT: 
    Mr. John Cymbalsky, U.S. Department of Energy, Office of Energy 
Efficiency and Renewable Energy, Building Technologies Office, EE-2J, 
1000 Independence Avenue SW., Washington, DC 20585-0121. Telephone: 
(202) 287-1692. Email: 
[email protected].
    Ms. Sarah Butler, U.S. Department of Energy, Office of General 
Counsel, GC-33, 1000 Independence Avenue SW., Washington, DC 20585-
0121, (202) 586-1777, Email: [email protected].
    For further information on how to submit a comment, review other 
public comments and the docket, or participate in the public meeting, 
contact Ms. Brenda Edwards at (202) 586-2945 or by email: 
[email protected].

SUPPLEMENTARY INFORMATION: 
    This notice of proposed rulemaking proposes to incorporate by 
reference into 10 CFR part 431 the testing methods contained in the 
following commercial standards:
    (1) ASTM Standard E 1084-86 (Reapproved 2009), ``Standard Test 
Method for Solar Transmittance (Terrestrial) of Sheet Materials Using 
Sunlight,'' approved April 1, 2009.
    Copies of ASTM standards may be purchased from ASTM International, 
100 Barr Harbor Drive, PO Box C700, West Conshohocken, PA, 19428, (877) 
909-2786, or at www.astm.org.

[[Page 50463]]

    See IV.N for a further discussion of this standard.

Table of Contents

I. Synopsis of the Proposed Rule
    A. Benefits and Costs to Customers
    B. Impact on Manufacturers
    C. National Benefits and Costs
    D. Conclusion
II. Introduction
    A. Authority
    B. Background
    1. Current Standards
    2. History of Standards Rulemaking for Beverage Vending Machines
III. General Discussion
    A. Equipment Classes and Scope of Coverage
    B. Test Procedure
    C. Compliance Dates
    D. Technological Feasibility
    1. General
    2. Maximum Technologically Feasible Levels
    E. Energy Savings
    1. Determination of Savings
    2. Significance of Savings
    F. Economic Justification
    1. Specific Criteria
    a. Economic Impact on Manufacturers and Customers
    b. Savings in Operating Costs Compared to Increase in Price 
(Life-Cycle Costs)
    c. Energy Savings
    d. Lessening of Utility or Performance of Equipment
    e. Impact of Any Lessening of Competition
    f. Need for National Energy Conservation
    g. Other Factors
    2. Rebuttable Presumption
IV. Methodology and Discussion of Related Comments
    A. Market and Technology Assessment
    1. Equipment Classes
    a. Class A and Class B Beverage Vending Machines
    b. Combination Vending Machines
    2. Machines Vending Perishable Goods
    3. Technology Assessment
    B. Screening Analysis
    C. Engineering Analysis
    1. Baseline Equipment and Representative Sizes
    2. Refrigerants
    3. Design Options Analyzed and Maximum Technologically Feasible 
Efficiency Level
    4. Manufacturer Production Costs
    D. Markups Analysis
    E. Energy Use Analysis
    F. Life-Cycle Cost and Payback Period Analyses
    1. Customer Purchase Prices
    2. Energy Prices
    3. Maintenance, Repair, and Installation Costs
    4. Equipment Lifetime
    5. Discount Rates
    6. Equipment Efficiency in the No-New-Standards Case
    7. Split Incentives
    G. National Impact Analysis
    1. Shipments Analysis
    a. Market Share by Equipment Class
    b. Market Share by Refrigerant
    c. High and Low Shipments Assumptions
    2. Forecasted Efficiency Trends
    3. National Energy Savings Analysis
    a. Full-Fuel-Cycle Analysis
    4. Net Present Value Analysis
    H. Customer Subgroup Analysis
    I. Manufacturer Impact Analysis
    1. Overview
    2. Government Regulatory Impact Model
    a. Government Regulatory Impact Model Key Inputs
    b. Government Regulatory Impact Model Scenarios
    3. Manufacturer Interviews
    a. Uncertainty Regarding Potential EPA Phaseout of Hazardous 
Refrigerants
    b. Impact on Product Utility
    c. Availability of Higher Efficiency Components
    4. Discussion of Comments
    J. Emissions Analysis
    K. Monetizing Carbon Dioxide and Other Emissions Impacts
    1. Social Cost of Carbon
    a. Monetizing Carbon Dioxide Emissions
    b. Development of Social Cost of Carbon Values
    c. Current Approach and Key Assumptions
    2. Valuation of Other Emissions Reductions
    L. Utility Impact Analysis
    M. Employment Impact Analysis
    N. Description of Materials Incorporated by Reference
V. Analytical Results and Conclusions
    A. Trial Standard Levels
    B. Economic Justification and Energy Savings
    1. Economic Impacts on Commercial Customers
    a. Life-Cycle Cost and Payback Period
    b. Life-Cycle Cost Subgroup Analysis
    c. Rebuttable Presumption Payback
    2. Economic Impact on Manufacturers
    a. Industry Cash-Flow Analysis Results
    b. Impacts on Direct Employment
    c. Impacts on Manufacturing Capacity
    d. Impacts on Subgroups of Manufacturers
    e. Cumulative Regulatory Burden
    3. National Impact Analysis
    a. Significance of Energy Savings
    b. Net Present Value of Customer Costs and Benefits
    c. Indirect 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
    C. Proposed Standards
    1. Benefits and Burdens of Trial Standard Levels Considered for 
Beverage Vending Machines
VI. Procedural Issues and Regulatory Review
    A. Review Under Executive Orders 12866 and 13563
    B. Review Under the Regulatory Flexibility Act
    1. Description and Estimated Number of Small Entities Regulated
    2. Description and Estimate of Compliance Requirements
    3. Significant Alternatives to the Rule
    C. Review Under the Paperwork Reduction Act of 1995
    D. Review Under the National Environmental Policy Act of 1969
    E. Review Under Executive Order 13132
    F. Review Under Executive Order 12988
    G. Review Under the Unfunded Mandates Reform Act of 1995
    H. Review Under the Treasury and General Government 
Appropriations Act, 1999
    I. Review Under Executive Order 12630
    J. Review Under the Treasury and General Government 
Appropriations Act, 2001
    K. Review Under Executive Order 13211
    L. Review Under the Information Quality Bulletin for Peer Review
VII. Public Participation
    A. Attendance at the Public Meeting
    B. Procedure for Submitting Requests to Speak and Prepared 
General Statements for Distribution
    C. Conduct of the Public Meeting
    D. Submission of Comments
    E. Issues on Which DOE Seeks Comment
VIII. Approval of the Office of the Secretary

I. Synopsis of the Proposed Rule

    Title III, Part A \1\ of the Energy Policy and Conservation Act of 
1975 (EPCA or the Act), Public Law 94-163 (42 U.S.C. 6291-6309, as 
codified), established the Energy Conservation Program for Consumer 
Products Other Than Automobiles.\2\ These products include refrigerated 
bottled or canned beverage vending machines (beverage vending machines 
or BVMs), the subject of this NOPR. (42 U.S.C. 6295(v)) \3\
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    \1\ For editorial reasons, upon codification in the U.S. Code, 
Part B was redesignated Part A.
    \2\ All references to EPCA in this document refer to the statute 
as amended through the Energy Efficiency Improvement Act of 2015 
(EEIA 2015), Pub. L. 114-11 (April 30, 2015).
    \3\ Because Congress included beverage vending machines in Part 
A of Title III of EPCA, the consumer product provisions of Part A 
(not the industrial equipment provisions of Part A-1) apply to 
beverage vending machines. DOE placed the regulatory requirements 
specific to beverage vending machines in Title 10 of the Code of 
Federal Regulations (CFR), part 431, ``Energy Efficiency Program for 
Certain Commercial and Industrial Equipment'' as a matter of 
administrative convenience based on their type and will refer to 
beverage vending machines as ``equipment'' throughout this document 
because of their placement in 10 CFR part 431. Despite the placement 
of beverage vending machines in 10 CFR part 431, the relevant 
provisions of Title A of EPCA and 10 CFR part 430, which are 
applicable to all product types specified in Title A of EPCA, are 
applicable to beverage vending machines. See 74 FR 44914, 44917 
(Aug. 31, 2009).
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    Pursuant to EPCA, any new or amended energy conservation standard 
must be designed to achieve the maximum improvement in energy 
efficiency that is technologically feasible and economically justified. 
(42 U.S.C. 6295(o)(2)(A)) Furthermore, the new or amended standard must 
result in a significant conservation of energy. (42 U.S.C. 
6295(o)(3)(B)) In accordance with these and other statutory provisions 
discussed in this NOPR, DOE proposes new and amended energy 
conservation standards for beverage vending machines. The proposed 
standards,

[[Page 50464]]

which are described in terms of the maximum daily energy consumption 
(MDEC) as a function of refrigerated volume, are shown in Table I.1. 
Specifically, DOE is proposing to amend the energy conservation 
standards established by the 2009 BVM final rule for Class A and Class 
B beverage vending machines. In addition, DOE is proposing to establish 
two new equipment classes at 10 CFR 431.292, Combination A and 
Combination B, as well as new energy conservation standards for those 
equipment classes. These proposed standards, if adopted, would apply to 
all equipment listed in Table I.1 and manufactured in, or imported 
into, the United States on or after the date 3 years after the 
publication of the final rule for this rulemaking.

 Table I.1--Proposed Energy Conservation Standards for Beverage Vending
                                Machines
------------------------------------------------------------------------
                                                   Proposed energy
                                             conservation  standards **
             Equipment class *                  Maximum daily energy
                                             consumption (MDEC)  kWh/day
                                                      [dagger]
------------------------------------------------------------------------
A.........................................  0.041 x V + 1.92[Dagger]
B.........................................  0.033 x V + 1.42[Dagger]
Combination A.............................  0.044 x V + 1.64[Dagger]
Combination B.............................  0.044 x V + 1.36[Dagger]
------------------------------------------------------------------------
* See section IV.A.1 of this NOPR for a discussion of equipment classes.
** ``V'' is the representative value of refrigerated volume (ft\3\) of
  the BVM model, as measured in accordance with the method for
  determining refrigerated volume adopted in the recently amended DOE
  test procedure for beverage vending machines and appropriate sampling
  plan requirements at 10 CFR 429.52(a)(3). 80 FR 45758 (July 31, 2015).
  See section III.B and V.A for more details.
[dagger] kilowatt hours per day.
[Dagger] Trial Standard Level (TSL) 4.

A. Benefits and Costs to Customers

    Table I.2 and Table I.3 present DOE's evaluation of the economic 
impacts of the proposed energy conservation standards on customers, or 
purchasers, of beverage vending machines, as measured by the average 
life-cycle cost (LCC) savings and the simple payback period (PBP).\4\ 
This analysis is based upon the use of two refrigerants, CO2 
(R-744) and propane (R-290). These refrigerants were selected for 
analysis based on the recent actions of the U.S. Environmental 
Protection Agency's (EPA's) Significant New Alternatives Policy (SNAP) 
program,\5\ including the listing of propane as acceptable in BVM 
applications under Rule 19 (80 FR 19454, 19491; April 10, 2015) and the 
change of status of R-134a to unacceptable in BVM applications 
beginning January 1, 2019 under Rule 20. 80 FR 42870, 42917-42920 (July 
20, 2015). The selected refrigerants on which this proposal is based 
was also guided by visible trends within the BVM marketplace and 
feedback from interested parties during public meetings, in written 
comments, and during manufacturer interviews.
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    \4\ The average LCC savings are measured relative to the 
efficiency distribution in the no-new-standards case, which depicts 
the market in the compliance year (see section IV.F.6 of this 
notice). The simple PBP, which is designed to compare specific 
efficiency levels, is measured relative to the baseline model (see 
section IV.C.1 of this notice). DOE acknowledges that not all BVM 
customers are also the entity that is responsible for the energy 
costs of operating the beverage vending machine in the field. 
However, there are many different contracting mechanisms for leasing 
and operating beverage vending machines, which are influenced by 
many factors, including the capital cost of the machine and the 
annual operating costs. As such, DOE believes that a simple 
``customer'' LCC-model accurately demonstrates the cost-
effectiveness of the potential energy efficiency improvements 
resulting from any new or amended standards, regardless of by whom 
the costs and benefits are borne.
    \5\ The Environmental Protection Agency's (EPA) Significant New 
Alternatives Policy (SNAP) program, which is the U.S. government 
regulatory program responsible for maintaining the list of 
alternatives to ozone-depleting substances allowed for use within 
specific applications in the United States, has taken two rulemaking 
actions that concern refrigerants for the U.S. refrigerated vending 
machine market. See section IV.C.2 for more details.
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    The average LCC savings are positive for all equipment classes and 
refrigerants, and the PBP is less than the average lifetime of the 
equipment, which is estimated to be 13.5 years.

     Table I.2--Impacts of Proposed Energy Conservation Standards on
         Customers of Beverage Vending Machines--CO2 Refrigerant
------------------------------------------------------------------------
                                                 Life-cycle
                                                    cost       Payback
                Equipment class                   savings       period
                                                   2014$        years
------------------------------------------------------------------------
Class A.......................................          173          3.6
Class B.......................................          534          2.3
Combination A.................................        1,344          1.4
Combination B.................................        1,098          0.6
------------------------------------------------------------------------


     Table I.3--Impacts of Proposed Energy Conservation Standards on
       Customers of Beverage Vending Machines--Propane Refrigerant
------------------------------------------------------------------------
                                                 Life-cycle
                                                    cost       Payback
                Equipment class                   savings       period
                                                   2014$        years
------------------------------------------------------------------------
Class A.......................................          265          1.1
Class B.......................................          838          1.3
Combination A.................................        1,405          1.1
Combination B.................................        1,153          0.5
------------------------------------------------------------------------

    DOE's analysis of the impacts of the proposed standards on 
customers is described in section V of this NOPR.

B. Impact on Manufacturers

    The industry net present value (INPV) is the sum of the discounted 
cash flows to the industry from the base year through the end of the 
analysis period (2015 to 2048). Using a real discount rate of 8.5 
percent, DOE estimates that the INPV in the case without amended 
standards for manufacturers of beverage vending machines is $ 62.7 
million.\6\ Under the proposed standards, DOE expects that INPV may 
change by approximately -$3.5 million to -$0.2 million, which is -5.6 
percent to -0.2 percent. DOE also expects industry conversion costs 
associated with amended standards compliance to total $2.8 million.
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    \6\ All monetary values in section I.B of this notice are 
expressed in 2014 dollars; discounted values are discounted to 2014 
unless explicitly stated otherwise.
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    DOE's analysis of the impacts of the proposed standards on 
manufacturers is described in section V.B.2 of this NOPR.

C. National Benefits and Costs \7\
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    \7\ All monetary values in section I.C of this notice are 
expressed in 2014 dollars and are discounted to 2014.
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    DOE's analyses indicate that the proposed energy conservation 
standards for beverage vending machines would save a significant amount 
of energy. The cumulative energy savings amount to 0.223 quadrillion 
Btus (quads) for beverage vending machines purchased in the 30-year 
period that begins in the year of compliance with new and amended 
standards for Class A, Class B, Combination A, and Combination B 
beverage vending machines (2019-2048),\8\ relative to the case without

[[Page 50465]]

amended standards. This represents a savings of 39 percent relative to 
the energy use of this equipment in the case without amended standards 
(referred to as the ``no-new-standards case'').\9\
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    \8\ The standards analysis period for national benefits covers 
the 30-year period, plus the life of equipment purchased during the 
period. In the past DOE presented energy savings results for only 
the 30-year period that begins in the year of compliance. In the 
calculation of economic impacts, however, DOE considered operating 
cost savings measured over the entire lifetime of products purchased 
in the 30-year period. DOE has chosen to modify its presentation of 
national energy savings to be consistent with the approach used for 
its national economic analysis.
    \9\ The no-new-standards case represents a mix of efficiencies 
above the minimum efficiency level (EL 0). Please see section IV.F.6 
for a more detail description of associated assumptions.
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    The cumulative net present value (NPV) of total customer costs and 
savings of the proposed standards for beverage vending machines range 
from $0.42 billion (at a 7-percent discount rate) to $1.10 billion (at 
a 3-percent discount rate \10\). This NPV expresses the estimated total 
value of future operating-cost savings minus the estimated increased 
product costs for beverage vending machines purchased in 2019-2048.
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    \10\ These discount rates are used in accordance with the Office 
of Management and Budget (OMB) guidance to Federal agencies on the 
development of regulatory analysis (OMB Circular A-4, September 17, 
2003), and section E, ``Identifying and Measuring Benefits and 
Costs,'' therein. Further details are provided in section IV.G of 
this notice.
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    In addition, the proposed standards would have significant 
environmental benefits. The energy savings described above are 
estimated to result in cumulative emission reductions (for equipment 
purchased in 2019-2048) of 13 million metric tons (MMt) \11\ of carbon 
dioxide (CO2), 60 thousand tons of methane (CH4), 
11 thousand tons of sulfur dioxide (SO2), 20 thousand tons 
of nitrogen oxides (NOX), 0.2 thousand tons of nitrogen 
oxide (N2O), and 0.03 tons of mercury (Hg).\12\ The 
cumulative reduction in CO2 emissions through 2030 amounts 
to 1.83 MMt, which is equivalent to the emissions resulting from the 
annual electricity use of about 250,000 homes.
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    \11\ A metric ton is equivalent to 1.1 short tons. Results for 
CH4, SO2, NOX, N2O, and 
Hg are presented in short tons.
    \12\ DOE calculated emissions reductions relative to the Annual 
Energy Outlook 2014 (AEO2014) reference case, which generally 
represents current legislation and environmental regulations for 
which implementing regulations were available as of October 31, 
2013.
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    The value of the CO2 reductions is calculated using a 
range of values per metric ton of CO2 (otherwise known as 
the social cost of carbon, or SCC) developed by a recent Federal 
interagency process.\13\ The derivation of the SCC values is discussed 
in section IV.K of this NOPR. DOE estimates that the present monetary 
value of the CO2 emissions reduction is between $0.1 and 
$1.2 billion, with a value of $0.4 billion using the central SCC case 
represented by $40.0 per metric ton in 2015. DOE also estimates the 
present monetary value of the NOX emissions reduction is 
between $1.8 and $18.8 million at a 7-percent discount rate and between 
$4.4 and $45.1 million at a 3-percent discount rate.\14\
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    \13\ Technical Update of the Social Cost of Carbon for 
Regulatory Impact Analysis Under Executive Order 12866, Interagency 
Working Group on Social Cost of Carbon, United States Government 
(May 2013; revised July 2015) (Available at https://www.whitehouse.gov/sites/default/files/omb/inforeg/scc-tsd-final-july-2015.pdf).
    \14\ DOE is currently investigating valuation of avoided Hg and 
SO2 emissions.
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    Table I.4 summarizes the national economic costs and benefits 
expected to result from these proposed standards for beverage vending 
machines.

 Table I.4--Summary of National Economic Benefits and Costs of Proposed
      Energy Conservation Standards for Beverage Vending Machines*
------------------------------------------------------------------------
                                      Present Value
             Category                 million 2014$     Discount Rate %
------------------------------------------------------------------------
                                Benefits
------------------------------------------------------------------------
Customer Operating Cost Savings...                520                  7
                                                1,301                  3
CO2 Reduction Monetized Value                      85                  5
 ($12.2/metric ton case)**........
CO2 Reduction Monetized Value                     400                  3
 ($40.0/metric ton case)**........
CO2 Reduction Monetized Value                     638                2.5
 ($62.3/metric ton case)**........
CO2 Reduction Monetized Value                   1,220                  3
 ($116.8/metric ton case)**.......
NOX Reduction Monetized Value (at                  10                  7
 $2,723/ton)**....................
25................................                  3
Total Benefits [dagger]...........                930                  7
                                                1,725                  3
------------------------------------------------------------------------
                                  Costs
------------------------------------------------------------------------
Customer Incremental Installed                    103                  7
 Costs............................
 
201...............................                  3
------------------------------------------------------------------------
                              Net Benefits
------------------------------------------------------------------------
Including CO2 and NOX Reduction                   837                 7%
 Monetized Value..................
 
1,524.............................                  3
------------------------------------------------------------------------
* This table presents the costs and benefits associated with beverage
  vending machines shipped in 2019-2048. These results include benefits
  to customers that accrue after the last year of analyzed shipments
  (2048) from the equipment purchased during the 30-year analysis
  period. The costs account for the incremental variable and fixed costs
  incurred by manufacturers due to the standard, some of which may be
  incurred in preparation for the rule.
** The CO2 values represent global monetized values of the SCC, in
  2014$, in 2015 under several scenarios of the updated SCC values. The
  first three cases use the averages of SCC distributions calculated
  using 5 percent, 3 percent, and 2.5 percent discount rates,
  respectively. The fourth case represents the 95th percentile of the
  SCC distribution calculated using a 3-percent discount rate. The SCC
  time series used by DOE incorporates an escalation factor. The value
  for NOX is the average of high and low values found in the literature.
[dagger] Total benefits for both the 3-percent and 7-percent cases are
  derived using the series corresponding to SCC value of $40.0/metric
  ton in 2015.


[[Page 50466]]

    The benefits and costs of these proposed standards for beverage 
vending machines sold in 2019-2048 can also be expressed in terms of 
annualized values. The monetary values for the total annualized net 
benefits are the sum of (1) the national economic value of the benefits 
in reduced operating costs, minus (2) the increases in equipment 
purchase and installation costs, plus (3) the value of the benefits of 
CO2 and NOX emission reductions, all 
annualized.\15\
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    \15\ 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 in 2015, the year used for discounting 
the NPV of total customer costs and savings, for the time-series of 
costs and benefits using discount rates of 3 and 7 percent for all 
costs and benefits except for the value of CO2 
reductions. For the latter, DOE used a range of discount rates, as 
shown in Table I.4. From the present value, DOE then calculated the 
fixed annual payment over a 30-year period (2019 through 2048) that 
yields 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 is a steady stream of 
payments.
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    Although DOE believes that the values of operating cost savings and 
CO2 emission reductions are both important, two issues are 
relevant. First, the national operating savings are domestic U.S. 
customer monetary savings that occur as a result of market 
transactions, whereas the value of CO2 reductions is based 
on a global value. Second, the assessments of operating cost savings 
and CO2 savings are performed with different methods that 
use different time frames for analysis. The national operating cost 
savings is measured for the lifetime of beverage vending machines 
shipped in the 30-year analysis period beginning the year compliance is 
required with the new and amended standards. Because CO2 
emissions have a very long residence time in the atmosphere,\16\ the 
SCC values in future years reflect future CO2 emissions 
impacts resulting from the emission of one ton of CO2 in 
each year. These impacts continue well beyond 2100.
---------------------------------------------------------------------------

    \16\ The atmospheric lifetime of CO2 is estimated of 
the order of 30-95 years. Jacobson, MZ (2005). ``Correction to 
``Control of fossil-fuel particulate black carbon and organic 
matter, possibly the most effective method of slowing global 
warming.'' J. Geophys. Res. 110. pp. D14105.
---------------------------------------------------------------------------

    Estimates of annualized benefits and costs of the proposed 
standards (over a 30-year period) are shown in Table I.5. The results 
under the primary estimate are as follows. Using a 7-percent discount 
rate for benefits and costs other than CO2 reduction, for 
which DOE used a 3-percent discount rate along with the average SCC 
series that has a value of $40.0 per metric ton in 2015,\17\ the cost 
of the standards proposed in this rule is $10.2 million per year in 
increased equipment costs, while the benefits are $51.3 million per 
year in reduced equipment operating costs, $22.3 million from 
CO2 reductions, and $1.0 million in reduced NOX 
emissions. In this case, the annualized net benefit amounts to $64 
million per year. Using a 3-percent discount rate for all benefits and 
costs and the average SCC series that has a value of $40.0 per metric 
ton in 2015, the cost of the standards proposed in this rule is $11.2 
million per year in increased equipment costs, while the benefits are 
$72.5 million per year in reduced operating costs, $22.3 million from 
CO2 reductions, and $1.4 million in reduced NOX 
emissions. In this case, the net benefit amounts to $85 million per 
year.
---------------------------------------------------------------------------

    \17\ DOE used a 3-percent discount rate because the SCC values 
for the series used in the calculation were derived using a 3-
percent discount rate (see section IV.K).
---------------------------------------------------------------------------

    DOE also calculated the low net benefits and high net benefits 
estimates by calculating the operating cost savings and shipments at 
the AEO2014 low economic growth case and high economic growth case 
scenarios, respectively. The low and high benefits for incremental 
installed costs were derived using the low and high price learning 
scenarios. In addition, the low and high benefits estimates reflect low 
and high shipments scenarios (see section IV.G.1.c of this NOPR). The 
net benefits and costs for low and high net benefits estimates were 
calculated in the same manner as the primary estimate by using the 
corresponding values of operating cost savings and incremental 
installed costs.

Table I.5--Annualized Benefits and Costs of Proposed Energy Conservation Standards for Beverage Vending Machines
----------------------------------------------------------------------------------------------------------------
                                                                                               High net benefits
                                                                           Low net benefits       estimate *
                                     Discount rate    Primary estimate *      estimate *     -------------------
                                                                                              million 2014$/year
----------------------------------------------------------------------------------------------------------------
Benefits
Operating Cost Savings..........  7%................  51................  48................  80
                                  3%................  73................  65................  106
CO2 Reduction Monetized Value     5%................  6.................  6.................  9
 ($12.2/metric ton case) **.
CO2 Reduction Monetized Value     3%................  22................  21................  31
 ($40.0/metric ton case) **.
CO2 Reduction Monetized Value     2.5%..............  33................  30................  45
 ($62.3/metric ton case) **.
CO2 Reduction Monetized Value     3%................  68................  63................  94
 ($116.8/metric ton case) **.
NOX Reduction Monetized Value     7%................  1.02..............  0.99..............  1.56
 (at $2,723/ton) **.
                                  3%................  1.38..............  1.29..............  1.97
    Total Benefits[dagger]......  7% plus CO2 range.  59 to 120.........  55 to 112.........  91 to 176
                                  7%................  75................  69................  112
                                  3% plus CO2 range.  80 to 142.........  72 to 131.........  117 to 206
                                  3%................  96................  86................  139
Costs
Incremental Equipment Costs.....  7%................  10.20.............  15.24.............  9.90
                                  3%................  11.18.............  15.57.............  10.46
Net Benefits
 
    Total [dagger]..............  7% plus CO2 range.  49 to 110.........  40 to 96..........  81 to 166
 

[[Page 50467]]

 
                                  7%................  64................  54................  103
                                  3% plus COX range.  69 to 131.........  56 to 113.........  107 to 192
                                  3%................  85................  71................  129
----------------------------------------------------------------------------------------------------------------
* This table presents the annualized costs and benefits associated with beverage vending machines shipped in
  2019-2048. These results include benefits to customers that accrue after the last year of analyzed shipments
  (2048) from the equipment purchased in during the 30-year analysis period. The results account for the
  incremental variable and fixed costs incurred by manufacturers due to the standard, some of which may be
  incurred in preparation for the rule. The primary, low benefits, and high benefits estimates utilize
  projections of energy prices from the AEO2014 reference case, low estimate, and high estimate, respectively,
  as well as the default shipments scenario along with the low and high shipments scenarios. In addition,
  incremental equipment costs reflect a medium decline rate for projected equipment price trends in the primary
  estimate, a low decline rate for projected equipment price trends in the low benefits estimate, and a high
  decline rate for projected equipment price trends in the high benefits estimate. The methods used to derive
  projected price trends are explained in technical support document.
** The CO2 values represent global monetized SCC values, in 2014$, in 2015 under several scenarios. The first
  three cases use the averages of SCC distributions calculated using 5-percent, 3-percent, and 2.5-percent
  discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution
  calculated using a 3-percent discount rate. The SCC time series incorporates an escalation factor. The value
  for NOX (in 2014$) is an average of high and low values found in the literature.
[dagger] Total benefits for both the 3-percent and 7-percent cases are derived using the series corresponding to
  the average SCC with a 3-percent discount rate ($40.0/metric ton case). In the rows labeled ``7% plus CO2
  range'' and ``3% plus CO2 range,'' the operating cost and NOX benefits are calculated using the labeled
  discount rate, and those values are added to the full range of CO2 values.

    DOE's analysis of the national impacts of the proposed standards is 
described in section V.B.3 of this NOPR.

D. Conclusion

    DOE has tentatively concluded that the proposed standards for 
beverage vending machines represent the maximum improvement in energy 
efficiency that is technologically feasible and economically justified, 
and would result in the significant conservation of energy. DOE further 
notes that equipment achieving these standard levels is already 
commercially available for all equipment classes covered by this 
proposal. DOE acknowledges that equipment using the SNAP-approved 
refrigerants (i.e., CO2 and propane) meeting the current or 
proposed standard levels is not available for all equipment classes, 
due to the limited use of CO2 as a refrigerant to date and 
the fact that propane has only recently been approved for use in BVM 
applications. 80 FR 19454, 19491 (April 10, 2015). However, DOE notes 
that Class B beverage vending machines using CO2 and that 
meet the proposed standard levels are already available. In addition, 
DOE believes that the existing industry experience in improving the 
efficiency of R-134a- and CO2-based equipment is applicable 
and transferable to equipment using propane as a refrigerant. DOE has 
addressed the technical feasibility and economic implications of 
meeting the proposed standard levels utilizing CO2 and 
propane refrigerants in the analyses presented in this NOPR and, based 
on these analyses, DOE has tentatively concluded that the benefits of 
the proposed standards to the nation (energy savings, positive NPV of 
customer benefits, customer LCC savings, and emission reductions) would 
outweigh the burdens (loss of INPV for manufacturers).
    DOE also considered more-stringent energy efficiency levels as 
potential standards, and is considering them in this rulemaking. 
However, DOE has tentatively concluded that the potential burdens of 
the more-stringent energy efficiency levels would outweigh the 
projected benefits. Based on consideration of the public comments DOE 
receives in response to this NOPR and related information collected and 
analyzed during the course of this rulemaking effort, DOE may adopt 
energy efficiency levels presented in this NOPR that are either higher 
or lower than the proposed standards, or some combination of levels 
that incorporate the proposed standards in part.

II. Introduction

    The following section briefly discusses the statutory authority 
underlying this proposal, as well as some of the relevant historical 
background related to the establishment of standards for beverage 
vending machines.

A. Authority

    Title III, Part B of the Energy Policy and Conservation Act of 
1975, as amended, (EPCA or the Act), Public Law 94-163 (42 U.S.C. 6291-
6309, as codified) established the Energy Conservation Program for 
Consumer Products Other Than Automobiles, a program covering most major 
household appliances (collectively referred to as ``covered 
products''), which includes the beverage vending machine. (42 U.S.C. 
6291(40)) As part of this program, EPCA directed DOE to prescribe 
energy conservation standards for beverage vending machines. (42 U.S.C. 
6295(v)) In addition, under 42 U.S.C. 6295(m), DOE must periodically 
review its already established energy conservation standards for a 
covered product. DOE is undertaking this rulemaking to meet this EPCA 
requirement.
    Pursuant to EPCA, DOE's energy conservation program for covered 
products consists essentially of four parts: (1) Testing, (2) labeling, 
(3) the establishment of Federal energy conservation standards, and (4) 
certification and enforcement procedures. The Secretary or the Federal 
Trade Commission, as appropriate, may prescribe labeling requirements 
for beverage vending machines. (42 U.S.C. 6294(a)(5)(A)) Subject to 
certain criteria and conditions, DOE is required to develop test 
procedures to measure the energy efficiency, energy use, or estimated 
annual operating cost of each covered product. (42 U.S.C. 6293) 
Manufacturers of covered equipment must use the prescribed DOE test 
procedure as the basis for certifying to DOE that their equipment 
complies with the applicable energy conservation standards adopted 
under EPCA and when making representations to the public regarding the 
energy use or efficiency of that equipment. (42 U.S.C. 6293(c) and 
6295(s)) Similarly, DOE must use these test procedures to determine 
whether the products comply with standards adopted pursuant to EPCA. 
Id.

[[Page 50468]]

    DOE recently updated its test procedure for beverage vending 
machines in a final rule published July 31, 2015. 80 FR 45758 (July 31, 
2015). In that final rule, DOE adopted several amendments and 
clarifications to the DOE test procedure in the new appendix A and B of 
subpart Q of 10 CFR part 431. As specified in the BVM test procedure 
final rule, manufacturers of beverage vending machines would be 
required to use appendix B to demonstrate compliance with any new and 
amended energy conservation standards adopted as a result of this 
rulemaking.
    DOE must follow specific statutory criteria for prescribing new or 
amended standards for covered equipment. As indicated previously, any 
new or amended standard for a covered product 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)) Furthermore, DOE may not adopt any standard that would 
not result in the significant conservation of energy. (42 U.S.C. 
6295(o)(3)) Moreover, DOE may not prescribe a standard: (1) For certain 
products, including beverage vending machines, if no test procedure has 
been established for the product; or (2) if DOE determines, by rule, 
that the standard is not technologically feasible or economically 
justified. (42 U.S.C. 6295(o)(3)(A)-(B))
    DOE, in deciding whether a standard is economically justified, must 
determine, after receiving comments on the proposed standard, whether 
the benefits of the standard exceed its burdens by considering, to the 
maximum extent practicable, the following seven factors:
    1. The economic impact of the standard on manufacturers and 
customers of products subject to the standard;
    2. The savings in operating costs throughout the estimated average 
life of the covered products in the type (or class) compared to any 
increase in the price, initial charges, or maintenance expenses for the 
covered products that are likely to result from the standard;
    3. The total projected amount of energy savings likely to result 
directly from the standard;
    4. Any lessening of the utility or the performance of the covered 
products likely to result from the standard;
    5. The impact of any lessening of competition, as determined in 
writing by the Attorney General, that is likely to result from the 
standard;
    6. The need for national energy conservation; and
    7. Other factors the Secretary of Energy considers relevant. (42 
U.S.C. 6295(o)(2)(B)(i))
    Further, EPCA, as codified, establishes a rebuttable presumption 
that a standard is economically justified if the Secretary finds that 
the additional cost to the customer 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 customer will receive as a result of the 
standard, as calculated under the applicable test procedure. (42 U.S.C. 
6295(o)(2)(B)(iii))
    EPCA, as codified, also contains what is known as an ``anti-
backsliding'' provision, which prevents the Secretary from prescribing 
any amended standard that either increases the maximum allowable energy 
use or decreases the minimum required energy efficiency of a covered 
product. (42 U.S.C. 6295(o)(1)) Also, the Secretary may not prescribe 
an amended or new standard if interested persons have established by a 
preponderance of the evidence that the standard is likely to result in 
the unavailability in the United States of any covered product type (or 
class) of performance characteristics (including reliability), 
features, sizes, capacities, and volumes that are substantially the 
same as those generally available in the United States. (42 U.S.C. 
6295(o)(4))
    Additionally, EPCA specifies requirements when promulgating a 
standard for a type or class of covered product that has two or more 
subcategories. DOE must specify a different standard level than that 
which applies generally to such type or class of products for any group 
of covered products that have the same function or intended use if DOE 
determines that products within such group: (A) Consume a different 
kind of energy from that consumed by other covered products within such 
type (or class); or (B) have a capacity or other performance-related 
feature which other products within such type (or class) do not have 
and which justifies a higher or lower standard. (42 U.S.C. 6294(q)(1)). 
In determining whether a performance-related feature justifies a 
different standard for a group of products, DOE generally considers 
such factors as the utility to the customer of the feature and other 
factors DOE deems appropriate. Id. In a rule prescribing such a 
standard, DOE includes an explanation of the basis on which such a 
higher or lower level was established. (42 U.S.C. 6295(q)(2)) DOE 
followed a similar process in the context of this rulemaking.
    Federal energy conservation requirements generally supersede State 
laws or regulations concerning energy conservation testing, labeling, 
and standards. (42 U.S.C. 6297(a) through (c)) DOE may, however, grant 
waivers of Federal preemption for particular State laws or regulations, 
in accordance with the procedures and other provisions set forth under 
42 U.S.C. 6297(d)).
    Finally, pursuant to EPCA any final rule for new or amended energy 
conservation standards promulgated after July 1, 2010 must address 
standby mode and off mode energy use. (42 U.S.C. 6295(gg)(3)) 
Specifically, when DOE adopts a standard for covered equipment after 
that date, it must, if justified by the criteria for adoption of 
standards under EPCA (42 U.S.C. 6295(o)), incorporate standby mode and 
off mode energy use into the standard, or, if that is not feasible, 
adopt a separate standard for such energy use for that product. (42 
U.S.C. 6295(gg)(3)(A) and (B)) DOE reviewed the operating modes 
available for beverage vending machines and determined that this 
equipment does not have operating modes that meet the definition of 
standby mode or off mode, as established at 42 U.S.C. 6295(gg)(3). 
Specifically, beverage vending machines are typically always providing 
at least one main function--refrigeration. (42 U.S.C. 6295(gg)(1)(A)) 
DOE recognizes that in a unique equipment design, the low power mode 
includes disabling the refrigeration system, while for other equipment 
the low power mode controls only elevate the thermostat set point. 
Because low power modes still include some amount of refrigeration for 
most equipment for the vast majority of equipment, DOE believes that 
such a mode does not constitute a ``standby mode,'' as defined by EPCA, 
for beverage vending machines. Therefore, DOE believes that beverage 
vending machines do not operate under standby and off mode conditions 
as defined in EPCA, and that the energy use of a beverage vending 
machine would be captured in any standard established for active mode 
energy use. As such, the new and amended energy conservation standards 
proposed in this NOPR do not specifically address standby and off mode 
energy consumption for the equipment.
    DOE also reviewed this regulation pursuant to Executive Order 
13563. 76 FR 3821, (January 21, 2011). Executive Order 13563 is 
supplemental to and explicitly reaffirms the principles, structures, 
and definitions governing regulatory review established in Executive 
Order 12866. To the extent permitted by law, agencies are required

[[Page 50469]]

by Executive Order 13563 to: (1) Propose or adopt a regulation only 
upon a reasoned determination that its benefits justify its costs 
(recognizing that some benefits and costs are difficult to quantify); 
(2) tailor regulations to impose the least burden on society, 
consistent with obtaining regulatory objectives, taking into account, 
among other things, and to the extent practicable, the costs of 
cumulative regulations; (3) select, in choosing among alternative 
regulatory approaches, those approaches that maximize net benefits 
(including potential economic, environmental, public health and safety, 
and other advantages; distributive impacts; and equity); (4) to the 
extent feasible, specify performance objectives, rather than specifying 
the behavior or manner of compliance that regulated entities must 
adopt; and (5) identify and assess available alternatives to direct 
regulation, including providing economic incentives to encourage the 
desired behavior, such as user fees or marketable permits, or providing 
information upon which choices can be made by the public.
    DOE emphasizes as well that Executive Order 13563 requires agencies 
to use the best available techniques to quantify anticipated present 
and future benefits and costs as accurately as possible. In its 
guidance, the Office of Information and Regulatory Affairs has 
emphasized that such techniques may include identifying changing future 
compliance costs that might result from technological innovation or 
anticipated behavioral changes. For the reasons stated in the preamble, 
DOE believes that this NOPR is consistent with these principles, 
including the requirement that, to the extent permitted by law, 
benefits justify costs and that net benefits are maximized. Consistent 
with Executive Order 13563, and the range of impacts analyzed in this 
rulemaking, the energy efficiency standards proposed herein by DOE 
achieve maximum net benefits.

B. Background

1. Current Standards
    In a final rule published on August 31, 2009 (henceforth referred 
to as the 2009 BVM final rule), DOE prescribed the current energy 
conservation standards for beverage vending machines. 74 FR 44914 
(August 31, 2009). The 2009 BVM final rule established energy 
conservation standards for Class A and Class B beverage vending 
machines, with a compliance date of August 31, 2012, as shown in Table 
II.1. DOE also established a class of combination machines, but did not 
set standards for combination machines, instead reserving a place for 
possible development of future standards for that equipment.

Table II.1--Energy Conservation Standards for Beverage Vending Machines,
 Prescribed by the 2009 BVM Final Rule--Compliance Date August 31, 2012
------------------------------------------------------------------------
                                                         Maximum daily
             Class                    Definition      energy consumption
------------------------------------------------------------------------
A..............................  Class A means a      0.055 x V + 2.56
                                  refrigerated
                                  bottled or canned
                                  beverage vending
                                  machine that is
                                  fully cooled, and
                                  is not a
                                  combination
                                  vending machine.
B..............................  Class B means any    0.073 x V + 3.16
                                  refrigerated
                                  bottled or canned
                                  beverage vending
                                  machine not
                                  considered to be
                                  Class A, and is
                                  not a combination
                                  vending machine.
Combination....................  Combination means a  [reserved]
                                  refrigerated
                                  bottled or canned
                                  beverage vending
                                  machine that also
                                  has non-
                                  refrigerated
                                  volumes for the
                                  purpose of vending
                                  other, non-
                                  ``sealed
                                  beverage''
                                  merchandise.
------------------------------------------------------------------------

    The 2009 BVM final rule document is currently available at http://www.regulations.gov/#!documentDetail;D=EERE-2006-STD-0125-0005.
2. History of Standards Rulemaking for Beverage Vending Machines
    EPCA directed the Secretary to issue, by rule, no later than August 
8, 2009, energy conservation standards for beverage vending machines. 
(42 U.S.C. 6295(v)) On August 31, 2009, DOE issued a final rule 
establishing performance standards for beverage vending machines to 
complete the first required rulemaking cycle. 74 FR 44914.
    DOE is conducting the current energy conservation standards 
rulemaking pursuant to 42 U.S.C. 6295(m), which requires that within 6 
years of issuing any final rule establishing or amending a standard, 
DOE shall publish either a notice of determination that amended 
standards are not needed or a NOPR proposing amended standards.
    In initiating this rulemaking, DOE prepared a framework document, 
``Energy Conservation Standards Rulemaking Framework Document for 
Refrigerated Beverage Vending Machines'' (framework document), which 
describes the procedural and analytical approaches DOE anticipates 
using to evaluate energy conservation standards for beverage vending 
machines. DOE published a notice that announced both the availability 
of the framework document and a public meeting to discuss the proposed 
analytical framework for the rulemaking. That notice also invited 
written comments from the public. 78 FR 33262 (June 4, 2013). This 
document is available at http://www.regulations.gov/#!docketDetail;D=EERE-2013-BT-STD-0022
    DOE held the framework public meeting on June 20, 2013, at which it 
(1) presented the contents of the framework document; (2) described the 
various analyses DOE planned to conduct during the rulemaking; (3) 
sought comments from interested parties on these subjects; and (4) in 
general, sought to inform interested parties about, and facilitate 
their involvement in, the rulemaking. Major issues discussed at the 
public meeting included: (1) Equipment classes; (2) analytical 
approaches and methods used in the rulemaking; (3) impact of standards 
and burden on manufacturers; (4) technology options; (5) distribution 
channels and shipments; (6) impacts of outside regulations; and (7) 
environmental issues. At the meeting and during the comment period on 
the framework document, DOE received many comments that helped it 
identify and resolve issues pertaining to beverage vending machines 
relevant to this rulemaking.
    DOE then gathered additional information and performed preliminary 
analyses to help review standards for this equipment. This process 
culminated in DOE publishing a notice to announce the availability of 
the preliminary analysis TSD and a public meeting to discuss the 
preliminary analysis results. 79 FR 46379 (August 8, 2014). In the 
preliminary analysis, DOE discussed and requested comment on

[[Page 50470]]

the tools and methods DOE used in performing its preliminary analysis, 
as well as analyses results. DOE also sought comments concerning other 
relevant issues that could affect potential amended standards for 
beverage vending machines. Id.
    The preliminary analysis provided an overview of DOE's technical 
and economic analyses supporting new and amended standards for beverage 
vending machines, discussed the comments DOE received in response to 
the framework document, and addressed issues raised by those comments. 
The preliminary analysis TSD also described the analytical framework 
that DOE used (and continues to use) in considering new and amended 
standards for beverage vending machines, including a description of the 
methodology, the analytical tools, and the relationships between the 
various analyses that are part of this rulemaking. Additionally, the 
preliminary analysis TSD presented in detail each analysis that DOE had 
performed for this equipment up to that point, including descriptions 
of inputs, data sources, methodologies, and results. These analyses 
included: (1) The market and technology assessment; (2) the screening 
analysis; (3) the engineering analysis; (4) the energy use analysis; 
(5) the markups analysis; (6) the LCC analysis; (7) the PBP analysis; 
(8) the shipments analysis; (9) the national impact analysis (NIA); and 
(10) a preliminary manufacturer impact analysis (MIA).
    The preliminary TSD that presents the methodology and results of 
each of these analyses is available at: http://www.regulations.gov/#!docketDetail;D=EERE-2013-BT-STD-0022. In this NOPR, DOE is presenting 
additional and revised analysis in all of these areas.
    The public meeting to review the preliminary analysis took place on 
September 16, 2014 (preliminary analysis public meeting). At the 
preliminary analysis public meeting, DOE presented the methodologies 
and results of the analyses prescribed in the preliminary analysis TSD. 
Comments received in response to the preliminary analysis have helped 
DOE identify and resolve issues related to the preliminary analyses and 
have helped refine the analyses presented in this NOPR. DOE discusses 
and responds to the comments received in response to the preliminary 
analysis in section IV of this NOPR.

III. General Discussion

    DOE is proposing amended standards for Class A and Class B beverage 
vending machines. DOE is also proposing to amend the definition for 
Class A equipment to more unambiguously differentiate Class A and Class 
B beverage vending machines. In addition, DOE is proposing to amend the 
definition of combination beverage machine, expand the combination 
vending machine equipment category into Combination A and Combination B 
beverage vending machine classes, and promulgate new standards for 
those classes. In the subsequent sections, DOE discusses the scope of 
coverage, test procedure, compliance dates, technical feasibility, 
energy savings, and economic justification of the proposed standards.

A. Equipment Classes and Scope of Coverage

    EPCA defines a beverage vending machine as ``a commercial 
refrigerator \18\ that cools bottled or canned beverages and dispenses 
the bottled or canned beverages on payment.'' (42 U.S.C. 6291(40))
---------------------------------------------------------------------------

    \18\ EPCA defines commercial refrigerator, freezer, and 
refrigerator-freezer at 42 U.S.C. 6311(9)(A).
---------------------------------------------------------------------------

    When evaluating and establishing energy conservation standards, DOE 
divides covered equipment into equipment classes by the type of energy 
used or by capacity or other performance-related features that 
justifies a different standard. In making a determination whether a 
performance-related feature justify differing standards, DOE must 
consider such factors as the utility to the customer of the feature and 
other factors DOE determines are appropriate. (42 U.S.C. 6295(q))
    In the 2009 BVM final rule, DOE determined that unique energy 
conservation standards were warranted for Class A and Class B beverage 
vending machines and added the following definitions to 10 CFR 431.292 
to differentiate such equipment:
    Class A means a beverage vending machine that is fully cooled, and 
is not a combination vending machine.
    Class B means any beverage vending machine not considered to be 
Class A, and is not a combination vending machine.
    74 FR 44914,44967 (August 31, 2009).
    DOE differentiated Class A and Class B beverage vending machines 
based on whether the refrigerated volume (V) of equipment was fully 
cooled, as DOE determined that this was the most significant criteria 
affecting energy consumption. Id. at 44924.
    The 2009 BVM final rule also established a definition for 
combination vending machine at 10 CFR 431.292.
    Combination vending machine means a beverage vending machine that 
also has non-refrigerated volumes for the purpose of vending other, 
non-``sealed beverage'' merchandise.
    74 FR 44914, 44967 (August 31, 2009).
    DOE considered the definition of beverage vending machine broad 
enough to include any vending machine that cools at least one bottled 
or canned beverage and dispenses it upon payment. DOE elected to 
establish combination machines as a separate equipment class because 
such machines may be challenged by component availability and such 
machines have a distinct utility that limits their energy efficiency 
improvement potential compared to Class A and B beverage vending 
machines. However, DOE did not establish standards for combination 
machines in the 2009 BVM final rule. Id. at 44920.
    While DOE's existing definitions of Class A and Class B equipment 
distinguish equipment based on whether or not the refrigerated volume 
is ``fully cooled,'' DOE regulations have never defined the term 
``fully cooled.'' In the framework document, DOE suggested a definition 
for ``fully cooled'' and further refined that definition in the BVM 
test procedure NOPR DOE published on August 11, 2014 (2014 BVM test 
procedure NOPR). 79 FR 46908, 46934. In response to comments received 
on both the framework document and 2014 BVM test procedure NOPR, DOE is 
proposing in this NOPR, to modify the definition of Class A to more 
unambiguously differentiate Class A and Class B equipment. 
Specifically, DOE proposes to use the presence of a transparent front 
on Class A beverage vending machines as a key distinguishing 
characteristic between Class A and Class B equipment and proposes to 
adopt that distinction as part of the Class A equipment class 
definition.
    In this NOPR, DOE is also proposing to amend the definition of 
combination vending machine to better align with industry definitions 
and provide more clarity regarding the physical characteristics of the 
``refrigerated'' and ``non-refrigerated'' volumes, or compartments. In 
addition, DOE is proposing to expand the class of combination vending 
machines established in the 2009 BVM final rule to differentiate 
Combination A and Combination B beverage vending machines based on 
similar criteria used to distinguish Class A and Class B beverage 
vending machines (i.e., the presence of a transparent front). See 
section IV.A.1 of this NOPR for more discussion on the equipment 
classes addressed in this NOPR.

[[Page 50471]]

B. Test Procedure

    The estimates of energy use and energy saving potential considered 
in the NOPR analysis are based on the performance of beverage vending 
machines when tested in accordance with appendix B of the recently 
amended DOE BVM test procedure located at 10 CFR 431.294. (See sections 
IV.B, IV.C, and IV.E of this NOPR for more discussion.) On July 31, 
2015, DOE published an amended test procedure for beverage vending 
machines, referred to as the 2015 BVM test procedure final rule in the 
Federal Register. 80 FR 45758 (July 31, 2015). In the 2015 BVM test 
procedure final rule, DOE adopted several minor amendments to clarify 
DOE's test procedure for beverage vending machines and also adopted 
several amendments related to the impact of low power modes on the 
measured daily energy consumption of BVM models. 80 FR 45758 (July 31, 
2015). DOE also reorganized the DOE test procedure into two new 
appendices, appendix A and appendix B to subpart Q to part 431 of Title 
10 of the Code of Federal Regulations and adopted a minor change to the 
certification and reporting requirements for beverage vending machines 
at 10 CFR 429.52(b)(2) and 10 CFR 431.296.
    In general, the DOE BVM test procedure, as amended, incorporates by 
reference American National Standards Institute (ANSI)/American Society 
of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) 
Standard 32.1-2010 to describe the measurement equipment, test 
conditions, and test protocol applicable to testing beverage vending 
machines. DOE's test procedure also specifies that the measurement of 
``refrigerated volume'' of beverage vending machines must be in 
accordance with the methodology specified in Appendix C of ANSI/ASHRAE 
Standard 32.1-2010.
    In the 2015 BVM test procedure final rule, DOE also adopted several 
new clarifying amendments including:
    (1) Eliminating testing at the 90 [deg]F ambient test condition;
    (2) clarifying the test procedure for combination vending machines;
    (3) clarifying the requirements for loading BVM models under the 
DOE test procedure;
    (4) clarifying the specifications of the test package;
    (5) clarifying the next-to-vend beverage temperature test 
condition;
    (6) specifying placement of thermocouples during the DOE test 
procedure;
    (7) establishing testing provisions at the lowest application 
product temperature;
    (8) clarifying certification and reporting requirements; and
    (9) clarifying the treatment of certain accessories when conducting 
the DOE test procedure.
    These test procedure amendments are all reflected in DOE's new 
appendix A, which became effective August 31, 2015 and must be used by 
manufacturers for representations and to demonstrate compliance with 
the energy conservation standards beginning January 27, 2016. 80 FR 
45758 (July 31, 2015).
    In addition to the amendments proposed in appendix A, appendix B 
includes provisions for testing low power modes. The test procedure 
found in appendix B is to be used in conjunction with any amended 
standards established as a result of this rulemaking. As such, 
manufacturers are not required to use appendix B until the compliance 
date of any new or amended standards. Id.

C. Compliance Dates

    The new and amended standards proposed in this NOPR, if adopted, 
would apply to equipment manufactured beginning on the date 3 years 
after the publication date of any final rule in the Federal Register. 
DOE anticipates that any final rule would be published in 2016, 
resulting in a compliance date in 2019. In its analysis, DOE used a 30-
year analysis period of 2019-2048.

D. Technological Feasibility

1. General
    In each energy conservation standards rulemaking, DOE conducts a 
screening analysis based on information gathered on all current 
technology options and prototype designs that could improve the 
efficiency of the products or equipment that are the subject of the 
rulemaking. As the first step in such an analysis, DOE develops a list 
of technology options for consideration in consultation with 
manufacturers, design engineers, and other interested parties. DOE then 
determines which of those means for improving efficiency are 
technologically feasible. DOE considers technologies incorporated in 
commercially available products or in working prototypes to be 
technologically feasible. 10 CFR part 430, subpart C, appendix A, 
section 4(a)(4)(i)
    After DOE determined that particular technology options are 
technologically feasible, it further evaluates each technology option 
in light of the following additional screening criteria: (1) 
Practicability to manufacture, install, and service; (2) adverse 
impacts on product utility or availability; and (3) adverse impacts on 
health or safety. 10 CFR part 430, subpart C, appendix A, section 
4(a)(4)(ii)-(iv) Section IV.B of this NOPR discusses the results of the 
screening analysis for beverage vending machines, particularly the 
designs DOE considered, those it screened out, and those that are the 
basis for the TSLs in this rulemaking. For further details on the 
screening analysis for this rulemaking, see chapter 4 of the NOPR TSD.
2. Maximum Technologically Feasible Levels
    When DOE proposes to adopt an amended standard for a type or class 
of covered product, it must determine the maximum improvement in energy 
efficiency or maximum reduction in energy use that is technologically 
feasible for such product. (42 U.S.C. 6295(p)(1)) Accordingly, in the 
engineering analysis, DOE determined the maximum technologically 
feasible (``max-tech'') improvements in energy efficiency for beverage 
vending machines, using the design parameters for the most efficient 
equipment available on the market or in working prototypes. The max-
tech levels that DOE determined for this rulemaking are described in 
section IV.C.3 of this NOPR and in chapter 5 of the NOPR TSD.

E. Energy Savings

1. Determination of Savings
    For each trial standard level (TSL), DOE projected energy savings 
from application of the TSL to equipment purchased in the 30-year 
period that begins in the year of compliance with new and amended 
standards for beverage vending machines (2019-2048).\19\ The savings 
are measured over the entire lifetime of equipment purchased in the 30-
year analysis period. DOE quantified the energy savings attributable to 
each TSL as the difference in energy consumption between each standards 
case and the no-new-standards case. The no-new-standards case 
represents a projection of energy consumption that reflects how the 
market for a product would likely evolve in the absence of new and

[[Page 50472]]

amended mandatory energy conservation standards.
---------------------------------------------------------------------------

    \19\ Each TSL is composed of specific efficiency levels for each 
product class. The TSLs considered for this NOPR are described in 
section V.A. DOE also conducted a sensitivity analysis that 
considers impacts for products shipped in a 9-year period.
---------------------------------------------------------------------------

    DOE used its NIA spreadsheet models to estimate energy savings from 
new and amended standards. The NIA spreadsheet model (described in 
section IV.G of this NOPR) calculates savings in site energy, which is 
the energy directly consumed by products at the locations where they 
are used. Based on the site energy, DOE calculates national energy 
savings (NES) in terms of primary energy savings at the site or at 
power plants, and also in terms of full-fuel-cycle (FFC) energy 
savings. The FFC metric includes the energy consumed in extracting, 
processing, and transporting primary fuels (i.e., coal, natural gas, 
petroleum fuels), and thus presents a more complete picture of the 
impacts of energy conservation standards.\20\ DOE's approach is based 
on the calculation of an FFC multiplier for each of the energy types 
used by covered products or equipment. For more information on FFC 
energy savings, see section IV.G.3.a of this notice.
---------------------------------------------------------------------------

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

2. Significance of Savings
    To adopt standards for a covered product, DOE must determine that 
such action would result in ``significant'' energy savings. (42 U.S.C. 
6295(o)(3)(B)) Although the term ``significant'' is not defined in the 
Act, the U.S. Court of Appeals for the District of Columbia Circuit, in 
Natural Resources Defense Council v. Herrington, 768 F.2d 1355, 1373 
(D.C. Cir. 1985), indicated that Congress intended ``significant'' 
energy savings in the context of EPCA to be savings that were not 
``genuinely trivial.'' The energy savings for the proposed standards 
(presented in section V.C of this NOPR) are nontrivial; therefore, DOE 
considers them ``significant'' within the meaning of section 325 of 
EPCA.

F. Economic Justification

1. Specific Criteria
    As noted previously, EPCA provides seven factors to be evaluated in 
determining whether a potential energy conservation standard is 
economically justified. (42 U.S.C. 6295(o)(2)(B)(i)) The following 
sections discuss how DOE addressed each of those seven factors in this 
rulemaking.
a. Economic Impact on Manufacturers and Customers
    In determining the impacts of a potential amended standard on 
manufacturers, DOE conducts an MIA, as discussed in section IV.I.3 of 
this NOPR, DOE first uses an annual cash-flow approach to determine the 
quantitative impacts. This step incorporates both a short-term 
assessment--based on the cost and capital requirements during the 
period between when a regulation is issued and when entities must 
comply with the regulation--and a long-term assessment over a 30-year 
period. The industry-wide impacts analyzed include: (1) INPV, which 
values the industry on the basis of expected future cash flows; (2) 
cash flows by year; (3) changes in revenue and income; and (4) other 
measures of impact, as appropriate. Second, DOE analyzes and reports 
the impacts on different types of manufacturers, such as impacts on 
small manufacturers. Third, DOE considers the impact of standards on 
domestic manufacturer employment and manufacturing capacity, as well as 
the potential for standards to result in plant closures and loss of 
capital investment, as discussed in section IV.I of this NOPR. Finally, 
DOE takes into account cumulative impacts of various DOE regulations 
and other regulatory requirements on manufacturers.
    For individual customers, measures of economic impact include the 
changes in LCC and PBP associated with new or amended standards. These 
measures are discussed further in the following section. For customers 
in the aggregate, DOE also calculates the national NPV of the economic 
impacts applicable to a particular rulemaking. DOE also evaluates the 
LCC impacts of potential standards on identifiable subgroups of 
customers that may be affected disproportionately by a national 
standard.
b. Savings in Operating Costs Compared To Increase in Price (Life-Cycle 
Costs)
    EPCA requires DOE to consider the savings in operating costs 
throughout the estimated average life of the covered product compared 
to any increase in the price of the covered product that are likely to 
result from the imposition of a standard. (42 U.S.C. 
6295(o)(2)(B)(i)(II)) DOE conducts this comparison in its LCC and PBP 
analysis.
    The LCC is the sum of the purchase price of a piece of equipment 
(including its installation) and the operating expense (including 
energy, maintenance, and repair expenditures) discounted over the 
lifetime of the equipment. The LCC analysis requires a variety of 
inputs such as equipment prices, equipment energy consumption, energy 
prices, maintenance and repair costs, equipment lifetime, and customer 
discount rates. To account for uncertainty and variability in specific 
inputs, such as equipment lifetime and discount rate, DOE uses a 
distribution of values, with probabilities attached to each value. For 
its analysis, DOE assumes that customers will purchase the covered 
equipment in the first year of compliance with amended standards.
    The PBP is the estimated amount of time (in years) it takes 
consumers to recover the increased purchase cost (including 
installation) of a more-efficient product through lower operating 
costs. DOE calculates the PBP by dividing the change in purchase cost 
due to a more-stringent standard by the change in annual operating cost 
for the year that standards are assumed to take effect.
    The LCC savings and PBP analysis for the considered efficiency 
levels are calculated relative to the case that reflects projected 
market trends in the absence of amended standards. DOE identifies the 
percentage of customers estimated to receive LCC savings or experience 
an LCC increase, in addition to the average LCC savings associated with 
a particular standard level. DOE's LCC analysis is discussed in further 
detail in section IV.F of this NOPR.
c. Energy Savings
    Although significant conservation of energy is a separate statutory 
requirement for adopting an energy conservation standard, EPCA requires 
DOE, in determining the economic justification of a standard, to 
consider the total projected energy savings that are expected to result 
directly from the standard. (42 U.S.C. 6295(o)(2)(B)(i)(III)) As 
discussed in more detail in section IV.G.3 of this NOPR, DOE uses 
spreadsheet models to project national energy savings.
d. Lessening of Utility or Performance of Equipment
    In establishing classes of products, and in evaluating design 
options and the impact of potential standard levels, DOE evaluates 
potential standards that would not lessen the utility or performance of 
the considered equipment. (42 U.S.C. 6295(o)(2)(B)(i)(IV)) Based on 
data available to DOE, DOE determined that the standards proposed in 
this NOPR would not reduce the utility or performance of the products 
under consideration in this rulemaking.
e. Impact of Any Lessening of Competition
    EPCA directs DOE to consider the impact of any lessening of 
competition, as determined in writing by the

[[Page 50473]]

Attorney General, that is likely to result from a proposed standard. 
(42 U.S.C. 6295(o)(2)(B)(i)(V)) It also directs the Attorney General of 
the United States (Attorney General) to determine the impact, if any, 
of any lessening of competition likely to result from a proposed 
standard and to transmit such determination to the Secretary within 60 
days of the publication of a proposed rule, together with an analysis 
of the nature and extent of the impact. (42 U.S.C. 6295(o)(2) (B)(ii)) 
DOE will transmit a copy of this proposed rule to the Attorney General 
with a request that the Department of Justice (DOJ) provide its 
determination on this issue. DOE will publish and respond to the 
Attorney General's determination in the final rule.
    DOE considers any lessening of competition that is likely to result 
from amended standards. The Attorney General determines the impact, if 
any, of any lessening of competition likely to result from a proposed 
standard, and transmits such determination to the Secretary, together 
with an analysis of the nature and extent of such impact.
    To assist the Attorney General in making such determination, DOE 
will provide DOJ with copies of this NOPR and the TSD for review. DOE 
will consider DOJ's comments on the proposed rule in preparing the 
final rule, and DOE will publish and respond to DOJ's comments in that 
document. DOE invites comment from the public regarding the competitive 
impacts that are likely to result from this proposed rule. In addition, 
stakeholders may also provide comments separately to DOJ regarding 
these potential impacts. See ADDRESSES section for information to send 
comments to DOJ.
f. Need for National Energy Conservation
    DOE also considers the need for national energy conservation in 
determining whether a new or amended standard is economically 
justified. (42 U.S.C. 6295(o)(2)(B)(i)(VI)) In evaluating the need for 
national energy conservation, DOE expects that the energy savings from 
the proposed new and amended standards are likely to provide 
improvements to the security and reliability of the nation's energy 
system. (42 U.S.C. 6295(o)(2)(B)(i)(VI)) Reductions in the demand for 
electricity also may result in reduced costs for maintaining the 
reliability of the nation's electricity system. DOE conducts a utility 
impact analysis to estimate how standards may affect the nation's 
needed power generation capacity, as discussed in section IV.L of this 
NOPR.
    The proposed new and amended standards are also likely to result in 
environmental benefits in the form of reduced emissions of air 
pollutants and greenhouse gases associated with energy production and 
use. DOE conducts an emissions analysis to estimate how standards may 
affect these emissions, as discussed in section IV.J of this NOPR. DOE 
reports the emissions impacts from each TSL it considered in section 
V.A of this NOPR. DOE also estimates the economic value of emissions 
reductions resulting from the considered TSLs, as discussed in section 
IV.K of this NOPR.
g. 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)) 
To the extent interested parties submit any relevant information 
regarding economic justification that does not fit into the other 
categories described above, DOE could consider such information under 
``other factors.''
2. Rebuttable Presumption
    EPCA sets forth a rebuttable presumption that an energy 
conservation standard is economically justified if the additional cost 
to the consumer of a product that meets the standard is less than three 
times the value of the first year's energy savings resulting from the 
standard, as calculated under the applicable DOE test procedure. (42 
U.S.C. 6295(o)(2)(B)(iii)) DOE's LCC and PBP analysis generate values 
used to calculate the effects that proposed energy conservation 
standards would have on the payback period for customers. These 
analyses include, but are not limited to, the 3-year payback period 
contemplated under the rebuttable-presumption test.
    In addition, DOE routinely conducts an economic analysis that 
considers the full range of impacts to customers, manufacturers, the 
nation, and the environment. (42 U.S.C. 6295(o)(2)(B)(i)) The results 
of this analysis serve as the basis for DOE's evaluation of the 
economic justification for a potential standard level (thereby 
supporting or rebutting the results of any preliminary determination of 
economic justification). The rebuttable presumption payback calculation 
is discussed in section V.B.1.c of this NOPR.

IV. Methodology and Discussion of Related Comments

    This section addresses the analyses DOE performed for this 
rulemaking. In the subsections, DOE discusses each component of the 
analysis and summarizes and responds to comments received in response 
to the preliminary analysis pertaining to each of the analyses DOE 
conducts.

A. Market and Technology Assessment

    DOE develops information in the market and technology assessment 
that provides an overall picture of the market for the equipment 
considered, including the nature of the equipment, the industry 
structure, and market characteristics for the equipment. This activity 
consists of both quantitative and qualitative efforts based primarily 
on publicly available information.
    DOE reviewed relevant literature and interviewed manufacturers to 
develop an overall picture of the BVM market in the United States. 
Industry publications, trade journals, government agencies, and trade 
organizations provided the bulk of the information, including (1) 
manufacturers and their market shares, (2) shipments by equipment type, 
(3) detailed equipment information, (4) industry trends, and (5) 
existing regulatory and non-regulatory equipment efficiency improvement 
initiatives. The analysis developed as part of the market and 
technology assessment is described in chapter 3 of the NOPR TSD.
1. Equipment Classes
    In this NOPR, DOE is proposing to amend the energy conservation 
standards established by the 2009 BVM final rule for the Class A and 
Class B beverage vending machines. DOE believes that Class A and Class 
B equipment classes continue to provide different utility to customers 
and have different energy profiles and applicable design options, as 
described below. As such, DOE believes it is appropriate to separately 
analyze and regulate Class A and Class B equipment. In addition, as 
noted previously, DOE is proposing to amend the definition for Class A 
equipment to more clearly and unambiguously describe the equipment 
characteristics that make up that class and differentiate it from Class 
B equipment, as well as to amend the definition of combination vending 
machine to better align with industry definitions and provide more 
clarity regarding the physical characteristics of the ``refrigerated'' 
and ``non-

[[Page 50474]]

refrigerated'' volumes, or compartments.\21\
---------------------------------------------------------------------------

    \21\ The definition of combination vending machine established 
by DOE in the 2009 BVM final rule referenced the presence of ``non-
refrigerated volumes'' to differentiate combination vending machines 
from other styles of refrigerated bottled or canned beverage vending 
machines. In the amended definition for combination vending machine 
DOE is proposing in this NOPR, DOE is referring instead to 
``compartments,'' which DOE believes captures the same intent as the 
term ``volumes'' in the previous definition, but better indicates 
that the ``volumes'' are to be physically separate.
---------------------------------------------------------------------------

    DOE is also proposing to define two new equipment classes at 10 CFR 
431.292, Combination A and Combination B, as well as establish new 
energy conservation standards for those equipment classes. In the 2009 
BVM final rule, DOE also established a definition for combination 
vending machines but elected not to set standards for them at that 
time. 74 FR 44914, 44920 (August 31, 2009). In considering standards 
for combination vending machines as part of this rulemaking, similar to 
Class A and Class B, DOE determined that the method of cooling and 
presence of a transparent front are important differentiating features 
for combination equipment.
    Table IV.1 summarizes the new and amended definitions for the four 
equipment classes analyzed in this NOPR. The definitions, as well as 
the general characteristics and differentiating features, of the four 
equipment classes proposed in this NOPR are described in the following 
subsections.

       Table IV.1--Equipment Classes for Beverage Vending Machines
------------------------------------------------------------------------
                 Class                              Definition
------------------------------------------------------------------------
A......................................  A refrigerated bottled or
                                          canned beverage vending
                                          machine that is not a
                                          combination beverage vending
                                          machine and in which 25
                                          percent or more of the surface
                                          area on the front side of the
                                          beverage vending machine is
                                          transparent
B......................................  Any refrigerated bottled or
                                          canned beverage vending
                                          machine that is not considered
                                          to be Class A and is not a
                                          combination vending machine
Combination A..........................  A combination vending machine
                                          where 25 percent or more of
                                          the surface area on the front
                                          side of the beverage vending
                                          machine is transparent
Combination B..........................  A combination vending machine
                                          that is not considered to be
                                          Combination A
------------------------------------------------------------------------

a. Class A and Class B Beverage Vending Machines
    Class A and Class B equipment are currently differentiated based on 
the cooling mechanism employed by the different equipment. The 
distinguishing criterion between these two equipment classes is whether 
the equipment is fully cooled. 10 CFR 431.292.
    At the time the definitions of Class A and Class B were 
established, DOE did not define the term ``fully cooled.'' In the 
framework document, DOE suggested defining ``fully cooled'' to mean a 
beverage vending machine within which each item in the beverage vending 
machine is brought to and stored at temperatures that fall within 
2[emsp14][deg]F of the average beverage temperature, which 
is the average of the temperatures of all the items in the next-to-vend 
position for each selection.
    In response to the framework document, DOE received many comments 
from interested parties regarding the definition of ``fully cooled.'' 
DOE proposed an alternative definition of ``fully cooled'' in the BVM 
test procedure NOPR that described ``fully cooled'' as ``a condition in 
which the refrigeration system of a beverage vending machine cools 
product throughout the entire refrigerated volume of a machine instead 
of being directed at a fraction (or zone) of the refrigerated volume as 
measured by the average temperature of the standard test packages in 
the furthest from the next-to-vend positions being no more than 
10[emsp14][deg]F above the integrated average temperature of the 
standard test packages.'' 79 FR 46908, 46934 (August 11, 2014). To 
accompany DOE's proposed definition of ``fully cooled,'' the 2014 BVM 
test procedure NOPR also proposed to adopt an optional test method that 
could be used to quantitatively differentiate between Class A and Class 
B equipment. 79 FR at 46917.
    In response to the definition of ``fully cooled'' proposed in the 
BVM test procedure NOPR, several interested parties recommended that 
DOE consider an alternative differentiation between equipment types to 
better capture differences in energy consumption. Interested parties 
also suggested that the presence of a transparent or opaque front and/
or the arrangement of products within the machine could be potential 
differentiating criteria that are more appropriate and consistent with 
the differentiation between equipment configurations applied in 
industry. Specifically, the California investor-owned utilities (CA 
IOUs), including Pacific Gas & Electric, Southern California Gas 
Company, Southern California Edison, and San Diego Gas and Electric, 
recommended that DOE consider an alternate differentiation between 
equipment types to better capture differences in energy consumption, 
and they suggested the consideration of the presence of a glass or 
opaque front and the arrangement of products within the machine. 
(Docket No. EERE-2013-BT-TP-0045, CA IOUs, No. 0005 at p. 1) Similarly, 
Sanden Vendo America Inc. (SVA) recommended that the product 
configuration would be more appropriate and consistent with the 
differentiation between equipment configurations applied in industry. 
(Docket No. EERE-2013-BT-TP-0045, SVA, Public Meeting Transcript, No. 
0004 at p. 52).
    Many interested parties also commented on the difficulty of 
establishing a quantitative temperature threshold to differentiate 
fully cooled equipment from non-fully cooled equipment that would be 
applicable across all BVM models. Specifically, Automated Merchandising 
Systems, Inc. (AMS) commented that a 10 [deg]F temperature differential 
lacks empirical data. (Docket No. EERE-2013-BT-TP-0045, AMS, Public 
Meeting Transcript, No. 0004 at p. 54) The Coca-Cola Company (Coca-
Cola) stated that they believe an 8 [deg]F temperature threshold was 
acceptable to differentiate Class A, and they added that Class B 
machines sometimes vary by as much as 18 [deg]F, depending on products 
vended and the dimensions of the machine. (Docket No. EERE-2013-BT-TP-
0045, Coca-Cola, No. 0010 at p. 4) Coca-Cola also stated that the DOE 
expectation for all product temperatures to be maintained within a 2 
[deg]F window for fully-cooled beverage vending machine was 
unrealistic. (Docket No. EERE-2013-BT-TP-0045, Coca-Cola, No. 0010 at 
p. 4) SVA commented that 10 [deg]F may be acceptable but stated that 
using physical differentiating characteristics, such as ``shelf'' 
versus ``stack'' style machines, may be more straightforward. (Docket 
No. EERE-2013-BT-TP-0045, SVA, No. 0008 at p. 2) The Northwest Energy 
Efficiency Alliance (NEEA) stated that many Class B vending machines 
typically had a temperature difference of much less than 10 [deg]F, and 
urged DOE to conduct further investigation. (Docket No. EERE-2013-BT-
TP-0045, NEEA, No. 0009 at p. 1)
    Regarding the additional fully cooled verification test procedure, 
SVA stated that additional testing to confirm a model was fully cooled 
created additional burden. (Docket No. EERE-2013-BT-TP-0045, SVA, No. 
0008 at p.

[[Page 50475]]

2) SVA and Coca-Cola also both noted that the introduction of 
additional thermocouples and the need to run additional thermocouple 
wire may introduce additional points of air leakage, interfere with 
proper airflow, and thereby affect the results of the test. (Docket No. 
EERE-2013-BT-TP-0045, SVA, No. 0008 at p. 2; Docket No. EERE-2013-BT-
TP-0045, Coca-Cola, No. 0010 at p. 4)
    In light of the extent and scope of the comments received in 
response to the amendments proposed in the 2014 BVM test procedure NOPR 
regarding the proposed definition of fully cooled, alternative criteria 
for differentiating Class A and Class B equipment, and the optional 
fully cooled verification test protocol, DOE wished to further consider 
potential classification options and criteria suggested by interested 
parties, as well as provide interested parties an additional 
opportunity to provide feedback on any proposals to amend the equipment 
class definitions. As such, DOE is responding to the comments presented 
by interested parties in response to the 2014 BVM test procedure NOPR 
and proposing an alternative approach to differentiate Class A and 
Class B equipment in this BVM energy conservation standard NOPR.
    In considering the definition of ``fully cooled'' and the best way 
to clarify the differentiation of Class A and Class B equipment, DOE 
considered all the comments submitted by interested parties, as well as 
the manner in which equipment is currently categorized by DOE and 
industry. In general, DOE agrees with the comments from interested 
parties in that, in practice, the cooling method is often correlated 
with the product configuration and presence of a transparent front. 
Specifically, beverage vending machines with horizontal product rows 
are typically fully cooled and have a transparent front, while beverage 
vending machines with vertical product stacks are typically zone cooled 
and are fully opaque. This correlation occurs due to the inherent 
utility of a fully cooled beverage vending machine, which was 
acknowledged in DOE's proposed definition of ``fully cooled'' (79 FR 
46915-46917 (August 11, 2014)) and in the 2009 BVM final rule (74 FR 
44914, 44924 (August 31, 2009)). Moreover, DOE is not aware of any 
instances of BVM models that are not fully cooled but which have a 
transparent front and/or horizontal product configuration or BVM models 
that are fully cooled but which have and opaque front and/or vertical 
stacks. Thus DOE believes that, based on current equipment designs, 
using criteria of: (a) Whether the equipment is fully cooled, (b) 
whether the equipment has a transparent front; or (c) whether the 
vertical or horizontal product arrangement is horizontal or vertical, 
would result in virtually identical equipment categorization.
    DOE also notes that, since DOE's engineering analysis represents 
typical, representative equipment designs for each equipment class (see 
section IV.C), the cooling method, the presence of a transparent or 
opaque front, and product arrangement are correlated in DOE's 
engineering analysis, as shown in Table IV.2.

    Table IV.2--Equipment Classes Design Parameters for Beverage Vending Machines Modeled in the Engineering
                                                    Analysis
----------------------------------------------------------------------------------------------------------------
                                                              Transparent or opaque        Vendible product
               Class                     Cooling method               front                  orientation
----------------------------------------------------------------------------------------------------------------
A..................................  Fully cooled..........  Transparent front.....  Horizontal product rows.
B..................................  Zone cooled...........  Opaque front..........  Vertical product stacks.
Combination A......................  Fully cooled..........  Transparent front.....  Horizontal product rows.
Combination B......................  Zone cooled...........  Opaque front..........  Vertical product stacks.
----------------------------------------------------------------------------------------------------------------

    DOE agrees with CA IOU and SVA's comments that alternative 
criteria, such as the presence of glass or the product configuration, 
may offer a more clear and unambiguous approach to differentiate Class 
A and Class B equipment than the cooling method, while continuing to 
preserve the same utility in each class of equipment. Specifically, DOE 
believes that the presence of a transparent front that allows a 
customer to view and select from all of the various next-to-vend 
product selections, which are all maintained at the appropriate vending 
temperature, is inherently related to the functionality of a beverage 
vending machine being ``fully cooled.'' DOE also notes that, 
theoretically, the presence of glass has a larger impact on the energy 
consumption of a given beverage vending machine than whether the 
equipment is fully cooled or whether the equipment has vertical or 
horizontal product arrangement. DOE believes that defining equipment 
classes based on a feature that is related to the unique utility and 
which has the largest impact on the energy use of the equipment is the 
most appropriate criterion to use to ensure that the utility provided 
by Class A equipment is maintained in the marketplace. In addition, 
since DOE believes that the cooling method and the presence of a glass 
or solid front is correlated in practice. As such, DOE believes that 
clarifying DOE's equipment class definitions using such an unambiguous 
product characteristic would not result in any changes to the 
classification of BVM models that are currently available on the 
market. 74 FR 44914, 44924 (August 31, 2009).
    In light of this, DOE is proposing to amend the definition of Class 
A beverage vending machines to read as follows:
    Class A means a refrigerated bottled or canned beverage vending 
machine that is not a combination beverage vending machine and in which 
25 percent or more of the surface area on the front side of the 
beverage vending machine is transparent.
    In this BVM energy conservation standard NOPR, DOE is not proposing 
to substantively modify the definition of Class B, since Class B is 
defined as the mutually exclusive converse of Class A. However, DOE is 
proposing to make a minor editorial change to include the term ``that'' 
to improve readability of the definition. That is, a Class B beverage 
vending machine would be defined as a refrigerated bottled or canned 
beverage vending machine that: (1) Is not considered to be Class A; and 
(2) is not a combination vending machine.
    DOE notes that the proposed definition of Class A is similar to and 
consistent with DOE's classification and definition of ``closed 
transparent'' and ``closed solid'' commercial refrigeration equipment. 
10 CFR 431.62.
    In addition to the amended definition for Class A beverage vending 
machines, which DOE is proposing based on comments from interested 
parties, DOE notes that a quantitative criteria is necessary to clearly 
determine whether a given BVM model ``has a transparent front.'' As 
such, DOE is also proposing to specify the procedures DOE will use in 
enforcement testing to clearly and

[[Page 50476]]

unambiguously classify Class A and Class B beverage vending machines 
based on percentage of transparent surface area on the front side of 
the beverage vending machine. Specifically, DOE is proposing language 
to clarify the procedure by which DOE will: (1) Determine the surface 
area of beverage vending machines; and (2) determine whether such 
surface area is transparent. However, similar to DOE's proposal for a 
fully cooled verification test in the 2014 BVM test procedure NOPR, 
these procedures would not be required for rating and certification of 
specific BVM models. 79 FR 46908, 46917 (August 11, 2014). Under the 
proposal, manufacturers would continue to be able to certify equipment 
as Class A or Class B based knowledge of the specific equipment 
dimensions and characteristics. However, DOE will use these procedures 
in enforcement testing to verify the appropriate equipment 
classification for all cases. As such, where the appropriate equipment 
classification is not abundantly clear, manufacturers may elect to 
perform the test to ensure they are categorizing their equipment 
properly; however, DOE reiterates that such testing is not required. To 
clarify that such procedures are only optional for manufacturers, DOE 
is proposing to add such procedures to the product-specific enforcement 
provisions at 10 CFR 429.134.
    To determine the surface area, DOE is proposing that the total 
surface area of the front side of the beverage vending machine, from 
edge to edge, be determined as the total length multiplied by the total 
height of a beverage vending machine. DOE is also proposing to specify 
that the transparent surface area consists of all areas composed of 
transparent material on the front side of a beverage vending machine, 
and that the non-transparent surface area consists of all areas 
composed of material that is not transparent on the front side of a 
beverage vending machine. The sum of the transparent and non-
transparent surface areas should equal the total surface area of the 
front side of a beverage vending machine, as shown in Figure IV.1.
BILLING CODE 6450-01-C
[GRAPHIC] [TIFF OMITTED] TP19AU15.007


[[Page 50477]]


    To determine whether a material is transparent, DOE is proposing to 
adopt the definition of transparent that is applicable to commercial 
refrigeration equipment, as adopted in the 2014 commercial 
refrigeration equipment test procedure final rule. 10 CFR 431.62; 79 FR 
22277, 22286-87, and 22308 (April 21, 2014). Under this definition, the 
term ``transparent'' applies to any material with greater than or equal 
to 45 percent light transmittance, as determined in accordance with the 
ASTM Standard E 1084-86 (Reapproved 2009), ``Standard Test Method for 
Solar Transmittance (Terrestrial) of Sheet Materials Using Sunlight,'' 
at normal incidence and in the intended direction of viewing. In the 
commercial refrigeration equipment test procedure NOPR, DOE had 
originally proposed that a transparent material was any material with 
greater than or equal to 65 percent light transmittance, consistent 
with the definition of total display area in the Air-Conditioning, 
Heating, and Refrigeration Institute (AHRI) Standard 1200 (I-P)-2010 
(AHRI 1200-2010), ``Performance Rating of Commercial Refrigerated 
Display Merchandisers and Storage Cabinets.'' 78 FR 64295, 64301-02 
(October 28, 2013). However, DOE adopted a threshold of 45 percent in 
the final rule based on comments from interested parties regarding the 
characteristics of low-emissivity and high performance glass. 79 FR 
22277, 22287 (April 21, 2014). DOE believes that the threshold of 45 
percent light transmittance to determine transparency is equally 
applicable to materials that are typically used to manufacture both 
commercial refrigeration equipment and beverage vending machines.
    Therefore, to determine whether a given material is transparent or 
not, DOE proposes that such material be tested in accordance with ASTM 
Standard E 1084-86 (Reapproved 2009) and, if the visible transmittance 
is greater than or equal to 45 percent, that material would be deemed 
to be transparent and considered in the transparent area of the 
beverage vending machine. When determining material properties, DOE 
notes that the utility of the transparent material is only applicable 
if the viewer can clearly see the refrigerated products contained 
within the refrigerated volume of the beverage vending machine. As 
such, DOE believes that the transparency of the beverage vending 
machine cabinet materials should be determined with consideration of 
all the materials used to construct the wall segment(s). That is, 
transparency should be determined for all the materials between the 
refrigerated volume and the ambient environment; only if the aggregate 
performance of all those materials yields a light transmittance of 
greater than or equal to 45 percent would that area be treated as 
transparent. For example, if a beverage vending machine wall segment 
was composed of sheet metal, insulation, and an opaque plastic 
covering, with light transmittance of 0, 0, and 0.5, respectively, the 
aggregate light transmittance of the side wall would be 0 and the area 
of that side wall would not be treated as transparent.
    In accordance with the proposed, amended definition for Class A, 
any given BVM model would be classified as Class A or Class B based on 
the relative transparent and non-transparent areas on the front side of 
the beverage vending machine. If at least 25 percent of the surface 
area on the front side of the beverage vending machine is transparent, 
and the beverage vending machine is not a combination vending machine, 
then the beverage vending machine would be considered to be Class A. 
Conversely, if greater than 75 percent of the surface area on the front 
side of the beverage vending machine is not transparent, and the 
beverage vending machine is not a combination vending machine, than the 
beverage vending machine would be considered to be Class B. DOE's 
proposed Class A definition only considers transparent area on the 
front side of beverage vending machine when determining the appropriate 
equipment class for beverage vending machines.
    DOE reiterates that this test method would be optional and would 
not be required for equipment certification or testing by 
manufacturers. Specifically, the determination of the light 
transmittance of a transparent material based on testing in accordance 
with ASTM Standard E 1084-86 (Reapproved 2009) would not be required in 
all cases to classify a BVM basic model as Class A or Class B, and 
manufacturers would continue to be able to specify the appropriate 
equipment class without utilizing this test method. However, the 
determination of the light transmittance of a transparent material 
would still be determined in accordance with ASTM Standard E 1084-86 
(Reapproved 2009) and DOE proposes to use this test method to determine 
equipment classification in enforcement testing. Thus, incorporation of 
a quantitative test procedure is not anticipated to add to the 
complexity or burden of conducting the DOE test procedure for most 
models of beverage vending machines.
    Regarding the proposed definition of ``fully cooled,'' DOE notes 
that many interested parties expressed concern about DOE's temperature 
differential of 10 [deg]F between the average next-to-vend temperature 
and the average temperature of standard test packages placed in the 
furthest from next-to-vend position during the test period. Many 
interested parties questioned the supporting data underlying DOE's 
proposed temperature threshold and encouraged DOE to collect additional 
data. In response to these comments, DOE notes that the originally 
proposed 10 [deg]F temperature differential was proposed based on the 
best information available to DOE. Specifically, DOE based the proposed 
temperature threshold on input from manufacturers provided in response 
to the framework document. (AMS, No. 0017 at p. 6) \22\ However, DOE 
acknowledges that AMS also noted that the number they suggested at the 
framework document public meeting was not based on empirical data. 
(Docket No. EERE-2013-BT-TP-0045, AMS, Public Meeting Transcript, No. 
0004 at p. 54)
---------------------------------------------------------------------------

    \22\ A notation in this form provides a reference for 
information that is in the docket of DOE's rulemaking to develop 
energy conservation standards for beverage vending machines (Docket 
No. EERE-2011-BT-STD-0022, which is maintained at 
www.regulations.gov). This particular notation refers to a comment: 
submitted by Automated Merchandising Systems, Inc. (AMS); appearing 
in document number 0017 of the docket; and appearing on page 6 of 
that document. Comments submitted on other dockets will use a 
similar format but will include the docket number at the beginning 
of the citation.
---------------------------------------------------------------------------

    To better inform the appropriate temperature threshold for 
classification of Class A and Class B beverage vending machines, and in 
response to comments received on the 2014 BVM test procedure NOPR, DOE 
analyzed additional data from 28 BVM units (11 Class A and 17 Class B). 
For these 28 units, DOE included standard test packages in the next-to-
vend and furthest from next-to-vend beverage locations, as proposed in 
the 2014 BVM test procedure NOPR. 79 FR 46908, 46917 (August 11, 2014). 
DOE compared the integrated average temperature of the next-to-vend 
standard test packages to the average of all the furthest from next-to-
vend standard test package measurements collected throughout the test 
(i.e., a spatial and temporal average over the entire test period). 
Based on the collected data, DOE determined that, consistent with 
comments from interested parties, the proposed 10 [deg]F temperature 
differential may be too stringent a criterion and may inadvertently 
classify some BVM models that have opaque fronts and products oriented 
in vertical stacks as ``fully cooled'' equipment, even though

[[Page 50478]]

the refrigerated volume is not designed or intended to be fully cooled. 
For example, for equipment with a small or very well insulated 
refrigerated volume, passive convention will act to cool more of the 
refrigerated volume than just the ``intentionally refrigerated'' next-
to-vend beverage selections.
    In light of this additional analysis, DOE agrees with the comments 
of interested parties stating that it is difficult to establish a 
strict range that will be universally applicable to all types of Class 
A and Class B beverage vending machines. Specifically, DOE's data 
suggests that Class B equipment may have temperature differences of 
less than 2 [deg]F between the next-to-vend and furthest from next-to-
vend beverage locations. Conversely, as Coca-Cola points out, Class A 
machines can also have temperature differentials of up to 7 [deg]F. 
(Docket No. EERE-2013-BT-TP-0045, Coca-Cola, No. 0010 at p. 4)
    DOE believes that modifying the definitions of Class A and Class B 
to rely on the presence of a transparent front allows for clear and 
unambiguous differentiation of equipment classes, while continuing to 
reflect the intent and utility of fully cooled versus non-fully cooled 
equipment. Further, DOE believes referencing the presence of a 
transparent front to identify Class A equipment aligns with DOE's and 
industry's interpretation of fully cooled, Class A machines to date. 
Therefore, DOE does not believe the proposed amendment of the Class A 
definition and associated optional test protocols would change the 
equipment class or energy conservation standard level for any equipment 
that is currently covered under existing standards. As such, DOE is 
proposing that the amended Class A and Class B definitions be effective 
30 days after the publication in the Federal Register of any final rule 
establishing such a definition.
    Regarding Coca-Cola's comment that 2 [deg]F is too stringent a 
tolerance for all the standard test packages in the machine, DOE notes 
that DOE did not propose such a requirement and agrees with Coca-Cola 
that maintaining all the standard test packages in the next-to-vend 
positions within 2 [deg]F of the specified average beverage temperature 
may not be feasible for all fully cooled equipment designs.
    In response to SVA and Coca-Cola's concerns regarding testing 
burden of the proposed fully cooled verification test procedure and the 
potential for increased air infiltration, DOE notes that, based on the 
amendments being proposed in this NOPR, the fully cooled verification 
test procedure would not be required. However, DOE is proposing to 
adopt optional specifications and criteria to determine surface area 
and transparency to allow for clear and unambiguous verification of the 
appropriate equipment class for any covered BVM models where the 
appropriate equipment class is not clear based on the physical 
equipment characteristics. Because the test methods to determine 
surface area and transparency would not be required for certification 
testing and is not proposed to be part of the BVM test procedure at 10 
CFR 431.296, manufacturers would not be required to take any additional 
temperature measurements beyond what is currently specified in ANSI/
ASHRAE Standard 32.1-2010, DOE believes that the proposed optional test 
method would not increase the burden associated with conducting the DOE 
BVM test procedure.
    DOE requests comment on the proposed amendment to the Class A 
equipment class definition. Specifically, DOE requests comment on 
whether the presence of a transparent front is always correlated with 
fully cooled equipment (section VII.E of this NOPR).
    DOE requests comment on the proposed optional test protocol to 
determine transparent and non-transparent surface areas and whether 
Class A equipment typically has at least 25 percent of the surface area 
on the front side of the unit that is transparent or if another 
quantitative threshold would be more appropriate (section VII.E of this 
NOPR).
    DOE requests comment on the proposed definition of transparent. 
Specifically, whether 45 percent light transmittance is an acceptable 
value for the glass or other transparent materials that are typically 
used to construct the front panel on Class A equipment (section VII.E 
of this NOPR).
b. Combination Vending Machines
    In the 2009 BVM final rule, DOE established a definition for 
combination vending machines (74 FR 44914, 44920; August 31, 2009). 
That definition describes a combination beverage vending machine as a 
refrigerated bottled or canned beverage machine that also has non-
refrigerated volumes for the purpose of vending other, non-``sealed 
beverage'' merchandise. 10 CFR 431.292. However, the 2009 BVM final 
rule did not consider or differentiate equipment within the combination 
vending machine equipment category or address any specific criteria 
that could be used to differentiate ``refrigerated'' and ``non-
refrigerated.''
    In its recent test procedure rulemaking, culminating in the 2015 
BVM test procedure final rule, DOE considered the applicability of the 
combination vending machine definition to equipment designs it has 
encountered on the market, and considered stakeholder comments on the 
definition of ``combination vending machine.'' 80 FR 45758 (July 31, 
2015). In the 2015 BVM test procedure final rule, DOE clarified the 
test procedure for combination vending machines and noted that such 
equipment must include compartments that are physically separated, 
while acknowledging that some combination equipment designs may employ 
a common product delivery chute between the refrigerated and non-
refrigerated compartments for the purposes of delivering vendible 
merchandise to the customer. DOE also gave notice that it would seek to 
further clarify the definition of ``combination vending machine'' in 
this BVM energy conservation standard NOPR. Id at 45765-67.
    As such, in consideration of the input of various interested 
parties throughout both the test procedure and energy conservation 
standards rulemaking processes, as well as of the range of equipment 
designs that DOE has observed for sale on the market, DOE is proposing, 
in this NOPR, an amended definition of ``combination vending machine.'' 
Specifically, DOE proposes to amend the definition of ``combination 
vending machine'' to more clearly and unambiguously establish the 
distinction between ``refrigerated'' and ``non-refrigerated'' 
compartments contained in a combination beverage vending machine. 
Specifically, DOE proposes that the determination of whether a 
compartment is refrigerated or non-refrigerated is based on whether a 
compartment is designed to be refrigerated, as demonstrated by the 
presence of temperature controls. The proposed definition is as 
follows:
    Combination vending machine means a bottled or canned beverage 
vending machine containing two or more compartments separated by a 
solid partition, that may or may not share a product delivery chute, in 
which at least one compartment is designed to be refrigerated, as 
demonstrated by the presence of temperature controls, and at least one 
compartment is not.
    DOE requests comment on the proposed amendment to the definition of 
``combination vending machine'' (section VII.E of this NOPR).
    DOE also believes that, similar to Class A and Class B equipment 
classes, the transparency of the front side of the vending machine can 
differentiate certain styles of combination vending machines that 
provide a unique utility in the marketplace because their

[[Page 50479]]

specific design attributes allow the equipment to be stocked with a 
wider variety of product selections that can be viewed directly through 
the equipment's transparent front. As such, in this NOPR, DOE is also 
proposing to define two new equipment classes at 10 CFR 431.292, 
Combination A and Combination B, and proposes to define those equipment 
classes as follows:
    Combination A means a combination vending machine where 25 percent 
or more of the surface area on the front side of the beverage vending 
machine is transparent.
    Combination B means a combination vending machine that is not 
considered to be Combination A.
    DOE proposes that the same definition of transparent and same 
optional test protocol to determine the transparency of materials and 
the relative surface areas of transparent and non-transparent surfaces 
would be applicable to combination vending machines except that, the 
external surface areas surrounding the non-refrigerated compartment(s) 
would not be considered. That is, all the surfaces that surround and 
enclose the compartment designed to be refrigerated (as demonstrated by 
the presence of temperature controls), as well as any surfaces that do 
not enclose any product-containing compartments (e.g., surfaces 
surrounding any mechanical equipment or containing the product 
selection and delivery apparatus) should be considered in the 
calculation of transparent and non-transparent surface area for a 
beverage vending machine, as shown in Figure IV.2. Therefore, the 
transparent area would be determined as a sum of the transparent areas 
on the front side of a combination vending machine that are not 
surrounding compartments not designed to be refrigerated (i.e., 
transparent areas surrounding compartments designed to be refrigerated 
and associated areas for product selection and delivery). The total 
area for a combination beverage vending machine would also be 
determined disregarding the surface area surrounding the compartment(s) 
not designed to be refrigerated. That is, the total area of the front 
side of the combination vending machine would be calculated as the 
total height multiplied by the total width from edge to edge minus the 
surface area surrounding any compartment(s) not designed to be 
refrigerated. This ``total area'' also represents a summation of the 
transparent and non-transparent areas not surrounding compartments not 
designed to be refrigerated, as shown in Figure IV.2. The relative 
transparent area on the front side of combination vending machines 
would be determined as the transparent area over the total area, 
similar to the calculation for Class A and B beverage vending machines, 
as discussed in section IV.A.1.a.
[GRAPHIC] [TIFF OMITTED] TP19AU15.008


[[Page 50480]]


    DOE requests comment on the proposed definition for Combination A 
and Combination B (section VII.E of this NOPR).
    DOE also requests comment on DOE's proposal to apply the optional 
test protocol for determining the surface area and transparency of 
materials to combination vending machines, except that the surface 
areas surrounding the refrigerated compartments that are not designed 
to be refrigerated would be excluded (section VII.E of this NOPR).
    In response to the framework document and preliminary analysis, DOE 
received input from interested parties regarding the design, 
construction, and sales volume of combination machines. In preparing 
the analyses presented in this NOPR, DOE used additional data from 
publicly available literature, as well as interviews with 
manufacturers, as the basis for its analysis of combination vending 
machine equipment classes. In considering setting standards for 
Combination A and Combination B beverage vending machines, as proposed, 
DOE is also interested in information regarding the design, market 
prevalence, and energy performance of such combination vending 
machines.
    AMS commented that DOE and manufacturers have expended and will 
continue to expend large amounts of effort and expense to improve 
combination machines even though they compose a small amount of the 
market. (AMS, No. 29 at p. 6)
    In response to AMS's comment regarding the small market share of 
combination vending machines, DOE notes that it revised the market 
share of combination vending machines based on input received during 
the manufacturer interview process (see section IV.I.3 of this NOPR). 
In the analysis for this NOPR, DOE found that combination vending 
machines represent 18 percent of the market, as opposed to 1 percent 
that was found in the preliminary analysis. Thus, DOE believes new 
energy conservation standards for combination machines represent a 
potential for national energy savings. In addition, since DOE is 
proposing standards for combination vending machines for the first 
time, the baseline efficiency for such equipment is much lower than for 
similar Class A or Class B equipment. Therefore, larger potential 
savings are available for combination vending machines than for Class A 
and Class B equipment on a per model basis. As such, DOE continues to 
analyze and propose standards for this equipment in this NOPR.
    DOE requests comment on its updated estimate of market share for 
combination vending machines (section VII.E of this NOPR).
    As noted in the 2015 BVM test procedure final rule, DOE believes 
that both appendix A and appendix B of the amended BVM test procedure 
are applicable to combination vending machines. 80 FR 45758 (July 31, 
2015). To clarify the applicability of certain test procedure 
provisions and requirements to combination vending machines, DOE 
adopted several clarifications to the 2015 BVM test procedure to make 
the treatment of combination vending machines more specific and 
precise. These clarifications include explicitly stating the 
applicability of the BVM test procedure to combination vending machines 
and clarifying that only the refrigerated compartment of a combination 
vending machine is to be evaluated in the refrigerated volume 
calculation and loaded with standard test packages and standard 
product. Id. at 45765-67. However, any lighting or other energy-
consuming features in the non-refrigerated compartment would be fully 
energized during the test procedure and operated in the same manner as 
any lighting or features in the refrigerated compartment.
    Appendix A of the BVM test procedure is applicable to combination 
vending machines for the purposes of making any representations 
regarding the energy consumption of such equipment beginning January 
27, 2016. 80 FR 45758 (July 31, 2015). Beginning on the compliance date 
of any energy conservation standards established for combination 
vending machines as a result of this rulemaking, manufacturers would be 
required to use appendix B of the BVM test procedure for the purposes 
of demonstrating compliance with any such energy conservation standards 
and when making representations regarding the energy consumption of 
covered equipment.
2. Machines Vending Perishable Goods
    DOE notes that there are beverage vending machines that are capable 
of vending certain perishable products and, as such, may require more 
strict temperature control than beverage vending machines that only 
vend non-perishable products, such as bottled or canned soda, juice, or 
water. DOE notes such perishable products may or may not be sealed 
beverages but that, if a vending machine is refrigerated and is capable 
of or can be configured to vend sealed beverages for at least one of 
the product selections, then the vending machine meets DOE's definition 
of beverage vending machine and must comply with DOE's regulations for 
this equipment.
    Based on input from interested parties provided in response to the 
framework document and as stated in chapter 2 of the preliminary 
analysis TSD, DOE believes that machines capable of vending perishable 
goods are generally not materially different from other beverage 
vending machines, and that the necessary levels of temperature 
maintenance needed to preserve perishables are achieved through the 
application of control settings rather than through design changes. In 
addition, such equipment can be tested using DOE's existing method of 
testing and does not have significantly different energy consumption 
profiles from other beverage vending machines when tested using DOE's 
methodology. Therefore, DOE does not believe separate equipment classes 
and standard levels are warranted for beverage vending machines that 
are capable of vending perishable goods, and DOE is not proposing a 
separate class for such equipment in this NOPR. As such, equipment that 
vends perishable products along with at least one sealed beverage must 
be tested in accordance with the DOE test procedure and must meet 
applicable energy conservation standards. Vending machines that are not 
capable of vending sealed beverages or are not refrigerated do not meet 
DOE's definition of beverage vending machine and, as such, are not 
subject to standards, test procedures, and certification and reporting 
requirements for beverage vending machines.
    DOE requests comment on its position that machines capable of 
vending perishable goods do not warrant separate classes due to their 
physical similarity to refrigerated beverage vending machines used to 
vend non-perishable products (section VII.E of this NOPR).
3. Technology Assessment
    As part of the technology assessment, DOE developed a list of 
technologies to consider for improving the efficiency of beverage 
vending machines. DOE considers as design options all technologies that 
meet the screening criteria and that produce quantifiable results under 
the DOE test procedure.
    DOE typically uses information about existing and past technology 
options and prototype designs to help determine which technologies 
manufacturers use to attain higher energy performance levels. In 
consultation with interested parties, DOE develops a list of 
technologies for consideration in its screening and engineering 
analyses.

[[Page 50481]]

Initially, these technologies encompass all those that DOE believes are 
technologically feasible. Since many options for improving equipment 
efficiency are available in existing equipment, equipment literature 
and direct examination of BVM units currently on the market provided 
much of the information underlying this analysis. While DOE notes that 
the majority of equipment use R-134a as a refrigerant, which will no 
longer be available for BVM applications at the time compliance would 
be required with any amended standards established as part of this 
final rule (80 FR 42870, 42917-42920; July 20, 2015), DOE believes that 
the majority of technology options considered in DOE's analysis and 
presented in the following list are applicable to all beverage vending 
machines, regardless of the refrigerant utilized. Specifically, DOE 
considered the following technologies in this NOPR analyses:
     higher-efficiency lighting
     higher-efficiency evaporator fan motors
     higher-efficiency evaporator fan blades
     improved evaporator design
     evaporator fan motor controllers
     low-pressure-differential evaporators
     insulation improvements (including foam insulation 
thickness increase and use of improved materials such as vacuum 
insulated panels)
     improved Glass Pack (for Class A and Combination A 
equipment)
     higher-efficiency compressors
     variable speed compressors
     increased condenser performance
     higher-efficiency condenser fan motors
     higher-efficiency condenser fan blades
     microchannel heat exchangers
     higher efficiency expansion valves
     improved anti-sweat heaters
     lighting controls (including timers and/or sensors)
     refrigeration low-power modes
    Chapter 3 of the TSD includes the detailed description of all 
technology options DOE identified for consideration in this rulemaking.

B. Screening Analysis

    The purpose of the screening analysis is to evaluate the 
technologies identified in the technology assessment to determine which 
technologies to consider further and which technologies to screen out. 
DOE consulted with industry, technical experts, and other interested 
parties in developing a list of energy-saving technologies for the 
technology assessment. DOE then applied the screening criteria to 
determine which technologies were unsuitable for further consideration 
in this rulemaking. Chapter 4 of the NOPR TSD contains details about 
DOE's screening criteria.
    DOE uses the following four screening criteria to determine which 
technology options are unsuitable for further consideration in an 
energy conservation standards rulemaking:
    1. Technological feasibility. DOE will consider technologies 
incorporated in commercial products or in working prototypes to be 
technologically feasible.
    2. Practicability to manufacture, install, and service. If mass 
production and reliable installation and servicing of a technology in 
commercial equipment could be achieved on the scale necessary to serve 
the relevant market at the time the standard comes into effect, then 
DOE will consider that technology practicable to manufacture, install, 
and service.
    3. Adverse impacts on product utility or product availability. If 
DOE determines that a technology would have a significant adverse 
impact on the utility of the product to significant subgroups of 
customers, or would result in the unavailability of any covered product 
type with performance characteristics (including reliability), 
features, sizes, capacities, and volumes that are substantially the 
same as products generally available in the United States at the time, 
it will not consider this technology further.
    4. Adverse impacts on health or safety. If DOE determines that a 
technology will have significant adverse impacts on health or safety, 
it will not consider this technology further.
10 CFR Part 430, Subpart C, Appendix A, 4(a)(4) and 5(b)
    These four screening criteria do not include the propriety status 
of design options. As noted previously, DOE will only consider 
efficiency levels achieved through the use of proprietary designs in 
the engineering analysis if they are not part of a unique path to 
achieve that efficiency level. DOE does not believe that any of the 
technologies identified in the technology assessment are proprietary, 
and thus, did not eliminate any technologies for that reason. Through a 
review of each technology, DOE found that the following technologies 
identified met all four screening criteria to be examined further in 
the analysis and decrease daily energy consumption (DEC) as measured by 
the BVM test procedure:
     Higher efficiency lighting
     higher efficiency evaporator fan motors
     higher efficiency evaporator fan blades
     evaporator fan motor controllers
     improved evaporator design
     low-pressure differential evaporators
     improvements to anti-sweat heaters
     improved or thicker insulation
     defrost mechanism
     higher efficiency compressors
     variable speed compressors
     microchannel heat exchangers
     improved condenser design
     higher efficiency condenser fan motors
     higher efficiency condenser fan blades
     improved glass pack design (for Class A and Combination A 
machines)
     lighting controls
     refrigeration low-power modes

C. Engineering Analysis

    The engineering analysis establishes the relationship between an 
increase in energy efficiency of the equipment and the corresponding 
increase in manufacturer selling price (MSP) associated with that 
efficiency level. This relationship serves as the basis for cost-
benefit calculations for individual customers, manufacturers, and the 
nation. DOE typically structures its engineering analysis using one of 
three approaches: (1) the design-option approach, (2) the efficiency-
level approach, or (3) the cost-assessment (reverse engineering) 
approach. The next paragraphs provide overviews of these three 
approaches.
    A design-option approach identifies individual technology options 
(from the market and technology assessment) that can be used alone or 
in combination with other technology options to increase the energy 
efficiency of a given BVM unit. Under this approach, cost estimates of 
the baseline equipment and more-efficient equipment that incorporates 
design options are based on manufacturer or component supplier data or 
engineering computer simulation models. Individual design options, or 
combinations of design options, are added to the baseline model in 
descending order of cost-effectiveness.
    An efficiency-level approach establishes the relationship between 
manufacturer cost and increased efficiency at predetermined efficiency 
levels above the baseline. Under this approach, DOE typically assesses 
increases in manufacturer cost for incremental increases in efficiency, 
without identifying the technology or design options that would be used 
to achieve such increases.

[[Page 50482]]

    A reverse-engineering, or cost-assessment, approach involves 
disassembling representative units of beverage vending machines, and 
estimating the manufacturing costs based on a ``bottom-up'' 
manufacturing cost assessment; such assessments use detailed data to 
estimate the costs for parts and materials, labor, shipping/packaging, 
and investment for models that operate at particular efficiency levels.
    As discussed in the framework document and preliminary analysis, 
DOE employed the design-option approach to develop the relationship 
between energy use of a beverage vending machine and MSP. The decision 
to use this approach was made due to several factors, including the 
lack of numerous discrete levels of equipment efficiency currently 
available on the market and the prevalence of relatively easily 
implementable energy-saving technologies applicable to this equipment. 
More specifically, DOE identified design options for analysis and used 
a combination of industry research and teardown-based cost modeling to 
determine manufacturing costs, then employed numerical modeling to 
determine the energy consumption of each combination of design options 
employed in increasing equipment efficiency. The resulting range of 
equipment efficiency levels and associated manufacturer production 
costs (MPCs) were converted to MSPs using information regarding typical 
manufacturer markups. Typical manufacturer markups are presented in 
chapter 5 of the NOPR TSD.
    DOE requests feedback on the manufacturer markup values used to 
convert MPC to MSP (section VII.E of this NOPR).
    DOE revised the engineering analysis presented in the preliminary 
analysis based on the feedback of stakeholders, information obtained 
through interviews with manufacturers, additional industry research, 
and recent regulatory changes implemented by EPA's SNAP program. 80 FR 
19454, 19491 (April 10, 2015) and 80 FR 42870, 42917-42920 (July 20, 
2015). In particular, DOE conducted analyses for equipment using 
propane (R-290) refrigerant, in addition to CO2 (R-744) and 
did not consider R-134a further in downstream analysis after 2019. In 
addition, DOE adjusted baseline assumptions for combination vending 
machines, included more representative costs for several design 
options, and revised lighting assumptions.
1. Baseline Equipment and Representative Sizes
    For each of the two classes of equipment with current standards 
(Class A and Class B), DOE developed baseline configurations containing 
design options consistent with units designed to perform at a level 
that approximates the existing 2009 BVM standard. DOE based its 
representative size assumptions for Class A and Class B equipment on 
the representative sizes assumed in the 2009 BVM rulemaking and input 
from manufacturers during the framework and preliminary analysis phases 
of this rulemaking, as well as data gathered from supplemental sources. 
DOE believes that these representative sizes continue to reflect the 
design and features of current baseline equipment for Class A and Class 
B equipment.
    For Combination A and Combination B equipment, DOE set its baseline 
efficiency level differently than for Class A and Class B equipment, 
since there are no current regulatory standards for this equipment. 
Specifically, DOE modeled the baseline level of efficiency for the 
Combination A and Combination B equipment as representing the least-
efficient technology generally found in the BVM market currently for 
each design option analyzed. That is, the baseline efficiency level for 
Combination A and Combination B equipment represented the least-
efficient combination of technologies available, which in some cases a 
baseline efficiency level with higher energy consumption than any 
physical combination BVM unit DOE analyzed.
    Representative sizes for Combination A and Combination B were 
established in the preliminary analysis based on equipment available in 
the current market and have been maintained for this NOPR. Specific 
details of the representative sizes chosen for analysis and design 
options representing each of the baseline equipment definitions for 
Class A, Class B, Combination A, and Combination B beverage vending 
machines are described in more detail in appendix 5A of the NOPR TSD.
    In response to the preliminary analysis, DOE received several 
comments regarding the methodology it used for setting baseline levels 
in the engineering analysis. SVA questioned DOE's assumption about the 
baseline not including low-power states and asserted that most 
manufacturers turn off lights prior to testing energy consumption, 
which is representative of low power mode. (SVA, No. 33 at p. 49) \23\ 
Crane recommended that technologies like lighting controls in low power 
mode and electronically commutated motors (ECMs) are already being 
utilized and should not be design options to improve efficiency. (Crane 
Merchandising System, Inc., No. 33 at pp. 53-54). SVA stated that they 
did not know of additional technologies to reduce energy consumption 
and that manufacturers are already almost at their maximum 
efficiencies. (SVA, No. 30 at p.1 and No. 33 at p. 99) AMS added that 
it has implemented most of the listed technologies and the increased 
cost associated with these has been significant but the energy impacts 
are unknown. (AMS, No. 29 at p. 2)
---------------------------------------------------------------------------

    \23\ A notation in this form provides a reference for 
information that is in the docket of DOE's rulemaking to develop 
test procedures for beverage vending machines (Docket No. EERE-2013-
BT-STD-0022, which is maintained at www.regulations.gov). This 
particular notation refers to a comment: (1) Submitted by Royal 
Vendors, Inc.; (2) appearing in document number 11 of the docket; 
and (3) appearing on page 3 of that document.
---------------------------------------------------------------------------

    In the engineering analysis for Class A and Class B equipment, DOE 
used the current standard level as the baseline energy consumption 
level. The current DOE standards are available at 10 CFR 431.296. All 
impacts of design options that DOE examined to improve efficiency are 
calculated from that level. Based on its analysis of the DOE BVM 
certification database as well as the list of ENERGY STAR[supreg] 
qualified beverage vending machines, DOE agrees with Crane and SVA that 
much of the equipment currently available on the market exceeds the 
minimum energy performance required by the current DOE standards. DOE 
further agrees with AMS and SVA that equipment that exceeds the current 
standards does so through the use of efficiency improvements beyond the 
baseline design, including design options that DOE uses in its analysis 
supporting this NOPR.
    Most of the design options analyzed in this NOPR were observed by 
DOE in some portion of the equipment currently on the market. The 
presence of these design options in equipment that exceeds the current 
standard level serves as validation of the energy performance 
improvements over the baseline level that are possible with these 
design options. However, DOE also realizes that no two manufacturers 
may necessarily use the same design option pathways to improve energy 
performance. As such, DOE notes that its engineering analyses represent 
just one potential pathway to achieve the efficiency levels modeled in 
downstream analyses.

[[Page 50483]]

    In response to SVA and Crane's comments regarding current 
manufacturer use of lighting controls, energy management systems, and 
low power modes to meet or exceed current energy conservation 
standards, DOE acknowledges that energy management systems that cannot 
be altered by the operator are allowed to be enabled during testing 
according to the current DOE test procedure. However, the engineering 
analysis supporting the 2009 BVM final rule did not assume the use of 
any such energy management system in any of the design options analyzed 
or in the pathway to the adopted standard level (Chapter 5 of the 2009 
BVM final rule TSD; Docket No. EERE-2006-STD-0125, No. 79). While 
manufacturers may elect to employ whatever mix of technology options 
they see fit, DOE's analyses from the 2009 rulemaking did not indicate 
that the use of energy management systems or low power modes would be 
required to meet the standard levels set forth in the 2009 BVM final 
rule. Similarly, in this NOPR, the baseline equipment performance 
assumes that all lighting and accessories are on for the duration of 
the test and no low power modes or energy management systems are 
enabled. As such, DOE believes that the baseline energy performance 
level is achievable without the use of any energy management systems 
and, thus, has included them as a design option for improving the 
efficiency of BVM equipment.
    Additionally, AMS expressed concern that the MDEC requirement for 
Class B machines is easier to attain than the MDEC for Class A 
machines. (AMS, No. 29 at p. 2-3) DOE understands that Class A units 
experience different heat transfer profiles than comparably sized and 
equipped Class B units. However, DOE is directed to independently 
establish energy conservation standards that are technologically 
feasible and economically justified for each class of covered 
equipment. In the 2009 BVM final rule, DOE established standards for 
Class A and Class B equipment based on full and independent engineering 
and economic analyses of the baseline equipment configurations and 
design options available for each equipment class. In light of inputs 
obtained during that rulemaking and to date in the current rulemaking, 
DOE intends to preserve Class A and Class B as distinct classes with 
separate, independently determined standard levels.
    DOE requests comment on whether equipment is tested with all 
lighting and accessories on for the duration of the test and no low 
power modes or energy management systems enabled (section VII.E of this 
NOPR).
    DOE requests information on whether the current standard level for 
Class A and Class B machines is achievable without the use of any 
energy management systems (section VII.E of this NOPR).
2. Refrigerants
    At the time of this analysis, hydrofluorocarbon (HFC) refrigerants, 
and specifically R-134a, are used in most beverage vending machines on 
the market currently in the United States. In addition, based on 
equipment certification reports received by DOE, public statements from 
major end users of beverage vending machines such as Coca-Cola,\24\ and 
information DOE obtained through confidential manufacturer interviews 
(see section IV.I.3), DOE has come to understand that CO2 
refrigerant is used in a small but growing portion of the BVM market.
---------------------------------------------------------------------------

    \24\ One example of such a public statement is available at 
http://www.coca-colacompany.com/innovation/coca-cola-installs-1-millionth-hfc-free-cooler-globally-preventing-525mm-metrics-tons-of-co2.
---------------------------------------------------------------------------

    As discussed earlier, the refrigerants that are available for use 
in the U.S. refrigerated vending machine market are changing as a 
result of two recent rulemaking actions by EPA's SNAP. First, EPA 
published proposed Rule 19 (Docket No. EPA-HQ-OAR-2014-0198) on July 9, 
2014, that proposed, among other things, to list several hydrocarbons--
isobutane and propane--and the hydrocarbon blend R-441A as acceptable 
alternatives under SNAP in the BVM application, subject to certain use 
conditions. 79 FR 38811. A final rule adopting these proposals became 
effective on May 11, 2015, and was published in the Federal Register on 
April 10, 2015. 80 FR 19454, 19491. EPA's second rulemaking under SNAP, 
Proposed Rule 20 (Docket No. EPA-HQ-OAR-2013-0748), was published on 
August 6, 2014 and proposed to change the status certain refrigerants 
to unacceptable for certain applications, including R-134a for BVM 
application, 79 FR 46126. A final rule corresponding to Proposed Rule 
20 was published in the Federal Registeron July 20, 2015. 80 FR 42870, 
42917-42920 (July 20, 2015). This rule changes the status of R-134a for 
new vending machines to unacceptable beginning on January 1, 2019. 
Therefore, equipment complying with the amended BVM standards DOE is 
proposing in this NOPR would do so using the refrigerants allowable 
under the newly amended SNAP listings.
    Due to the EPA SNAP rulemaking actions that were ongoing at the 
time of the preliminary analysis and to the small but growing 
prevalence of equipment using non-HFC refrigerants in the U.S. market, 
DOE received a number of stakeholder comments related to refrigerants 
in this rulemaking.
    In comments in response to the preliminary analysis, NEEA drew 
DOE's attention to the ongoing \25\ SNAP rulemakings and questioned 
their impacts on the final rule. The National Automatic Merchandising 
Association (NAMA) also commented that EPA's proposed SNAP ruling would 
introduce a new and significant variable that is not represented in the 
current data. (NAMA, No. 32 at p. 4)
---------------------------------------------------------------------------

    \25\ At the time of the comment period for the BVM preliminary 
analysis, both SNAP rulemakings were in the proposal stage, and thus 
still ongoing.
---------------------------------------------------------------------------

    In a joint written submission, the Alliance to Save Energy, 
American Council for an Energy-Efficient Economy, Appliance Standard 
Awareness Project (ASAP), Natural Resources Defense Council, and NEEA 
(Joint Comment) stated that DOE should examine possible efficiency 
improvements from the use of hydrocarbon refrigerants (Joint Comment, 
No. 27 at p. 2). NAMA and AMS expressed concern about the cost of 
hydrocarbon refrigeration systems, as well as their performance and 
reliability. (NAMA, No. 32 at p. 2; AMS, No. 29 at p. 2)
    Additionally, DOE received comments specific to the use of 
CO2 as a refrigerant. NAMA expressed concern about meeting 
the current DOE MDEC standards for Class A equipment using 
CO2 because of the inherently lower efficiency of 
CO2 compressors. (NAMA, No. 32 at p. 2) SVA commented that 
CO2 refrigeration systems are less energy efficient than R-
134a, but cost 50 percent more. (SVA, No. 30 at p. 1)
    In response to the comments from stakeholders and due to the 
changes in allowable refrigerants for BVM applications arising as a 
result of EPA SNAP Final Rule 20 (80 FR 42870, 42917-42920; July 20, 
2015), DOE analyzed the performance of Class A, Class B, Combination A, 
and Combination B equipment utilizing CO2 refrigerant (R-
744) and propane refrigerant (R-290) in this rulemaking.
    DOE notes that while CO2 has been approved for use in 
the United States in refrigerated beverage vending applications by EPA 
SNAP for several years, other hydrocarbons, including propane, were 
only recently listed as acceptable alternatives for use in refrigerated 
beverage vending applications in the United States with

[[Page 50484]]

EPA's recent publication of final rule 19, which became effective on 
May 11, 2015. 80 FR 19454, 19491. Although DOE is not aware of any 
commercially available BVM models using propane as a refrigerant, DOE 
has based this NOPR analysis on the use of propane as an alternative 
refrigerant, in addition to CO2, based on use of propane as 
a refrigerant in other similar, self-contained commercial refrigeration 
applications. (See e.g., Docket No. EPA-HQ-OAR-2014-0198, The 
Environmental Investigation Agency, No. 0134) EPA also listed R-450A, 
an HFC/HFO blend, as acceptable for retrofitting BVMs (79 FR 62863 
(October 21, 2014)) and is evaluating R-450A and other similar blends 
as acceptable for new beverage vending machines. However, DOE did not 
evaluate these refrigerants in this NOPR, as DOE is not aware of any 
commercially available BVM models using R-450A or other hydrocarbon 
blends as a refrigerant or of any significant research and development 
efforts on the part of domestic BVM manufacturers to commercialize this 
technology in the near future.
    In the engineering analysis for this NOPR, DOE first conducted 
analysis for each equipment class based on equipment using R-134a 
refrigerant, the refrigerant found in the majority of equipment 
available today and therefore providing the most specific and 
comprehensive data available. DOE then conducted analysis on each 
equipment class, using CO2 and propane refrigerants, by 
adjusting the R-134a analysis to account for the performance 
differences attributable to the new refrigerants. This methodology 
allowed DOE to leverage the large existing base of experience, data, 
and models for sale utilizing R-134a while ensuring that its 
engineering model and downstream analyses properly addressed the 
refrigerant landscape applicable at the time when compliance with 
amended standards would be required.
    In conducting its CO2 analysis, DOE used inputs that 
align with SVA's comment regarding a lower efficiency for 
CO2 refrigeration systems. DOE adjusted its engineering 
analysis to account for an increase in energy use for a beverage 
vending machine that uses CO2 versus a similarly equipped 
unit using R-134a. Specifically, DOE used a 6-percent compressor power 
increase, based on a separate analytical comparison of HFC and 
CO2 compressors, to account for the inherent relative 
inefficiency of CO2. This figure was reviewed with 
manufacturers during interviews and through requests for public comment 
on the preliminary analysis. DOE also analyzed components for 
CO2 refrigeration systems such as compressors and 
refrigeration coils as having higher costs than those for HFC 
refrigeration systems. Additionally, as CO2 models were 
currently available on the market for purchase at the time of this 
analysis, DOE was able to procure, test, and tear down CO2 
equipment to use in corroborating its analysis.
    For propane equipment, DOE used a similar methodology to that 
applied for CO2. The engineering analysis used adjusted 
values for compressor performance, incorporating a 15-percent reduction 
in energy consumption as compared to an R-134a compressor, as well as 
adjustments to the cost of the compressor, heat exchangers, and other 
system components. These factors were developed through a separate, 
focused analysis targeting the inherent differences in performance 
potential between HFC and hydrocarbon refrigerants. For a detailed 
explanation of the methodology used in adjusting the analysis conducted 
on equipment using R-134a refrigerant for analyzing CO2 and 
propane beverage vending machines in this NOPR, please see chapter 5 of 
the NOPR TSD.
    Commensurate with NAMA and SVA's comments, DOE found in its 
analysis that, because of the decreased efficiency of CO2 
compressors as compared to R-134a compressors, more design options 
would need to be implemented for equipment using CO2 
refrigerant than equipment using R-134a or propane in order to achieve 
the same efficiency level. However, DOE's analysis showed that both the 
current standard level and all of the efficiency levels analyzed, 
including the proposed standard level, could be met by equipment using 
any refrigerant. Specifically, DOE established efficiency levels for 
the LCC, NIA, and national energy savings (NES) analyses that could be 
reached using any of the refrigerants analyzed. An MPC and an MSP were 
assigned to each efficiency level by weighting the refrigerant-specific 
MSPs associated with reaching that efficiency level based on the 
modeled market share of each refrigerant. For more information on DOE's 
efficiency level selection and the formulation of market shares by 
refrigerant, see sections IV.E and IV.G.1 of this NOPR, respectively.
    To refine its engineering analysis for beverage vending machines 
further, DOE requests comment and data from interested parties on 
several topics related to the refrigerants analyzed in the engineering 
analysis and their relative performance characteristics. Specifically, 
DOE requests information on the efficiency of CO2 and 
propane compressors in BVM applications (section VII.E of this NOPR).
    DOE requests comment on the conclusion that both the current 
standard level and all of the efficiency levels analyzed could be met 
by equipment using any refrigerant (section VII.E of this NOPR).
    DOE requests information on the additional costs associated with 
CO2 and propane refrigeration systems, respectively, 
including but not limited to additional costs for the compressor, 
evaporator, condenser, and refrigerant tubing (section VII.E of this 
NOPR).
    DOE requests comment and information on the use of propane, 
isobutane, and other hydrocarbon refrigerants in current commercially 
available BVM models or on significant research and development efforts 
on the part of domestic BVM manufacturers to commercialize this 
technology in the near future (section VII.E of this NOPR).
    DOE requests comment on the likelihood of manufacturers using 
propane versus isobutane refrigerant since both have been added to the 
list of acceptable substitutes for use in BVM applications by EPA SNAP. 
If it is likely that isobutane would also be implemented in BVM 
applications, DOE requests similar information on the efficiency of 
isobutane compressors and additional costs associated with isobutane 
refrigeration systems, including but not limited to additional costs 
for the compressor, evaporator, condenser, and refrigerant tubing 
(section VII.E of this NOPR).
3. Design Options Analyzed and Maximum Technologically Feasible 
Efficiency Level
    In response to the preliminary analysis, DOE received several 
comments with specific feedback regarding the design options analyzed. 
Specifically, SVA commented that the physical size constraint of 
certain evaporator fan applications did not allow for ECM motors, and 
NAMA stated that more insulation would make beverage vending machines 
larger and impact its market acceptance. (SVA, No. 33 at p. 40 and 
NAMA, No. 32 at p. 1) Additionally, AMS commented that additional 
insulation may be added to the beverage vending machines, but this 
would affect the size of machine, its product capacity, and market 
acceptance. (AMS, No. 29 at p. 2) SVA and NAMA commented that by 2019 
all machines will have light-emitting diode (LED) lighting. (SVA, No. 
33 at p. 88, NAMA, No. 32 at p. 2)

[[Page 50485]]

    DOE based the specifications used in most of the design options for 
the engineering analysis on observations of what is currently in use in 
the market, including components and features incorporated by 
manufacturers of beverage vending machines as well as suppliers of 
those components. This information was gathered from the physical 
procurement and teardown of models and from confidential interviews 
conducted with manufacturers of beverage vending machines and other 
types of commercial refrigerated equipment. This methodology indicated 
that ECM evaporator motors are included in some Class A models 
currently produced. Additionally, DOE did not find there to be 
significant size differences between ECMs and other fan motor types.
    In response to NAMA and AMS, DOE notes that the design options 
considered included the specifications for the foam insulation, which 
were 1 inch and 1.125 inches in the design options in the analysis. 
Both of these are commonly found insulation thicknesses in units being 
sold currently on the market, demonstrating in the market that these 
foam thicknesses are not prohibitive to implement.
    DOE is aware of the increasing market share of beverage vending 
machines using LED lighting, and all of the standard levels proposed in 
this NOPR are at levels where the engineering analysis indicates LEDs 
will be a part of the least-cost path to achieving the proposed level. 
The comments by SVA and NAMA support this finding.
    Regarding the concerns expressed by AMS over the levels of cost 
incurred by manufacturers in potentially improving the efficiency of 
combination vending machines, DOE is analyzing these machine types in 
parallel as a separate equipment class alongside the Class A and Class 
B equipment analyzed in this rulemaking. Any new standards for 
combination vending machines would only be promulgated after a thorough 
assessment of the costs and benefits to manufacturers, customers, and 
the nation, and would be set at a level deemed technologically feasible 
and economically justified. This will include an investigation of 
manufacturer product and capital conversion costs as part of the MIA.
    In addition to these comments regarding the implementation of 
design options, DOE received comments regarding use of variable speed 
compressors, which were not analyzed in the engineering analysis for 
the preliminary analysis. In its written statement, the Joint Comment 
drew DOE's attention to Embraco, a manufacturer of variable speed 
compressors, and commented that DOE should incorporate variable speed 
compressors into their engineering analysis and refer to 2011 
residential refrigerator rule for guidance. (Joint Comment, No. 27 at 
p. 1) ASAP also asked if DOE had considered variable speed compressors 
manufactured by Embraco. (ASAP, No. 33 at p. 31) AMS commented that 
fractional horsepower variable speed compressors were not available in 
the United States anymore since they have been made obsolete by the 
supplier. (AMS, No. 33 at p. 27)
    DOE agrees with the Joint Comment that at least one variable speed 
compressor model with a suitable operating capacity range is available 
to BVM manufacturers. However, DOE is not aware of any beverage vending 
machines on the market or in prototype that use this or any other model 
of variable speed compressor. Additionally, in public comments and 
during manufacturer interviews, DOE was not provided any specific data 
on the performance or reliability of this technology were it to be 
implemented in beverage vending machines. In response to the comment 
regarding residential refrigerators, DOE agrees that the residential 
refrigerator rulemaking provides good guidance regarding the 
calculation of potential savings associated with the technology. 
However, DOE is concerned that the operating characteristics of 
beverage vending machines, including extended pull-down periods, may 
differ sufficiently from those experienced by other applications in 
which variable speed compressors have been effectively implemented. For 
this reason, DOE does not believe that the residential refrigerator 
experience provides adequate data regarding the potential energy 
impacts of variable speed compressors in BVM applications. Without 
application-specific energy and cost data for this technology in 
beverage vending machines or similar applications, DOE is not able to 
adequately predict the potential energy savings from such a technology 
and assess its cost-effectiveness against other design options. 
Additionally, DOE is not aware of any variable speed compressors using 
refrigerants allowable under the new EPA SNAP rules with operating 
capacity ranges nominally applicable to beverage vending machines.
    DOE requests comment on whether the conversion to use of any 
alternative refrigerant may impact the availability or relevance of any 
design options currently observed in equipment on the market (section 
VII.E of this NOPR).
    DOE requests data on the use of variable speed compressors in 
beverage vending machines (section VII.E of this NOPR).
    In the previous stages of this rulemaking, DOE requested comment 
regarding the maximum technologically feasible level of performance 
attainable with technologies currently on the market. During the 
preliminary analysis, DOE reviewed a wide range of information sources 
from which to draw data on baseline and improved vending machine 
performance. DOE assembled this information into cost-efficiency curves 
extending from the baseline to max tech for each equipment class and 
configuration examined through the use of the design options listed in 
Table IV.3. DOE reviewed and revised these cost-efficiency curves in 
this NOPR based on feedback from interested parties and input from 
manufacturers provided during the course of manufacturer interviews. 
DOE believes that these cost-efficiency curves capture the feasible 
levels of equipment performance to the extent possible at this stage in 
the analysis.

     Table IV.3--Design Options Modeled in the Engineering Analysis
------------------------------------------------------------------------
               Design option                            Notes
------------------------------------------------------------------------
Higher efficiency lighting................  e.g., LEDs
Higher efficiency evaporator fan motors...  e.g., Electronically
                                             commutated motors
Evaporator fan controls...................  ............................
Improved evaporator design................  ............................
Insulation increases or improvements......  e.g., Thicker insulation,
                                             vacuum insulated panels
Improved glass pack.......................  Class A and Combination A
                                             only
Higher efficiency condenser fan motors....  e.g., Electronically
                                             commutated motors
Improved condenser design.................
Higher efficiency compressors.............
Lighting low power modes..................  e.g., Lighting timers
Refrigeration low power modes.............  e.g., Timer-based cabinet
                                             temperature rise
------------------------------------------------------------------------

4. Manufacturer Production Costs
    In its engineering analysis, DOE estimates costs for manufacturers 
to produce equipment at the baseline and at increasingly higher levels 
of energy efficiency. In this NOPR, DOE based this manufacturer 
production cost model upon data from physical disassembly of units 
available on the market, corroborated with information from

[[Page 50486]]

manufacturer literature, discussions with industry experts, input from 
manufacturer interviews (see section IV.I.3 of this NOPR), and other 
sources. The baseline units modeled in the engineering analysis 
incorporated refrigerants allowable under SNAP regulations at the time 
of the effective date of any new or amended standards, namely propane 
and CO2. As such, the manufacturer production costs at the 
baseline and increasing levels of efficiency all reflect the costs 
incurred in producing equipment using acceptable refrigerants under the 
final SNAP regulations issued in 2015. The incremental cost associated 
with producing a given BVM unit using propane or CO2 
refrigerant, as compared to a similar BVM unit using R-134a refrigerant 
is accounted for through the use of these refrigerant-specific cost 
curves. Chapter 5 of the TSD provides a detailed description of the 
manufacturing cost analysis.

D. Markups Analysis

    DOE uses manufacturer-to-customer markups to convert the MSP 
estimates from the engineering analysis into customer purchase prices, 
which are subsequently used in the LCC and PBP analysis to evaluate how 
the increased cost of higher efficiency equipment compares to the 
annual and lifetime energy and operating cost savings resulting from 
such efficiency improvements. Accordingly, DOE estimates markups for 
baseline and all higher efficiency levels that are applied to the MSPs 
from the engineering analysis to obtain final customer purchase prices.
    In order to develop markups, DOE identified distribution channels 
(i.e., how the equipment is distributed from the manufacturer to the 
customer). Once proper distribution channels for each of the equipment 
classes were established, DOE relied on economic data from the U.S. 
Census Bureau and input from the industry to determine to what extent 
equipment prices increase as they pass from the manufacturer to the 
customer (see chapter 6 of the TSD).
    DOE identified three distribution channels, as described below:
    (1) Equipment Manufacturer [rarr]Vending Machine Operator (e.g., 
bottler, beverage distributor, large food operator)
    (2) Equipment Manufacturer [rarr]Distributor [rarr]Vending Machine 
Operator
    (3) Equipment Manufacturer [rarr]Distributor [rarr]Site Owner
    In the preliminary analysis public meeting, DOE was informed of an 
additional distribution channel wherein the equipment passes directly 
to large food service operators. (Crane Merchandising Systems, Public 
Meeting Transcript, No. 33 at pp. 63-64) DOE assumed that this 
distribution channel can be treated the same as the first distribution 
channel above, in which equipment goes directly from the manufacturer 
to the end user.
    DOE requests comment on distribution channels for beverage vending 
machines (section VII.E of this NOPR).

E. Energy Use Analysis

    The purpose of the energy use analysis is to establish an estimate 
of annual energy consumption (AEC) of beverage vending machines now and 
over the 30-year analysis period and to assess the energy-savings 
potential of different equipment efficiencies. DOE uses the resulting 
estimated AEC in the LCC and PBP analysis (section IV.F of this NOPR) 
to establish the customer operating cost savings of efficiency 
improvements considered. DOE also uses the estimate of energy use at 
the baseline and at higher levels of efficiency to estimate NES in the 
NIA (section IV.G of this NOPR).
    The energy use analysis assessed the estimated AEC of a beverage 
vending machine as installed in the field. DOE recognizes that a 
variety of factors may affect the actual energy use of a beverage 
vending machine in the field, including ambient conditions, use and 
stocking profiles, and other factors. However, very limited data exist 
on field energy consumption of beverage vending machines. As such, in 
the energy use analysis DOE estimated that the DEC produced by the DOE 
test procedure is representative of the average daily energy 
consumption of that BVM unit in an indoor environment. However, for 
beverage vending machines installed outdoors, DOE developed a 
methodology to account for the impact of ambient conditions on the 
average AEC. Therefore, to model the AEC of each BVM unit, DOE 
separately estimated the energy use of equipment installed indoors and 
outdoors, to account for the impact of ambient temperature and relative 
humidity on field-installed BVM energy use.
    As presented in the preliminary analysis, to determine AEC of BVM 
units installed indoors, DOE estimated that the DEC modeled in the 
engineering analysis and measured according to the DOE test procedure 
would be representative of the average energy consumption for that 
equipment every day of the year. Specifically, DOE believes beverage 
vending machines that are typically located inside industrial and 
commercial buildings are exposed to relatively constant temperature and 
relative humidity conditions throughout the year. DOE also believes 
that the nominal test conditions of (75 [deg]F and 45 percent relative 
humidity) are sufficiently representative of conditioned spaces such 
that further adjustment of the tested energy consumption is not 
necessary for beverage vending machines located indoors.
    To estimate the AEC from the DEC, DOE then multiplied the DEC 
values for a given BVM unit by 365 days per year. DOE estimated that 
Class A and Combination A beverage vending machines and a majority of 
Class B and Combination B beverage vending machines would all be 
installed inside.
    However, DOE understands that some Class B and Combination B 
beverage vending machines are installed outdoors. Class B and 
Combination B beverage vending machines installed outdoors will be 
subject to potentially more variable ambient temperature and relative 
humidity conditions than BVM units installed indoors. These differences 
also vary depending on which climatic region the beverage vending 
machine is located.
    During the 2009 BVM rulemaking, DOE modified its energy consumption 
model developed in the engineering analysis to reflect the equipment's 
thermal and compressor performance characteristics and to simulate the 
realistic performance of the machine exposed to varying temperature and 
relative humidity conditions (Chapter 7 of the 2009 BVM final rule TSD; 
Docket No. EERE-2006-STD-0125, No. 79). For the current analysis, DOE 
simplified its analysis by developing linear relationships between the 
modeled DEC as determined in accordance with the DOE test procedure and 
the AEC for Class B and Combination B beverage vending machines 
installed outdoors, as presented in the preliminary analysis. As such, 
DOE estimated the AEC of a given Class B or Combination B beverage 
vending machine installed outside by multiplying the DEC value by the 
linear equation determined from based on the 2009 BVM rulemaking 
analysis.
    DOE estimated the fraction of Class B machines located in outdoor 
settings, based on publicly available data from college campuses,\26\ 
and found that 16 percent of Class B machines were installed outdoors. 
DOE believes that

[[Page 50487]]

these data from college campuses are reasonably representative of BVM 
locations nationally due to the wide variety of building types and 
outdoor spaces on large college campuses, which can be correlated with 
the likely BVM locations expected.
---------------------------------------------------------------------------

    \26\ Beverage vending machine Outdoor Location and Elevated (90 
[deg]F) Outdoor Temperature Analysis. Lawrence Berkeley National 
Laboratory. June 2014. Available at http://eetd.lbl.gov/sites/all/files/lbnl-6744e.pdf.
---------------------------------------------------------------------------

    DOE requests comment on the conclusion that data from college 
campuses are reasonably representative of BVM locations nationally and 
on their use in estimating the proportion of Class B and Combination B 
beverage vending machines installed outdoors (section VII.E of this 
NOPR).
    DOE determined AEC estimates for each of the eight equipment class 
and refrigerant combinations modeled in the engineering analysis and 
presented in Table IV.4. That is, Class A, Class B, Combination A, and 
Combination B beverage vending machines were modeled individually for 
each of the two refrigerants used in these NOPR analyses: Propane (R-
290) and CO2 (R-744). However, while the engineering 
analysis considered three specific sizes (small, medium, and large) for 
Class A and Class B equipment, and two specific sizes (medium and 
large) for Combination A and B equipment, DOE based its energy use 
analysis on a ``representative size'' BVM for each equipment class. DOE 
determined this representative size based on a weighted average of the 
equipment sizes modeled in the engineering analysis. Because DOE does 
not believe there is a large spread of available refrigerated volumes 
in a given equipment class and because DOE does not anticipate the 
distribution of refrigerated volumes to change as a function of 
efficiency, DOE believes this simplifying assumption is justified and 
will not affect the results in a meaningful way. The representative 
sizes DOE used in its analysis for each equipment class are presented 
in Table IV.4.

    Table IV.4--Representative Size, in Terms of Refrigerated Volume
(ft\3\), for Each Equipment Class and Refrigerant Combination Modeled in
                         the Energy Use Analysis
------------------------------------------------------------------------
                                                         Representative
         Equipment class              Refrigerant         refrigerated
                                                          volume ft\3\
------------------------------------------------------------------------
Class A.........................  CO2................               30.0
                                  Propane............
Class B.........................  CO2................               23.4
                                  Propane............
Combination A...................  CO2................               10.3
                                  Propane............
Combination B...................  CO2................                4.3
                                  Propane............
------------------------------------------------------------------------

    DOE's methodology for estimating the energy use of Class A, Class 
B, Combination A, and Combination B beverage vending machines is 
discussed in more detail in chapter 7 of the NOPR TSD. In the following 
paragraph, DOE responds to specific comments received by interested 
parties on the energy use methodology DOE developed in the preliminary 
analysis.
    In response to the preliminary analysis, DOE received several 
comments regarding the prevalence of beverage vending machines 
installed outdoors. AMS and NAMA agreed that Class A machines are 
almost exclusively used indoors. (AMS, No. 29 at p. 4; NAMA, No. 32 at 
p. 5) AMS added that, although they produce Combination A machines that 
are rated for outdoor use, they acknowledge that this is a minor 
portion of shipments and should be considered negligible. (AMS, No. 29 
at p. 4) Natural Resources Canada (NRCan) asked for the source of the 
25 percent outdoor installations used in 2009 and if that information 
is more accurate than the 16 percent assumption used now. (NRCan, No. 
33 at p. 81) NEEA was unsure if 16 percent of machines were really 
representative of outdoor use and whether using distributions from 
college campuses was representative. (NEEA, No. 33 at p. 71-72)
    DOE appreciates the comments from AMS and NAMA corroborating DOE's 
assumptions regarding Class A and Combination A equipment. Based on 
these comments, DOE has continued to assume that all Class A and 
Combination A beverage vending machines are installed indoors in this 
NOPR analysis. In response to the comments from NRCan regarding the 
source of the percentage of Class B machines installed outdoors in the 
2009 BVM rulemaking, DOE based that estimate on engineering judgment 
and requested comment from manufacturers on this assumption. 74 FR 
44927 (August 31, 2009). No additional data were provided to inform 
this analysis, and as such, DOE concluded that the percentage of Class 
B machines installed outdoors was reasonably representative of BVM 
installations throughout the country.
    In response to NEEA's comment, DOE estimated the fraction of Class 
B beverage vending machines installed outdoors based on data regarding 
the BVM locations and types of vending machines found at six colleges 
and universities around the country. These campuses are thought to be 
fairly representative of the general BVM population because they have a 
mix of building types that mirror some of the major markets for 
beverage vending machines, including retail, commercial lodging, 
offices, public assembly, and outdoor spaces (see chapter 7 in the TSD 
for a full discussion of the building types represented in the sample 
from college campuses). From this research, DOE determined that 16 
percent of Class B beverage vending machines are installed outside and 
believes that this assumption is more reliable than the assumption of 
25 percent used in the 2009 BVM final rule.
    In the preliminary analysis, DOE developed state-level (including 
the District of Columbia) adjustment factors to determine the AEC of 
beverage vending machines located outdoors in different regions of the 
country. Such adjustment factors would make it possible for DOE to 
model variability in the percentage of beverage vending machines 
installed outdoors in different climates, if such data were available. 
In the preliminary analysis, DOE requested such data from interested 
parties. DOE received several comments regarding the use of adjustment 
factors to estimate the location-specific AEC for Class B and 
Combination B equipment in each state (including the District of 
Columbia) and DOE's request for additional data regarding the 
variability of equipment installed outdoors by state or climate region. 
NEEA asked how the adjustment factors were calculated and what they 
would be used for. (NEEA, No. 33 at p. 73-74) Southern California 
Edison (SCE) asked if the adjustment factor accounted for some of the 
accessories that may be left off by cold weather heaters. (SCE, No. 33 
at p. 74-75) NEEA suggested that DOE consider that more product would 
be dispensed in warmer weather and that may have an impact on the 
adjustment as well. (NEEA, No. 33 at p. 77-78)
    In response to NEEA's comment regarding the methodology used in 
developing the adjustment factors to determine the AEC by state, the 
adjustment factor for each state was determined by dividing the outdoor 
AEC for each state by the national average AEC reported in Tables 7.4.1 
and 7.4.2 of the 2009 BVM final rule TSD. The adjustment factor was 
applied to the calculated average AEC of a given beverage vending 
machine, determined using the scaling factor described above to 
translate the tested DEC of a given BVM model to an AEC value. In the 
preliminary analysis, DOE intended to apply the adjustment factors to 
generate state-level estimates of energy use for outdoor equipment that 
reflect relative numbers of units installed outdoors by state. Such 
data could then be averaged based on population-weights to generate

[[Page 50488]]

a nationally representative average AEC for outdoor equipment.
    This level of data specificity would be necessary to accommodate 
for regional or state-level variation in the installation of outdoor 
units. In the preliminary analysis, DOE requested comment on any 
regional variation in the incidence of BVM equipment installed 
outdoors, but did not receive any input or data from interested 
parties. DOE was also not able to identify any data that would support 
state-level or regional variation in the percentage of Class B and 
Combination B BVM units installed outdoors. As such, in the energy use 
analysis performed for this NOPR, DOE determined that there are 
insufficient data to support variations in outdoor installations in 
different climate areas and has assumed one nationally representative 
value. DOE thus believes that using state-level adjustment factors are 
not necessary and opted to use a national average AEC for outdoor 
equipment to simplify the analysis. This simplification does not affect 
the accuracy of the annual energy use results, since the adjustment 
factors were generated based on the national average AEC.
    DOE requests comment on its decision to disregard the adjustment 
factors calculated in the preliminary analysis thereby simplifying the 
energy use analysis by using the national average AEC values (section 
VII.E of this NOPR).
    In response to SCE's comment regarding the adjustment factor for 
accessories, such as cold weather heaters, DOE reiterates that these 
factors are based on modeling performed in support of the 2009 BVM 
final rule. In the 2009 BVM final rule, DOE did not model the energy 
use of cold weather heaters due to lack of information on their use and 
control and because they are not measured as part of the DOE test 
procedure rating. DOE had no data on how the energy use of these 
heaters would be impacted by the design options considered at each 
efficiency level. As such, DOE's analysis assumes that the incremental 
energy use of any electric resistance heating elements energized to 
prevent freezing in cold temperatures is not directly affected by 
improved efficiency levels considered by DOE in the BVM analysis and 
has not been considered in the analysis.
    DOE lacks sufficient data to consider the incidence of cold weather 
heaters in the energy use analysis or control methodologies for this 
technology. DOE notes that, potentially, not all beverage vending 
machines installed outdoors in climates experiencing extended periods 
below 32 [deg]F outside would include such a feature, as some Class B 
and Combination B beverage vending machines installed outdoors may be 
moved inside during cold-weather periods. In addition, even based on 
conservative assumptions regarding the likely use of electric heaters 
in beverage vending machines installed outdoors, the energy use of cold 
weather heaters in outdoor Class B and Combination B equipment would be 
small compared to the annual energy use of the machine. As such, DOE 
believes that accounting for the energy use of cold weather heaters in 
the energy use analysis would not significantly impact the national 
average energy consumption values used in the LCC and downstream 
analyses. Since DOE lacks sufficient data on which to base assumptions 
regarding representative control strategies and operational 
characteristics of such BVM accessories, and because DOE believes the 
impact of any such heaters on the national average energy consumption 
values would be small, DOE elected to continue to use the unmodified 
regression developed in the preliminary analysis, which does not 
account for the energy use of cold weather heaters, to estimate the 
national average AEC of outdoor Class B and Combination B equipment.
    DOE requests comment regarding whether the analysis should account 
for the impact of any incremental energy use associated with cold 
weather heaters on the national average energy consumption of Class B 
and Combination B equipment (section VII.E of this NOPR). If so, DOE 
also requests data on the incidence and control methodology of cold 
weather heaters in BVM equipment installed in cold climates (section 
VII.E of this NOPR).
    Regarding NEEA's comment that variables such as purchasing patterns 
may vary seasonally and impact energy use, DOE did not account for such 
influences since there are no robust data regarding how increased 
equipment usage increases energy use above the tested value or the 
extent of changes in number or frequency of purchases in different 
climatic conditions. As such, DOE continues to estimate that the energy 
use of the beverage vending machines as tested in accordance with the 
DOE test procedure is reasonably representative of equipment energy 
usage in the field for indoor installations, and has applied the 
climate based scaling factors as described to estimate outdoor annual 
energy use.
    DOE also acknowledges that most beverage vending machines are 
located inside conditioned spaces and will add to the building cooling 
load in the summer and reduce the building heating load in the winter. 
However, DOE notes that in its energy use analysis, DOE is most 
interested in the incremental improvements in energy consumption 
achieved by different design options and not the entire heat load 
contributed by a beverage vending machine. Based on similar analysis 
performed on self-contained commercial refrigeration equipment in 
support of recently published amended energy conservation standards for 
commercial refrigeration equipment, DOE believes that the net effect of 
these impacts are fairly modest in most cases. 78 FR 55890, 55926 
(September 11, 2013). DOE also believes that the added complexity of 
determining the overall impact on building space-conditioning loads is 
not justified given the variety of building types, BVM locations (e.g., 
outside, inside, or in vestibules), and HVAC system designs that would 
need to be taken into account.
    DOE requests comment on the energy use analysis methodology used to 
estimate the AEC of Class A, Class B, Combination A, and Combination B 
beverage vending machines located indoors and outdoors, as applicable 
(section VII.E of this NOPR).
    DOE requests comment on any other variables DOE should account for 
in its estimate of national average energy use for beverage vending 
machines (section VII.E of this NOPR).

F. Life-Cycle Cost and Payback Period Analyses

    New or amended energy conservation standards usually decrease 
equipment operating expenses and increase the initial installed price. 
DOE analyzes the net effect of new or amended standards on customers by 
evaluating the net LCC. To evaluate the net LCC, DOE uses the cost-
efficiency relationship derived in the engineering analysis and the 
energy costs derived from the energy use analysis. Inputs to the LCC 
calculation include the installed cost of equipment to the customer 
(customer purchase price plus installation cost), operating expenses 
(energy expenses and maintenance and repair costs), the lifetime of the 
unit, and a discount rate.
    Because the installed cost of equipment typically increases while 
operating costs typically decrease under new standards, there is a time 
in the life of equipment having higher-than-baseline efficiency when 
the net operating-cost benefit (in dollars) since the time of purchase 
is equal to the incremental first cost of purchasing the equipment. The 
time required for

[[Page 50489]]

equipment to reach this cost-equivalence point is known as the PBP.
    DOE uses Monte Carlo simulation and probability distributions to 
incorporate uncertainty and variability in the LCC and PBP analysis. 
DOE used Microsoft Excel combined with Crystal Ball\TM\ (a commercially 
available program) to develop LCC and PBP spreadsheet models that 
incorporate both Monte Carlo simulation and probability distributions. 
The LCC subgroup analysis includes an assessment of impacts on customer 
subgroups.
    DOE determined several input values for the LCC and PBP analysis 
including (1) customer purchase prices; (2) electricity prices; (3) 
maintenance, service, and installation costs; (4) equipment lifetimes; 
(5) discount rates; (6) equipment efficiency in the no-new-standards 
case; and (7) split incentives. The approach and data DOE used to 
derive these input values are described below.
1. Customer Purchase Prices
    DOE multiplied the MSPs estimated in the engineering analysis by 
the supply-chain markups to calculate customer purchase prices for the 
LCC and PBP analysis. DOE determined, on average, 15 percent of this 
equipment passes through a distributor or wholesaler, and 85 percent of 
the equipment is sold by a manufacturer directly to the end user. In 
the LCC and PBP analysis, approximately 15 percent of the Monte Carlo 
iterations include a distributor or wholesaler markup, while 85 percent 
of the iterations use a markup factor of 1.0, indicative of no 
additional markup on top of the MSPs (besides sales tax).
    DOE developed a projection of price trends for beverage vending 
machines in the preliminary analysis that, based on historical price 
trends, projected the MSP to decline by 1 percent from the 2014 MSP 
estimates through the 2019 assumed compliance date of new or amended 
standards. The preliminary analysis also projects an approximately 40 
percent decline from the MSP values estimated in 2013 to the end of the 
30-year NIA analysis period used in the NOPR.
    DOE received comments from stakeholders regarding the price 
learning in the life-cycle cost analysis. AMS disagreed with the 
current price trend because the impacts of the EPA SNAP program are not 
able to be included in the calculations. (AMS, No. 29 at p. 4) SVA 
commented that DOE should consider price trend differences between 
Class A glass front beverage vending machines and conventional (Class 
B) beverage vending machines. (SVA, No. 30 at p. 2) Advocates commented 
that price trends as used in the preliminary analysis are sufficient 
and that prices for overall BVM units are not likely to decline as 
quickly as LED and accessory prices. (Joint Comment, No. 27 at p. 2)
    DOE acknowledges the Advocates' comment supporting price trends. 
Regarding AMS's comment concerning the impact of SNAP on price trends 
of BVM equipment, DOE's analysis accounts for the impact of the SNAP 
rules on the U.S. beverage vending machine market.\27\ Specifically, 
this analysis reflects the promulgation of final rule 19 (80 FR 19454), 
which allows for the use of certain hydrocarbon refrigerants in BVM 
applications, and final rule 20, which changed the status of R-134a to 
unacceptable for BVM applications 80 FR 42870, 42917-42920 (July 20, 
2015). See appendix 8C of the NOPR TSD for a detailed discussion of the 
price trend numbers. In response to SVA's comment, DOE agrees that it 
would be better to have data very specific to individual equipment 
class price trends. However, such data are not available. The Producer 
Price Index (PPI) used in the analysis of price trends embodies the 
price trends of beverage vending machines as well as other vending 
machines. DOE performed a sensitivity analysis with price trends held 
constant, and found that doing so did not impact the selection of 
efficiency levels for TSLs. (See appendix 10D of the NOPR TSD.) Because 
DOE believes there is evidence of price learning in many appliances and 
equipment, and historical evidence of real price decline in beverage 
vending machines, DOE continued to include price learning based 
scenario for the NOPR.
---------------------------------------------------------------------------

    \27\ Docket No. EPA-HQ-OAR-2014-0198 and Docket No. EPA-HQ-OAR-
2013-0748.
---------------------------------------------------------------------------

    DOE re-examined the data available and updated the price trend 
analysis for this NOPR analysis. DOE continued to use the automatic 
merchandising machines PPI but included historical shipments data from 
the U.S. Census Bureau's Current Industrial Reports to examine the 
decline in inflation adjusted PPI as a function of cumulative beverage 
vending machine shipments. Using these data for the beverage vending 
machines price trends analysis and DOE's projections for future 
shipments yields a price decline of roughly 10 percent over the period 
of 2014 through 2048. For the LCC model, between 2014 and 2019, the 
price decline is 1 percent. DOE used this revised price trend in the 
NOPR analysis, which reflects analytical techniques more consistent 
with the methodology DOE has preferentially used for other appliances. 
See appendix 8C of the TSD for further details on the price learning 
analysis.
2. Energy Prices
    DOE derived electricity prices from the EIA energy price data for 
regional average energy price data for the commercial and industrial 
sectors (manufacturing facilities). DOE used projections of these 
energy prices for commercial and industrial customers to estimate 
future energy prices in the LCC and PBP analysis. EIA's Annual Energy 
Outlook 2014 (AEO2014) was used as the default source of projections 
for future energy prices.
    DOE developed estimates of commercial and industrial electricity 
prices for each state and the District of Columbia. DOE derived average 
regional energy prices from data that are published annually based on 
EIA Form 826. DOE then used EIA's AEO2014 price projections to estimate 
regional commercial and industrial electricity prices in future years. 
DOE assumed that 60 percent of installations were in commercial 
locations and 40 percent were in industrial locations.
3. Maintenance, Repair, and Installation Costs
    DOE considered any expected changes to maintenance, repair, and 
installation costs for the beverage vending machines covered in this 
rulemaking. Typically, small incremental changes in equipment 
efficiency incur little or no changes in repair and maintenance costs 
over baseline equipment. The repair cost is the cost to the customer 
for replacing or repairing components in the BVM equipment that have 
failed. The maintenance cost is the cost to the customer of maintaining 
equipment operation. There is a greater probability that equipment with 
efficiencies that are significantly higher than the baseline will incur 
increased repair and maintenance costs, as such equipment is more 
likely to incorporate technologies that are not widely available or are 
less reliable than conventional, baseline technologies.
    DOE based repair costs for baseline equipment on data in a Foster-
Miller Inc.\28\ report with adjustments to account for LED lighting. 
Maintenance costs include both preventative maintenance and annualized 
cost of refurbishment. Two ENERGY STAR

[[Page 50490]]

reports indicate that beverage vending machines are refurbished every 4 
to 5 years; therefore, DOE estimated that beverage vending machines 
undergo refurbishment every 4.5 years. DOE used RSMeans \29\ data for 
preventative maintenance costs and used data from the 2009 BVM final 
rule \30\ for the annualized cost of refurbishment.
---------------------------------------------------------------------------

    \28\ Foster-Miller, Inc. Vending Machine Service Call Reduction 
Using the VendingMiser, February 18, 2002. Report BAY-01197. 
Waltham, MA.
    \29\ RSMeans Facilities Maintenance & Repair 2010, 17th Annual 
Edition. 2009. Kingston, MA.
    \30\ U.S. Department of Energy--Office of Energy Efficiency and 
Renewable Energy. Chapter 8 Life-Cycle Cost And Payback Period 
Analyses, Beverage Vending Machines Final Rule Technical Support 
Document. 2009. Washington, DC. (Last accessed January 2015.) 
https://www1.eere.energy.gov/buildings/appliance_standards/commercial/pdfs/bvm_final_fr_tsd_chapter_8.pdf.
---------------------------------------------------------------------------

    In the 2009 BVM rulemaking, DOE assumed that more-efficient 
beverage vending machines would not incur increased installation costs. 
Further, DOE did not find evidence of a change in repair or maintenance 
costs by efficiency level with the exception of repair cost decreases 
for efficiency levels that used LED lighting.
    NAMA commented that more efficient equipment uses newer, more 
expensive technology with no proven track record and, as such, higher 
efficiency levels will yield higher repair costs. (NAMA, No. 32 at p. 
3) DOE also received comment that different refrigerants might have 
different maintenance costs. (SCE, Public Meeting Transcript, No. 33 at 
p. 93)
    DOE has not included different installation, maintenance, and 
repair costs for equipment with greater efficiency than the baseline 
efficiency models given the uncertainty of whether costs might actually 
increase or decrease with more efficient equipment. DOE has no 
information to suggest that maintenance costs vary with efficiency. 
DOE's repair costs are based on the annualized repair cost for baseline 
equipment from data in the Foster-Miller Inc. 2002 report,\31\ adjusted 
for fewer lighting repairs and replacements (due to longer lifetimes of 
LED fixtures as compared to fluorescents), and to reflect 2014 prices 
(see chapter 8 of the NOPR TSD). DOE does not currently have sufficient 
data regarding the individual cost and lifetime or failure rate of each 
technology to account for variations in higher efficiency technologies.
---------------------------------------------------------------------------

    \31\ Foster-Miller, Inc. Vending Machine Service Call Reduction 
Using the VendingMiser, February 18, 2002. Report BAY-01197. 
Waltham, MA.
---------------------------------------------------------------------------

    Regarding SCE's comment that refrigerants might have different 
maintenance and repair costs, DOE accounted for this by applying the 
same assumptions regarding increased cost of refrigeration system 
components used in the engineering analysis (see chapter 5 of the TSD) 
to the refrigeration system components and costs from the Foster Miller 
report. Specifically, DOE assumed that CO2 and propane 
refrigeration systems were 50 percent more expensive than R-134a 
refrigeration systems. As such, this results in a higher average annual 
repair cost for CO2 and propane beverage vending machines of 
approximately $30 relative to equipment that uses HFC. DOE acknowledges 
that propane may incur higher maintenance costs due to more stringent 
safety requirements; however, such increased costs are difficult to 
quantify at this time, as propane has only very recently become an 
approved refrigerant on the EPA SNAP list. 80 FR 19454, 19491 (April 
10, 2015).
    DOE requests comment on the maintenance and repair costs modeled in 
the LCC analysis and especially appreciates additional data regarding 
differences in maintenance or repair costs that vary as a function of 
refrigerant, equipment class, or efficiency level (section VII.E of 
this NOPR).
4. Equipment Lifetime
    DOE used information from various literature sources and input from 
manufacturers and other interested parties to establish average 
equipment lifetimes for use in the LCC and subsequent analyses. The 
2009 final rule assumed that average BVM lifetime is 10 years. 74 FR 
44914, 44927 (August 31, 2009). For this NOPR, a longer average 
lifetime of 13.5 years is assumed based on refurbishments occurring 
twice during the life of the equipment at an interval of 4.5 years. 
This estimate is based on a 2010 ENERGY STAR webinar,\32\ which 
reported average lifetimes of 12 to 15 years, and data on the 
distribution of equipment ages in the stock of beverage vending 
machines in the Pacific Northwest from the Northwest Power and 
Conservation Council 2007 Regional Technical Forum \33\ (RTF), which 
observed the age of the units in service to be approximately 8 years on 
average. Also, in response to the framework document, AMS commented 
that their machines were built to last 15 years (AMS, No. 17 at p. 12). 
DOE further assumed in the preliminary analysis that more efficient 
equipment will not have different lifetimes than the baseline 
equipment. SVA agreed with DOE's assumption that new technologies will 
not impact equipment lifetimes. (SVA, No. 30 at p. 2) DOE did not find 
evidence to the contrary, so it has maintained this assumption in the 
current analysis. This is supported by the comment made by AMS 
regarding the lifetime of their equipment.
---------------------------------------------------------------------------

    \32\ USEPA (2010) Always Count Your Change, How ENERGY STAR 
Refrigerated Vending Machines Save Your Facility Money and Energy. 
Available online: http://www.energystar.gov/ia/products/vending_machines/Vending_Machine_Webinar_Transcript.pdf. Accessed 
May 16, 2014.
    \33\ Haeri, H., D. Bruchs, D. Korn, S. Shaw, J. Schott, 
Characterization and Energy Efficiency Opportunities in Vending 
Machines for the Northwestern US Market. Prepared for Northwest 
Power and Conservation Council Regional Technical Forum by Quantec, 
LLC and The Cadmus Group, Inc. Portland, OR. July 24, 2007.
---------------------------------------------------------------------------

    In the preliminary analysis stage in the rulemaking, DOE received 
comments about equipment lifetimes. NEEA requested confirmation that 
refurbishments are included in maintenance and repair costs. (NEEA No. 
33 at p. 116) NEEA requested clarification on when DOE was accounting 
for refurbishments in their analysis. (NEEA, No. 33 at p. 108) AMS 
agreed that the lifetime estimations presented are a reasonable 
approximation of real-world BVM lifetimes. AMS also stated that they 
believe the efficiency level will have an impact on BVM lifetimes. AMS 
believes that designs for higher efficiency include technologies that 
are less mature and would likely lower the lifetimes of the equipment 
until these technologies are more mature. (AMS, No. 29 at p.5)
    As discussed in section IV.F.3 of this NOPR, refurbishment costs 
are included in the maintenance costs, and a discussion of how 
maintenance and repair costs are derived is in chapter 8 of the NOPR 
TSD. DOE acknowledges AMS's comment regarding efficiency levels' 
potential impact on BVM lifetimes. However, without reliable data, DOE 
did not have justification to establish different lifetimes based on 
the considered efficiency levels. DOE believes a lifetime of 13.5 years 
across efficiency levels is a representative lifetime assumption for 
beverage vending machines. DOE used this assumption in its analysis for 
this NOPR.
    DOE notes that assumptions regarding equipment lifetime and 
refurbishment cycles also affect DOE's shipments model, which is 
discussed in section IV.G.1 of this NOPR.
    DOE requests comment on the assumed lifetime of beverage vending 
machines and if the lifetime of beverage vending machines is likely to 
be longer or shorter in the future (section VII.E of this NOPR).
    DOE requests comment on its assumption that a beverage vending 
machine will typically undergo two

[[Page 50491]]

refurbishments during the course of its life and if refurbishments are 
likely to increase or decrease in the future (section VII.E of this 
NOPR). DOE also requests comment on the applicability of this 
assumption to all equipment classes (section VII.E of this NOPR).
    DOE requests further input or evidence regarding any technology 
options considered that would be expected to reduce overall equipment 
lifetimes and if so, by how much (section VII.E of this NOPR).
5. Discount Rates
    DOE developed discount rates by estimating the average cost of 
capital to companies that purchase beverage vending machines covered 
under this rulemaking. DOE commonly uses the cost of capital to 
estimate the present value of cash flows to be derived from a typical 
company project or investment. Most companies use both debt and equity 
capital to fund investments, so the cost of capital is the weighted-
average cost to the firm of equity and debt financing.
6. Equipment Efficiency in the No-New-Standards Case
    To accurately analyze the incremental costs and benefits of the 
proposed standard levels, DOE's analyses consider the projected 
distribution of equipment efficiencies in the no-new-standards case 
(the case without new energy efficiency standards). That is, DOE 
calculates the percentage of customers who would be affected by a 
standard at a particular efficiency level (in the LCC and PBP analysis, 
discussed in this section IV.F), as well as the national benefits (in 
the NIA, discussed in section IV.G) and impacts on manufacturers (in 
the MIA, discussed in section IV.I) recognizing that a range of 
efficiencies currently exist in the market place for beverage vending 
machines and will continue to exist in the no-new-standards case.
    To estimate the efficiency distributions for each equipment class, 
DOE relied on all publicly available energy use data. Specifically, the 
market efficiency distribution was determined separately for each 
equipment class and for each refrigerant. For equipment for which 
certification information was available in the DOE certification \34\ 
and ENERGY STAR databases,\35\ these data were used to determine the 
efficiency distribution of models within the equipment class, which 
only included Class B CO2 equipment.
---------------------------------------------------------------------------

    \34\ https://www.regulations.doe.gov/ccms.
    \35\ http://www.energystar.gov/productfinder/product/certified-vending-machines/results.
---------------------------------------------------------------------------

    For Class A and Class B equipment that is not represented in DOE's 
combined BVM models database (Class A CO2 equipment and 
Class A and Class B propane equipment), were assumed to be all ENERGY 
STAR compliant in the no-new-standards case. DOE made this assumption 
because DOE believes that, given the desire by most major bottlers for 
ENERGY STAR-listed equipment, if a manufacturer were to redesign a case 
to use a new refrigerant, it is likely that they would also bring the 
model up to ENERGY STAR performance levels. Or, if a manufacturer did 
not reengineer the model to meet the ENERGY STAR level independently, 
DOE assumed that it is likely that a manufacturer would use the same 
case and basic accessory set (i.e., non-refrigeration system 
components) available on other similar ENERGY STAR-listed models using 
R-134a, changing only the compressor, as opposed to building separate 
less efficient components for the propane cases. Under these 
assumptions, DOE determined the ENERGY STAR performance level for each 
equipment class and refrigerant based both on the absolute DEC level, 
as well as the design option set included in such level. Both analysis 
approaches resulted in selection of the first efficiency level above 
the baseline, or EL 1, for Class A and Class B propane equipment and 
for Class A CO2 beverage vending machines. Therefore, all 
shipments of Class A and Class B propane, as well as Class A 
CO2 are assumed to be at EL 1, which corresponds to the 
ENERGY STAR level for Class A equipment and slightly below ENERGY STAR 
for Class B equipment (ENERGY STAR is EL 2 for Class B equipment).
    DOE requests comment on its assumption that all baseline Class A 
and Class B propane and Class A CO2 equipment would be EL 1 
(section VII.E of this NOPR).
    For Combination A and Combination B beverage vending machines, DOE 
notes that very little data exist regarding the efficiency distribution 
of such equipment. However, DOE has observed that all manufacturers of 
Combination A and Combination B equipment also produce Class A and/or 
Class B equipment. Therefore, based on the same analysis methodology 
used for Class A and Class B propane equipment and Class A 
CO2 equipment, DOE estimated the efficiency distribution of 
Combination A and Combination B equipment based on the design option 
set reflected in the efficiency distribution for Class A and Class B 
equipment that are currently available on the market. Specifically, DOE 
assumed that it is likely that a manufacturer would use the same basic 
cabinet design and feature set available on combination vending 
machines as are available on similar Class A or Class B equipment, as 
opposed to developing separate, less efficient designs for their 
combination models. However, DOE notes that there are some BVM 
manufacturers that produce only Class A and/or Class B equipment and 
that these manufacturers typically produce the most efficient units. To 
reflect this fact, DOE assumed that the design option set corresponding 
to the ENERGY STAR levels for Class A and Class B equipment, which is 
the most common design, represented the maximum efficiency for 
combination equipment and an equivalent market share for combination 
equipment. That is, the market share at the ENERGY STAR level for Class 
A and Class B equipment was assumed to be applicable to the efficiency 
level corresponding to a similar equipment design (but not necessarily 
similar DEC) for Combination A and Combination B equipment, 
respectively. The remaining shipments were equally distributed between 
the ``ENERGY STAR equivalent'' efficiency level and the baseline 
efficiency level, or EL 0.
    To project this efficiency distribution over the analysis time 
frame in the no-new-standard case, DOE assumed that the efficiency 
distribution that currently exists in the market would be maintained 
over the analysis period (2019-2048). Chapter 8 of this NOPR TSD 
provides more detail about DOE's approach to developing no-new-
standards case efficiency distributions.
    DOE requests comment on its assumption that Combination A and 
Combination B beverage vending machines have efficiency distributions 
similar to Class A and Class B equipment because manufacturers will use 
the same cabinet and similar components in the combination machines as 
the conventional Class A and Class B equipment (section VII.E of this 
NOPR).
    In the preliminary analysis stage of this rulemaking, DOE received 
several comments regarding the efficiency distribution of BVM equipment 
and underlying data. AMS disagreed with the current approach to 
estimate the efficiencies of equipment shipments because of the impact 
of the EPA SNAP program and the optimistic assumption of 93 percent 
Energy Star compliance. AMS also stated that since combination machines 
are not subject to DOE rules, shipments of combination machines with 
operating efficiencies less than EL0

[[Page 50492]]

are more common. (AMS, No. 29 at p. 5-6) SVA commented that Class A and 
B data in the Energy Star and CCMS databases are too low due the 
lighting systems being shut down during testing. (SVA, No. 30 at p. 2)
    In response to AMS's comment regarding the impact of EPA's SNAP on 
ENERGY STAR compliance, DOE notes that it independently developed 
efficiency distributions for each equipment class and refrigerant. As 
stated previously, for Class A CO2 equipment and Class A and 
B propane equipment, DOE developed no-new-standards case efficiency 
distributions based on the assumed efficiency level of equipment when 
actual model performance data did not exist. Based on DOE's engineering 
data, DOE does not anticipate difficulty in these alternative 
refrigerants meeting ENERGY STAR performance levels. DOE notes that 
some Class B CO2 BVM models are currently certified in the 
ENERGY STAR database and propane is inherently a more efficient 
refrigerant than CO2.
    Regarding the efficiency distribution of combination machines, as 
stated above, DOE assumed that combination vending machines enter the 
market at efficiency levels similar to, but slightly less than, the 
comparable Class A and Class B efficiency distributions. In response to 
AMS's comment, each efficiency level is uniquely defined for each 
equipment class and EL0 represents the baseline efficiency for 
Combination A and Combination B equipment. DOE acknowledges that 
Combination A and Combination B equipment classes may be less efficient 
than Class A and B equipment because these classes have not previously 
been subject to standards. Therefore, DOE designed the EL0 level for 
these classes to reflect the minimum efficiency combination equipment 
that may currently exist in the market. Based on the definition of EL0 
as the baseline or minimum efficiency for each equipment class, it is 
not possible for equipment to have lower efficiency than the baseline. 
See chapter 5 of the NOPR TSD for a discussion of the technology 
options that define the baseline Combination A and B equipment, which 
define EL0.
    In response to SVA's comment regarding the accuracy of the ENERGY 
STAR and CCMS data for Class A and Class B equipment, DOE acknowledges 
that currently manufacturers can utilize certain types of lighting 
controls within the ENERGY STAR and CCMS testing databases that comply 
with the DOE test procedure for beverage vending machines at 10 CFR 
431.294. Specifically, ASHRAE Standard 32.1-2010, which is currently 
incorporated by reference in the DOE test procedure, specifies that 
machines may be tested with energy management controls that are 
``permanently operational and not capable of being adjusted by a 
machine operator'' operable. However, in absence of other information, 
DOE decided to continue using the ENERGY STAR and CCMS data to develop 
no-new-standards case efficiency levels. DOE notes that the recently 
published 2015 BVM test procedure final rule adopted a new Appendix A 
that contains the test procedure that should currently be used to 
certify equipment with existing energy conservation standards. Several 
clarifications were adopted in Appendix A, including the specification 
that, while energy management systems that cannot be adjusted by the 
machine operator may be employed, all lighting is to be illuminated to 
the maximum extent throughout the test. DOE notes that such treatment 
may be different than SVA's interpretation of the test procedure at the 
time of commenting, as SVA submitted their comment prior to the 
publication of the test procedure final rule.
7. Split Incentives
    DOE acknowledges that in most cases the purchasers of beverage 
vending machines (a bottler or a vending services company) do not pay 
the energy costs for operation and thus would not directly reap any 
energy cost savings from more-efficient equipment. However, DOE 
believes that BVM owners would seek to pass on higher equipment costs 
to the users who pay the energy costs, if possible. DOE understands 
that the BVM owner typically has a financial arrangement with the 
company or institution on whose premises the beverage vending machine 
is located, in which the latter may pay a fee or receive a share of the 
revenue from the beverage vending machine. Thus, DOE expects that BVM 
owners could modify the arrangement to effectively pass on higher 
equipment costs. Therefore, DOE's LCC and PBP analysis uses the 
perspective that the company or institution on whose premises the 
beverage vending machine is located pays the higher equipment cost and 
receives the energy cost savings. DOE acknowledges that there is 
uncertainty about the pass-through of higher equipment costs, and thus 
it requests comments concerning the extent to which such pass-through 
occurs in the BVM market.
    DOE also received comments about the split incentives used in the 
LCC analysis in the preliminary analysis stage of the rulemaking. AMS 
commented that it has no direct knowledge of the financial arrangements 
between BVM owners and the party that pays for the energy costs and 
whether increased costs can be passed to the party that pays the energy 
costs. (AMS, No. 29 at p. 5) SVA commented that additional equipment 
costs would not be passed along to those who pay the energy costs. 
(SVA, No. 30 at p. 2) NEEA commented that it was aware of one large 
bottler that passes the electricity cost directly through the vended 
product. (NEEA, Public Meeting Transcript, No. 33 at p. 97)
    DOE acknowledges the comments regarding whether energy costs are 
passed onto the beverage vending machine owners, but given the 
uncertainty on the subject and absence of better information, DOE 
believes that its approach is reasonable to apply.

G. National Impact Analysis

    The NIA assesses the NES and the NPV from a national perspective of 
total customer costs and savings expected to result from new or amended 
energy conservation standards at specific efficiency levels (i.e., TSL) 
for each equipment class of beverage vending machines. DOE calculates 
the NES and NPV based on projections of annual equipment shipments, 
along with the AEC and total installed cost data from the LCC analysis. 
For the NOPR analysis, DOE forecasted the energy savings, operating 
cost savings, equipment costs, and NPV of customer benefits for 
equipment sold from 2019 through 2048 (the expected year in which the 
last standards-compliant equipment is shipped during the 30-year 
analysis).
    DOE evaluates the impacts of new and amended standards by comparing 
base-case without such standards with standards-case projections. The 
no-new-standards case characterizes energy use and customer costs for 
each equipment class in the absence of any amended energy conservation 
standards. DOE compares these no-new-standards case projections with 
projections characterizing the market for each equipment class if DOE 
adopted the new and amended standards at each TSL. For the standards 
cases, DOE assumed a ``roll-up'' scenario in which equipment at 
efficiency levels that do not meet the standard level under 
consideration would ``roll up'' to the efficiency level that just meets 
the proposed standard level, and equipment already being purchased at 
efficiency levels at or above the proposed standard level would remain 
unaffected.
    DOE uses a spreadsheet model to calculate the energy savings and 
the

[[Page 50493]]

national customer costs and savings from each TSL. The NOPR TSD and 
other documentation that DOE provides during the rulemaking help 
explain the models and how to use them, and interested parties can 
review DOE's analyses by interacting with these spreadsheets. The NIA 
spreadsheet model uses average values as inputs (rather than 
probability distributions of key input parameters as used in the LCC). 
To assess the effect of input uncertainty on NES and NPV results, DOE 
developed its spreadsheet model to conduct sensitivity analyses by 
running scenarios on specific input variables.
    For the current analysis, the NIA used projections of energy price 
trends from the AEO2014 reference case. In addition, DOE analyzed 
scenarios that used inputs from the AEO2014 low economic growth and 
high economic growth cases. These cases have lower and higher energy 
price trends, respectively, compared to the reference case. NIA results 
based on these cases are presented in appendix 10E of the NOPR TSD.
    A detailed description of the procedure to calculate NES and NPV 
and inputs for this analysis are provided in chapter 10 of the NOPR 
TSD.
1. Shipments Analysis
    DOE uses forecasts of annual product shipments to calculate the 
national impacts of standards (NES and NPV) and to calculate the future 
cash flows of manufacturers.\36\ DOE developed shipments forecasts 
based on an analysis of key market drivers for the particular 
equipment. In DOE's shipments model, shipments of equipment are driven 
by stock replacements assuming that the overall population of beverage 
vending machines will slightly decrease over the next several decades.
---------------------------------------------------------------------------

    \36\ DOE uses all available data on manufacturer model 
availability, shipments, or national sales to develop estimates of 
the number of BVM units of each equipment class sold in each year of 
the analysis period. In general one would expect a close 
correspondence between shipments and sales and a reasonable 
correlation between model availability and sales.
---------------------------------------------------------------------------

    In the preliminary analysis, DOE estimated that the current stock 
of units installed in the field is 2.6 million. While it is true that 
new geographical locations may add vending machines to the current 
stock, DOE stated that many places are removing vending machines, and 
as such, that total stock will continue to decline. In the preliminary 
analysis, DOE used publicly available reports from ENERGY STAR on the 
market penetration of ENERGY STAR qualified machines to estimate total 
sales from 2005 to 2012. These reports indicated that shipments of new 
equipment have remained stagnant at approximately 100,000, and DOE 
assumed this would continue into the future. Therefore, in the 
preliminary analysis, DOE estimated that the total stock of beverage 
vending machines would decline to 1.51 million by 2019, and then 
stabilize at around 1.45 million through to 2050. DOE also estimated 
that all new shipments of BVM units were to replace existing equipment 
at the end of its useful life, consistent with the assumption of 
declining stock and the fact that the number of retiring units far 
exceeds units shipped.
    SVA commented that DOE's shipments assumptions are too high. Sanden 
estimated that shipments are closer to 35,000 units a year and have 
been decreasing the past 7 years. (SVA, No. 30 at p. 3) An unidentified 
commenter during the public meeting stated that DOE's estimate of 
100,000 shipments is too high. (Public Meeting Transcript, No. 33 at p. 
107) In discussion of shipments, AMS stated that their equipment would 
all be classified as size Medium Class A and their combination machines 
would be classified in the small volume category. (AMS, No. 29 at p. 4)
    DOE revised its shipments estimate in the NOPR analysis based on 
available information and estimates provided by manufacturers in 
response to the preliminary analysis phase of this rulemaking through 
the manufacturer interview process (see section IV.I.3 of this NOPR) to 
45,000 new shipments per year in 2014. DOE modeled historical shipments 
for the period between 2006 and 2014 by assuming shipments of beverage 
vending machines decreased linearly from approximately 100,000 units 
per year, which was assumed in the 2009 BVM final rule (74 FR 44914, 
44928, (August 31, 2009)) to 45,000 units per year. Based on these 
shipments, by 2014, the estimated stock has dropped from approximately 
3M to 2.2M units surviving. DOE notes that if shipments were maintained 
around 45,000 units per year over the 30-year analysis period, this 
would result in a dramatic decline in overall stock of beverage vending 
machines in the United States and would reflect many current BVM owners 
removing BVM units from the marketplace permanently. Specifically, 
constant shipments of 45,000 would result in an 80 percent permanent 
reduction in BVM stock to approximately 600,000 units starting around 
2030. Such a scenario would represent a significant change in the 
availability of vending machines in the nation and viability of the BVM 
industry, and DOE has not been able to identify any literature, data, 
or information that would support such a drastic change in the 
distribution of BVM units in the United States. As noted in chapter 9 
of the preliminary analysis TSD, DOE referenced any available market 
literature as well as information regarding trends to limit 
availability of sugary beverages and snack food, particularly in 
schools, but notes that such information is extremely limited. DOE also 
notes that the types of vended products available in beverage vending 
machines are not limited to soda or other sugary beverages and that 
sales of water, energy drinks, and sports drinks have been increasing 
over the past several years.\37\ Lacking any data indicating or 
supporting a significant reduction in availability or deployment of 
beverage vending machines, DOE believes it is reasonable to assume that 
the current estimate of 45,000 new shipments per year represents a low 
point and that shipments will recover overtime to maintain reasonably 
constant stocks of beverage vending machines into the future.
---------------------------------------------------------------------------

    \37\ Vending Times Census of the Industry 2013 and 2014. 
Available at www.vendingtimes.com.
---------------------------------------------------------------------------

    For the shipments model in this NOPR, DOE increased the historical 
shipments values between 1998 and 2006 by 18 percent to reflect the 
fact that the 2009 BVM final rule shipments model addresses only Class 
A and Class B equipment, not combination equipment. DOE estimates that 
combination machines represent 18 percent of total beverage vending 
machine shipments, as discussed further in section IV.G.1.a. Increasing 
the shipments and stock of beverage vending machines assumed in the 
2009 BVM final rule resulted in a stock of 3.1 M BVM units in the 
United States in 2006. Between 2006 and 2014 DOE estimated that, 
consistent with SVA's observation that shipments have been declining 
over the past several years, shipments declined linearly from 118,000 
in 2006 to 45,000 in 2014. Based on these shipments, by 2014, the 
estimated stock has dropped to 2.2M units surviving in 2014.
    DOE modeled future shipments of new beverage vending machines from 
2014-2048 based on data from Vending Times Census of the Industry 2014 
\38\ that reported BVM stock trends in the commercial and industrial 
building sectors, as well as specific commercial and industrial 
building sectors where

[[Page 50494]]

beverage vending machines are commonly deployed. For each commercial 
and industrial building sector, DOE modeled an average annual 
percentage reduction in stock, as shown in Table IV.5, based on an 
assumed percentage reduction in BVM units for different commercial 
building uses. The number of buildings for each sector was also 
evaluated based on data available from the 2012 Commercial Building 
Energy Consumption Survey (CBECS),\39\ and an average increase in 
number of buildings was calculated by comparing 2012 CBECS data to 
historical 2003 CBECS data. Such a method accounts for the estimated 
growth in commercial buildings and decline in BVM units deployed in 
each commercial and industrial building sector individually. Then, to 
calculate the estimated BVM stock in future years through 2048, a 
building weighted average of average annual stock reductions was 
calculated for the industry overall and applied to current stock 
information starting in 2014. The estimated stock in 2048, based on 
this method is 1.8M, a 20 percent decrease from the 2.2M estimated in 
2014. When accounting for the growth in number of buildings in the 
applicable commercial and industrial building sectors, this represents 
a decline in average saturation of beverage vending machines from 0.77 
beverage vending machines per building in 2014 to 0.35 beverage vending 
machines per building in 2048.
---------------------------------------------------------------------------

    \38\ Vending Times Census of the Industry 2014. Available at 
www.vendingtimes.com.
    \39\ http://www.eia.gov/consumption/commercial/reports/2012/preliminary/index.cfm.

 Table IV.5--Average Annual Percent Reduction in BVM Stock and Growth in
 Number of Buildings for Each Industrial Sector and the Industry Overall
------------------------------------------------------------------------
                                                        Annual growth in
Commercial and industrial building   Average annual %    # of buildings
             sector *                reduction in BVM   (est. from CBECS
                                          stock             data) *
------------------------------------------------------------------------
Plants, Factories.................              0.29%              3.01%
Schools & Colleges and                           0.74               0.09
 Universities.....................
Public Locations..................               0.38              -0.80
Government and Military...........               0.29               2.03
Offices, Office Complexes.........               0.74               2.54
Hospitals, Nursing Homes..........               1.47               2.41
Other Locations...................               0.45               1.27
                                   -------------------------------------
    Total.........................               0.55               1.78
------------------------------------------------------------------------
* Note that the commercial and industrial building sectors assumed in
  this analysis correspond to those referenced in the 2013 Vending Times
  Census of the Industry. DOE mapped the CBECS building types to these
  commercial and industrial building sectors and provides a description
  of that mapping in chapter 9 of the NOPR TSD.

    For more information on DOE's shipments estimates, the shipments 
analysis assumptions, and details on the calculation methodology, refer 
to chapter 9 of the NOPR TSD.
    DOE requests comment on its assumptions regarding historical 
shipments between 1998 and 2014 (section VII.E of this NOPR). DOE also 
requests data from manufacturers on historical shipments, by equipment 
class, size, and efficiency level, for as many years as possible, 
ideally beginning in 1998 until the present (section VII.E of this 
NOPR).
    DOE requests comment on its assumptions regarding future shipments. 
Specifically, DOE requests comment on the stock of BVM units likely to 
be available in the United States or in particular commercial and 
industrial building sectors over time (section VII.E of this NOPR). DOE 
also requests comment on the number of beverage vending machines that 
are typically installed in each location or building in each industry 
and if this is likely to increase or decrease over time (section VII.E 
of this NOPR).
    DOE requests comment on its assumptions regarding likely reduction 
in stock in different commercial and industrial building sectors in 
which beverage vending machines are typically installed (section VII.E 
of this NOPR). DOE also requests comment on other factors that might be 
influencing an overall reduction in BVM stock and if this trend is 
likely to continue over time (section VII.E of this NOPR).
    In this shipments analysis, DOE assumed that the lifetimes of 
beverage vending machines will remain constant over the 30-year 
analysis period. However, DOE notes that the number of refurbishments a 
piece of equipment undergoes and its approximate lifetime will impact 
its persistence in the market and the need for new units to replace 
retiring old stock.
    DOE also notes that changes in the availability of new refrigerants 
and limitation of certain other refrigerants for BVM applications may 
impact the overall BVM market in the United States and, specifically, 
the future shipments of new beverage vending machines through 2048. 
However, DOE has no data on which to base any assumptions regarding how 
changes in refrigerant availability would impact shipments now or in 
the future. However, DOE notes that it does not expect the specific 
refrigerant used in a given beverage vending machine to impact demand 
for beverage vending machines and overall equipment stocks over time. 
As such, DOE maintains that the historical Vending Times data and 
stock-based analysis approach that DOE employed to develop shipment 
assumptions for this NOPR are appropriate and represent the best 
available information about future shipments of beverage vending 
machines.
    DOE requests comment on the impact of the EPA SNAP rules on future 
shipments of beverage vending machines, by equipment class, 
refrigerant, and efficiency level (section VII.E of this NOPR).
a. Market Share by Equipment Class
    Given a total volume of shipments, DOE estimates the shipments of 
each equipment class based on the estimated market share of each 
equipment class. In the preliminary analysis, DOE assumed that 98 
percent of shipments were Class A and Class B, split equally between 
these two classes, and that Combination A and Combination B each 
represented 1 percent of the total BVM market.
    In response to the preliminary analysis, NAMA commented that almost 
all shipments by their members are

[[Page 50495]]

Class A. (NAMA, No. 32 at p. 4) NAMA also commented that Class A 
equipment from their members would be considered ``medium volume.'' 
(NAMA, No. 32 at p. 4) NAMA also commented on market share, stating 
that most are Class A, but some will become Combination A. NAMA stated 
that there is no data to support market share proportioning. (NAMA, No. 
32 at p. 3)
    DOE received comments regarding shipments of combination machines. 
AMS produces machines that would be classified as Combination A, but 
cannot comment on the market share of their shipments. (AMS, No. 29 at 
p. 6) SVA commented that it does not manufacture combination machines, 
but believes that 25 percent is a high number of combination machines 
in the market relative to bottle vending machines. (SandenVendo, No. 33 
at p. 68)
    DOE agrees with commenters that the market share of Class A 
equipment is quite large and possibly larger than Class B. Based on the 
comments made in response to the preliminary analysis and additional 
quantitative information provided during manufacturer interviews (see 
section IV.I.3 of this NOPR), DOE revised the market share assigned to 
each of the equipment classes, as shown in Table IV.6.

   Table IV.6--Market Share of Each Equipment Class Assumed During the
                 Preliminary Analysis and NOPR Analysis
------------------------------------------------------------------------
                                       Preliminary
          Equipment class            analysis market   NOPR Market share
                                          share
------------------------------------------------------------------------
Class A...........................                49%              54.3%
Class B...........................                 49               27.7
Combination A.....................                  1                9.3
Combination B.....................                  1                8.7
------------------------------------------------------------------------

    In this NOPR analysis, DOE tentatively assumed that the market 
share for each equipment class was maintained over the 30-year analysis 
period and did not change as a function of standard level or as a 
function of changes in refrigerant availability resulting from the two 
recent EPA SNAP rulemakings. 80 FR 19454, 19491 (April 10, 2015) and 80 
FR 42870, 42917-42920 (July 20, 2015). That is, in 2048, Class A, Class 
B, Combination A, and Combination B continued to represent 54.3, 27.7, 
9.3, and 8.7 percent of the market, respectively. DOE made this 
assumption because it does not have data or information to suggest that 
the relative shipments of different equipment classes would change over 
time and, if so, in what direction and on what basis.
    In response to SVA's comment, DOE notes that in the preliminary 
analysis the market share of Combination A and Combination B machines 
was only 2 percent and, in the NOPR analysis it has been revised to 18 
percent based on input manufacturers provided during the manufacturer 
interviews (see section IV.I.3 of this NOPR).
b. Market Share by Refrigerant
    Once DOE has defined shipments by equipment class, DOE also defines 
the shipments within each equipment class by refrigerant. In the 
preliminary analysis, DOE assumed a shipments scenario through 2048 in 
the absence of any changes in refrigerant availability that would 
result from the promulgation of final rules under EPA's SNAP program, 
which proposed to change the status of R-134a to unacceptable, and 
proposed to list propane as acceptable for BVM applications. 79 FR 
46126 (August 6, 2014); 79 FR 38811 (July 9, 2014).\40\ Specifically, 
under this ``no change in refrigerant availability'' scenario, DOE 
assumed 50 percent of beverage vending machine equipment in each 
equipment class would be CO2 equipment by 2020. DOE based 
this assumption based on a public commitment made by Coca-Cola to be 
``HFC free by 2015,'' acknowledging that bottlers represent 
approximately 90 percent of the BVM market \41\ and assuming that Coca-
Cola represents approximately half of the bottler BVM market \42\ DOE 
assumed that, if Coca-Cola achieves their goal of 100 percent of their 
machines using CO2 refrigerant by 2020,\43\ it is likely 
that some other smaller BVM operators may have transitioned to 
CO2 refrigerant-based machines based on their availability 
and proven performance in the market by that time. DOE assumed this 
applied to all equipment classes equivalently and requested comment 
from manufacturers on this assumption in the preliminary analysis.
---------------------------------------------------------------------------

    \40\ DOE notes that both rules were only proposed at the time of 
the preliminary analysis.
    \41\ Northwest Power and Conservation Council Regional Technical 
Forum. 2007. ``Characterization of Energy Efficiency Opportunities 
in Vending Machines for the Northwestern US Market.''
    \42\ R744, ``Coca-Cola to approve 9 models of CO2 
vending machine--exclusive interview,'' Available online http://www.r744.com/news/view/3466.
    \43\ To date, Coca-Cola is slightly behind their stated goal of 
2015. The Coca-Cola Company (2014) 2013/2014 Global Reporting 
Initiative Report. Available online http://assets.coca-colacompany.com/1a/e5/20840408404b9bc484ebc58d536c/2013-2014-coca-cola-sustainability-report-pdf.pdf.
---------------------------------------------------------------------------

    In response, DOE received comments about shipments of 
CO2 based equipment. SVA agreed with DOE's assumption that 
50 percent of shipments will use CO2 as a refrigerant by 
2020 or earlier, but that since CO2 has a slightly higher 
energy consumption than R-134a, any reduction in DEC levels, especially 
for Class A equipment, could slow the rate of transition as 
manufactures try to develop equipment that meets MDEC requirements. 
(SVA, No. 30 at p. 3)
    In this NOPR analysis, DOE revised the assumptions regarding the 
relative shipments of each refrigerant based on recent regulatory 
actions under EPA's SNAP program, which listed propane and other 
hydrocarbon refrigerants as acceptable for BVM applications (80 FR 
19454, 19491(April 10, 2015)) and changed the status of the industry-
standard refrigerant R-134a to unacceptable beginning on January 1, 
2019 (80 FR 42870, 42917-42920; July 20, 2015). Specifically, in this 
NOPR DOE modeled a shipments scenario assuming that all shipments of 
new BVM equipment would use CO2 or propane as a refrigerant 
beginning on January 1, 2019, as required by Final Rule 20. Id.
    Given the greater market experience with CO2, DOE 
assumed that CO2 would represent 60 percent of the market 
and propane would represent 40 percent of the market for all equipment 
classes beginning in 2019 and continuing through the end of the 
analysis period (2048). Specifically, due to the listing of 
CO2 as an acceptable refrigerant for BVM applications 
several years ago by EPA SNAP, as well as a commitment by Coca-Cola 
(the largest equipment purchaser) to move away from HFC refrigerants in 
the near future, the

[[Page 50496]]

market has already seen evolution towards the widespread use of 
CO2. In response to SVA's comment regarding the rate of 
adoption of CO2 equipment, DOE believes that 2019 provides 
manufacturers sufficient time to develop new equipment designs to meet 
MDEC requirements.
    However, DOE acknowledges that propane-based BVM models have only 
very recently become authorized under SNAP and that there is much more 
limited industry experience with this refrigerant. DOE has based this 
NOPR analysis on the use of propane as an alternative refrigerant, in 
addition to CO2, and assumed that propane-based BVM models 
will represent 40 percent of shipments by 2019. As mentioned in the 
engineering analysis, DOE believes this assumption is reasonable based 
on use of propane as a refrigerant in other, similar, self-contained 
commercial refrigeration applications. (See, e.g., Docket No. EPA-HQ-
OAR-2014-0198, The Environmental Investigation Agency, No. 0134)
    DOE's shipments analysis and assumptions are discussed in more 
detail in chapter 9 of the NOPR TSD.
    DOE requests comment on its assumptions regarding the relative 
market share of each refrigerant by equipment class (section VII.E of 
this NOPR).
c. High and Low Shipments Assumptions
    DOE recognizes that there is a considerable amount of uncertainty 
associated with forecasting future shipments of beverage vending 
machines. As such, in addition to the primary shipments scenario 
presented above, DOE also estimated low and high shipments scenarios as 
sensitivities on the primary scenario. The low and high shipments 
scenarios include the same assumptions regarding market share by 
equipment class and refrigerant, which is that just the magnitude of 
total shipments of new beverage vending machines is varied among the 
scenarios. Specifically, for the low shipments scenario, DOE assumed 
that shipments declined to 45,000, as suggested by manufacturers, but 
recover only to 100,000 shipments per year and result in a stock of 1.3 
M at the end of the analysis period. This is in contrast to the primary 
shipments scenario, in which shipments recover past 100,000 BVM units 
per year and contribute to an overall BVM stock of 1.8 M BVM units at 
the end of the analysis period. Under the low shipments scenario, the 
surviving stock of beverage vending machines is 1.34 M BVM units, a 40 
percent reduction in units installed in the United States. Conversely, 
the high shipments scenario assumes the same overall decline in stock 
assumed in the primary shipment case; that is, a stock of 1.8 M BVM 
units in 2048. However, the high shipments scenario assumes that 
shipments recover more quickly than in the primary shipments case. The 
high shipments scenario assumes shipments of new beverage vending 
machines recover over the next 10 years and are maintained at 
approximately 135,000 new BVM units per year from 2024 through 2048. 
While the high shipments scenario reflects the same stock estimate as 
the primary shipments scenario in 2048, because the high shipments 
scenario assumes a faster recovery of shipments; approximately 33 
percent more BVM units are shipped between 2019 and 2048 than under the 
primary shipments scenario. These two sensitivity scenarios are 
discussed in more detail in chapter 9 of the NOPR TSD.
    DOE requests comment on the high and low shipments scenarios 
(section VII.E of this NOPR).
2. Forecasted Efficiency Trends
    A key component of DOE's NIA is the energy efficiencies forecasted 
over time for the no-new-standards case (without new standards) and 
each of the standards cases. The forecasted efficiencies represent the 
annual shipment-weighted energy efficiency of the equipment under 
consideration during the forecast period (i.e., from the assumed 
compliance date of a new standard to 30 years after compliance is 
required).
    As discussed above, DOE developed a distribution of efficiencies in 
the no-new-standards case for the assumed compliance year of new 
standards for each BVM equipment class. Because no information was 
available to suggest a different trend, DOE assumed that the efficiency 
distribution in the no-new-standards case would remain the same in 
future years. In each standards case, a ``roll-up'' scenario approach 
was applied to establish the efficiency distribution for the compliance 
year. Under the ``roll-up'' scenario, DOE assumed: (1) Equipment 
efficiencies in the no-new-standards case that do not meet the standard 
level under consideration would ``roll-up'' to meet the new standard 
level; and (2) equipment efficiencies above the standard level under 
consideration would not be affected. The ``roll-up'' was a more 
conservative approach over the ``market shift'' approach. In a market 
shift approach it is assumed that a given number of customers will 
prefer to buy equipment above the baseline. Therefore, in a standards 
case scenario customers will continue to purchase above the new 
baseline by shifting to an efficiency level that keeps their purchase 
the same number of efficiency levels above the new baseline until they 
no longer can do so because the market becomes compressed by the 
maximum available efficiency level.
    DOE received comments during the preliminary analysis regarding the 
NIA analysis. Sanden commented that energy consumption levels will 
increase as new interactive technologies are used in beverage vending 
machines. (SVA, No. 30 at p. 3) NEEA commented that a company may 
decide to move from the baseline to EL4 not the next EL that minimizes 
costs. (NEEA No. 33 at p. 117)
    DOE acknowledges the comments on forecasted efficiency 
distributions and that customers may choose to skip efficiency levels; 
however, without better information DOE chose to stay with the more 
conservative approach of rolling up to the next efficiency level to 
minimize costs, which is consistent with expected business behavior in 
competitive markets. In response to SVA's comments, DOE also 
acknowledges that customers may be influenced by a variety of factors 
that would prevent them from simply shifting their purchasing behavior 
to an energy efficiency level equivalently higher than the new 
standard-level equipment due to the increased availability of beverage 
vending machines with new customer interactive technologies, such as 
digital graphics display screens, that increase the energy consumption 
of BVM models compared to units without such screens.
    DOE also recognizes that recent changes in refrigerant availability 
resulting from the two recent EPA SNAP rulemakings may have an impact 
on forecasted efficiency distributions under the no-new-standards case. 
80 FR 19454, 19491 (April 10, 2015) and 80 FR 42870, 42917-42920 (July 
20, 2015). However, DOE did not account for such in this NOPR analysis, 
as DOE does not have data or information to suggest how efficiency 
distributions of different equipment classes or refrigerants would 
change over time and, if so, in what direction and on what basis as a 
result of these changes.
    DOE requests comment on the impact of the recent EPA SNAP 
rulemakings changing the availability of certain refrigerants for the 
BVM application on future efficiency distributions (section VII.E of 
this NOPR).

[[Page 50497]]

3. National Energy Savings Analysis
    The inputs for determining the NES are: (1) Annual energy 
consumption per unit; (2) shipments; (3) product or equipment stock; 
(4) national energy consumption; and (5) site-to-source conversion 
factors. As discussed in the energy use analysis, DOE calculated the 
national energy consumption by multiplying the number of units (stock) 
of each type of equipment (by vintage or age) by the unit energy 
consumption (also by vintage). Vintage represents the age of the 
equipment.
    DOE calculated annual NES based on the difference in national 
energy consumption for the no-new-standards case (without new 
efficiency standards) and for each higher efficiency standard.\44\ 
Cumulative energy savings are the sum of the annual NES over the period 
in which equipment shipped in 2019-2048 are in operation.
---------------------------------------------------------------------------

    \44\ The no-new-standards case represents a mix of efficiencies 
above the minimum efficiency level (EL 0). Please see section IV.F.6 
for a more detail description of associated assumptions.
---------------------------------------------------------------------------

    DOE uses a multiplicative factor called ``site-to-source conversion 
factor'' to convert site energy consumption (at the commercial 
building) into primary or source energy consumption (the energy input 
at the energy generation station required to convert and deliver the 
energy required at the site of consumption). These site-to-source 
conversion factors account for the energy used at power plants to 
generate electricity and for the losses in transmission and 
distribution, as well as for natural gas losses from pipeline leakage 
and energy used for pumping. For electricity, the conversion factors 
vary over time due to projected changes in generation sources (that is, 
the power plant types projected to provide electricity to the country). 
The factors that DOE developed are marginal values, which represent the 
response of the system to an incremental decrease in consumption 
associated with amended energy conservation standards.
    For this NOPR, DOE used conversion factors based on the U.S. energy 
sector modeling using the National Energy Modeling System (NEMS) 
Building Technologies (NEMS-BT) version that corresponds to AEO2014 and 
which provides national energy forecasts through 2040. Within the 
results of NEMS-BT model runs performed by DOE, a site-to-source ratio 
for commercial refrigeration was developed. The site-to-source ratio 
was held constant beyond 2040 through the end of the analysis period 
(30 years plus the life of equipment).
a. Full-Fuel-Cycle Analysis
    DOE has historically presented NES in terms of primary energy 
savings. On August 18, 2011, DOE published a final statement of policy 
in the Federal Register announcing its intention to use FFC measures of 
energy use and greenhouse gas and other emissions in the NIA and 
emissions analyses included in future energy conservation standards 
rulemakings. 76 FR 51281. While DOE stated in that document that it 
intended to use the Greenhouse Gases, Regulated Emissions, and Energy 
Use in Transportation (GREET) model to conduct the analysis, it also 
said it would review alternative methods, including the use of NEMS. 
After evaluating both models and the approaches discussed in the August 
18, 2011 document, DOE published an amended statement of policy, 
articulating its determination that NEMS is a more appropriate tool for 
this purpose. 77 FR 49701 (August 17, 2012).
    The approach used for this NOPR, and the FFC multipliers that were 
applied, are described in appendix 10D of the TSD. NES results are 
presented in both primary and in terms of FFC savings; the savings by 
TSL are summarized in terms of FFC savings in section I.C of this NOPR.
4. Net Present Value Analysis
    The inputs for determining NPV are: (1) Total annual installed 
cost, (2) total annual savings in operating costs, (3) a discount 
factor to calculate the present value of costs and savings, (4) present 
value of costs, and (5) present value of savings. DOE calculated the 
net savings for each year as the difference between the no-new-
standards case and each standards case in terms of total savings in 
operating costs versus total increases in installed costs. DOE 
calculated savings over the lifetime of equipment shipped in the 
forecast period. DOE calculated NPV as the difference between the 
present value of operating cost savings and the present value of total 
installed costs.
    For the NPV analysis, DOE calculates increases in total installed 
costs as the difference in total installed cost between the no-new-
standards case and standards case (i.e., once the standards take 
effect). Because the more-efficient equipment bought in the standards 
case usually costs more than equipment bought in the no-new-standards 
case, cost increases appear as negative values in calculating the NPV.
    DOE expresses savings in operating costs as decreases associated 
with the lower energy consumption of equipment bought in the standards 
case compared to the no-new-standards case. Total savings in operating 
costs are the product of savings per unit and the number of units of 
each vintage that survive in a given year.
    DOE multiplied monetary values in future years by the discount 
factor to determine the present value of costs and savings. DOE 
estimates the NPV of customer benefits using both a 3-percent and a 7-
percent real discount rate as the average real rate of return on 
private investment in the U.S. economy. DOE uses these discount rates 
in accordance with guidance provided by the U.S. 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'') The 7-percent real value is an 
estimate of the average before-tax rate of return to private capital in 
the U.S. economy. The 3-percent real value represents the ``societal 
rate of time preference,'' which is the rate at which society discounts 
future consumption flows to their present.

H. Customer Subgroup Analysis

    In analyzing the potential impact of new or amended standards on 
commercial customers, DOE evaluates the impact on identifiable groups 
(i.e., subgroups) of customers, such as different types of businesses 
that may be disproportionately affected by a national standard level. A 
customer subgroup comprises an identifiable subset of the population 
that might be affected disproportionately by new or amended energy 
conservation standards. The purpose of the subgroup analysis is to 
determine the extent of this disproportional impact. In comparing 
potential impacts on the different customer subgroups, DOE may evaluate 
variations in regional electricity prices, energy use profiles, and 
purchase prices that might affect the LCC of an energy conservation 
standard to certain customer subgroups. In the preliminary analysis, 
DOE requested feedback from interested parties regarding relevant 
subgroups for consideration and did not receive specific comments 
regarding customer subgroups to be analyzed. For this rulemaking, DOE 
identified manufacturing and/or industrial facilities that purchase 
their own beverage vending machines as a relevant subgroup. These 
facilities typically have higher discount rates and lower electricity 
prices than the general population of BVM customers. These two 
conditions make it likely that this subgroup will have the lowest LCC

[[Page 50498]]

savings of any major customer subgroup.
    DOE determined the impact on this BVM customer subgroup using the 
LCC spreadsheet model. DOE conducted the LCC and PBP analysis for 
customers represented by the subgroup. The results of DOE's LCC 
subgroup analysis are summarized in section V.B.1.b of this NOPR and 
described in detail in chapter 12 of the TSD.
    DOE requests comment on the identification and analysis of beverage 
vending machine customer subgroups (section VII.E of this NOPR).

I. Manufacturer Impact Analysis

1. Overview
    DOE performed a MIA to determine the financial impact of amended 
energy conservation standards on manufacturers of beverage vending 
machines, and to estimate the potential impact of such standards on 
employment and manufacturing capacity. The MIA has both quantitative 
and qualitative aspects. The quantitative part of the MIA primarily 
relies on the Government Regulatory Impact Model (GRIM), an industry 
cash-flow model with inputs specific to this rulemaking. The key GRIM 
inputs are data on the industry cost structure, equipment costs, 
shipments, and assumptions about markups and conversion expenditures. 
The key output is the INPV. Different sets of assumptions (i.e., markup 
and shipments scenarios) will produce different results. The 
qualitative part of the MIA addresses factors such as product 
characteristics, impacts on particular subgroups of firms, and 
important market and product trends. The complete MIA is outlined in 
chapter 12 of the NOPR TSD.
    DOE conducted the MIA for this rulemaking in three phases. In Phase 
1 of the MIA, DOE conducted structured, detailed interviews with 
manufacturers and prepared a profile of the BVM industry. During 
manufacturer interviews, DOE discussed engineering, manufacturing, 
procurement, and financial topics to identify concerns and to inform 
and validate assumptions used in the GRIM. See section IV.I.3 of this 
NOPR for a description of the key issues manufacturers raised during 
the interviews. See appendix 12A of the TSD for a copy of the interview 
guide.
    DOE used information obtained during these interviews to prepare a 
profile of the BVM industry. Drawing on financial analysis performed as 
part of the 2009 energy conservation standard for BVMs, as well as 
feedback obtained from manufacturers, DOE derived financial inputs for 
the GRIM (e.g., sales, general, and administration (SG&A) expenses; 
research and development (R&D) expenses; and tax rates). DOE also used 
public sources of information, including company SEC 10-K filings,\45\ 
corporate annual reports, the U.S. Census Bureau's Economic Census,\46\ 
and Hoover's reports,\47\ to develop the industry profile.
---------------------------------------------------------------------------

    \45\ U.S. Securities and Exchange Commission. Annual 10-K 
Reports. Various Years. <http://sec.gov>.
    \46\ U.S. Census Bureau, Annual Survey of Manufacturers: General 
Statistics: Statistics for Industry Groups and Industries. <http://factfinder2.census.gov/faces/nav/jsf/pages/searchresults.xhtml?refresh=t>.
    \47\ Hoovers Inc. Company Profiles. Various Companies. <http://www.hoovers.com>.
---------------------------------------------------------------------------

    In Phase 2 of the MIA, DOE prepared an industry cash-flow analysis 
to quantify the potential impacts of an amended energy conservation 
standard on manufacturers of BVMs. In general, energy conservation 
standards can affect manufacturer cash flow in three distinct ways: (1) 
Create a need for increased investment; (2) raise production costs per 
unit; and (3) alter revenue due to higher per-unit prices and possible 
changes in sales volumes. To quantify these impacts, DOE used the GRIM 
to perform a cash-flow analysis for the BVM industry using financial 
values derived during Phase 1.
    In Phase 3 of the MIA, DOE evaluated subgroups of manufacturers 
that may be disproportionately impacted by amended energy conservation 
standards or that may not be represented accurately by the average cost 
assumptions used to develop the industry cash-flow analysis. For 
example, small manufacturers, niche players, or manufacturers 
exhibiting a cost structure that largely differs from the industry 
average could be more negatively affected. DOE identified one subgroup 
for a separate impact analysis, small businesses.
    DOE initially identified eight companies that sell BVM equipment in 
the United States. For the small businesses subgroup analysis, DOE 
applied the small business size standards published by the Small 
Business Administration (SBA) to determine whether a company is 
considered a small business. 65 FR 30836, 30848 (May 15, 2000), as 
amended at 65 FR 53533, 53544 (Sept. 5, 2000) and codified at 13 CFR 
part 121. To be categorized as a small business under North American 
Industry Classification System (NAICS) code 333318, Other Commercial 
and Service Industry Machinery Manufacturing, a BVM manufacturer and 
its affiliates may employ a maximum of 1,000 employees. The 1,000-
employee threshold includes all employees in a business's parent 
company and any other subsidiaries. Based on this classification, of 
the eight companies selling BVMs in the United States, DOE identified 
five manufacturers that qualify as small businesses, one of which is a 
foreign manufacturer. The BVM small manufacturer subgroup is discussed 
in chapter 12 of the NOPR TSD and in section V.B.2 of this NOPR.
    Additionally, in Phase 3 of the MIA, DOE evaluated impacts of 
amended energy conservation standards on manufacturing capacity and 
direct employment. DOE also evaluated cumulative regulatory burdens 
affecting the BVM industry.
2. Government Regulatory Impact Model
    DOE uses the GRIM to quantify the changes in cash flow due to new 
standards that result in a higher or lower industry value. The GRIM 
analysis uses a standard, annual cash-flow analysis that incorporates 
manufacturer costs, markups, shipments, and industry financial 
information as inputs. The GRIM models changes in costs, distribution 
of shipments, investments, and manufacturer margins that could result 
from an amended energy conservation standard. The GRIM spreadsheet uses 
the inputs to arrive at a series of annual cash flows, beginning in 
2015 (the reference year of the analysis) and continuing to 2048. DOE 
calculated INPVs by summing the stream of annual discounted cash flows 
during this period. For BVM manufacturers, DOE used a real discount 
rate of 8.5 percent, which was derived from industry financials and 
then modified according to feedback received during manufacturer 
interviews.
    The GRIM calculates cash flows using standard accounting principles 
and compares changes in INPV between a no-new-standards case and each 
standards case. The difference in INPV between the no-new-standards 
case and a standards case represents the financial impact of the 
amended energy conservation standard on manufacturers. As discussed 
previously, DOE collected this information on the critical GRIM inputs 
from a number of sources, including publicly available data and 
interviews with a number of manufacturers (described in the next 
section). The GRIM results are shown in section V.B.2 of this NOPR. 
Additional details about the GRIM, the discount rate, and other 
financial parameters can

[[Page 50499]]

be found in chapter 12 of the NOPR TSD.
a. Government Regulatory Impact Model Key Inputs
Manufacturer Production Costs
    Manufacturing more efficient equipment is typically more expensive 
than manufacturing baseline equipment due to the use of more complex 
components, which are typically more costly than baseline components. 
The changes in the MPCs of the analyzed equipment can affect the 
revenues, gross margins, and cash flow of the industry, making these 
equipment cost data key GRIM inputs for DOE's analysis.
    In the MIA, DOE used the MPCs for each considered efficiency level 
calculated in the engineering analysis, as described in section IV.C of 
this notice and further detailed in chapter 5 of the NOPR TSD. In 
addition, DOE used information from its teardown analysis, described in 
chapter 5 of the TSD, to disaggregate the MPCs into material, labor, 
and overhead costs. To calculate the MPCs for equipment above the 
baseline, DOE added the incremental material, labor, and overhead costs 
from the engineering cost-efficiency curves to the baseline MPCs. These 
cost breakdowns and product markups were validated and revised with 
manufacturers during manufacturer interviews. DOE notes that, since all 
BVM equipment would be required to be compliant with EPA's new Rule 20 
regulations prohibiting the use of R-134a after January 1, 2019 (80 FR 
42870, 42917-42920; July 20, 2015), the MPCs modeled in the GRIM 
represent equipment that is compliant with Rule 20 (i.e., uses only 
CO2 and propane refrigerants), as well as any existing 
energy conservation standards for such equipment.
Shipments Forecasts
    The GRIM estimates manufacturer revenues based on total unit 
shipment forecasts by equipment class and the distribution of these 
values by efficiency level. Changes in sales volumes and efficiency mix 
over time can significantly affect manufacturer finances. For this 
analysis, the GRIM uses the NIA's annual shipment forecasts derived 
from the shipments analysis. See section IV.G of this NOPR and chapter 
10 of the NOPR TSD for additional details.
Product and Capital Conversion Costs Associated With Energy 
Conservation Standards for Beverage Vending Machines
    An amended energy conservation standard would cause manufacturers 
to incur one-time conversion costs to bring their production facilities 
and product designs into compliance. DOE evaluated the level of 
conversion-related expenditures that would be needed to comply with 
each considered efficiency level in each equipment class. For the MIA, 
DOE classified these conversion costs into two major groups: (1) 
Product conversion costs; and (2) capital conversion costs. Product 
conversion costs are one-time investments in research, development, 
testing, marketing, and other non-capitalized costs necessary to make 
product designs comply with the amended energy conservation standard. 
Capital conversion costs are one-time investments in property, plant, 
and equipment necessary to adapt or change existing production 
facilities such that new compliant equipment designs can be fabricated 
and assembled.
    Industry investments related to compliance with EPA Rule 20 are 
detailed in the next section (``One-Time Investments Associated with 
EPA SNAP Rule 20'') and are separate from the conversion costs 
manufacturers are estimated to incur to comply with amended energy 
conservation standards.
    To evaluate the level of capital conversion expenditures 
manufacturers would likely incur to comply with amended energy 
conservation standards, DOE used manufacturer interview feedback to 
determine an average per-manufacturer capital conversion cost for each 
design option and equipment class. DOE scaled the per-manufacturer 
capital conversion costs to the industry level using a count of 
manufacturers producing the given equipment class (i.e., Class A, Class 
B, Combination A, Combination B). DOE validated manufacturer comments 
related to capital conversion costs related to amended standards 
compliance through estimates of capital expenditure requirements 
derived from the product teardown analysis and engineering analysis 
described in chapter 5 of the TSD.
    As detailed in Section IV.G.1 of this notice, shipments of BVM 
units with HFC refrigerants are forecasted to fall to zero by 2019 as a 
result of the EPA SNAP Rule 20 compliance date of 2019. Therefore, DOE 
estimates no conversion costs associated with the remaining shipments 
of BVM units with HFC refrigerants that are forecasted to occur during 
the conversion period (the three years leading up to the amended energy 
conservation standard year of 2019).
    Table IV.7 contains the per-manufacturer capital conversion costs 
associated with key design options for each equipment class. DOE 
assumes that all Combination A units share a common cabinet and glass 
pack design with a Class A unit, and would not carry any additional 
capital conversion costs.

                  Table IV.7--Per-Manufacturer Capital Conversion Costs for Key Design Options
                                                [2014$ millions]
----------------------------------------------------------------------------------------------------------------
                                                          Capital conversion costs  (2014$ millions)
                Design option                -------------------------------------------------------------------
                                                  Class A         Class B       Combination A     Combination B
----------------------------------------------------------------------------------------------------------------
Enhanced Glass Pack.........................            0.06           * N/A                 0               N/A
1.125'' Thick Insulation....................            0.13            0.10                 0              0.09
Vacuum Insulated Panels.....................            0.27            0.31                 0              0.27
----------------------------------------------------------------------------------------------------------------
* N/A = Not Applicable


[[Page 50500]]

    DOE used a top-down approach that relied on manufacturer feedback 
from interviews to assess product conversion costs for the BVM 
industry. Using the DOE's CCMS \48\ and ENERGY STAR \49\ databases, 
along with manufacturer Web sites, DOE determined the number of 
platforms that are currently available for each equipment type (i.e., 
Class A, Class B, Combination A, Combination B). DOE used manufacturer 
feedback to determine an average per platform product conversion cost 
by design option and equipment type. DOE then used the platform counts 
to scale the average per platform product conversion to the industry 
level. DOE received insufficient feedback from industry to estimate 
representative product conversion costs for Combination A and 
Combination B equipment. As a result, DOE scaled Class A product 
conversion costs to estimate Combination A product conversion costs and 
DOE scaled Class B product conversion costs to scale Combination B 
product conversion costs. This scaling was based on the ratio of 
Combination A to Class A platforms in the industry and the ratio of 
Combination B to Class B platforms, respectively.
---------------------------------------------------------------------------

    \48\ ``CCMS.'' CCMS. January 19, 2015. Accessed January 19, 
2015. http://www.regulations.doe.gov/certification-data/.
    \49\ ENERGY STAR Certified Vending Machines. June 6, 2013. 
Accessed January 19, 2015. http://www.energystar.gov/products/certified-products.
---------------------------------------------------------------------------

    Table IV.8 contains the per-platform product conversion costs 
associated with key design options for each equipment class.

                    Table IV.8--Per-Platform Product Conversion Costs for Key Design Options
                                                [2014$ millions]
----------------------------------------------------------------------------------------------------------------
                                                           Product conversion costs (2014$ millions)
                Design option                -------------------------------------------------------------------
                                                  Class A         Class B       Combination A     Combination B
----------------------------------------------------------------------------------------------------------------
Higher Efficiency Compressor................            0.03            0.04             0.004              0.04
Enhanced Glass Pack.........................            0.08           * N/A             0.004               N/A
1.125'' Thick Insulation....................            0.09            0.05             0.004              0.05
Vacuum Insulated Panels.....................            0.14            0.11             0.004              0.10
----------------------------------------------------------------------------------------------------------------
* N/A = Not Applicable.

    DOE assumes that all energy conservation standards-related 
conversion costs occur between the year of publication of the final 
rule and the year by which manufacturers must comply with the new 
standard. The conversion cost figures used in the GRIM can be found in 
section V.B.2 of this NOPR. For additional information on the estimated 
product and capital conversion costs, see chapter 12 of the NOPR TSD.
    DOE requests manufacturers provide an estimate of the capital and 
product conversion costs associated compliance with DOE amended energy 
conservation standards (section VII.E of this NOPR). In addition, DOE 
specifically requests feedback from industry regarding the product 
conversion costs associated with standards compliance for Combination A 
and Combination B equipment (section VII.E of this NOPR).
One-Time Investments Associated With EPA SNAP Rule 20
    As a result of EPA Rule 20, the industry will be required to make 
an upfront investment in order to transition from the use of R-134a to 
R-744 or R-290. This industry investment (detailed below) is not a 
result of the amended DOE energy conservation standards. However, DOE 
reflects the impact of this investment in both the no-new-standards and 
standards cases.
    EPA Rule 20 did not provide an estimate of the upfront investments 
associated with a R-134a refrigerant phase-out for BVM manufacturers. 
Based on feedback in interviews, DOE estimated an upfront cost to the 
industry to comply with Rule 20 using refrigerants R-744 and R-290. DOE 
estimated that each BVM manufacturer would need to invest $750,000 to 
update their products to comply with Rule 20 if they have no compliant 
products today. DOE assumed this one-time investment applied to all 
eight manufacturers, resulting in an industry cost of $6 million.\50\ 
DOE believes this is a conservative estimate since there are 
manufacturers that already have SNAP-compliant products on the market 
today and those manufacturers would not need to make the same level of 
investment ahead of the 2019 effective date. For integration into the 
GRIM, DOE assumed that this one-time cost would occur in 2018 because 
the EPA's Rule 20 requires a phaseout of R-134a by 2019. This cost is 
independent of conversion costs that industry would need to make as a 
result of amended energy conservation standards (discussed in the 
previous section). Unlike product and capital conversion costs 
necessitated by DOE energy conservation standards, DOE includes this 
one-time Rule 20 investment in the GRIM in both the no-new-standards 
case and the standards case. The costs related to complying with EPA 
Rule 20 have been incorporated into the baseline to which DOE analyzed 
these proposed standards. As such, all the costs to industry that occur 
in the standards case relate to the impact of the proposed energy 
conservations standards.
---------------------------------------------------------------------------

    \50\ In the GRIM, the $6 million one-time SNAP investment would 
affect the industry in the no-new-standards case as well as at each 
TSL.
---------------------------------------------------------------------------

    DOE requests manufacturers provide an estimate of the one-time 
investments required to transition to alternative refrigerants, such as 
CO2 and propane (section VII.E of this NOPR).
    DOE requests that manufacturers provide sufficient detail such that 
DOE could model and verify these one-time costs related to the change 
in refrigerants, including the specific capital expenditures required 
and the potential redesign costs on a per-platform basis (section VII.E 
of this NOPR).
    Additionally, DOE requests manufacturers provide information about 
the ability to coordinate one-time investments related to EPA Rule 20 
compliance and conversion costs necessitated by the DOE energy 
conservation standards (section VII.E of this NOPR).
b. Government Regulatory Impact Model Scenarios
Manufacturer Markup Scenarios
    MSPs include direct manufacturing production costs (i.e., labor, 
materials, and overhead estimated in DOE's MPCs) and all non-production 
costs (i.e., SG&A, R&D, and interest), along with profit. To calculate 
the MSPs in the GRIM, DOE applied manufacturer

[[Page 50501]]

markups to the MPCs estimated in the engineering analysis for each 
equipment class and efficiency level. Modifying these manufacturer 
markups in the standards case yields different sets of impacts on 
manufacturers. For the MIA, DOE modeled two standards-case manufacturer 
markup scenarios to represent the uncertainty regarding the potential 
impacts on prices and profitability for manufacturers following the 
implementation of amended energy conservation standards: (1) A 
preservation of gross margin percentage markup scenario; and (2) a 
preservation of per-unit operating profit markup scenario. These 
scenarios lead to different manufacturer markup values that, when 
applied to the inputted MPCs, result in varying revenue and cash flow 
impacts.
    Under the preservation of gross margin percentage scenario, DOE 
applied a single uniform ``gross margin percentage'' markup across all 
efficiency levels (for a given equipment class), which assumes that 
manufacturers would be able to maintain the same amount of profit as a 
percentage of revenues at all efficiency levels within an equipment 
class. As production costs increase with efficiency, this scenario 
implies that the absolute dollar markup will increase as well. Based on 
publicly available financial information for manufacturers of beverage 
vending machines as well as comments from manufacturer interviews, DOE 
assumed the average manufacturer markups to vary by equipment class as 
shown in Table IV.9.

                Table IV.9--Baseline Manufacturer Markups
------------------------------------------------------------------------
                        Equipment class                          Markup
------------------------------------------------------------------------
Class A.......................................................      1.22
Class B.......................................................      1.17
Combination A.................................................      1.36
Combination B.................................................      1.36
------------------------------------------------------------------------

    Because this manufacturer markup scenario assumes that 
manufacturers would be able to maintain their gross margin percentage 
markups as production costs increase in response to an amended energy 
conservation standard, it represents a high bound to industry 
profitability.
    In the preservation of per-unit operating profits scenario, 
manufacturer markups are calibrated such that the per-unit operating 
profit in the year after the compliance date of the amended energy 
conservation standard is the same as in the no-new-standards case for 
each product class. Under this scenario, as the cost of production goes 
up, manufacturers are generally required to reduce the markups on their 
minimally compliant products to maintain a cost-competitive offering. 
The implicit assumption behind this scenario is that the industry can 
only maintain operating profits after compliance with the amended 
standard is required. Therefore, gross margin (as a percentage) is 
reduced between the no-new-standards case and the standards case. This 
manufacturer markup scenario represents a low bound to industry 
profitability under an amended energy conservation standard.
3. Manufacturer Interviews
    To inform the MIA, DOE interviewed manufacturers with an estimated 
combined market share of 78 percent. The information gathered during 
these interviews enabled DOE to tailor the GRIM to reflect the unique 
financial characteristics of the BVM industry. During the manufacturer 
interviews, DOE asked manufacturers to describe their major concerns 
about this rulemaking. Below, DOE summarizes these issues, which were 
informally raised in manufacturer interviews, in order to obtain public 
comment and related data.
a. Uncertainty Regarding Potential EPA Phaseout of Hazardous 
Refrigerants
    Manufacturers expressed significant concern relating to the 
combined effect of amended energy efficiency standards for BVMs and the 
proposal by the EPA to change the status of certain HFC's, including R-
134a, to unacceptable. At the time of the MIA interviews, EPA SNAP Rule 
20 had been proposed, containing a proposed compliance date of January 
1, 2016. 79 FR 46126, 46135 (August 6, 2014). The rule has since been 
finalized with a change of status for R-134a to unacceptable in new 
vending applications beginning in 2019. 80 FR 42870, 42917-42920 (July 
20, 2015).
    Manufacturers stated that complying with the current DOE efficiency 
standard for Class A products has been difficult enough without having 
to switch refrigerants. They stated that alternative refrigerants may 
be less efficient than HFC-134a and the proposed ban of HFCs coupled 
with amended standards for Class A products could potentially limit or 
prevent certain manufacturers' abilities to maintain Class A product 
offerings. Manufacturers requested that DOE take the change in 
refrigerant into account in its analysis.
b. Impact on Product Utility
    Manufacturers commented that current Class A standards greatly 
inhibit their ability to provide all the features demanded by their 
customers, and, by extension, any amended standard for Class A machines 
would have an even greater detrimental impact on customer utility and 
product innovation. Because many of the product add-ons oriented 
towards greater purchaser interaction--a feature valued by some Class A 
customers--require more energy, more stringent standards would be in 
direct conflict with customer utility.
c. Availability of Higher Efficiency Components
    Due to the low volume nature of the BVM industry overall, 
manufacturers expressed concern relating to the availability of 
components that would be required if energy efficiency standards for 
beverage vending machines are amended.
    Historically, because there has been a minimal market for higher 
efficiency beverage vending machines, there are few suppliers of higher 
efficiency components to the industry. These suppliers have had the 
ability to charge high prices for components.
    Manufacturers added that this issue becomes even more burdensome 
when considering the high efficiency components that will be needed for 
use in beverage vending machines using natural refrigerants (i.e., 
CO2 or propane). BVM manufacturers are concerned that, due 
to the extremely low number of CO2 and hydrocarbon component 
manufactures, the limited availability and cost of these components 
would significantly increase product manufacturing costs.
4. Discussion of Comments
    During the public comment period following the preliminary analysis 
public meeting, NAMA (a trade association) and AMS (a small business 
manufacturer of beverage vending machines) provided several comments on 
the potential impact of amended energy conservation standards on 
manufacturers.
    AMS commented that potential EPA regulations to phase out R-134a 
could create costs totaling at least $100,000 associated with the need 
for a new engineering laboratory, manufacturing changes, and new safety 
equipment to handle hydrocarbon refrigerants. Additionally, AMS pointed 
out that the EPA proposal to phase out R-134a by 2016 will require 
product redesign, followed by testing and safety certifications in 
addition to the

[[Page 50502]]

restructuring of testing and production facilities. (AMS, No. 29 at p. 
3) NAMA also commented that the additional cost of manufacturing and 
safety equipment needed to produce hydrocarbon refrigeration systems 
for beverage vending machines would exceed $100,000. Both AMS and NAMA 
raised concerns that the proposed EPA regulations and an amended energy 
conservation standard would result in significant cumulative regulatory 
burden. (AMS, No. 29 at p. 3; NAMA, No. 32 at p. 3)
    DOE recognizes that EPA regulations that restrict the use of HFC 
refrigerants will lead to changes in production costs for manufacturers 
and necessitate investments. DOE accounted for the forthcoming HFC 
phase out by estimating refrigerant-specific design pathways, cost 
efficiency curves and the upfront investments needed to adapt products, 
production lines, and facilities to the use of propane and 
CO2. While AMS and NEMA estimated an investment of $100,000 
per manufacturer for capital expenditures such as laboratory, 
production facility, and safety equipment changes, DOE used a higher 
value of $750,000 per manufacturer to account for capital expenditures 
as well as non-equipment costs such R&D, testing, and marketing 
material changes to bring BVM equipment using propane-290 or R-744 to 
market. DOE integrated this cost into both the no-new-standards and 
standards case estimates of INPV. See section IV.I.2. for further 
detail on one-time costs associated with SNAP Rule 20 compliance. 
Furthermore, DOE includes the EPA's SNAP Rule 20 in its list of 
cumulative regulatory burdens in section V.B.2.e of this NOPR.
    In comments, AMS noted that while they may be the smallest U.S. 
manufacturer of beverage vending machines, they do not meet the 
definition of a ``small business.'' (AMS, No. 29 at p. 1)
    For the purposes of the Regulatory Flexibility Analysis, DOE is 
required to use the SBA definition of ``small business'' for 
manufacturing. The SBA definition sets size thresholds based on 
classifications by the NAICS. BVM manufacturing is classified under 
NAICS 333318, ``Other Commercial and Service Industry Machinery 
Manufacturing.'' For this category, the SBA size threshold is 1,000 
employees or less for an entity to be considered as a small business. 
Under the SBA definition of a small business and for the purposes of 
the Regulatory Flexibility Analysis, DOE believes AMS is a small 
manufacturer. The Regulatory Flexibility Analysis uses the SBA 
thresholds in determining whether small manufacturers as a subgroup may 
be disproportionately impacted by the proposed standard and in 
determining whether there are regulatory alternatives to DOE's proposed 
energy conservation regulation.
    Separate from the Regulatory Flexibility Analysis, EPCA also 
provides compliance flexibility for small companies meeting specific 
criteria. Under 10 CFR part 430 subpart E, titled ``Small Business 
Exemptions,'' a manufacturer whose annual gross revenue from all of its 
operations does not exceed $8,000,000 may apply for an exemption from 
all or part of an energy conservation standard for a limited period of 
time. This criterion is used to determine whether individual companies 
can apply for temporary exemption from the energy conservation 
standard. Companies with annual revenue greater than $8,000,000 do not 
meet the ``Small Business Exemption'' criteria under 10 CFR 40 subpart 
E and do not qualify for exemption requests. However, such companies 
may still be considered a small manufacturer for the purposes of the 
Regulatory Flexibility Analysis, as discussed previously.

J. Emissions Analysis

    The emissions analysis consists of two components. The first 
component estimates the effect of potential energy conservation 
standards on power sector and site (where applicable) combustion 
emissions of CO2, NOX, SO2, and Hg. 
The second component estimates the impacts of potential standards on 
emissions of two additional greenhouse gases, CH4 and 
N2O, as well as the reductions to emissions of all species 
due to ``upstream'' activities in the fuel production chain. These 
upstream activities comprise extraction, processing, and transporting 
fuels to the site of combustion. The associated emissions are referred 
to as upstream emissions.
    The analysis of power sector emissions uses marginal emissions 
factors calculated using a methodology based on results published for 
the AEO2014 reference case and a set of side cases that implement a 
variety of efficiency-related policies. The methodology is described in 
chapter 15 of the NOPR TSD.
    Combustion emissions of CH4 and N2O are 
estimated using emissions intensity factors published by the EPA, GHG 
Emissions Factors Hub.\51\ The FFC upstream emissions are estimated 
based on the methodology described in chapter 15 of the NOPR TSD. The 
upstream emissions include both emissions from fuel combustion during 
extraction, processing, and transportation of fuel, and ``fugitive'' 
emissions (direct leakage to the atmosphere) of CH4 and 
CO2.
---------------------------------------------------------------------------

    \51\ Available at http://www.epa.gov/climateleadership/inventory/ghg-emissions.html.
---------------------------------------------------------------------------

    The emissions intensity factors are expressed in terms of physical 
units per MWh or MMBtu of site energy savings. Total emissions 
reductions are estimated using the energy savings calculated in the 
national impact analysis.
    For CH4 and N2O, DOE calculated emissions 
reduction in tons and also in terms of units of carbon dioxide 
equivalent (CO2eq). Gases are converted to CO2eq 
by multiplying the physical units by the gases' global warming 
potential (GWP) over a 100-year time horizon. Based on the Fourth 
Assessment Report of the Intergovernmental Panel on Climate Change,\52\ 
DOE used GWP values of 28 for CH4 and 265 for 
N2O.
---------------------------------------------------------------------------

    \52\ Intergovernmental Panel on Climate Change. Chapter 8 in 
Climate Change 2013: The Physical Science Basis. Contribution of 
Working Group I to the Fifth Assessment Report of the 
Intergovernmental Panel on Climate Change. Stocker, T.F., D. Qin, 
G.-K. Plattner, M. Tignor, S.K. Allen, J. Boschung, A. Nauels, Y. 
Xia, V. Bex and P.M. Midgley (eds.). 2013. Cambridge University 
Press, Cambridge, United Kingdom and New York, NY, USA.
---------------------------------------------------------------------------

    The AEO2014 projections incorporate the projected impacts of 
existing air quality regulations on emissions. AEO2014 generally 
represents current legislation and environmental regulations, including 
recent government actions, for which implementing regulations were 
available as of October 31, 2013. DOE's estimation of impacts accounts 
for the presence of the emissions control programs discussed in the 
following paragraphs.
    SO2 emissions from affected electric generating units 
(EGUs) are subject to nationwide and regional emissions cap-and-trade 
programs. Title IV of the Clean Air Act sets an annual emissions cap on 
SO2 for affected EGUs in the 48 contiguous states and the 
District of Columbia (DC). SO2 emissions from 28 eastern 
states and DC were also limited under the Clean Air Interstate Rule 
(CAIR), which created an allowance-based trading program that operates 
along with the Title IV program in those states and DC 70 FR 25162 (May 
12, 2005). CAIR was remanded to EPA by the U.S. Court of Appeals for 
the District of Columbia Circuit (D.C. Circuit), but it remained in 
effect.\53\ In 2011 EPA issued

[[Page 50503]]

a replacement for CAIR, the Cross-State Air Pollution Rule (CSAPR). 76 
FR 48208 (August 8, 2011). On August 21, 2012, the D.C. Circuit issued 
a decision to vacate CSAPR,\54\ and the court ordered EPA to continue 
administering CAIR. On April 29, 2014, the U.S. Supreme Court reversed 
the judgment of the D.C. Circuit and remanded the case for further 
proceedings consistent with the Supreme Court's opinion.\55\ On October 
23, 2014, the D.C. Circuit lifted the stay of CSAPR.\56\ Pursuant to 
this action, CSAPR went into effect (and CAIR ceased to be in effect) 
as of January 1, 2015.
---------------------------------------------------------------------------

    \53\ See North Carolina v. EPA, 550 F.3d 1176 (D.C. Cir. 2008); 
North Carolina v. EPA, 531 F.3d 896 (D.C. Cir. 2008).
    \54\ See EME Homer City Generation, LP v. EPA, 696 F.3d 7, 38 
(D.C. Cir. 2012).
    \55\ See EPA v. EME Homer City Generation, 134 S.Ct. 1584, 1610 
(U.S. 2014). The Supreme Court held in part that EPA's methodology 
for quantifying emissions that must be eliminated in certain States 
due to their impacts in other downwind States was based on a 
permissible, workable, and equitable interpretation of the Clean Air 
Act provision that provides statutory authority for CSAPR.
    \56\ See Georgia v. EPA, Order (D.C. Cir. filed October 23, 
2014) (No. 11-1302).
---------------------------------------------------------------------------

    Because AEO2014 was prepared before the Supreme Court's opinion, it 
assumed that CAIR remains a binding regulation through 2040. Thus, 
DOE's analysis used emissions factors that assume that CAIR, not CSAPR, 
is the regulation in force. However, the difference between CAIR and 
CSAPR is not relevant for the purpose of DOE's analysis of emissions 
impacts from energy conservation standards.
    The attainment of emissions caps is typically flexible among EGUs 
and is enforced through the use of emissions allowances and tradable 
permits. Under existing EPA regulations, any excess SO2 
emissions allowances resulting from the lower electricity demand caused 
by the adoption of an efficiency standard could be used to permit 
offsetting increases in SO2 emissions by any regulated EGU. 
In past rulemakings, DOE recognized that there was uncertainty about 
the effects of efficiency standards on SO2 emissions covered 
by the existing cap-and-trade system, but it concluded that no 
reductions in power sector emissions would occur for SO2 as 
a result of standards.
    Beginning in 2016, however, SO2 emissions will fall as a 
result of the Mercury and Air Toxics Standards (MATS) for power plants. 
77 FR 9304 (February 16, 2012) In the final MATS rule, EPA established 
a standard for hydrogen chloride (HCl) as a surrogate for acid gas 
hazardous air pollutants (HAPs), and also established a standard for 
SO2 (a non-HAP acid gas) as an alternative equivalent 
surrogate standard for acid gas HAP. The same controls are used to 
reduce HAP and non-HAP acid gas; thus, SO2 emissions will be 
reduced as a result of the control technologies installed on coal-fired 
power plants to comply with the MATS requirements for acid gas. AEO2014 
assumes that, in order to continue operating, coal plants must have 
either flue gas desulfurization or dry sorbent injection systems 
installed by 2016. Both technologies are used to reduce acid gas 
emissions and also reduce SO2 emissions. Under the MATS, 
emissions will be far below the cap that would be established by CAIR, 
so it is unlikely that excess SO2 emissions allowances 
resulting from the lower electricity demand would be needed or used to 
permit offsetting increases in SO2 emissions by any 
regulated EGU. Therefore, DOE believes that efficiency standards will 
reduce SO2 emissions in 2016 and beyond.
    CAIR established a cap on NOX emissions in 28 eastern 
states and the District of Columbia.\57\ Energy conservation standards 
are expected to have little or no physical effect on these emissions in 
those states covered by CAIR because excess NOX emissions 
allowances resulting from the lower electricity demand could be used to 
permit offsetting increases in NOX emissions. However, 
standards would be expected to reduce NOX emissions in the 
states not affected by the caps, so DOE estimated NOX 
emissions reductions from potential standards considered in this NOPR 
for these states.
---------------------------------------------------------------------------

    \57\ CSAPR also applies to NOX, and it would 
supersede the regulation of NOX under CAIR. As stated 
previously, the current analysis assumes that CAIR, not CSAPR, is 
the regulation in force. The difference between CAIR and CSAPR with 
regard to DOE's analysis of NOX emissions is slight.
---------------------------------------------------------------------------

    The MATS also limit mercury emissions from power plants, but they 
do not include emissions caps and, as such, DOE's energy conservation 
standards would likely reduce mercury emissions. DOE estimated mercury 
emissions reduction using emissions factors based on AEO2014, which 
incorporates the MATS.
    Power plants may emit particulates from the smoke stack, which are 
known as direct particulate matter (PM) emissions. NEMS does not 
account for direct PM emissions from power plants. DOE is investigating 
the possibility of using other methods to estimate reduction in PM 
emissions due to standards. The great majority of ambient PM associated 
with power plants is in the form of secondary sulfates and nitrates, 
which are produced at a significant distance from power plants by 
complex atmospheric chemical reactions that often involve the gaseous 
emissions of power plants, mainly SO2 and NOX. 
The monetary benefits that DOE estimates for reductions in 
SO2 and NOX emissions resulting from standards 
are in fact primarily related to the health benefits of reduced ambient 
PM.
    DOE notes that the Supreme Court recently remanded EPA's 2012 rule 
regarding national emission standards for hazardous air pollutants from 
certain electric utility steam generating units. See Michigan v. EPA 
(Case No. 14-46, 2015). DOE has tentatively determined that the remand 
of the MATS rule does not change the assumptions regarding the impact 
of energy efficiency standards on SO2 emissions (see chapter 
13 for further discussion). Further, while the remand of the MATS rule 
may have an impact on the overall amount of mercury emitted by power 
plants, it does not change the impact of the energy efficiency 
standards on mercury emissions. DOE will continue to monitor 
developments related to this case and respond to them as appropriate.

K. Monetizing Carbon Dioxide and Other Emissions Impacts

    As part of the development of this proposed rule, DOE considered 
the estimated monetary benefits from the reduced emissions of 
CO2 and NOX that are expected to result from each 
of the TSLs considered. In order to make this calculation similar to 
the calculation of the NPV of customer benefit, DOE considered the 
reduced emissions expected to result over the lifetime of equipment 
shipped in the forecast period for each TSL. This section summarizes 
the basis for the monetary values used for each of these emissions and 
presents the values considered in this rulemaking.
    For this proposed rule, DOE is relying on a set of values for the 
SCC that was developed by an interagency process. A summary of the 
basis for these values is provided below, and a more detailed 
description of the methodologies used is provided as an appendix to 
chapter 14 of the TSD.
1. Social Cost of Carbon
    The SCC is an estimate of the monetized damages associated with an 
incremental increase in carbon emissions in a given year. It is 
intended to include (but is not limited to) climate-change-related 
changes in net agricultural productivity, human health, property 
damages from increased flood risk, and the value of ecosystem services. 
Estimates of the SCC are provided in dollars per metric ton of 
CO2. A domestic SCC value is meant to

[[Page 50504]]

reflect the value of damages in the United States resulting from a unit 
change in CO2 emissions, while a global SCC value is meant 
to reflect the value of damages worldwide.
    Under section 1(b) of Executive Order 12866, agencies must, to the 
extent permitted by law, ``assess both the costs and the benefits of 
the intended regulation and, recognizing that some costs and benefits 
are difficult to quantify, propose or adopt a regulation only upon a 
reasoned determination that the benefits of the intended regulation 
justify its costs.'' The purpose of the SCC estimates presented here is 
to allow agencies to incorporate the monetized social benefits of 
reducing CO2 emissions into cost-benefit analyses of 
regulatory actions. The estimates are presented with an acknowledgement 
of the many uncertainties involved and with a clear understanding that 
they should be updated over time to reflect increasing knowledge of the 
science and economics of climate impacts.
    As part of the interagency process that developed these SCC 
estimates, technical experts from numerous agencies met on a regular 
basis to consider public comments, explore the technical literature in 
relevant fields, and discuss key model inputs and assumptions. The main 
objective of this process was to develop a range of SCC values using a 
defensible set of input assumptions grounded in the existing scientific 
and economic literatures. In this way, key uncertainties and model 
differences transparently and consistently inform the range of SCC 
estimates used in the rulemaking process.
a. Monetizing Carbon Dioxide Emissions
    When attempting to assess the incremental economic impacts of 
CO2 emissions, the analyst faces a number of serious 
challenges. A report from the National Research Council \58\ points out 
that any assessment will suffer from uncertainty, speculation, and lack 
of information about: (1) Future emissions of greenhouse gases; (2) the 
effects of past and future emissions on the climate system; (3) the 
impact of changes in climate on the physical and biological 
environment; and (4) the translation of these environmental impacts 
into economic damages. As a result, any effort to quantify and monetize 
the harms associated with climate change will raise serious questions 
of science, economics, and ethics and should be viewed as provisional.
---------------------------------------------------------------------------

    \58\ National Research Council. Hidden Costs of Energy: Unpriced 
Consequences of Energy Production and Use. 2009. National Academies 
Press: Washington, DC.
---------------------------------------------------------------------------

    Despite the limits of both quantification and monetization, SCC 
estimates can be useful in estimating the social benefits of reducing 
CO2 emissions. The agency can estimate the benefits from 
reduced (or costs from increased) emissions in any future year by 
multiplying the change in emissions in that year by the SCC value 
appropriate for that year. The net present value of the benefits can 
then be calculated by multiplying each of these future benefits by an 
appropriate discount factor and summing across all affected years.
    It is important to emphasize that the interagency process is 
committed to updating these estimates as the science and economic 
understanding of climate change and its impacts on society improves 
over time. In the meantime, the interagency group will continue to 
explore the issues raised by this analysis and consider public comments 
as part of the ongoing interagency process.
b. Development of Social Cost of Carbon Values
    In 2009, an interagency process was initiated to offer a 
preliminary assessment of how best to quantify the benefits from 
reducing CO2 emissions. To ensure consistency in how 
benefits are evaluated across agencies, the Administration sought to 
develop a transparent and defensible method, specifically designed for 
the rulemaking process, to quantify avoided climate change damages from 
reduced CO2 emissions. The interagency group did not 
undertake any original analysis. Instead, it combined SCC estimates 
from the existing literature to use as interim values until a more 
comprehensive analysis could be conducted. The outcome of the 
preliminary assessment by the interagency group was a set of five 
interim values: Global SCC estimates for 2007 (in 2006$) of $55, $33, 
$19, $10, and $5 per metric ton of CO2. These interim values 
represented the first sustained interagency effort within the U.S. 
government to develop an SCC for use in regulatory analysis. The 
results of this preliminary effort were presented in several proposed 
and final rules.
c. Current Approach and Key Assumptions
    Since the release of the interim values, the interagency group 
reconvened on a regular basis to generate improved SCC estimates. 
Specifically, the group considered public comments and further explored 
the technical literature in relevant fields. The interagency group 
relied on three integrated assessment models commonly used to estimate 
the SCC: The FUND, DICE, and PAGE models. These models are frequently 
cited in the peer-reviewed literature and were used in the last 
assessment of the Intergovernmental Panel on Climate Change. Each model 
was given equal weight in the SCC values that were developed.
    Each model takes a slightly different approach to model how changes 
in emissions result in changes in economic damages. A key objective of 
the interagency process was to enable a consistent exploration of the 
three models while respecting the different approaches to quantifying 
damages taken by the key modelers in the field. An extensive review of 
the literature was conducted to select three sets of input parameters 
for these models: Climate sensitivity, socio-economic and emissions 
trajectories, and discount rates. A probability distribution for 
climate sensitivity was specified as an input into all three models. In 
addition, the interagency group used a range of scenarios for the 
socio-economic parameters and a range of values for the discount rate. 
All other model features were left unchanged, relying on the model 
developers' best estimates and judgments.
    The interagency group selected four sets of SCC values for use in 
regulatory analyses. Three sets of values are based on the average SCC 
from the three integrated assessment models, at discount rates of 2.5, 
3, and 5 percent. The fourth set, which represents the 95th percentile 
SCC estimate across all three models at a 3-percent discount rate, is 
included to represent higher-than-expected impacts from temperature 
change further out in the tails of the SCC distribution. The values 
grow in real terms over time. Additionally, the interagency group 
determined that a range of values from 7 percent to 23 percent should 
be used to adjust the global SCC to calculate domestic effects, 
although preference is given to consideration of the global benefits of 
reducing CO2 emissions. Table IV.10 presents the values in 
the 2010 interagency group report,\59\ which is reproduced in appendix 
14A of the TSD.
---------------------------------------------------------------------------

    \59\ Social Cost of Carbon for Regulatory Impact Analysis Under 
Executive Order 12866. Interagency Working Group on Social Cost of 
Carbon, United States Government, February 2010. www.whitehouse.gov/sites/default/files/omb/inforeg/for-agencies/Social-Cost-of-Carbon-for-RIA.pdf.

[[Page 50505]]



                     Table IV.10--Annual SCC Values From 2010 Interagency Report, 2010-2050
                                        [2007 dollars per metric ton CO2]
----------------------------------------------------------------------------------------------------------------
                                                                             Discount rate (%)
                                                          ------------------------------------------------------
                                                                5            3           2.5             3
                           Year                           ------------------------------------------------------
                                                                                                       95th
                                                             Average      Average      Average      percentile
----------------------------------------------------------------------------------------------------------------
2010.....................................................          4.7         21.4         35.1            64.9
2015.....................................................          5.7         23.8         38.4            72.8
2020.....................................................          6.8         26.3         41.7            80.7
2025.....................................................          8.2         29.6         45.9            90.4
2030.....................................................          9.7         32.8         50.0           100.0
2035.....................................................         11.2         36.0         54.2           109.7
2040.....................................................         12.7         39.2         58.4           119.3
2045.....................................................         14.2         42.1         61.7           127.8
2050.....................................................         15.7         44.9         65.0           136.2
----------------------------------------------------------------------------------------------------------------

    The SCC values used for this NOPR were generated using the most 
recent versions of the three integrated assessment models that have 
been published in the peer-reviewed literature.\60\ (See appendix 14B 
of the TSD for further information.) Table IV.11 shows the updated sets 
of SCC estimates in 5-year increments from 2010 through 2050. The full 
set of annual SCC estimates from 2010 through 2050 is reported in 
appendix 14B of the TSD. The central value that emerges is the average 
SCC across models at the 3-percent discount rate. However, for purposes 
of capturing the uncertainties involved in regulatory impact analysis, 
the interagency group emphasizes the importance of including all four 
sets of SCC values.
---------------------------------------------------------------------------

    \60\ Technical Update of the Social Cost of Carbon for 
Regulatory Impact Analysis Under Executive Order 12866. Interagency 
Working Group on Social Cost of Carbon, United States Government. 
May 2013; revised July 2015. https://www.whitehouse.gov/sites/default/files/omb/inforeg/scc-tsd-final-july-2015.pdf.

                     Table IV.11--Annual SCC Values From 2013 Interagency Update, 2010-2050
                                        [2007 dollars per metric ton CO2]
----------------------------------------------------------------------------------------------------------------
                                                                             Discount rate (%)
                                                          ------------------------------------------------------
                                                                5            3           2.5             3
                           Year                           ------------------------------------------------------
                                                                                                       95th
                                                             Average      Average      Average      percentile
----------------------------------------------------------------------------------------------------------------
2010.....................................................           10           31           50              86
2015.....................................................           11           36           56             105
2020.....................................................           12           42           62             123
2025.....................................................           14           46           68             138
2030.....................................................           16           50           73             152
2035.....................................................           18           55           78             168
2040.....................................................           21           60           84             183
2045.....................................................           23           64           89             197
2050.....................................................           26           69           95             212
----------------------------------------------------------------------------------------------------------------

    It is important to recognize that a number of key uncertainties 
remain and that current SCC estimates should be treated as provisional 
and revisable because they will evolve with improved scientific and 
economic understanding. The interagency group also recognizes that the 
existing models are imperfect and incomplete. The National Research 
Council report mentioned in section IV.K.1.a of this NOPR points out 
that there is tension between the goal of producing quantified 
estimates of the economic damages from an incremental ton of carbon and 
the limits of existing efforts to model these effects. A number of 
analytic challenges are being addressed by the research community, 
including research programs housed in many of the Federal agencies 
participating in the interagency process to estimate the SCC. The 
interagency group intends to periodically review and reconsider those 
estimates to reflect increasing knowledge of the science and economics 
of climate impacts, as well as improvements in modeling.
    In summary, in considering the potential global benefits resulting 
from reduced CO2 emissions, DOE used the values from the 
2013 interagency report, adjusted to 2014$ using the gross domestic 
product price deflator. For each of the four cases of SCC values, the 
values for emissions in 2015 were $12.2, $40.0, $62.3, and $116.8 per 
metric ton of CO2 avoided. DOE derived values after 2050 
using the relevant growth rates for the 2040-2050 period in the 
interagency update.
    DOE multiplied the CO2 emissions reduction estimated for 
each year by the SCC value for that year in each of the four cases. To 
calculate a present value of the stream of monetary values, DOE 
discounted the values in each of the four cases using the specific 
discount rate that had been used to obtain the SCC values in each case.
2. Valuation of Other Emissions Reductions
    As noted above, DOE has taken into account how the new and amended

[[Page 50506]]

energy conservation standards would reduce NOX emissions in 
those 22 states not affected by emission caps. DOE estimated the 
monetized value of NOX emissions reductions resulting from 
each of the TSLs considered for this rule based on estimates found in 
the relevant scientific literature. Estimates of monetary value for 
reducing NOX from stationary sources range from $483 to 
$4,963 per ton (2014$).\61\ DOE calculated monetary benefits using a 
medium value for NOX emissions of $2,723 per short ton (in 
2014$), and real discount rates of 3 percent and 7 percent.
---------------------------------------------------------------------------

    \61\ U.S. Office of Management and Budget, 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. Available at 
www.whitehouse.gov/sites/default/files/omb/assets/omb/inforeg/2006_cb/2006_cb_final_report.pdf.
---------------------------------------------------------------------------

    DOE is evaluating appropriate monetization of avoided 
SO2 and Hg emissions in energy conservation standards 
rulemakings. DOE has not included such monetization in the current 
analysis.

L. Utility Impact Analysis

    The utility impact analysis estimates several effects on the power 
generation industry that would result from the adoption of new or 
amended energy conservation standards proposed in this NOPR. The 
utility impact analysis estimates the changes in electric installed 
capacity and generation that result for each TSL. The utility impact 
analysis uses a variant of NEMS associated with AEO2014,\62\ which is a 
public domain, multi-sectored, partial equilibrium model of the U.S. 
energy sector. DOE uses a variant of this model, referred to as NEMS-
BT,\63\ to account for selected utility impacts of new or amended 
energy conservation standards. DOE's analysis consists of a comparison 
between model results for the most recent AEO reference case and for 
cases in which energy use is decremented to reflect the impact of 
potential standards. The energy savings inputs associated with each TSL 
come from the NIA. Chapter 15 of the TSD describes the utility impact 
analysis.
---------------------------------------------------------------------------

    \62\ For more information on NEMS, refer to the U.S. Department 
of Energy, Energy Information Administration documentation. A useful 
summary is National Energy Modeling System: An Overview 2003, DOE/
EIA-0581 (2003), March 2003.
    \63\ DOE/EIA approves use of the name ``NEMS'' to describe only 
an official version of the model without any modification to code or 
data. Because this analysis entails some minor code modifications 
and the model is run under various policy scenarios that are 
variations on DOE/EIA assumptions, DOE refers to it by the name 
``NEMS-BT'' (``BT'' is DOE's Building Technologies Program, under 
whose aegis this work has been performed).
---------------------------------------------------------------------------

M. Employment Impact Analysis

    DOE considers employment impacts in the domestic economy as one 
factor in selecting a proposed standard. Employment impacts include 
both direct and indirect impacts. Direct employment impacts are changes 
in the number of employees at the plants that produce the covered 
products, along with affiliated distribution and service companies. DOE 
evaluated direct employment impacts in the MIA.
    Indirect employment impacts are changes in national employment that 
occur due to the shift in expenditures and capital investment caused by 
the purchase and operation of more-efficient equipment. Indirect 
employment impacts from standards consist of the jobs created or 
eliminated in the national economy due to: (1) Reduced spending by end 
users on energy; (2) reduced spending on new energy supply by the 
utility industry; (3) increased customer spending on the purchase of 
new equipment; and (4) the effects of those three factors throughout 
the economy.
    One method for assessing the possible effects on the demand for 
labor of such shifts in economic activity is to compare sector 
employment statistics developed by the Labor Department's Bureau of 
Labor Statistics (BLS). BLS regularly publishes its estimates of the 
number of jobs per million dollars of economic activity in different 
sectors of the economy, as well as the jobs created elsewhere in the 
economy by this same economic activity. Data from BLS indicate that 
expenditures in the utility sector generally create fewer jobs (both 
directly and indirectly) than expenditures in other sectors of the 
economy.\64\ There are many reasons for these differences, including 
wage differences and the fact that the utility sector is more capital-
intensive and less labor-intensive than other sectors. Energy 
conservation standards have the effect of reducing customer utility 
bills. Because reduced customer expenditures for energy likely lead to 
increased expenditures in other sectors of the economy, the general 
effect of efficiency standards is to shift economic activity from a 
less labor-intensive sector (i.e., the utility sector) to more labor-
intensive sectors (e.g., the retail and service sectors). Thus, based 
on the BLS data alone, DOE believes net national employment may 
increase because of shifts in economic activity resulting from amended 
and new BVM energy conservation standards proposed in this NOPR.
---------------------------------------------------------------------------

    \64\ See U.S. Department of Commerce--Bureau of Economic 
Analysis. Regional Multipliers: A User Handbook for the Regional 
Input-Output Modeling System (RIMS II). 1992.
---------------------------------------------------------------------------

    For the standard levels proposed in this NOPR, DOE estimated 
indirect national employment impacts using an input/output model of the 
U.S. economy called Impact of Sector Energy Technologies version 3.1.1 
(ImSET).\65\ ImSET is a special-purpose version of the ``U.S. Benchmark 
National Input-Output'' (I-O) model, which was designed to estimate the 
national employment and income effects of energy-saving technologies. 
The ImSET software includes a computer-based I-O model having 
structural coefficients that characterize economic flows among 187 
sectors. ImSET's national economic I-O structure is based on a 2002 
U.S. benchmark table, specially aggregated to the 187 sectors most 
relevant to industrial, commercial, and residential building energy 
use. DOE notes that ImSET is not a general equilibrium forecasting 
model and understands the uncertainties involved in projecting 
employment impacts, especially changes in the later years of the 
analysis. Because ImSET does not incorporate price changes, the 
employment effects predicted by ImSET may overestimate actual job 
impacts over the long run. For this NOPR, DOE used ImSET only to 
estimate short-term (2020 and 2025) employment impacts.
---------------------------------------------------------------------------

    \65\ Scott, M.J., O.V. Livingston, P.J. Balducci, J.M. Roop, and 
R.W. Schultz. ImSET 3.1: Impact of Sector Energy Technologies. 2009. 
Pacific Northwest National Laboratory, Richland, WA. Report No. 
PNNL-18412. www.pnl.gov/main/publications/external/technical_reports/PNNL-18412.pdf.
---------------------------------------------------------------------------

    DOE reiterates that the indirect employment impacts estimated with 
ImSET for the entire economy differ from the direct employment impacts 
in the BVM manufacturing sector estimated using the GRIM in the MIA, as 
described at the beginning of this section. The methodologies used and 
the sectors analyzed in the ImSET and GRIM models are different.

N. Description of Materials Incorporated by Reference

    As discussed in section IV.A.1.a, DOE is proposing in this NOPR to 
incorporate by reference ASTM Standard E 1084-86 (Reapproved 2009), 
``Standard Test Method for Solar Transmittance (Terrestrial) of Sheet 
Materials Using Sunlight,'' to determine whether a material is 
transparent when assessing whether a beverage vending machine has a 
transparent front and meets the proposed Class A definition.

[[Page 50507]]

Copies of ASTM standards may be purchased from ASTM International, 100 
Barr Harbor Drive, PO Box C700, West Conshohocken, PA, 19428, (877) 
909-2786, or at www.astm.org.

V. Analytical Results and Conclusions

    The following section addresses the results from DOE's analyses 
with respect to potential energy conservation standards for beverage 
vending machines in this rulemaking.

A. Trial Standard Levels

    DOE analyzed 8 efficiency levels (ELs) for Class A equipment, 12 
ELs for Class B equipment, 15 ELs for Combination A equipment, and 14 
ELs for Combination B equipment in the LCC and NIA analyses, where each 
EL represents a 5-percent improvement in efficiency from baseline 
efficiency (EL 0) to up to max tech. Of the ELs analyzed for each class 
DOE selected five TSLs based on the following criteria:
    (1) TSL 1 is equivalent to the current ENERGY STAR criterion for 
all equipment that is eligible for ENERGY STAR qualification. This 
corresponded to EL 2 for Class B equipment and EL 1 for Class A. 
Combination equipment is currently not eligible for ENERGY STAR 
qualification and, as such, DOE selected TSL 1 as equivalent to EL 1, 
since EL 1 was the first EL analyzed above the baseline (EL 0).
    (2) TSL 2 was selected to be the EL, which is 10 percent better 
than TSL 1.
    (3) TSL 3 was selected to be an interim analysis point 
corresponding to the EL halfway between TSL 2 and 4 (rounding up when 
between ELs).
    (4) TSL 4 represents the EL with the maximum NPV at a 7-percent 
discount rate. This level also corresponds to the maximum LCC savings 
for most equipment classes. In addition, the EL corresponding to a 3-
year payback, zero customers with net cost, and maximum NPV at a 3-
percent discount rate were the same or within one EL from the selected 
EL.
    (5) TSL 5 corresponds to the max tech EL.
    Table V.1 shows the TSL levels DOE selected for the equipment 
classes analyzed. Note that DOE performed its analyses for a 
``representative size'' beverage vending machine and defined 
refrigerant-neutral ELs such that the selected ELs could be met by any 
refrigerant. Similarly, the defined TSLs share this approach and can be 
met by either refrigerant.

                   Table V.1--Trial Standard Levels for a Representative Size BVM Model Expressed in Terms of Daily Energy Consumption
                                                                        [kWh/day]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                             Representative
             Equipment Class                 volume (ft)\3\              TSL             Baseline    TSL 1      TSL 2      TSL 3      TSL 4      TSL 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Class A..................................               30.0  EL......................          0          1          3          4          5          8
                                                              DEC.....................       4.21       4.00       3.58       3.37       3.16       2.49
Class B..................................               23.4  EL......................          0          2          4          8         11         12
                                                              DEC.....................       4.86       4.37       3.89       2.92       2.19       1.70
Combination A............................               10.3  EL......................          0          1          3          8         13         15
                                                              DEC.....................       5.99       5.69       5.09       3.59       2.10       1.66
Combination B............................                4.3  EL......................          0          1          3          8         13         14
                                                              DEC.....................       4.44       4.21       3.77       2.66       1.55       1.19
--------------------------------------------------------------------------------------------------------------------------------------------------------

    In this NOPR, DOE elected to maintain the energy conservation 
standard structure established in the 2009 BVM final rule, which 
establishes the MDEC of covered BVM models in terms of a linear 
equation of the following form:

MDEC = A x V + B

Where:
A is expressed in terms of kWh/(day[middot]ft3) of measured 
refrigerated volume,
V is the measured refrigerated volume (ft3) calculated for the 
equipment, and
B is an offset factor expressed in kWh/day.

    Coefficients A and B are uniquely derived for each equipment class 
based on a linear equation passing between the daily energy consumption 
values for equipment of different refrigerated volumes. For the A and B 
coefficients, DOE used the unique energy consumption values of the 
small, medium, and large or medium and large size BVM units for Class A 
and B or Combination A and B beverage vending machines, respectively. 
Table V.2 depicts the TSL equations for each analyzed TSL and equipment 
class. The methodology used to establish the TSL equations and more 
detailed results is described in more detail in appendix 10B of the 
TSD.

 Table V.2--Trial Standard Levels Maximum Daily Energy Consumption (kWh/day) Expressed in Terms of Equations and
                                         Coefficients for BVM Equipment
----------------------------------------------------------------------------------------------------------------
             TSL                    Class A              Class B           Combination A        Combination B
----------------------------------------------------------------------------------------------------------------
Baseline....................     0.055 x V + 2.56     0.073 x V + 3.16     0.126 x V + 4.70     0.126 x V + 3.89
1...........................     0.052 x V + 2.43     0.066 x V + 2.84     0.119 x V + 4.46     0.120 x V + 3.69
2...........................     0.047 x V + 2.18     0.058 x V + 2.53     0.107 x V + 3.99     0.107 x V + 3.31
3...........................     0.044 x V + 2.05     0.044 x V + 1.90     0.075 x V + 2.82     0.076 x V + 2.33
4...........................     0.041 x V + 1.92     0.033 x V + 1.42     0.044 x V + 1.64     0.044 x V + 1.36
5...........................     0.032 x V + 1.51     0.026 x V + 1.10     0.035 x V + 1.31     0.034 x V + 1.04
----------------------------------------------------------------------------------------------------------------

    In Table V.2, ``V'' is the representative value of refrigerated 
volume (ft\3\) of the BVM model, as measured in accordance with the 
method for determining refrigerated volume adopted in the recently 
amended DOE test procedure for beverage vending machines and 
appropriate sampling plan requirements. 80 FR 45758 (July 31, 2015). In 
this NOPR, DOE is proposing a calculation method at 10 CFR 429.52(a)(3) 
for determining the

[[Page 50508]]

representative value of refrigerated volume for each BVM model. DOE is 
proposing that the representative value of refrigerated volume must be 
determined as the mean of the measured refrigerated volume of each 
tested unit and manufacturers must use this calculated value for 
determining the appropriate standard level for that model.
    DOE is also proposing provisions to assess whether the 
representative value of refrigerated volume, as certified by 
manufacturers, is valid. Under the proposed provisions, DOE would 
compare the manufacturer's certified rating with results from the unit 
or units in DOE's tested sample. If the results of the tested unit or 
units in DOE's sample are within 5 percent of the representative value 
of refrigerated volume certified by manufacturers, the certified 
refrigerated volume value would be considered valid. Based on whether 
the representative value of refrigerated volume is valid, DOE proposes 
to do one of the following:
    (1) If the representative value of refrigerated volume, as 
certified by manufacturers, is valid, DOE would use this value to 
determine the MDEC for that model; or
    (2) If the representative value of refrigerated volume is invalid, 
DOE would use the results of the tested unit or units as the basis for 
calculating the MDEC for that BVM model.
    DOE proposes that these sampling and enforcement provisions would 
be effective 30 days after publication of any final rule in the Federal 
Register and, as such, applicable to both the existing standards, as 
well as any new and amended standards adopted as a result of this 
rulemaking.
    DOE requests comment on the proposal to clarify the calculation of 
the refrigerated volume for each BVM basic model (section VII.E of this 
NOPR).

B. Economic Justification and Energy Savings

    DOE analyzed the economic impacts on customers by looking at the 
effects potential standards would have on the LCC and PBP. DOE also 
examined the impacts of potential standards on customer subgroups. 
These analyses are discussed below.
1. Economic Impacts on Commercial Customers
a. Life-Cycle Cost and Payback Period
    Customers affected by new standards usually incur higher purchase 
prices and lower operating costs. DOE evaluates these impacts on 
individual customers by calculating changes in LCC and the PBP 
associated with the TSLs. The results of the LCC analysis for each TSL 
were obtained by comparing the installed and operating costs of the 
equipment in the base-case scenario against the standards-case 
scenarios at each TSL. Inputs used for calculating the LCC include 
total installed costs (i.e., equipment price plus installation costs), 
operating expenses (i.e., annual energy savings, energy prices, energy 
price trends, repair costs, and maintenance costs), equipment lifetime, 
and discount rates.
    The LCC analysis is carried out using Monte Carlo simulations. 
Consequently, the results of the LCC analysis are distributions 
covering a range of values, as opposed to a single deterministic value. 
DOE presents the mean or median values, as appropriate, calculated from 
the distributions of results. The LCC analysis also provides 
information on the percentage of customers for whom an increase in the 
minimum efficiency standard would have a positive impact (net benefit), 
a negative impact (net cost), or no impact.
    DOE also performed a PBP analysis as part of the LCC analysis. The 
PBP is the number of years it would take for the customer to recover 
the increased costs of higher-efficiency equipment as a result of 
operating cost savings. The PBP is an economic benefit-cost measure 
that uses benefits and costs without discounting. Chapter 8 of the NOPR 
TSD provides detailed information on the LCC and PBP analysis.
    DOE used a ``roll-up'' scenario in this rulemaking. Under the roll-
up scenario, DOE assumes that the market shares of the efficiency 
levels (in the no-new-standards case) that do not meet the standard 
level under consideration would be ``rolled up'' into (meaning ``added 
to'') the market share of the efficiency level at the standard level 
under consideration, and the market shares of efficiency levels that 
are above the standard level under consideration would remain 
unaffected. Customers in the no-new-standards scenario who buy the 
equipment at or above the TSL under consideration would be unaffected 
if the standard were to be set at that TSL. Customers in the base-case 
scenario who buy equipment below the TSL under consideration would be 
affected if the standard were to be set at that TSL. Among these 
affected customers, some may benefit from lower LCCs of the equipment 
and some may incur net cost due to higher LCCs, depending on the inputs 
to the LCC analysis, such as electricity prices, discount rates, and 
installed costs.
    DOE's LCC and PBP analysis provided key outputs for each efficiency 
level above the baseline. The results for all equipment classes are 
given in Table V.3 through Table V.18. DOE's results indicate that 
affected customers typically have a positive LCC savings, with the 
exception of the TSL 5 Class A CO2 equipment customers.

                                                Table V.3--Average LCC and PBP Results for Class A, CO2*
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                          Average costs (2014$)
                                                                  % of    -----------------------------------------------------    Simple      Average
                         TSL                             EL     Baseline                                  Lifetime                payback      lifetime
                                                               energy use   Installed     First year's    operating     LCC        period      (years)
                                                                               cost      operating cost     cost                  (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            0         100        2,898              419       4,226      7,124  ...........         13.5
1...................................................        1          95        2,902              412       4,151      7,053          0.6         13.5
                                                            2          90        2,911              404       4,075      6,986          0.9         13.5
2...................................................        3          85        2,921              397       4,000      6,921          1.1         13.5
3...................................................        4          80        2,968              389       3,924      6,892          2.4         13.5
4...................................................        5          75        3,031              382       3,849      6,880          3.6         13.5
                                                            6          70        3,205              374       3,773      6,978          6.9         13.5
                                                            7          65        3,457              367       3,698      7,155         10.7         13.5
5...................................................        8          59        3,759              358       3,607      7,367         14.1         13.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The results for each EL are calculated assuming that all customers use equipment at that efficiency level. The PBP is measured relative to the
  baseline equipment.


[[Page 50509]]


  Table V.4--Average LCC Savings Relative to the No-New-Standards Case Efficiency Distribution for Class A, CO2
----------------------------------------------------------------------------------------------------------------
                                                                             Life-cycle cost savings
                                                        % of    ------------------------------------------------
                    TSL                        EL     Baseline                               Average life-cycle
                                                     energy use     % of Customers that        cost savings *
                                                                   experience a net cost          (2014$)
----------------------------------------------------------------------------------------------------------------
                                                  0         100                         0                      0
1.........................................        1          95                         0                      0
                                                  2          90                         0                     67
2.........................................        3          85                         0                    132
3.........................................        4          80                         0                    160
4.........................................        5          75                         1                    173
                                                  6          70                        31                     75
                                                  7          65                        78                  (102)
5.........................................        8          59                        93                  (314)
----------------------------------------------------------------------------------------------------------------
* The calculation includes customers with zero LCC savings (no impact). Parentheses indicate negative values.


                                              Table V.5--Average LCC and PBP Results for Class A, Propane *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                          Average costs (2014$)
                                                                  % of    -----------------------------------------------------    Simple      Average
                         TSL                             EL     Baseline                                  Lifetime                payback      lifetime
                                                               energy use   Installed     First year's    operating     LCC        period      (years)
                                                                               cost      operating cost     cost                  (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            0         100        2,874              419       4,226      7,100  ...........         13.5
1...................................................        1          95        2,877              412       4,151      7,028          0.4         13.5
                                                            2          90        2,883              404       4,075      6,958          0.6         13.5
2...................................................        3          85        2,892              397       4,000      6,892          0.8         13.5
3...................................................        4          80        2,903              389       3,924      6,827          1.0         13.5
4...................................................        5          75        2,914              382       3,849      6,763          1.1         13.5
                                                            6          70        3,005              374       3,773      6,778          2.9         13.5
                                                            7          65        3,176              367       3,698      6,874          5.8         13.5
5...................................................        8          59        3,381              358       3,607      6,988          8.3         13.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The results for each EL are calculated assuming that all customers use equipment at that efficiency level. The PBP is measured relative to the
  baseline equipment.


    Table V.6--Average LCC Savings Relative to the No-New-Standards Case Efficiency Distribution for Class A,
                                                     Propane
----------------------------------------------------------------------------------------------------------------
                                                                             Life-cycle cost savings
                                                        % of    ------------------------------------------------
                    TSL                        EL     Baseline                               Average life-cycle
                                                     energy use     % of Customers that        cost savings *
                                                                   experience a net cost          (2014$)
----------------------------------------------------------------------------------------------------------------
                                                  0         100                         0                      0
1.........................................        1          95                         0                      0
                                                  2          90                         0                     70
2.........................................        3          85                         0                    136
3.........................................        4          80                         0                    201
4.........................................        5          75                         0                    265
                                                  6          70                         0                    250
                                                  7          65                        15                    154
5.........................................        8          59                        47                     39
----------------------------------------------------------------------------------------------------------------
* The calculation includes customers with zero LCC savings (no impact). Parentheses indicate negative values.


                                                Table V.7--Average LCC and PBP Results for Class B, CO2*
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                          Average costs (2014$)
                                                                  % of    -----------------------------------------------------    Simple      Average
                         TSL                             EL     Baseline                                  Lifetime                payback      lifetime
                                                               energy use   Installed     First year's    operating     LCC        period      (years)
                                                                               cost      operating cost     cost                  (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            0         100        2,368              458       4,617      6,985  ...........         13.5
                                                            1          95        2,372              450       4,532      6,904          0.5         13.5
1...................................................        2          90        2,376              441       4,447      6,823          0.5         13.5
                                                            3          85        2,380              433       4,362      6,743          0.5         13.5
2...................................................        4          80        2,385              424       4,277      6,663          0.5         13.5

[[Page 50510]]

 
                                                            5          75        2,391              416       4,192      6,584          0.5         13.5
                                                            6          70        2,397              408       4,108      6,505          0.6         13.5
                                                            7          65        2,403              399       4,023      6,426          0.6         13.5
3...................................................        8          60        2,411              391       3,938      6,349          0.6         13.5
                                                            9          55        2,425              382       3,853      6,277          0.7         13.5
                                                           10          50        2,450              354       3,567      6,017          0.8         13.5
4...................................................       11          45        2,625              346       3,482      6,106          2.3         13.5
5...................................................       12          35        3,298              329       3,311      6,609          7.2         13.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The results for each EL are calculated assuming that all customers use equipment at that efficiency level. The PBP is measured relative to the
  baseline equipment.


  Table V.8--Average LCC Savings Relative to the No-New-Standards Case Efficiency Distribution for Class B, CO2
----------------------------------------------------------------------------------------------------------------
                                                                             Life-cycle cost savings
                                                        % of    ------------------------------------------------
                    TSL                        EL     Baseline                               Average life-cycle
                                                     energy use     % of Customers that        cost savings *
                                                                   experience a net cost          (2014$)
----------------------------------------------------------------------------------------------------------------
                                                  0         100                         0                      0
                                                  1          95                         0                      0
1.........................................        2          90                         0                      0
                                                  3          85                         0                      0
2.........................................        4          80                         0                     34
                                                  5          75                         0                     80
                                                  6          70                         0                    147
                                                  7          65                         0                    215
3.........................................        8          60                         0                    292
                                                  9          55                         0                    363
                                                 10          50                         0                    624
4.........................................       11          45                         0                    534
5.........................................       12          35                        51                     31
----------------------------------------------------------------------------------------------------------------
* The calculation includes customers with zero LCC savings (no impact).


                                              Table V.9--Average LCC and PBP Results for Class B, Propane *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                          Average costs (2014$)
                                                                  % of    -----------------------------------------------------    Simple      Average
                         TSL                             EL     Baseline                                  Lifetime                payback      lifetime
                                                               energy use   Installed     First year's    operating     LCC        period      (years)
                                                                               cost      operating cost     cost                  (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            0         100        2,337              458       4,617      6,954  ...........         13.5
                                                            1          95        2,339              450       4,532      6,871          0.3         13.5
1...................................................        2          90        2,342              441       4,447      6,789          0.3         13.5
                                                            3          85        2,345              433       4,362      6,708          0.3         13.5
2...................................................        4          80        2,349              424       4,277      6,626          0.4         13.5
                                                            5          75        2,354              416       4,192      6,547          0.4         13.5
                                                            6          70        2,360              408       4,108      6,468          0.5         13.5
                                                            7          65        2,366              399       4,023      6,388          0.5         13.5
3...................................................        8          60        2,372              391       3,938      6,310          0.5         13.5
                                                            9          55        2,381              382       3,853      6,233          0.6         13.5
                                                           10          50        2,392              374       3,768      6,160          0.7         13.5
4...................................................       11          45        2,486              346       3,482      5,967          1.3         13.5
5...................................................       12          35        2,989              329       3,311      6,300          5.0         13.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The results for each EL are calculated assuming that all customers use equipment at that efficiency level. The PBP is measured relative to the
  baseline equipment.


[[Page 50511]]


   Table V.10--Average LCC Savings Relative to the No-New-Standards Case Efficiency Distribution for Class B,
                                                     Propane
----------------------------------------------------------------------------------------------------------------
                                                                             Life-cycle cost savings
                                                        % of    ------------------------------------------------
                    TSL                        EL     Baseline                               Average life-cycle
                                                     energy use     % of Customers that        cost savings *
                                                                   experience a net cost          (2014$)
----------------------------------------------------------------------------------------------------------------
                                                  0         100                         0                      0
                                                  1          95                         0                      4
1.........................................        2          90                         0                     16
                                                  3          85                         0                     97
2.........................................        4          80                         0                    179
                                                  5          75                         0                    258
                                                  6          70                         0                    338
                                                  7          65                         0                    417
3.........................................        8          60                         0                    495
                                                  9          55                         0                    572
                                                 10          50                         0                    645
4.........................................       11          45                         0                    838
5.........................................       12          35                         4                    505
----------------------------------------------------------------------------------------------------------------
* The calculation includes customers with zero LCC savings (no impact).


                                            Table V.11--Average LCC and PBP Results for Combination A, CO 2 *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                          Average costs (2014$)
                                                                  % of    -----------------------------------------------------    Simple      Average
                         TSL                             EL     Baseline                                  Lifetime                payback      lifetime
                                                               energy use   Installed     First year's    operating     LCC        period      (years)
                                                                               cost     operating  cost     cost                  (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            0         100        2,877              508       5,117      7,994  ...........         13.5
1...................................................        1          95        2,879              497       5,007      7,886          0.2         13.5
                                                            2          90        2,881              486       4,897      7,778          0.2         13.5
2...................................................        3          85        2,883              475       4,787      7,670          0.2         13.5
                                                            4          80        2,886              464       4,677      7,563          0.2         13.5
                                                            5          75        2,889              453       4,567      7,456          0.2         13.5
                                                            6          70        2,894              442       4,457      7,351          0.2         13.5
                                                            7          65        2,900              431       4,347      7,247          0.3         13.5
3...................................................        8          60        2,909              420       4,237      7,146          0.4         13.5
                                                            9          55        2,919              410       4,127      7,047          0.4         13.5
                                                           10          50        2,930              399       4,017      6,948          0.5         13.5
                                                           11          45        2,945              388       3,908      6,852          0.6         13.5
                                                           12          40        2,962              357       3,596      6,559          0.6         13.5
4...................................................       13          35        3,108              346       3,487      6,595          1.4         13.5
                                                           14          30        3,689              335       3,377      7,066          4.7         13.5
5...................................................       15          28        3,995              330       3,328      7,323          6.3         13.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The results for each EL are calculated assuming that all customers use equipment at that efficiency level. The PBP is measured relative to the
  baseline equipment.


Table V.12--Average LCC Savings Relative to the No-New-Standards Case Efficiency Distribution for Combination A,
                                                       CO2
----------------------------------------------------------------------------------------------------------------
                                                                             Life-cycle cost savings
                                                        % of    ------------------------------------------------
                    TSL                        EL     Baseline                               Average life-cycle
                                                       energy       % of Customers that        cost savings *
                                                         use       experience a net cost          (2014$)
----------------------------------------------------------------------------------------------------------------
                                                  0         100                         0                      0
1.........................................        1          95                         0                     53
                                                  2          90                         0                    161
2.........................................        3          85                         0                    269
                                                  4          80                         0                    376
                                                  5          75                         0                    483
                                                  6          70                         0                    588
                                                  7          65                         0                    692
3.........................................        8          60                         0                    793
                                                  9          55                         0                    892
                                                 10          50                         0                    991
                                                 11          45                         0                  1,087
                                                 12          40                         0                  1,381
4.........................................       13          35                         0                  1,344
                                                 14          30                         1                    873
5.........................................       15          28                        10                    616
----------------------------------------------------------------------------------------------------------------


[[Page 50512]]


                                          Table V.13--Average LCC and PBP Results for Combination A, Propane *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                          Average costs (2014$)
                                                                  % of    -----------------------------------------------------    Simple      Average
                         TSL                             EL     Baseline                                  Lifetime                payback      lifetime
                                                                 energy     Installed     First year's    operating     LCC        period      (years)
                                                                   use         cost     operating  cost     cost                  (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            0         100        2,871              508       5,117      7,988  ...........         13.5
1...................................................        1          95        2,873              497       5,007      7,880          0.1         13.5
                                                            2          90        2,874              486       4,897      7,771          0.1         13.5
2...................................................        3          85        2,876              475       4,787      7,663          0.1         13.5
                                                            4          80        2,878              464       4,677      7,555          0.2         13.5
                                                            5          75        2,880              453       4,567      7,448          0.2         13.5
                                                            6          70        2,884              442       4,457      7,341          0.2         13.5
                                                            7          65        2,890              431       4,347      7,237          0.2         13.5
3...................................................        8          60        2,897              420       4,237      7,134          0.3         13.5
                                                            9          55        2,907              410       4,127      7,034          0.4         13.5
                                                           10          50        2,918              399       4,017      6,935          0.4         13.5
                                                           11          45        2,932              388       3,908      6,840          0.5         13.5
                                                           12          40        2,949              357       3,596      6,545          0.5         13.5
4...................................................       13          35        3,043              346       3,487      6,530          1.1         13.5
                                                           14          30        3,535              335       3,377      6,912          3.9         13.5
5...................................................       15          28        3,810              330       3,328      7,138          5.3         13.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The results for each EL are calculated assuming that all customers use equipment at that efficiency level. The PBP is measured relative to the
  baseline equipment.


Table V.14--Average LCC Savings Relative to the No-New-Standards Case Efficiency Distribution for Combination A,
                                                     Propane
----------------------------------------------------------------------------------------------------------------
                                                                             Life-cycle cost savings
                                                        % of    ------------------------------------------------
                    TSL                        EL     Baseline                               Average life-cycle
                                                       energy       % of Customers that        cost savings *
                                                         use       experience a net cost          (2014$)
----------------------------------------------------------------------------------------------------------------
                                                  0         100                         0                      0
1.........................................        1          95                         0                     55
                                                  2          90                         0                    164
2.........................................        3          85                         0                    272
                                                  4          80                         0                    380
                                                  5          75                         0                    487
                                                  6          70                         0                    593
                                                  7          65                         0                    697
3.........................................        8          60                         0                    801
                                                  9          55                         0                    900
                                                 10          50                         0                    999
                                                 11          45                         0                  1,095
                                                 12          40                         0                  1,390
4.........................................       13          35                         0                  1,405
                                                 14          30                         0                  1,023
5.........................................       15          28                         3                    797
----------------------------------------------------------------------------------------------------------------
* The calculation includes customers with zero LCC savings (no impact).


                                            Table V.15--Average LCC and PBP Results for Combination B, CO2 *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                          Average costs (2014$)
                                                                  % of    -----------------------------------------------------    Simple      Average
                         TSL                             EL     Baseline                                  Lifetime                payback      lifetime
                                                                 energy     Installed     First year's    operating     LCC        period      (years)
                                                                   use         cost     operating  cost     cost                  (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            0         100        2,474              458       4,618      7,092  ...........         13.5
1...................................................        1          95        2,475              450       4,533      7,008          0.1         13.5
                                                            2          90        2,476              441       4,448      6,924          0.1         13.5
2...................................................        3          85        2,477              433       4,363      6,840          0.1         13.5
                                                            4          80        2,478              425       4,278      6,756          0.1         13.5
                                                            5          75        2,479              416       4,193      6,672          0.1         13.5
                                                            6          70        2,480              408       4,108      6,589          0.1         13.5
                                                            7          65        2,485              399       4,023      6,508          0.2         13.5
3...................................................        8          60        2,490              391       3,938      6,428          0.2         13.5
                                                            9          55        2,499              382       3,853      6,352          0.3         13.5
                                                           10          50        2,511              374       3,768      6,279          0.4         13.5
                                                           11          45        2,525              366       3,683      6,208          0.5         13.5

[[Page 50513]]

 
                                                           12          40        2,539              357       3,598      6,138          0.7         13.5
4...................................................       13          35        2,556              329       3,312      5,868          0.6         13.5
5...................................................       14          27        3,278              315       3,172      6,451          5.6         13.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The results for each EL are calculated assuming that all customers use equipment at that efficiency level. The PBP is measured relative to the
  baseline equipment.


Table V.16--Average LCC Savings Relative to the No-New-Standards Case Efficiency Distribution for Combination B,
                                                       CO2
----------------------------------------------------------------------------------------------------------------
                                                                             Life-cycle cost savings
                                                        % of    ------------------------------------------------
                    TSL                        EL     Baseline                               Average life-cycle
                                                       energy       % of Customers that        cost savings *
                                                         use       experience a net cost          (2014$)
----------------------------------------------------------------------------------------------------------------
                                                  0         100                         0                      0
1.........................................        1          95                         0                     21
                                                  2          90                         0                     64
2.........................................        3          85                         0                    127
                                                  4          80                         0                    211
                                                  5          75                         0                    295
                                                  6          70                         0                    378
                                                  7          65                         0                    459
3.........................................        8          60                         0                    539
                                                  9          55                         0                    615
                                                 10          50                         0                    687
                                                 11          45                         0                    759
                                                 12          40                         0                    829
4.........................................       13          35                         0                  1,098
5.........................................       14          27                         7                    516
----------------------------------------------------------------------------------------------------------------
* The calculation includes customers with zero LCC savings (no impact).


                                          Table V.17--Average LCC and PBP Results for Combination B, Propane *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                          Average costs (2014$)
                                                                  % of    -----------------------------------------------------    Simple      Average
                         TSL                             EL     Baseline                                  Lifetime                payback      lifetime
                                                                 energy     Installed     First year's    operating     LCC        period      (years)
                                                                   use         cost     operating  cost     cost                  (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            0         100        2,461              458       4,618      7,079  ...........         13.5
1...................................................        1          95        2,461              450       4,533      6,995          0.1         13.5
                                                            2          90        2,462              441       4,448      6,911          0.1         13.5
2...................................................        3          85        2,463              433       4,363      6,826          0.1         13.5
                                                            4          80        2,464              425       4,278      6,742          0.1         13.5
                                                            5          75        2,465              416       4,193      6,658          0.1         13.5
                                                            6          70        2,466              408       4,108      6,574          0.1         13.5
                                                            7          65        2,467              399       4,023      6,490          0.1         13.5
3...................................................        8          60        2,470              391       3,938      6,409          0.1         13.5
                                                            9          55        2,476              382       3,853      6,329          0.2         13.5
                                                           10          50        2,484              374       3,768      6,253          0.3         13.5
                                                           11          45        2,498              366       3,683      6,181          0.4         13.5
                                                           12          40        2,513              337       3,397      5,910          0.4         13.5
4...................................................       13          35        2,529              329       3,312      5,841          0.5         13.5
5...................................................       14          27        2,869              315       3,172      6,041          2.9         13.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The results for each EL are calculated assuming that all customers use equipment at that efficiency level. The PBP is measured relative to the
  baseline equipment.


[[Page 50514]]


Table V.18--Average LCC Savings Relative to the No-New-Standards Case Efficiency Distribution for Combination B,
                                                     Propane
----------------------------------------------------------------------------------------------------------------
                                                                             Life-cycle cost savings
                                                        % of    ------------------------------------------------
                    TSL                        EL     Baseline                               Average life-cycle
                                                       energy       % of Customers that        cost savings *
                                                         use       experience a net cost          (2014$)
----------------------------------------------------------------------------------------------------------------
                                                  0         100                         0                      0
1.........................................        1          95                         0                     28
                                                  2          90                         0                     84
2.........................................        3          85                         0                    168
                                                  4          80                         0                    252
                                                  5          75                         0                    336
                                                  6          70                         0                    421
                                                  7          65                         0                    504
3.........................................        8          60                         0                    586
                                                  9          55                         0                    666
                                                 10          50                         0                    742
                                                 11          45                         0                    813
                                                 12          40                         0                  1,084
4.........................................       13          35                         0                  1,153
5.........................................       14          27                         0                    953
----------------------------------------------------------------------------------------------------------------
* The calculation includes customers with zero LCC savings (no impact).

b. Life-Cycle Cost Subgroup Analysis
    Using the LCC spreadsheet model, DOE estimated the impacts of the 
TSLs on manufacturing and/or industrial facilities that purchase their 
own beverage vending machines. This subgroup typically has higher 
discount rates and lower electricity prices relative to the average 
customer. DOE estimated the average LCC savings and simple PBP for this 
subgroup as shown in Table V.19 through Table V.26.
    The results of the LCC subgroup analysis indicate that the 
manufacturing/industrial subgroup fares slightly worse than the average 
customer, with the subgroup showing lower LCC savings and longer 
payback periods than a typical customer shows. At TSL 4, all equipment 
classes have positive LCC savings for the subgroup, although not as 
great in magnitude as for the average customer. Chapter 11 of the NOPR 
TSD provides a more detailed discussion on the LCC subgroup analysis 
and results.

 Table V.19--Comparison of Impacts for Manufacturing/Industrial Subgroup Relative to All Customers, Class A, CO2
----------------------------------------------------------------------------------------------------------------
                                              LCC Savings (2014$) *             Simple Payback Period (years)
                                     ---------------------------------------------------------------------------
                 TSL                    Manufacturing                         Manufacturing
                                           subgroup        All customers         subgroup        All customers
----------------------------------------------------------------------------------------------------------------
1...................................                0                  0                0.8                0.6
2...................................               98                132                1.3                1.1
3...................................              110                160                3.0                2.4
4...................................              106                173                4.5                3.6
5...................................             (433)              (314)              17.7               14.1
----------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.


   Table V.20--Comparison of Impacts for Manufacturing/Industrial Subgroup Relative to All Customers, Class A,
                                                     Propane
----------------------------------------------------------------------------------------------------------------
                                              LCC Savings (2014$) *             Simple payback period (years)
                                     ---------------------------------------------------------------------------
                 TSL                    Manufacturing                         Manufacturing
                                           subgroup        All customers         subgroup        All customers
----------------------------------------------------------------------------------------------------------------
1...................................                0                  0                0.5                0.4
2...................................              103                136                1.0                0.8
3...................................              151                201                1.2                1.0
4...................................              199                265                1.3                1.1
5...................................              (80)                39               10.4                8.3
----------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.


[[Page 50515]]


 Table V.21--Comparison of Impacts for Manufacturing/Industrial Subgroup Relative to All Customers, Class B, CO2
----------------------------------------------------------------------------------------------------------------
                                              LCC Savings (2014$) *             Simple payback period (years)
                                     ---------------------------------------------------------------------------
                 TSL                    Manufacturing                         Manufacturing
                                           subgroup        All customers         subgroup        All customers
----------------------------------------------------------------------------------------------------------------
1...................................                0                  0                0.6                0.5
2...................................               26                 34                0.6                0.5
3...................................              222                292                0.8                0.6
4...................................              403                534                2.7                2.3
5...................................             (136)                31                8.7                7.2
----------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.


   Table V.22--Comparison of Impacts for Manufacturing/Industrial Subgroup Relative to All Customers, Class B,
                                                     Propane
----------------------------------------------------------------------------------------------------------------
                                              LCC Savings (2014$) *             Simple payback period (years)
                                     ---------------------------------------------------------------------------
                 TSL                    Manufacturing                         Manufacturing
                                           subgroup        All customers         subgroup        All customers
----------------------------------------------------------------------------------------------------------------
1...................................               13                 16                0.4                0.3
2...................................              138                179                0.5                0.4
3...................................              380                495                0.7                0.5
4...................................              661                838                1.6                1.3
5...................................              292                505                6.1                5.0
----------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.


 Table V.23--Comparison of Impacts for Manufacturing/Industrial Subgroup Relative to All Customers, Combination
                                                     A, CO2
----------------------------------------------------------------------------------------------------------------
                                               LCC Savings (2014$)              Simple payback period (years)
                                     ---------------------------------------------------------------------------
                 TSL                    Manufacturing                         Manufacturing
                                           subgroup        All customers         subgroup        All customers
----------------------------------------------------------------------------------------------------------------
1...................................               42                 53                0.2                0.2
2...................................              209                269                0.2                0.2
3...................................              613                793                0.5                0.4
4...................................            1,038              1,344                1.7                1.4
5...................................              276                616                7.7                6.3
----------------------------------------------------------------------------------------------------------------


 Table V.24--Comparison of Impacts for Manufacturing/Industrial Subgroup Relative to All Customers, Combination
                                                   A, Propane
----------------------------------------------------------------------------------------------------------------
                                               LCC Savings (2014$)              Simple payback period (years)
                                     ---------------------------------------------------------------------------
                 TSL                    Manufacturing                         Manufacturing
                                           subgroup        All customers         subgroup        All customers
----------------------------------------------------------------------------------------------------------------
1...................................               43                 55                0.2                0.1
2...................................              211                272                0.2                0.1
3...................................              619                801                0.4                0.3
4...................................            1,097              1,405                1.3                1.1
5...................................              456                797                6.5                5.3
----------------------------------------------------------------------------------------------------------------


 Table V.25--Comparison of Impacts for Manufacturing/Industrial Subgroup Relative to All Customers, Combination
                                                     B, CO2
----------------------------------------------------------------------------------------------------------------
                                               LCC Savings (2014$)              Simple payback period (years)
                                     ---------------------------------------------------------------------------
                 TSL                    Manufacturing                         Manufacturing
                                           subgroup        All customers         subgroup        All customers
----------------------------------------------------------------------------------------------------------------
1...................................               16                 21                0.2                0.1
2...................................               98                127                0.2                0.1

[[Page 50516]]

 
3...................................              417                539                0.3                0.2
4...................................              877              1,098                0.8                0.6
5...................................              266                516                6.8                5.6
----------------------------------------------------------------------------------------------------------------


 Table V.26--Comparison of Impacts for Manufacturing/Industrial Subgroup Relative to All Customers, Combination
                                                   B, Propane
----------------------------------------------------------------------------------------------------------------
                                               LCC Savings (2014$)              Simple payback period (years)
                                     ---------------------------------------------------------------------------
                 TSL                    Manufacturing                         Manufacturing
                                           subgroup        All customers         subgroup        All customers
----------------------------------------------------------------------------------------------------------------
1...................................               22                 28                0.1                0.1
2...................................              131                168                0.1                0.1
3...................................              455                586                0.2                0.1
4...................................              923              1,153                0.6                0.5
5...................................              693                953                3.5                2.9
----------------------------------------------------------------------------------------------------------------

c. Rebuttable Presumption Payback
    As discussed in section III.F.2 of this NOPR, EPCA provides a 
rebuttable presumption that an energy conservation standard is 
economically justified if the additional cost to the customer of the 
equipment that meets the new or amended standard level is less than 
three times the value of the first-year energy savings resulting from 
the standard. (42 U.S.C. 6295(o)(1)(B)(iii)) DOE's LCC and PBP analyses 
generate values that calculate the PBP for customers of potential new 
and amended energy conservation standards. These analyses include, but 
are not limited to, the 3-year PBP contemplated under the rebuttable 
presumption test. However, DOE routinely conducts a full economic 
analysis that considers the full range of impacts, including those to 
the customer, manufacturer, nation, and environment, as required under 
42 U.S.C. 6295(o)(2)(B)(i). 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. Table V.27 
shows the rebuttable presumption payback periods for TSL 4, for all 
equipment classes and both CO2 and propane refrigerants.

     Table V.27--Rebuttable Presumption Payback Periods at TSL 4 for All Refrigerants and Equipment Classes
----------------------------------------------------------------------------------------------------------------
                                                                 Rebuttable presumption payback period  (years)
                          Refrigerant                          -------------------------------------------------
                                                                Class A  Class B   Combination A   Combination B
----------------------------------------------------------------------------------------------------------------
CO2...........................................................      3.6      2.3             1.4             0.6
Propane.......................................................      1.1      1.3             1.1             0.5
----------------------------------------------------------------------------------------------------------------

2. Economic Impact on Manufacturers
    DOE performed an MIA to estimate the impact of amended energy 
conservation standards on manufacturers of beverage vending machines. 
The section below describes the expected impacts on manufacturers at 
each TSL. Chapter 12 of the NOPR TSD explains the analysis in further 
detail.
a. Industry Cash-Flow Analysis Results
    The following tables illustrate the estimated financial impacts 
(represented by changes in industry net present value, or INPV) of 
amended energy conservation standards on manufacturers of beverage 
vending machines, as well as the conversion costs that DOE expects 
manufacturers would incur for all equipment classes at each TSL.
    As discussed in sections IV.I and V.B.2.a of this NOPR, DOE modeled 
two different markup scenarios to evaluate the range of cash flow 
impacts on the BVM industry: (1) The preservation of gross margin 
percentage markup scenario; and (2) the preservation of per-unit 
operating profit markup scenario.
    To assess the less severe end of the range of potential impacts, 
DOE modeled a preservation of gross margin percentage markup scenario, 
in which a uniform ``gross margin percentage'' markup is applied across 
all potential efficiency levels. In this scenario, DOE assumed that a 
manufacturer's absolute dollar markup would increase as production 
costs increase in the standards case.
    To assess the more severe end of the range of potential impacts, 
DOE modeled the preservation of per unit operating profit markup 
scenario, which reflects manufacturer concerns surrounding their 
inability to maintain margins as manufacturing production

[[Page 50517]]

costs increase to meet more stringent efficiency levels. In this 
scenario, as manufacturers make the necessary investments required to 
convert their facilities to produce new standards-compliant products 
and incur higher costs of goods sold, their percentage markup 
decreases. Operating profit does not change in absolute dollars but 
decreases as a percentage of revenue.
    Each of the modeled scenarios results in a unique set of cash flows 
and corresponding industry values at each TSL. In the following 
discussion, the INPV results refer to the difference in industry value 
between the no-new-standards case and each standards case that result 
from the sum of discounted cash flows from the reference year 2015 
through 2048, the end of the analysis period. To provide perspective on 
the short-run cash flow impact, DOE includes in the discussion of the 
results a comparison of free cash flow between the no-new-standards 
case and the standards case at each TSL in the year before amended 
standards would take effect. This figure provides an understanding of 
the magnitude of the required conversion costs--relative to the cash 
flow generated by the industry in the no-new-standards case.
    Table V.28 and Table V.29 present a range of results reflecting 
both the preservation of gross margin percentage markup scenario and 
the preservation of per-unit operating profit markup scenario. As 
noted, the preservation of per-unit operating profit scenario accounts 
for the more severe impacts presented. Estimated conversion costs and 
free cash flow in the year prior to the effective date of amended 
standards do not vary with markup scenario.

             Table V.28--Manufacturer Impact Analysis Under the Preservation of Gross Margin Percentage Markup Scenario for Analysis Period
                                                                       [2015-2048]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              No-new-                          Trial standard level
                                                         Units               standards  ----------------------------------------------------------------
                                                                                case          1            2            3            4            5
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV.......................................  2014$M.......................        62.7         62.7         62.8         63.1         62.9         73.8
Change in INPV.............................  2014$M *.....................  ...........       (0.01)        0.06         0.33         0.15        11.07
                                             % Change *...................  ...........       (0.02)        0.10         0.53         0.24        17.64
Product Conversion Costs...................  2014$M.......................  ...........        0.05         0.23         0.79         1.61         3.36
Capital Conversion Costs...................  2014$M.......................  ...........  ...........  ...........        0.18         1.19         3.16
Total Conversion Costs.....................  2014$M.......................  ...........        0.05         0.23         0.97         2.80         6.52
Free Cash Flow.............................  2014$M.......................        (1.6)        (1.6)        (1.7)        (2.0)        (2.7)        (4.1)
                                             % Change *...................  ...........        (0.9)        (4.5)       (20.0)       (63.6)      (151.5)
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.


            Table V.29--Manufacturer Impact Analysis Under the Preservation of Per-Unit Operating Profit Markup Scenario for Analysis Period
                                                                       [2015-2048]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              No-new-                          Trial standard level
                                                         Units               standards  ----------------------------------------------------------------
                                                                                case          1            2            3            4            5
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV.......................................  2014$M.......................        62.7         62.7         62.5         61.7         59.2         50.7
Change in INPV.............................  2014$M *.....................  ...........       (0.03)       (0.24)       (1.04)       (3.54)      (12.06)
                                             % Change *...................  ...........       (0.05)       (0.38)       (1.66)       (5.65)      (19.23)
Product Conversion Costs...................  2014$M.......................  ...........        0.05         0.23         0.79         1.61         3.36
Capital Conversion Costs...................  2014$M.......................  ...........  ...........  ...........        0.18         1.19         3.16
Total Conversion Costs.....................  2014$M.......................  ...........        0.05         0.23         0.97         2.80         6.52
Free Cash Flow.............................  2014$M.......................        (1.6)        (1.6)        (1.7)        (2.0)        (2.7)        (4.1)
                                             % Change *...................  ...........        (0.9)        (4.5)       (20.0)       (63.6)      (151.5)
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.

    At TSL 1, DOE estimates the impact on INPV for manufacturers of 
beverage vending machine to range from -$.03 million to -$.01 million, 
or a change in INPV of -0.05 percent and -0.02 percent under the 
preservation of per-unit operating profit markup scenario and 
preservation of gross margin percentage markup scenario, respectively. 
At this TSL, industry free cash flow is estimated to decrease by 
approximately 0.9 percent to $1.6 million, compared to the base-case 
value of $1.6 million in the year before the compliance date (2018).
    At TSL 1, the industry as a whole is expected to incur $0.05 
million in product conversion costs and would have no capital 
conversion costs necessary to manufacture redesigned platforms 
associated with amended energy conservation standards compliance. DOE's 
engineering analysis indicates that the most cost-effective design 
options to reach TSL 1 are component swaps and software modifications 
such as automatic lighting controls, evaporator fan controls, 
incorporation of a permanent split capacitor evaporator fan motor, or 
enhanced evaporator coils. Manufacturer feedback indicated that such 
component swaps do not incur large product or capital conversion costs.
    At TSL 2, DOE estimates the impact on INPV for manufacturers of 
beverage vending machines to range from -$.24 million to -$.06 million, 
or a change in INPV of -0.38 to -0.10 percent under the preservation of 
gross margin percentage markup scenario and the preservation of per-
unit operating profit markup scenario, respectively. At this TSL, 
industry free cash flow is estimated to decrease by approximately 4.5 
percent to $1.7 million, compared to the base-case value of $1.6 
million in the year before the compliance date (2018).

[[Page 50518]]

    At TSL 2, the industry as a whole is expected to incur $0.23 
million in product conversion costs and no capital conversion costs to 
manufacturer products requiring platform redesigns. DOE's engineering 
analysis indicates that the most cost-effective design options to reach 
TSL 2 are component swaps and software modifications such as 
incorporating an enhanced evaporator coil, improved single speed 
reciprocating compressor, or a low power state for CO2 
products, and incorporating a permanent split capacitor condenser fan 
motor, LED lighting, enhanced evaporator coil, or evaporator fan 
controls for propane products. Manufacturer feedback indicated that 
such component swaps do not incur large product or capital conversion 
costs.
    At TSL 3, DOE estimates the impact on INPV for manufacturers of 
beverage vending machines to range from -$1.04 million to $0.33 
million, or a change in INPV of -1.66 percent to 0.53 percent under the 
preservation of gross margin percentage markup scenario and the 
preservation of per-unit operating profit markup scenario, 
respectively. At this TSL, industry free cash flow is estimated to 
decrease by approximately 20.0 percent to $2.0 million, compared to the 
base-case value of $1.6 million in the year before the compliance date 
(2018).
    At TSL 3, the industry as a whole is expected to spend $0.79 
million in product conversion costs, as well as $0.18 million in 
capital conversion costs to manufacture redesigned platforms. While 
conversion costs remain relatively constant for manufacturers of Class 
B, Combination A and Combination B machines, the conversion costs for 
Class A equipment increase at TSL 3 (especially for CO2 
products), as a greater portion of these products will require larger 
investments to achieve the trial efficiency. At this level, 
manufacturers will most likely be required to integrate enhanced glass 
packs into Class A CO2 machines. Because Class A machines 
represent approximately 54 percent of the market, conversion costs 
associated with these products have a significant impact on total 
industry conversion costs.
    At TSL 4, DOE estimates the impact on INPV for manufacturers of 
beverage vending machines to range from -$3.54 million to -$0.15 
million, or a change in INPV of -5.65 percent to -0.24 percent under 
the preservation of gross margin percentage markup scenario and the 
preservation of per-unit operating profit markup scenario, 
respectively. At this TSL, industry free cash flow is estimated to 
decrease by approximately 63.6 percent to -$2.7 million, compared to 
the base-case value of $1.6 million in the year before the compliance 
date (2018).
    At TSL 4, the industry as a whole is expected to spend $1.61 
million in product conversion costs, as well as $1.19 million in 
capital conversion costs for platform redesigns. At TSL 4, some 
manufacturers will likely be required to increase the thickness of 
their products' insulation and incorporate vacuum insulated panels 
(VIPs). Additionally, many manufacturers of Combination A machines will 
most likely be required to integrate enhanced glass packs in order to 
achieve the required efficiency.
    At TSL 4, there is a slight decrease of less than 1 percent in 
total industry shipments in 2019 relative to the no-new-standards case. 
Under the preservation of gross margin percentage markup scenario, the 
decrease in shipments and increased conversion costs are outweighed by 
a relatively larger increase in industry revenue, resulting in a 
positive change in INPV. Under the preservation of per-unit operating 
profit markup scenario, the increase in MPCs at TSL 4 is outweighed by 
the decrease in shipments and the increase in industry conversion 
costs, resulting in a decrease in INPV.
    At TSL 5, DOE estimates the impact on INPV for manufacturers of 
beverage vending machines to range from -$12.06 million to $11.07 
million, or a change in INPV of -19.23 percent to 17.64 percent under 
the preservation of gross margin percentage markup scenario and the 
preservation of per-unit operating profit markup scenario, 
respectively. At this TSL, industry free cash flow is estimated to 
decrease by approximately 151.5 percent to $4.1 million, compared to 
the base-case value of $1.6 million in the year before the compliance 
date (2018).
    At TSL 5, the industry as a whole is expected to spend $3.36 
million in product conversion costs associated with the research and 
development and testing and certification, as well as $3.16 million in 
one-time investments in PP&E for platform redesigns. The conversion 
cost burden for manufacturers of all products increases substantially 
at TSL 5. At this level, manufacturers will likely be required to 
integrate VIPs to achieve the required efficiency. VIPs are an unproven 
technology in the BVM industry and would likely require substantial 
effort and cost to incorporate.
    At TSL 5, there is an 6-percent decrease in total industry 
shipments in 2019 relative to the no-new-standards case. Under the 
preservation of gross margin percentage markup scenario, this decrease 
in shipments and increased conversion costs are outweighed by a 
relatively larger increase in industry MPCs, resulting in a positive 
change in INPV. Under the preservation of per-unit operating profit 
markup scenario, the increase in MPCs at TSL 5 is outweighed by the 
decrease in shipments and the increase in industry conversion costs. 
This results in a decrease in INPV.
b. Impacts on Direct Employment
    To quantitatively assess the potential impacts of amended energy 
conservation standards on direct employment, DOE used the GRIM to 
estimate the domestic labor expenditures and number of direct employees 
in the no-new-standards case and at each TSL from 2014 through 2048. 
DOE used data from the U.S. Census Bureau's 2011 Annual Survey of 
Manufacturers,\66\ the results of the engineering analysis, and 
interviews with manufacturers to determine the inputs necessary to 
calculate industry-wide labor expenditures and domestic direct 
employment levels. Labor expenditures related to manufacturing of 
beverage vending machines are a function of labor intensity, sales 
volume, and an assumption that wages remain fixed in real terms over 
time. The total labor expenditures in each year are calculated by 
multiplying the MPCs by the labor percentage of MPCs. DOE estimates 
that 90 percent of BVM units are produced domestically.
---------------------------------------------------------------------------

    \66\ U.S. Census Bureau, Annual Survey of Manufacturers: General 
Statistics: Statistics for Industry Groups and Industries (2011) 
(Available at http://www.census.gov/manufacturing/asm/index.html).
---------------------------------------------------------------------------

    The total labor expenditures in the GRIM were then converted to 
domestic production employment levels by dividing production labor 
expenditures by the annual payment per production worker (production 
worker hours times the labor rate found in the U.S. Census Bureau's 
2011 Annual Survey of Manufacturers). The production worker estimates 
in this section only cover workers up to the line-supervisor level who 
are directly involved in fabricating and assembling a product within an 
original equipment manufacturer (OEM) facility. Workers performing 
services that are closely associated with production operations, such 
as materials handling tasks using forklifts, are also included as 
production labor. DOE's estimates only account for production workers 
who manufacture the specific products covered by this rulemaking.
    Because production employment expenditures are assumed to be a 
fixed

[[Page 50519]]

percentage of cost of goods sold and the MPCs typically increase with 
more efficient products, labor tracks the increased prices in the GRIM. 
As efficiency of BVMs increase, so does the complexity of the products, 
generally requiring more labor to produce. Based on industry feedback, 
DOE believes that manufacturers that use domestic production currently 
will continue to produce the same scope of covered products in domestic 
production facilities. DOE does not expect production to shift to lower 
labor cost countries. To estimate a lower bound to employment, DOE 
assumed that employment tracks closely with industry shipments, and any 
percentage decrease in shipments will result in a commensurate 
percentage decrease in employment. A complete description of the 
assumptions used to generate these upper and lower bounds can be found 
in chapter 12 of the NOPR TSD.
    Using the GRIM, DOE estimates that in the absence of amended energy 
conservation standards, there would be 414 domestic production workers 
in the BVM industry. As noted previously, DOE estimates that 90 percent 
of BVM units sold in the United States are manufactured domestically. 
Table V.30 shows the range of the impacts of potential amended energy 
conservation standards on U.S. production workers of beverage vending 
machines.

                        Table V.30--Potential Changes in the Total Number of Beverage Vending Machine Production Workers in 2019
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                     Trial standard level
                                           No-new-standards case *  ------------------------------------------------------------------------------------
                                                                            1                2                3                4                5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Potential Changes in Domestic            ..........................  ...............          0 to 2          0 to 11        (1) to 40      (26) to 133
 Production Workers in 2019. **
--------------------------------------------------------------------------------------------------------------------------------------------------------
* No-new-standards case estimates 414 domestic production workers in the BVM industry in 2019.
** Parentheses indicate negative values.

    The upper end of the range estimates the maximum increase in the 
number of production workers in the BVM industry after implementation 
of an emended energy conservation standard. It assumes that 
manufacturers would continue to produce the same scope of covered 
products within the United States and would require some additional 
labor to produce more efficient products.
    The lower end of the range represents the maximum decrease in total 
number of U.S. production workers that could result from an amended 
energy conservation standard. During interviews, manufacturers noted 
that, due to the high shipping costs associated with beverage vending 
machines, they would be hesitant to move any major production 
operations outside the U.S. Therefore, the lower bound of direct 
employment impacts assumes domestic production of beverage vending 
machines would decrease by the same relative percentage decrease in 
industry shipments as a result of an amended energy conservation 
standard.
    This conclusion is independent of any conclusions regarding 
indirect employment impacts in the broader United States economy, which 
are documented in chapter 16 of the TSD.
    DOE requests comments on the total annual direct employment levels 
in the industry for BVM production (section VII.E of this NOPR).
c. Impacts on Manufacturing Capacity
    According to interview feedback from BVM manufacturers, amended 
energy conservations standards will not significantly constrain 
manufacturing production capacity. Manufacturers stated that they would 
use normally-scheduled factory downtime to make any facility 
modifications that are necessary as a result of amended standards. DOE 
believes that manufactures will be able to maintain production capacity 
levels sufficient to meet market demand under these proposed levels. 
However, manufacturers did express concern regarding the potential 
strain on technical resources if the amended standard's effective date 
did not provide ample time for the industry to first fully comply with 
the EPA's proposed HFC phaseout. At the time of manufacturer 
interviews, EPA SNAP Proposed Rule 20 (Docket No. EPA-HQ-OAR-2013-0748) 
proposed to change the status of certain refrigerants to be 
unacceptable for certain applications, including HFC-134a for BVM 
applications, with a proposed phaseout on January 1, 2016. 79 FR 46126, 
46135 (August 6, 2014). Although Rule 20 has subsequently been 
finalized with a mandated phaseout date of January 1, 2019 (80 FR 
42870, 42917-42920; July 20, 2015), few manufacturers have experience 
with CO2 designs, and no beverage vending machines in the 
domestic market currently use propane. The switch to CO2 and 
propane will require all manufacturers to redesign the majority of 
their products. Manufacturers are concerned they do not have the 
technical capacity to redesign for new refrigerants and amended energy 
conservation standards. DOE accounted for the forthcoming HFC phaseout 
in its analysis by estimating CO2- and propane-specific 
cost-efficiency curves and industry conversion costs related to energy 
conservation standards compliance, as well as a one-time investment 
required for the industry to switch all BVM production to 
CO2- and propane. Cost-efficiency curves are presented in 
chapter 5 of the NOPR TSD, and information regarding conversion costs 
is contained in chapter 12.
d. Impacts on Subgroups of Manufacturers
    Small manufacturers, niche equipment manufacturers, and 
manufacturers exhibiting a cost structure substantially different from 
the industry average could be affected disproportionately. As discussed 
in sections IV.I.3 and V.B.2.a of this NOPR, using average cost 
assumptions to develop an industry cash-flow estimate is inadequate to 
assess differential impacts among manufacturer subgroups.
    For BVM equipment, DOE identified and evaluated the impact of 
amended energy conservation standards on one subgroup: Small 
manufacturers. The SBA defines a ``small business'' as having 1,000 
employees or less for NAICS 333318, ``Other Commercial and Service 
Industry Machinery Manufacturing.'' Based on this definition, DOE 
identified 5 manufacturers in the BVM equipment industry that are small 
businesses.
    For a discussion of the impacts on the small manufacturer subgroup, 
see the Regulatory Flexibility Analysis in

[[Page 50520]]

section V.B.2.d of this NOPR and chapter 12 of the NOPR TSD.
e. Cumulative Regulatory Burden
    While any one regulation may not impose a significant burden on 
manufacturers, the combined effects of several impending regulations 
may have serious consequences for some manufacturers, groups of 
manufacturers or an entire industry. Assessing the impact of a single 
regulation may overlook this cumulative regulatory burden. Multiple 
regulations affecting the same manufacturer can strain profits and can 
lead companies to abandon product lines or markets with lower expected 
future returns than competing products. For these reasons, DOE conducts 
an analysis of cumulative regulatory burden as part of its rulemakings 
pertaining to appliance efficiency.
    For the cumulative regulatory burden analysis, DOE considers other 
DOE regulations that could affect BVM manufacturers that will take 
effect approximately three years before or after the 2019 compliance 
date of amended energy conservation standards. The compliance years and 
expected industry conversion costs of energy conservation standards 
that may also impact BVM manufacturers are indicated in Table V.31.

Table V.31--Compliance Dates and Expected Conversion Expenses of Federal Energy Conservation Standards Affecting
                                                BVM Manufacturers
----------------------------------------------------------------------------------------------------------------
                                                 Compliance
                 Regulation                       date(s)                  Expected expenses/impacts
----------------------------------------------------------------------------------------------------------------
Commercial Refrigeration Equipment 79 FR           3/27/2017   $43.1 million.
 17725 (March 28, 2014).
----------------------------------------------------------------------------------------------------------------

    Manufacturers cited ENERGY STAR standards for beverage vending 
machines as a source of regulatory burden. In response, DOE does not 
consider the ENERGY STAR program in its analysis of cumulative 
regulatory burden because ENERGY STAR is a voluntary program and is not 
federally mandated.
    In interviews, manufactures cited the proposed phaseout of HFCs 
(including the common BVM refrigerant, HFC-134a) which could happen as 
early as January 2016 (subsequently finalized for January 2019), as a 
major source of additional burden accompanying potential amended 
efficiency standards. As detailed in section IV.I, based on feedback in 
interviews, DOE assumed that each manufacturer would need to invest 
$750,000 to update their products to comply with Rule 20. DOE assumed 
this one-time SNAP investment would apply to all eight manufacturers in 
the year leading up to the phaseout (i.e., 2018), resulting in an 
additional burden to the industry of $6 million. This one-time cost 
occurs in both the no-new-standards case and in the standards case.
3. National Impact Analysis
a. Significance of Energy Savings
    DOE estimated the NES by calculating the difference in annual 
energy consumption for the base-case scenario and standards-case 
scenario at each TSL for each equipment class and summing up the annual 
energy savings for the beverage vending machines purchased during the 
30-year 2019 through 2048 analysis period. Energy impacts include the 
30-year period, plus the life of equipment purchased in the last year 
of the analysis, or roughly 2019 through 2078. The energy consumption 
calculated in the NIA is full-fuel-cycle (FFC) energy, which quantifies 
savings beginning at the source of energy production. DOE also reports 
primary or source energy that takes into account losses in the 
generation and transmission of electricity. FFC and primary energy are 
discussed in section IV.G.3 of this NOPR.
    Table V.32 presents the source NES for all equipment classes at 
each TSL and the sum total of NES for each TSL.

           Table V.32--Cumulative National Primary Energy Savings for Equipment Purchased in 2019-2048
                                                     [Quads]
----------------------------------------------------------------------------------------------------------------
                                                                          Standard level
                Equipment class                 ----------------------------------------------------------------
                                                    TSL 1        TSL 2        TSL 3        TSL 4        TSL 5
----------------------------------------------------------------------------------------------------------------
Class A........................................      * 0.000        0.031        0.046        0.062        0.108
    CO2........................................        0.000        0.018        0.028        0.037        0.065
    Propane....................................        0.000        0.012        0.018        0.025        0.044
Class B........................................        0.004        0.013        0.045        0.071        0.087
    CO2........................................        0.000        0.002        0.020        0.036        0.045
    Propane....................................        0.004        0.011        0.025        0.035        0.042
Combination A..................................        0.002        0.010        0.029        0.048        0.052
    CO2........................................        0.001        0.006        0.017        0.029        0.031
    Propane....................................        0.001        0.004        0.012        0.019        0.021
Combination B..................................        0.001        0.005        0.019        0.033        0.037
    CO2........................................        0.000        0.003        0.011        0.019        0.022
    Propane....................................        0.000        0.002        0.008        0.013        0.015
                                                ----------------------------------------------------------------
        Total [dagger].........................        0.006        0.058        0.138        0.213        0.284
----------------------------------------------------------------------------------------------------------------
* The value equal to 0.000 means the NES rounds to less than 0.001 quads.
[dagger] Numbers may not add to totals, due to rounding.

    Table V.33 presents FFC energy savings at each TSL for each 
equipment class. The NES increases from 0.007 quads at TSL 1 to 0.297 
quads at TSL 5.

[[Page 50521]]



  Table V.33--Cumulative National Energy Savings Including Full-Fuel-Cycle for Equipment Purchased in 2019-2048
                                                     (Quads)
----------------------------------------------------------------------------------------------------------------
                                                                          Standard level
                Equipment class                 ----------------------------------------------------------------
                                                    TSL 1        TSL 2        TSL 3        TSL 4        TSL 5
----------------------------------------------------------------------------------------------------------------
Class A........................................      * 0.000        0.032        0.048        0.064        0.114
    CO2........................................        0.000        0.019        0.029        0.039        0.068
    Propane....................................        0.000        0.013        0.019        0.026        0.046
Class B........................................        0.004        0.014        0.047        0.074        0.091
    CO2........................................        0.000        0.002        0.021        0.037        0.047
    Propane....................................        0.004        0.011        0.026        0.037        0.044
Combination A..................................        0.002        0.010        0.030        0.050        0.055
    CO2........................................        0.001        0.006        0.018        0.030        0.033
    Propane....................................        0.001        0.004        0.012        0.020        0.022
Combination B..................................        0.001        0.005        0.020        0.034        0.038
    CO2........................................        0.000        0.003        0.011        0.020        0.023
    Propane....................................        0.000        0.002        0.008        0.014        0.016
                                                ----------------------------------------------------------------
        Total **...............................        0.007        0.061        0.145        0.223        0.297
----------------------------------------------------------------------------------------------------------------
* A value equal to 0.000 means the NES rounds to less than 0.001 quads.
** Numbers may not add to totals, due to rounding.

    OMB Circular A-4 \67\ requires agencies to present analytical 
results, including separate schedules of the monetized benefits and 
costs that show the type and timing of benefits and costs. Circular A-4 
also directs agencies to consider the variability of key elements 
underlying the estimates of benefits and costs. For this rulemaking, 
DOE undertook a sensitivity analysis using 9 rather than 30 years of 
product shipments. The choice of a 9-year period is a proxy for the 
timeline in EPCA for the review of certain energy conservation 
standards and potential revision of and compliance with such revised 
standards.\68\ DOE notes that the review timeframe established in EPCA 
generally does not overlap with the product lifetime, product 
manufacturing cycles or other factors specific to beverage vending 
machines. Thus, this information is presented for informational 
purposes only and is not indicative of any change in DOE's analytical 
methodology. The NES results based on a 9-year analysis period are 
presented in Table V.34. The impacts are counted over the lifetime of 
equipment purchased in 2019 through 2027.
---------------------------------------------------------------------------

    \67\ U.S. Office of Management and Budget, ``Circular A-4: 
Regulatory Analysis'' (Sept. 17, 2003) (Available at: http://www.whitehouse.gov/omb/circulars_a004_a-4/).
    \68\ EPCA requires DOE to review its standards at least once 
every 6 years, and requires, for certain products, a 3-year period 
after any new standard is promulgated before compliance is required, 
except that in no case may any new standards be required within 6 
years of the compliance date of the previous standards. (42 U.S.C. 
6295(m)) While adding a 6-year review to the 3-year compliance 
period adds up to 9 years, DOE notes that it may undertake reviews 
at any time within the 6 year period and that the 3-year compliance 
date may yield to the 6-year backstop. A 9-year analysis period may 
not be appropriate given the variability that occurs in the timing 
of standards reviews and the fact that for some consumer products, 
the compliance period is 5 years rather than 3 years.

            Table V.34--National Full-Fuel-Cycle Energy Savings for 9 Years of Shipments (2019-2027)
                                                     [Quads]
----------------------------------------------------------------------------------------------------------------
                                                                          Standard level
                Equipment class                 ----------------------------------------------------------------
                                                    TSL 1        TSL 2        TSL 3        TSL 4        TSL 5
----------------------------------------------------------------------------------------------------------------
Class A........................................      * 0.000        0.006        0.010        0.013        0.023
    CO2........................................        0.000        0.004        0.006        0.008        0.013
    Propane....................................        0.000        0.003        0.004        0.005        0.009
Class B........................................        0.001        0.003        0.009        0.015        0.018
    CO2........................................        0.000        0.000        0.004        0.007        0.009
    Propane....................................        0.001        0.002        0.005        0.007        0.009
Combination A..................................        0.000        0.002        0.006        0.010        0.011
    CO2........................................        0.000        0.001        0.004        0.006        0.007
    Propane....................................        0.000        0.001        0.002        0.004        0.004
Combination B..................................        0.000        0.001        0.004        0.007        0.008
    CO2........................................        0.000        0.001        0.002        0.004        0.004
    Propane....................................        0.000        0.000        0.002        0.003        0.003
                                                ----------------------------------------------------------------
        Total **...............................        0.001        0.012        0.029        0.045        0.059
----------------------------------------------------------------------------------------------------------------
* A value equal to 0.000 means the NES rounds to less than 0.001 quads.
** Numbers may not add to totals, due to rounding.


[[Page 50522]]

b. Net Present Value of Customer Costs and Benefits
    DOE estimated the cumulative NPV to the nation of the total savings 
for the customers that would result from potential standards at each 
TSL. In accordance with OMB guidelines on regulatory analysis (OMB 
Circular A-4, section E, September 17, 2003), DOE calculated NPV using 
both a 7-percent and a 3-percent real discount rate. The 7-percent rate 
is an estimate of the average before-tax rate of return on private 
capital in the U.S. economy, and reflects the returns on real estate 
and small business capital, including corporate capital. DOE used this 
discount rate to approximate the opportunity cost of capital in the 
private sector, because recent OMB analysis has found the average rate 
of return on capital to be near this rate. In addition, DOE used the 3-
percent rate to capture the potential effects of amended standards on 
private consumption. This rate represents the rate at which society 
discounts future consumption flows to their present value. It 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 CPI), 
which has averaged about 3 percent on a pre-tax basis for the last 30 
years.
    Table V.35 and Table V.36 show the customer NPV results for each of 
the TSLs DOE considered for beverage vending machines at both 7-percent 
and 3-percent discount rates. In each case, the impacts cover the 
expected lifetime of equipment purchased from 2019 through 2048. 
Detailed NPV results are presented in chapter 10 of the NOPR TSD.
    The NPV results at a 7-percent discount rate for TSL 5 were 
negative for Class A. In all cases the TSL 5 NPV was significantly 
lower than the TSL 4 results. This is consistent with the results of 
LCC analysis results for TSL 5, which showed significant increase in 
LCC and significantly higher PBPs. Efficiency levels for TSL 4 were 
chosen to correspond to the highest NPV at a 7-percent discount rate 
for all classes. Consequently, the total NPV for beverage vending 
machines was highest for TSL 4, with a value of $0.417 billion (2014$) 
at a 7-percent discount rate. TSL 3 showed the second highest total 
NPV, with a value of $0.261 billion (2014$) at a 7-percent discount 
rate. TSL 1, TSL 2 and TSL 5 have a total NPV lower than TSL 3 or 4.

         Table V.35--Net Present Value at a 7-Percent Discount Rate for Equipment Purchased in 2019-2048
                                                 [billion 2014$]
----------------------------------------------------------------------------------------------------------------
                                                                          Standard level
                Equipment class                 ----------------------------------------------------------------
                                                    TSL 1        TSL 2        TSL 3        TSL 4        TSL 5
----------------------------------------------------------------------------------------------------------------
Class A........................................        0.000        0.058        0.076        0.090    * (0.069)
    CO2........................................        0.000        0.034        0.042        0.045      (0.077)
    Propane....................................        0.000        0.023        0.035        0.046        0.007
Class B........................................        0.007        0.026        0.088        0.149        0.053
    CO2........................................        0.000        0.005        0.038        0.070        0.004
    Propane....................................        0.007        0.022        0.049        0.079        0.049
Combination A..................................        0.004        0.020        0.059        0.101        0.050
    CO2........................................        0.002        0.012        0.035        0.059        0.027
    Propane....................................        0.002        0.008        0.024        0.041        0.023
Combination B..................................        0.002        0.010        0.039        0.077        0.047
    CO2........................................        0.001        0.005        0.022        0.045        0.021
    Propane....................................        0.001        0.005        0.016        0.032        0.026
                                                ----------------------------------------------------------------
        Total..................................        0.013        0.113        0.261        0.417        0.081
----------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative numbers.


         Table V.36--Net Present Value at a 3-Percent Discount Rate for Equipment Purchased in 2019-2048
                                                 [billion 2014$]
----------------------------------------------------------------------------------------------------------------
                                                                          Standard level
                Equipment class                 ----------------------------------------------------------------
                                                    TSL 1        TSL 2        TSL 3        TSL 4        TSL 5
----------------------------------------------------------------------------------------------------------------
Class A........................................        0.000        0.149        0.203        0.249     *(0.005)
    CO2........................................        0.000        0.088        0.114        0.131      (0.072)
    Propane....................................        0.000        0.060        0.089        0.118        0.067
Class B........................................        0.018        0.066        0.224        0.395        0.229
    CO2........................................        0.000        0.012        0.098        0.191        0.074
    Propane....................................        0.018        0.054        0.125        0.205        0.154
Combination A..................................        0.010        0.050        0.149        0.260        0.166
    CO2........................................        0.006        0.030        0.089        0.154        0.094
    Propane....................................        0.004        0.020        0.060        0.106        0.073
Combination B..................................        0.004        0.025        0.097        0.196        0.142
    CO2........................................        0.002        0.013        0.056        0.115        0.070
    Propane....................................        0.002        0.012        0.041        0.080        0.072
                                                ----------------------------------------------------------------
        Total..................................        0.032        0.290        0.673        1.100        0.532
----------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative numbers.


[[Page 50523]]

    The NPV results based on the aforementioned 9-year analysis period 
are presented in Table V.37 and Table V.38. The impacts are counted 
over the lifetime of equipment purchased in 2019-2027. As mentioned 
previously in section V.B.3.a of this NOPR, this information is 
presented for informational purposes only and is not indicative of any 
change in DOE's analytical methodology or decision criteria.

         Table V.37--Net Present Value at a 7-Percent Discount Rate for 9 Years of Shipments (2019-2027)
                                                 [billion 2014$]
----------------------------------------------------------------------------------------------------------------
                                                                          Standard level
                Equipment class                 ----------------------------------------------------------------
                                                    TSL 1        TSL 2        TSL 3        TSL 4        TSL 5
----------------------------------------------------------------------------------------------------------------
Class A........................................      * 0.000        0.022        0.028        0.033   ** (0.035)
    CO2........................................        0.000        0.013        0.015        0.016      (0.035)
    Propane....................................        0.000        0.009        0.013        0.017        0.000
Class B........................................        0.003        0.010        0.033        0.056        0.016
    CO2........................................        0.000        0.002        0.015        0.026      (0.001)
    Propane....................................        0.003        0.008        0.019        0.030        0.017
Combination A..................................        0.002        0.008        0.022        0.038        0.017
    CO2........................................        0.001        0.005        0.013        0.022        0.009
    Propane....................................        0.001        0.003        0.009        0.016        0.008
Combination B..................................        0.001        0.004        0.015        0.030        0.017
    CO2........................................        0.000        0.002        0.008        0.017        0.007
    Propane....................................        0.000        0.002        0.006        0.012        0.010
                                                ----------------------------------------------------------------
        Total..................................        0.005        0.043        0.099        0.157        0.015
----------------------------------------------------------------------------------------------------------------
* A value equal to 0.000 means the NPV rounds to less than $0.001 (2014$).
** Values in parentheses are negative numbers.


         Table V.38--Net Present Value at a 3-Percent Discount Rate for 9 Years of Shipments (2019-2027)
                                                 [billion 2014$]
----------------------------------------------------------------------------------------------------------------
                                                                          Standard level
                Equipment class                 ----------------------------------------------------------------
                                                    TSL 1        TSL 2        TSL 3        TSL 4        TSL 5
----------------------------------------------------------------------------------------------------------------
Class A........................................      * 0.000        0.038        0.051        0.062   ** (0.017)
    CO2........................................        0.000        0.023        0.029        0.032      (0.030)
    Propane....................................        0.000        0.015        0.023        0.030        0.013
Class B........................................        0.005        0.017        0.058        0.102        0.051
    CO2........................................        0.000        0.003        0.025        0.049        0.014
    Propane....................................        0.005        0.014        0.032        0.053        0.037
Combination A..................................        0.003        0.013        0.038        0.067        0.039
    CO2........................................        0.002        0.008        0.023        0.040        0.022
    Propane....................................        0.001        0.005        0.015        0.027        0.018
Combination B..................................        0.001        0.006        0.025        0.051        0.035
    CO2........................................        0.001        0.003        0.015        0.030        0.017
    Propane....................................        0.001        0.003        0.011        0.021        0.018
                                                ----------------------------------------------------------------
        Total..................................        0.008        0.075        0.173        0.283        0.109
----------------------------------------------------------------------------------------------------------------
* A value equal to 0.000 means the NPV rounds to less than $0.001 (2014$).
** Values in parentheses are negative numbers.

c. Indirect Impacts on Employment
    DOE expects energy conservation standards for beverage vending 
machines to reduce energy costs for equipment owners, with the 
resulting net savings being redirected to other forms of economic 
activity. Those shifts in spending and economic activity could affect 
the demand for labor. Thus, indirect employment impacts may result from 
expenditures shifting between goods (the substitution effect) and 
changes in income and overall expenditure levels (the income effect) 
that occur due to the imposition of new and amended standards. These 
impacts may affect a variety of businesses not directly involved in the 
decision to make, operate, or pay the utility bills for beverage 
vending machines. As described in section IV.M of this NOPR, DOE used 
an input/output model of the U.S. economy to estimate indirect 
employment impacts of the TSLs that DOE considered in this rulemaking 
(see chapter 16 of the NOPR TSD for more details). DOE understands that 
there are uncertainties involved in projecting employment impacts, 
especially changes in the later years of the analysis. Therefore, DOE 
generated results for near-term time frames (2020-2025), where these 
uncertainties are reduced.
    The results suggest that these proposed standards would be likely 
to have negligible impact on the net demand for labor in the economy. 
All TSLs increase net demand for labor by fewer than 1000 jobs. The net 
change in jobs is so small that it would be imperceptible in national 
labor statistics and might be offset by other, unanticipated effects on 
employment. Chapter 16 of the NOPR TSD presents more detailed results 
about anticipated indirect employment impacts. As shown in Table V.39, 
DOE estimates that net indirect employment impacts from a BVM amended 
standard are small relative to the national economy.

[[Page 50524]]



             Table V.39--Net Short-Term Change in Employment
                                 [Jobs]
------------------------------------------------------------------------
                   Trial standard level                      2020   2025
------------------------------------------------------------------------
1.........................................................      1      4
2.........................................................      9     35
3.........................................................     21     82
4.........................................................     32    129
5.........................................................    334    190
------------------------------------------------------------------------

4. Impact on Utility or Performance of Equipment
    In its analyses, DOE has considered potential impacts of amended 
standards, including the use of design options considered in the 
engineering analysis, on the performance and utility of BVM equipment. 
This includes the ability to achieve and maintain the necessary vending 
temperatures, the ability to display and vend product upon receipt of 
payment, and other factors core to the utility of vending machine 
operation. DOE has tentatively concluded that the amended standards it 
is proposing in this NOPR would not lessen the utility or performance 
of beverage vending machines.
    DOE requests comment on its preliminary conclusion that the 
proposed standard levels will not have any negative impact on the 
performance or utility of equipment available in the market (section 
VII.E of this NOPR).
5. Impact of Any Lessening of Competition
    The Attorney General determines the impact, if any, of any 
lessening of competition likely to result from a proposed standard, and 
transmits such determination in writing to the Secretary, together with 
an analysis of the nature and extent of such impact. (42 U.S.C. 
6295(o)(2)(B)(i)(V) and (o)(2)(B)(ii))
    To assist the Attorney General in making such a determination, DOE 
provided DOJ with copies of this NOPR and the TSD for review. DOE will 
consider DOJ's comments on the proposed rule in preparing the final 
rule, and DOE will publish and respond to DOJ's comments in that 
document.
6. Need of the Nation To Conserve Energy
    An improvement in the energy efficiency of the products subject to 
this rule is likely to improve the security of the nation's energy 
system by reducing overall demand for energy. Reduced electricity 
demand may also improve the reliability of the electricity system. 
Reductions in national electric generating capacity estimated for each 
considered TSL are reported in chapter 15 of the NOPR TSD.
    Energy conservation savings from new and amended standards for the 
BVM equipment classes covered in this NOPR could also produce 
environmental benefits in the form of reduced emissions of air 
pollutants and greenhouse gases associated with electricity production. 
Table V.40 provides DOE's estimate of cumulative emissions reductions 
projected to result from the TSLs considered in this rulemaking. The 
table includes both power sector emissions and upstream emissions. The 
upstream emissions were calculated using the multipliers discussed in 
section IV.G of this NOPR. DOE reports annual CO2, 
NOX, and Hg emissions reductions for each TSL in chapter 13 
of the NOPR TSD.

        Table V.40--Cumulative Emissions Reduction for Potential Standards for Beverage Vending Machines
----------------------------------------------------------------------------------------------------------------
                                                                               TSL
                                                ----------------------------------------------------------------
                                                      1            2            3            4            5
----------------------------------------------------------------------------------------------------------------
                                         Power Sector and Site Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)......................         0.36         3.36         7.99        12.33        16.42
NOX (thousand tons)............................         0.28         2.61         6.21         9.57        12.76
Hg (tons)......................................         0.00         0.01         0.02         0.03         0.04
N2O (thousand tons)............................         0.01         0.05         0.11         0.17         0.23
CH4 (thousand tons)............................         0.04         0.33         0.78         1.20         1.60
SO2 (thousand tons)............................         0.31         2.83         6.75        10.40        13.86
----------------------------------------------------------------------------------------------------------------
                                               Upstream Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)......................         0.02         0.19         0.46         0.71         0.95
NOX (thousand tons)............................         0.30         2.77         6.59        10.16        13.54
Hg (tons)......................................      0.00001       0.0001       0.0002       0.0003       0.0004
N2O (thousand tons)............................         0.00         0.00         0.00         0.01         0.01
CH4 (thousand tons)............................         1.74        16.11        38.37        59.17        78.89
SO2 (thousand tons)............................         0.00         0.03         0.08         0.12         0.17
----------------------------------------------------------------------------------------------------------------
                                                 Total Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)......................         0.38         3.55         8.45        13.04        17.37
NOX (thousand tons)............................         0.58         5.37        12.80        19.73        26.30
Hg (tons)......................................        0.001         0.01         0.02         0.03         0.04
N2O (thousand tons)............................         0.01         0.05         0.12         0.18         0.24
CH4 (thousand tons)............................         1.77        16.44        39.15        60.37        80.49
SO2 (thousand tons)............................         0.31         2.87         6.83        10.53        14.02
----------------------------------------------------------------------------------------------------------------

    As part of the analysis for this NOPR, DOE estimated monetary 
benefits likely to result from the reduced emissions of CO2 
and NOX estimated for each of the TSLs considered for 
beverage vending machines. As discussed in section IV.K of this NOPR, 
for CO2, DOE used values for the SCC developed by an 
interagency process. The interagency group selected four sets of SCC 
values for use in regulatory analyses. Three sets are based on the 
average SCC from three integrated assessment models, at discount rates 
of 2.5 percent, 3 percent, and 5 percent. The fourth set, which 
represents the 95th-percentile SCC estimate across all three models at 
a 3-percent discount rate, is included to

[[Page 50525]]

represent higher-than-expected impacts from temperature change further 
out in the tails of the SCC distribution. The four SCC values for 
CO2 emissions reductions in 2015, expressed in 2014$, are 
$12.2 per metric ton, $40.0 per metric ton, $62.3 per metric ton, and 
$116.8 per metric ton for discount rates of 2.5 percent, 3 percent, 5 
percent, and 3 percent respectively. The values for later years are 
higher due to increasing emissions-related costs as the magnitude of 
projected climate change increases.
    Table V.41 presents the global value of CO2 emissions 
reductions at each TSL. DOE calculated domestic values as a range from 
7 percent to 23 percent of the global values, and these results are 
presented in chapter 14 of the NOPR TSD.

                    Table V.41--Global Present Value of CO2 Emissions Reduction for Potential Standards for Beverage Vending Machines
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                               SCC Case * (million 2014$)
                                                              ------------------------------------------------------------------------------------------
                             TSL                                 5% Discount rate,     3% Discount rate,     2.5% Discount  rate,     3% Discount rate,
                                                                     average *             average *              average *           95th percentile *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                Primary Energy Emissions
--------------------------------------------------------------------------------------------------------------------------------------------------------
1............................................................                   2.4                  11.1                     17.7                  33.8
2............................................................                  21.9                 102.9                    164.4                 314.2
3............................................................                  52.1                 245.1                    391.5                 748.1
4............................................................                  80.3                 378.0                    603.7               1,153.6
5............................................................                 106.9                 503.3                    804.1               1,536.2
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Upstream Emissions
--------------------------------------------------------------------------------------------------------------------------------------------------------
1............................................................                   0.1                   0.6                      1.0                   1.9
2............................................................                   1.2                   5.9                      9.4                  18.0
3............................................................                   3.0                  14.0                     22.4                  42.8
4............................................................                   4.5                  21.6                     34.6                  66.0
5............................................................                   6.1                  28.8                     46.1                  87.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     Total Emissions
--------------------------------------------------------------------------------------------------------------------------------------------------------
1............................................................                   2.5                  11.7                     18.7                  35.8
2............................................................                  23.1                 108.8                    173.8                 332.1
3............................................................                  55.0                 259.1                    413.9                 790.9
4............................................................                  84.9                 399.6                    638.3               1,219.6
5............................................................                 113.0                 532.1                    850.1               1,624.1
--------------------------------------------------------------------------------------------------------------------------------------------------------
* For each of the four cases, the corresponding SCC value for emissions in 2015 is $12.2, $40.0, $62.3, and $116.8 per metric ton (2014$), respectively.

    DOE is aware that scientific and economic knowledge about the 
contribution of CO2 and other greenhouse gas (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 included in this NOPR the most recent 
values and analyses resulting from the interagency review process.
    DOE also estimated a range for the cumulative monetary value of the 
economic benefits associated with NOX emissions reductions 
anticipated to result from amended standards for the BVM equipment that 
is the subject of this NOPR. The dollar-per-ton values that DOE used 
are discussed in section IV.K of this NOPR. Table V.42 presents the 
present value of cumulative NOX emissions reductions for 
each TSL calculated using the average dollar-per-ton values and 7-
percent and 3-percent discount rates.

   Table V.42--Present Value of NOX Emissions Reduction for Potential
                 Standards for Beverage Vending Machines
------------------------------------------------------------------------
                                                      (million 2014$)
                                                 -----------------------
                       TSL                            3%          7%
                                                   Discount    Discount
                                                     rate        rate
------------------------------------------------------------------------
                         Power Sector Emissions
------------------------------------------------------------------------
1...............................................         0.4         0.2
2...............................................         3.3         1.4
3...............................................         7.9         3.4
4...............................................        12.2         5.2
5...............................................        16.3         6.9
------------------------------------------------------------------------
                           Upstream Emissions
------------------------------------------------------------------------
1...............................................         0.4         0.1
2...............................................         3.4         1.4
3...............................................         8.1         3.3
4...............................................        12.5         5.1
5...............................................        16.7         6.8
------------------------------------------------------------------------
                             Total Emissions
------------------------------------------------------------------------
1...............................................         0.7         0.3
2...............................................         6.7         2.8
3...............................................        16.1         6.7
4...............................................        24.8        10.3
5...............................................        33.0        13.7
------------------------------------------------------------------------


[[Page 50526]]

    The NPV of the monetized benefits associated with emissions 
reductions can be viewed as a complement to the NPV of the customer 
savings calculated for each TSL considered in this rulemaking. Table 
V.43 presents the NPV values that result from adding the estimates of 
the potential economic benefits resulting from reduced CO2 
and NOX emissions in each of four valuation scenarios to the 
NPV of customer savings calculated for each TSL considered in this 
rulemaking, at both a 7-percent and a 3-percent discount rate. The 
CO2 values used in the columns of each table correspond to 
the four scenarios for the valuation of CO2 emission 
reductions discussed above.

      Table V.43--Net Present Value of Customer Savings Combined With Net Present Value of Monetized Benefits From CO2 and NOX Emissions Reductions
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  Customer NPV at 3% discount rate added with:
                                                                 ---------------------------------------------------------------------------------------
TSL                                                                       SCC Value of          SCC Value of          SCC Value of          SCC Value of
                                                                      $12.2/metric ton      $40.0/metric ton      $62.3/metric ton     $116.8/metric ton
                                                                          CO2* and med       CO2* and medium       CO2* and medium    CO2* and med value
                                                                       value for NOX**       value for NOX**       value for NOX**             for NOX**
                                                                 ---------------------------------------------------------------------------------------
                                                                                                      (billion 2014$)
--------------------------------------------------------------------------------------------------------------------------------------------------------
1...............................................................                 0.036                 0.045                 0.052                 0.069
2...............................................................                 0.320                 0.405                 0.470                 0.629
3...............................................................                 0.744                 0.948                 1.103                 1.480
4...............................................................                 1.210                 1.524                 1.763                 2.344
5...............................................................                 0.678                 1.097                 1.415                 2.189
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  Customer NPV at 7% discount rate added with:
                                                                 ---------------------------------------------------------------------------------------
TSL                                                                       SCC Value of          SCC Value of          SCC Value of          SCC Value of
                                                                      $12.2/metric ton      $40.0/metric ton      $62.3/metric ton     $116.8/metric ton
                                                                          CO2* and med       CO2* and medium       CO2* and medium    CO2* and med value
                                                                       value for NOX**       value for NOX**       value for NOX**             for NOX**
                                                                 ---------------------------------------------------------------------------------------
                                                                                                      (billion 2014$)
--------------------------------------------------------------------------------------------------------------------------------------------------------
1...............................................................                 0.016                 0.025                 0.032                 0.049
2...............................................................                 0.139                 0.225                 0.290                 0.448
3...............................................................                 0.323                 0.527                 0.682                 1.059
4...............................................................                 0.512                 0.827                 1.065                 1.647
5...............................................................                 0.207                 0.627                 0.945                 1.719
--------------------------------------------------------------------------------------------------------------------------------------------------------
* These label values represent the global SCC in 2015, in 2014$. The present values have been calculated with scenario-consistent discount rates.
** Medium Value corresponds to $2,723 per ton of NOX emissions.

    In considering the previous results, two issues are relevant. 
First, the national operating cost savings are domestic U.S. customer 
monetary savings that occur as a result of market transactions, while 
the value of CO2 reductions is based on a global value. 
Second, the assessments of operating cost savings and the SCC are 
performed with different methods that use quite different time frames 
for analysis. The national operating cost savings is measured for the 
lifetime of products shipped in 2019-2048. The SCC values, on the other 
hand, reflect the present value of future climate-related impacts 
resulting from the emission of one metric ton of CO2 in each 
year. These impacts continue well beyond 2100.
7. Other Factors
    The Secretary of Energy, in determining whether a standard is 
economically justified, may consider any other factors that the 
Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)) No 
other factors were considered in this analysis.

C. Proposed Standards

    When considering proposed standards, the new or amended energy 
conservation standards for any type (or class) of covered product must 
be designed to achieve the maximum improvement in energy efficiency 
that the Secretary determines is technologically feasible and 
economically justified. (42 U.S.C. 6295(o)(2)(A)) In determining 
whether a proposed standard is economically justified, the Secretary 
must determine whether the benefits of the standard exceed its burdens 
to the greatest extent practicable, in light of the seven statutory 
factors discussed previously. (42 U.S.C. 6295(o)(2)(B)(i)) The new or 
amended standard must also result in a significant conservation of 
energy. (42 U.S.C. 6295(o)(3)(B))
    DOE considered the impacts of the standards for beverage vending 
machines at each TSL, beginning with the maximum technologically 
feasible level, to determine whether that level was economically 
justified. Where the max-tech level was not justified, DOE then 
considered the next-most-efficient level and undertook the same 
evaluation until it reached the highest efficiency level that is both 
technologically feasible and economically justified and saves a 
significant amount of energy.
    To aid the reader in understanding the benefits and/or burdens of 
each TSL, tables in this section summarize the quantitative analytical 
results for each TSL, based on the assumptions and methodology 
discussed herein. The efficiency levels contained in each TSL are 
described in section V.A of this NOPR. In addition to the quantitative 
results presented in the tables, DOE also considers other burdens and 
benefits that affect economic justification. These include the impacts 
on identifiable subgroups of customers who may be disproportionately 
affected by a national standard, impacts on employment, technological 
feasibility, manufacturer costs, and impacts on competition may affect 
the economic results presented. Section V.B.1.b of this NOPR presents 
the estimated impacts of each TSL for these subgroups. DOE discusses 
the

[[Page 50527]]

impacts on direct employment in BVM manufacturing in section V.B.2.b of 
this NOPR, and discusses the indirect employment impacts in section 
V.B.3.c of this NOPR.
1. Benefits and Burdens of Trial Standard Levels Considered for 
Beverage Vending Machines
    Table V.44, Table V.45, and Table V.46 summarize the quantitative 
impacts estimated for each TSL for beverage vending machines. The 
national impacts are measured over the lifetime of beverage vending 
machines purchased in the 30-year period that begins in the year of 
compliance with amended standards (2019-2048). The energy savings, 
emissions reductions, and value of emissions reductions refer to full-
fuel-cycle results.

                                Table V.44--Summary of Analytical Results for Beverage Vending Machines: National Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
           Category                     TSL 1                    TSL 2                    TSL 3                   TSL 4                   TSL 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
National FFC Energy Savings    0.01...................  0.06...................  0.14..................  0.22..................  0.30
 (quads).
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                        NPV of Customer Benefits (2014$ billion)
--------------------------------------------------------------------------------------------------------------------------------------------------------
3% Discount Rate.............  0.03...................  0.29...................  0.67..................  1.10..................  0.53
7% Discount Rate.............  0.01...................  0.11...................  0.26..................  0.42..................  0.08
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                 Cumulative Emissions Reduction (Total FFC Emissions) *
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (MMt)....................  0.38...................  3.55...................  8.45..................  13.04.................  17.37
NOX (kt).....................  0.58...................  5.37...................  12.80.................  19.73.................  26.30
Hg (t).......................  0.00...................  0.01...................  0.02..................  0.03..................  0.04
N2O (kt).....................  0.01...................  0.05...................  0.12..................  0.18..................  0.24
N2O(kt CO2eq)................  1.38...................  12.85..................  30.61.................  47.20.................  62.92
CH4 (kt).....................  1.77...................  16.44..................  39.15.................  60.37.................  80.49
CH4 (kt CO2)eq...............  49.59..................  460.33.................  1,096.12..............  1,690.37..............  2,253.81
SO2 (kt).....................  0.31...................  2.87...................  6.83..................  10.53.................  14.02
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                              Value of Cumulative Emissions Reduction (Total FFC Emissions)
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (2014$ million)**........  2.5 to 35.8............  23.1 to 332.1..........  55.0 to 790.9.........  84.9 to 1,219.6.......  113.0 to 1,624.1
NOX--3% Discount Rate (2014$   0.7....................  6.7....................  16.1..................  24.8..................  33.0
 million).
NOX--7% Discount Rate (2014$   0.3....................  2.8....................  6.7...................  10.3..................  13.7
 million).
--------------------------------------------------------------------------------------------------------------------------------------------------------
* MMT is million metric ton. kt is thousand tons. t is ton. CO2eq is the quantity of CO2 that would have the same global warming potential (GWP).
** Range of the economic value of CO2 reductions is based on estimates of the global benefit of reduced CO2 emissions.


                                                 Table V.45--NPV of Customer Benefits by Equipment Class
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                               Trial standard level (billion 2014$)
                     Equipment class                       Discount rate -------------------------------------------------------------------------------
                                                                (%)              1               2               3               4               5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Class A.................................................               3           0.000           0.149           0.203           0.249        *(0.005)
                                                                       7           0.000           0.058           0.076           0.090         (0.069)
Class B.................................................               3           0.018           0.066           0.224           0.395           0.229
                                                                       7           0.007           0.026           0.088           0.149           0.053
Combination A...........................................               3           0.010           0.050           0.149           0.260           0.166
                                                                       7           0.004           0.020           0.059           0.101           0.050
Combination B...........................................               3           0.004           0.025           0.097           0.196           0.142
                                                                       7           0.002           0.010           0.039           0.077           0.047
                                                         -----------------------------------------------------------------------------------------------
    Total--All Classes..................................               3           0.032           0.290           0.673           1.100           0.532
                                                                       7           0.013           0.113           0.261           0.417           0.081
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.


                       Table V.46--Summary of Analytical Results for Beverage Vending Machines: Manufacturer and Customer Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                       TSL 1                   TSL 2                   TSL 3                   TSL 4                     TSL 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  Manufacturer Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
Industry NPV relative to a    62.7 to 62.7..........  62.5 to 62.8..........  61.7 to 63.1..........  59.2 to 62.9..........  50.7 to 73.8.
 case without standards
 value of 62.7 (million
 2014$).

[[Page 50528]]

 
Industry NPV (% Change).....  -0.05% to -0.02%......  -0.38% to 0.10%.......  -1.66% to 0.53%.......  -5.65% to 0.24%.......  -19.23% to 17.64%.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            Customer Mean LCC Savings (2014$)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Class A CO2.................  0.....................  132...................  160...................  173...................  (314)*.
Class A Propane.............  0.....................  136...................  201...................  265...................  39.
Class B CO2.................  0.....................  34....................  292...................  534...................  31.
Class B Propane.............  16....................  179...................  495...................  838...................  505.
Combination A CO2...........  53....................  269...................  793...................  1,344.................  616.
Combination A Propane.......  55....................  272...................  801...................  1,405.................  797.
Combination B CO2...........  21....................  127...................  539...................  1,098.................  516.
Combination B Propane.......  28....................  168...................  586...................  1,153.................  953.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Customer Simple PBP (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Class A CO2.................  0.6...................  1.1...................  2.4...................  3.6...................  14.1.
Class A Propane.............  0.4...................  0.8...................  1.0...................  1.1...................  8.3.
Class B CO2.................  0.5...................  0.5...................  0.6...................  2.3...................  7.2.
Class B Propane.............  0.3...................  0.4...................  0.5...................  1.3...................  5.0.
Combination A CO2...........  0.2...................  0.2...................  0.4...................  1.4...................  6.3.
Combination A Propane.......  0.1...................  0.1...................  0.3...................  1.1...................  5.3.
Combination B CO2...........  0.1...................  0.1...................  0.2...................  0.6...................  5.6.
Combination B Propane.......  0.1...................  0.1...................  0.1...................  0.5...................  2.9.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          Distribution of Customer LCC Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
Class A CO2:
    Net Cost (%)............  0.....................  0.....................  0.....................  1.....................  93.
Class A Propane:
    Net Cost (%)............  0.....................  0.....................  0.....................  0.....................  47.
Class B CO2:
    Net Cost (%)............  0.....................  0.....................  0.....................  0.....................  51.
Class B Propane:
    Net Cost (%)............  0.....................  0.....................  0.....................  0.....................  51.
Combination A CO2:
    Net Cost (%)............  0.....................  0.....................  0.....................  0.....................  10.
Combination A Propane:
    Net Cost (%)............  0.....................  0.....................  0.....................  0.....................  3.
Combination B CO2:
    Net Cost (%)............  0.....................  0.....................  0.....................  0.....................  7.
Combination B Propane:
    Net Cost (%)............  0.....................  0.....................  0.....................  0.....................  0.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.

    DOE also notes that the economics literature provides a wide-
ranging discussion of how customers trade-off upfront costs and energy 
savings in the absence of government intervention. Much of this 
literature attempts to explain why customers appear to undervalue 
energy efficiency improvements. There is evidence that customers 
undervalue future energy savings as a result of: (1) A lack of 
information; (2) a lack of sufficient salience of the long-term or 
aggregate benefits; (3) a lack of sufficient savings to warrant 
delaying or altering purchases (e.g., an inefficient ventilation fan in 
a new building or the delayed replacement of a water pump); (4) 
excessive focus on the short term, in the form of inconsistent 
weighting of future energy cost savings relative to available returns 
on other investments; (5) computational or other difficulties 
associated with the evaluation of relevant tradeoffs; and (6) a 
divergence in incentives (e.g., renter versus building owner, builder 
versus home buyer). Other literature indicates that with less than 
perfect foresight and a high degree of uncertainty about the future, 
customers may trade off these types of investments at a higher-than-
expected rate between current consumption and uncertain future energy 
cost savings. This undervaluation suggests that regulation that 
promotes energy efficiency can produce significant net private gains 
(as well as producing social gains by, for example, reducing 
pollution).
    While DOE is not prepared at present to provide a fuller 
quantifiable framework for estimating the benefits and costs of changes 
in customer purchase decisions due to an amended energy conservation 
standard, DOE is committed to developing a framework that can support 
empirical quantitative tools for improved assessment of the customer 
welfare impacts of appliance standards. DOE posted a paper that 
discusses the issue of customer welfare impacts of appliance energy 
efficiency standards, and potential enhancements to the methodology by 
which these impacts are defined and estimated in the regulatory 
process.\69\ DOE welcomes comments on how to more fully assess

[[Page 50529]]

the potential impact of energy conservation standards on customer 
choice and methods to quantify
---------------------------------------------------------------------------

    \69\ Sanstad, A. Notes on the Economics of Household Energy 
Consumption and Technology Choice. 2010. Lawrence Berkeley National 
Laboratory, Berkeley, CA. www1.eere.energy.gov/buildings/appliance_standards/pdfs/consumer_ee_theory.pdf.
---------------------------------------------------------------------------

    TSL 5 corresponds to the max-tech level for all the equipment 
classes and offers the potential for the highest cumulative energy 
savings through the analysis period from 2019 to 2048. The estimated 
energy savings from TSL 5 are 0.30 quads of energy. TSL 5 has an 
estimated NPV of customer benefit of $0.081 billion using a 7-percent 
discount rate, and $0.53 billion using a 3-percent discount rate.
    The cumulative emissions reductions at TSL 5 are 17.4 million 
metric tons of CO2, 14.0 thousand tons of SO2, 
26.3 thousand tons of NOX, 0.04 tons of Hg, 80.5 thousand 
tons of CH4, and 0.2 thousand tons of N2O. The 
estimated monetary value of the CO2 emissions reductions at 
TSL 5 ranges from $113 million to $1,624 million.
    At TSL 5, the average LCC savings range from a negative $314 to a 
positive $797, depending on equipment class. The fraction of customers 
incurring a net cost range from 0 percent for Combination B machines 
with propane refrigerant to 93 percent for Class A machines with 
CO2 refrigerant.
    At TSL 5, the projected change in INPV ranges from a decrease of 
$12.1 million to an increase of $11.1 million. If the lower bound of 
the range of impacts is reached, TSL 5 could result in a net loss of up 
to 19.2 percent in INPV for manufacturers.
    Accordingly, the Secretary tentatively concludes that at TSL 5 for 
beverage vending machines, the benefits of energy savings, emission 
reductions, and the estimated monetary value of the CO2 
emissions reductions would be outweighed by the negative LCC savings 
and the negative INPV on manufacturers. Consequently, DOE has 
tentatively concluded that TSL 5 is not economically justified.
    Next DOE considered TSL 4, which saves an estimated total of 0.22 
quads of energy, an amount DOE considers significant. TSL 4 has an 
estimated NPV of customer benefit of $0.42 billion using a 7-percent 
discount rate, and $1.1 billion using a 3-percent discount rate.
    The cumulative emissions reductions at TSL 4 are 13.0 million 
metric tons of CO2, 10.5 thousand tons of SO2, 
19.7 thousand tons of NOX, 0.03 tons of Hg, 60.3 thousand 
tons of CH4, and 0.2 thousand tons of N2O. The 
estimated monetary value of the CO2 emissions reductions at 
TSL 5 ranges from $85 million to $1,220 million.
    At TSL 4, the average LCC savings ranges from $173 to $1,405, 
depending on equipment class. The fraction of customers incurring a net 
cost range from 0 percent for all equipment classes except 1 percent 
for Class A equipment with CO2 refrigerant.
    At TSL 4, the projected change in INPV ranges from a decrease of 
$3.5 million to an increase of $0.2 million. At TSL 4, DOE recognizes 
the risk of negative impacts if manufacturers' expectations concerning 
reduced profit margins are realized. If the lower bound of the range of 
impacts is reached, as DOE expects, TSL 4 could result in a net loss of 
up to 5.7 percent in INPV for manufacturers.
    After carefully considering the analysis results and weighing the 
benefits and burdens of TSL 4, DOE believes that setting the standards 
for beverage vending machines at TSL 4 represents the maximum 
improvement in energy efficiency that is technologically feasible and 
economically justified. TSL 4 is technologically feasible because the 
technologies required to achieve these levels already exist in the 
current market and are available from multiple manufacturers. TSL 4 is 
economically justified because the benefits to the nation in the form 
of energy savings, customer NPV at 3 percent and at 7 percent, and 
emissions reductions outweigh the costs associated with reduced INPV 
and potential effects of reduced manufacturing capacity.
    Therefore, DOE proposes the adoption of amended energy conservation 
standards for beverage vending machines at TSL 4 as indicated in Table 
V.47.

 Table V.47--Proposed Energy Conservation Standards for Beverage Vending
                                Machines
------------------------------------------------------------------------
                                            Proposed energy conservation
                                             standards ** maximum daily
             Equipment class *                energy consumption (MDEC)
                                                  kWh/day [dagger]
------------------------------------------------------------------------
A.........................................   0.041 x V + 1.920 [Dagger]
B.........................................   0.033 x V + 1.422 [Dagger]
Combination A.............................   0.044 x V + 1.645 [Dagger]
Combination B.............................   0.044 x V + 1.361 [Dagger]
------------------------------------------------------------------------
* See section IV.A.1 of the NOPR for a discussion of equipment classes.
** ``V'' is the representative value of refrigerated volume (ft\3\) of
  the BVM model, as measured in accordance with the method for
  determining refrigerated volume adopted in the recently amended DOE
  test procedure for beverage vending machines and appropriate sampling
  plan requirements. 80 FR 45758 (July 31, 2015). See section III.B and
  V.A for more details.
[dagger] kilowatt hours per day.
[Dagger] Trial Standard Level (TSL) 4.

VI. Procedural Issues and Regulatory Review

A. Review Under Executive Orders 12866 and 13563

    Section 1(b)(1) of Executive Order 12866, ``Regulatory Planning and 
Review,'' 58 FR 51735 (October 4, 1993), requires each agency to 
identify the problem that it intends to address, including, where 
applicable, the failures of private markets or public institutions that 
warrant new agency action, as well as to assess the significance of 
that problem. The problems that these proposed standards address are as 
follows:
    (1) Insufficient information and the high costs of gathering and 
analyzing relevant information lead some customers to miss 
opportunities to make cost-effective investments in energy efficiency.
    (2) In some cases the benefits of more efficient equipment are not 
realized due to misaligned incentives between purchasers and users. An 
example of such a case is when the equipment purchase decision is made 
by a building contractor or building owner who does not pay the energy 
costs.
    (3) There are external benefits resulting from improved energy 
efficiency of beverage vending machines that are not captured by the 
users of such equipment. These benefits include externalities related 
to public health, environmental protection, and national security that 
are not reflected in energy prices, such as reduced emissions of air 
pollutants and greenhouse gases that impact human health and global 
warming. DOE attempts to quantify some of the external benefits through 
use of social cost of carbon values.
    In addition, DOE determined that this regulatory action is a 
``significant regulatory action'' under Executive Order 12866. DOE 
presented to the Office of Information and Regulatory Affairs (OIRA) in 
the OMB for review the draft rule and other documents prepared for this 
rulemaking, including a regulatory impact analysis (RIA), and has 
included these documents in the rulemaking record. The assessments 
prepared pursuant to Executive Order 12866 can be found in the 
technical support document for this rulemaking.
    DOE also reviewed this regulation pursuant to Executive Order 
13563, issued on January 18, 2011. 76 FR 3281 (January 21, 2011). 
Executive Order 13563 is supplemental to and explicitly reaffirms the 
principles, structures, and definitions governing regulatory review 
established in Executive Order 12866. To the extent permitted by law, 
agencies are required by Executive Order 13563

[[Page 50530]]

to: (1) Propose or adopt a regulation only upon a reasoned 
determination that its benefits justify its costs (recognizing that 
some benefits and costs are difficult to quantify); (2) tailor 
regulations to impose the least burden on society, consistent with 
obtaining regulatory objectives, taking into account, among other 
things, and to the extent practicable, the costs of cumulative 
regulations; (3) select, in choosing among alternative regulatory 
approaches, those approaches that maximize net benefits (including 
potential economic, environmental, public health and safety, and other 
advantages; distributive impacts; and equity); (4) to the extent 
feasible, specify performance objectives, rather than specifying the 
behavior or manner of compliance that regulated entities must adopt; 
and (5) identify and assess available alternatives to direct 
regulation, including providing economic incentives to encourage the 
desired behavior, such as user fees or marketable permits, or providing 
information upon which choices can be made by the public.
    DOE emphasizes as well that Executive Order 13563 requires agencies 
to use the best available techniques to quantify anticipated present 
and future benefits and costs as accurately as possible. In its 
guidance, the Office of Information and Regulatory Affairs has 
emphasized that such techniques may include identifying changing future 
compliance costs that might result from technological innovation or 
anticipated behavioral changes. For the reasons stated in the preamble, 
DOE believes that this NOPR is consistent with these principles, 
including the requirement that, to the extent permitted by law, 
benefits justify costs and that net benefits are maximized.

B. Review Under the Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires 
preparation of an initial regulatory flexibility analysis (IRFA) for 
any rule that by law must be proposed for public comment, unless the 
agency certifies that the rule, if promulgated, will not have a 
significant economic impact on a substantial number of small entities. 
As required by Executive Order 13272, ``Proper Consideration of Small 
Entities in Agency Rulemaking,'' 67 FR 53461 (August 16, 2002), DOE 
published procedures and policies on February 19, 2003, to ensure that 
the potential impacts of its rules on small entities are properly 
considered during the rulemaking process. 68 FR 7990. DOE has made its 
procedures and policies available on the Office of the General 
Counsel's Web site (www.energy.gov/gc/office-general-counsel). DOE has 
prepared the following IRFA for the products that are the subject of 
this rulemaking.
    For the manufacturers of BVM equipment, the SBA set a size 
threshold, which defines those entities classified as ``small 
businesses'' for the purposes of the statute. DOE used the SBA's small 
business size standards to determine whether any small entities would 
be subject to the requirements of the rule. 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 and are available at http://www.sba.gov/content/table-small-business-size-standards. BVM equipment 
manufacturing is classified under NAICS 333318, ``Other Commercial and 
Service Industry Machinery Manufacturing.'' The SBA sets a threshold of 
1,000 employees or less for an entity to be considered as a small 
business for this category.
1. Description and Estimated Number of Small Entities Regulated
    During its market survey, DOE used available public information to 
identify potential small manufacturers. DOE's research involved public 
databases (e.g., DOE's Compliance Certification Management System 
(CCMS),\70\ and ENERGY STAR \71\ databases), individual company Web 
sites, and market research tools (e.g., Hoovers reports \72\) to create 
a list of companies that manufacture or sell products covered by this 
rulemaking. DOE also asked stakeholders and industry representatives 
during manufacturer interviews and at DOE public meetings if they were 
aware of any other small manufacturers. DOE reviewed publicly available 
data and contacted select companies on its list, as necessary, to 
determine whether they met the SBA's definition of a small business 
manufacturer of covered BVM equipment. DOE screened out companies that 
do not offer products covered by this rulemaking, do not meet the 
definition of a ``small business,'' or are foreign-owned.
---------------------------------------------------------------------------

    \70\ ``CCMS.'' CCMS. http://www.regulations.doe.gov/certification-data/.
    \71\ ENERGY STAR Certified Vending Machines. June 6, 2013. 
http://www.energystar.gov/products/certified-products.
    \72\ Hoovers. http://www.hoovers.com/.
---------------------------------------------------------------------------

    DOE identified eight companies selling BVM equipment products in 
the United States. Four are small domestic manufacturers and one is a 
small foreign manufacturer with domestic-sited subsidiary that serves 
as its marketing arm in the United States. DOE contacted all identified 
BVM manufacturers for interviews. Ultimately, DOE interviewed 
manufacturers representing approximately 78 percent of BVM equipment 
industry shipments and approximately 50 percent of the small business 
shipments.
2. Description and Estimate of Compliance Requirements
    The four small domestic BVM manufacturers account for approximately 
15-20 percent of BVM equipment shipments. The small domestic 
manufacturers are Automated Merchandising Systems, Multi-Max Systems, 
Seaga Manufacturing, and Wittern.
    In general, the small manufacturers focus on the Combination A and 
Combination B market segments. Together, the four domestic and one 
foreign small manufacturer account for 74 percent of Combination A and 
Combination B sales. Based on the shipments analysis, Combination A and 
Combination B shipments account for roughly 18 percent of the total BVM 
market.
    The remaining 82 percent of BVM shipments are Class A and Class B 
units. Small business manufacturers (including the one foreign small 
manufacturer) account for approximately 5 percent of the market for 
each of the Class A and Class B market segments. The remaining 95 
percent of both Class A and Class B market segments are held by the 
three large manufacturers: Crane, Royal, and SVA.
    DOE derived industry conversion using a top-down approach described 
in methodology section IV.I.2.a. Using product platform counts by 
equipment type (i.e., Class A, Class B, Combo A, Combo B) and 
manufacturer, DOE estimated the distribution of industry conversion 
costs between small manufacturers and large manufacturers. Using its 
count of manufacturers, DOE calculated capital conversion costs (Table 
VI.1) and product conversion costs (Table VI.2) for an average small 
manufacturer versus an average large manufacturer. To provide context 
on the size of the conversion costs relative to the size of the 
businesses, DOE presents the conversion costs relative to annual 
revenue and annual operating profit under the proposed standard level, 
as shown in Table VI.3. The current annual revenue and annual operating 
profit estimates are derived from the GRIM's industry revenue 
calculations and the

[[Page 50531]]

market share breakdowns of small versus large manufacturers.

Table VI.1--Comparison of Typical Small and Large Manufacturer's Capital
                           Conversion Costs *
------------------------------------------------------------------------
                               Capital conversion    Capital conversion
                                costs for typical     costs for typical
    Trial standard level       small manufacturer    large manufacturer
                                (2014$ millions)      (2014$ millions)
------------------------------------------------------------------------
TSL 1.......................                  0.00                  0.00
TSL 2.......................                  0.00                  0.00
TSL 3.......................                  0.02                  0.02
TSL 4.......................                  0.07                  0.27
TSL 5.......................                  0.32                  0.52
------------------------------------------------------------------------
* Capital conversion costs are the capital investments made during the 3-
  year period between the publication of the final rule and the
  compliance year of the proposed standard.


Table VI.2--Comparison of Typical Small and Large Manufacturer's Product
                           Conversion Costs *
------------------------------------------------------------------------
                               Product conversion    Product conversion
                                costs for typical     costs for typical
    Trial standard level       small manufacturer    large manufacturer
                                (2014$ millions)      (2014$ millions)
------------------------------------------------------------------------
TSL 1.......................                  0.00                  0.01
TSL 2.......................                  0.02                  0.04
TSL 3.......................                  0.10                  0.10
TSL 4.......................                  0.14                  0.30
TSL 5.......................                  0.35                  0.53
------------------------------------------------------------------------
* Product conversion costs are the R&D and other product development
  investments made during the 3-year period between the publication of
  the final rule and the compliance year of the proposed standard.


                       Table VI.3--Comparison of Conversion Costs for an Average Small and an Average Large Manufacturer at TSL 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                            Conversion
                                                              Capital         Product                       Conversion      Conversion        costs/
                                                            conversion      conversion      Conversion     costs/ annual      costs/        conversion
                                                            cost (2014$     cost (2014$    costs/ annual     operating      conversion        period
                                                             millions)       millions)      revenue (%)     profit (%)    period revenue     operating
                                                                                                                               * (%)       profit * (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Small Manufacturer......................................            0.07            0.14               7             119               2              40
Large Manufacturer......................................            0.27            0.30               2              40               1              13
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The conversion period, the time between the final rule publication year and the compliance year for this rulemaking, is 3 years.

    At the proposed level, DOE estimates total conversion costs 
associated with new and amended energy conservation standards for an 
average small manufacturer to be $217,000, which is approximately 7 
percent of annual revenue and 119 percent of annual operating profit. 
This suggests that an average small manufacturer would need to reinvest 
roughly 40 percent of its operating profit per year over the conversion 
period to comply with standards.
    The total conversion costs associated with new and amended energy 
conservation standards for an average large manufacturer is $571,000, 
which is approximately 2 percent of annual revenue and 40 percent of 
annual operating profit. This suggests that an average large 
manufacturer would need to reinvest roughly 13 percent of its operating 
profit per year over the 3-year conversion period.
    Product conversion costs, which include one-time investments such 
as product redesigns and industry certification, are a key driver of 
conversion investments to comply with standards. Product conversion 
costs tend to be fixed and do not scale with sales volume. For each 
equipment platform, small businesses must make redesign investments 
that are similar to their large competitors. However, because small 
manufacturers' costs are spread over a lower volume of units, it takes 
longer for small manufacturers to recover their investments. Similarly, 
capital conversion costs are spread across a lower volume of shipments 
for small business manufacturers.
    DOE requests comment regarding any potential impacts on small 
business manufacturers from the proposed standards. In particular, DOE 
seeks further information and data regarding the sales volume and 
annual revenues for small businesses so the agency can be better 
informed about the potential impacts to small business manufacturers of 
the proposed energy conservation standards. DOE will consider any such 
additional information when formulating and selecting TSLs for the 
final rule (section VII.E of this NOPR).
3. Significant Alternatives to the Rule
    The preceding discussion analyzes impacts on small businesses that 
would result from DOE's proposed rule. In addition to the other TSLs 
being considered, the proposed rulemaking TSD includes a regulatory 
impact analysis (RIA). For beverage vending machines, the RIA discusses 
the following policy alternatives: (1) No change in standard; (2) 
customer

[[Page 50532]]

rebates; (3) customer tax credits; (4) manufacturer tax credits; (5) 
voluntary energy efficiency targets; (6) early replacement; and (7) 
bulk government purchases. While these alternatives may mitigate to 
some varying extent the economic impacts on small entities compared to 
the standards, DOE did not consider these alternatives further because 
they are either not feasible to implement without authority and funding 
from Congress, or they are expected to result in energy savings that 
are much smaller than those that will be achieved by the new and 
amended standard levels. Voluntary programs at these levels achieve 
only a fraction of the savings achieved by standards and would provide 
even lower savings benefits which would be inconsistent with DOE's 
statutory mandate to maximize the improvement in energy efficiency that 
the Secretary determines is technologically feasible and economically 
justified.
    DOE also examined standards at lower efficiency levels, TSL 3, TSL 
2 and TSL 1. TSL 3 achieves approximately 40 percent lower savings than 
TSL 4, TSL 2 achieves 80 percent lower savings than TSL 4 and TSL 1 
achieves 99 percent less savings of TSL 4. Additionally, DOE considered 
standards at higher efficiency levels, corresponding to TSL 5. TSL 5 
achieves approximately 44 percent higher savings than TSL 4. However. 
DOE rejected this TSL due to the negative NPV results. Furthermore, the 
estimated conversion costs for small business manufacturers are higher 
at TSL 5 than at TSL 4. To comply with TSL 5, the average small 
manufacturer must make $570,000 in conversion cost investments, which 
$370,000 more than at TSL 4. (See chapter 17 of the NOPR TSD for 
further detail on the policy alternatives DOE considered.)
    Additional compliance flexibilities may be available through other 
means. For example, individual manufacturers may petition for a waiver 
of the applicable test procedure. Further, EPCA provides that a 
manufacturer whose annual gross revenue from all of its operations does 
not exceed $8,000,000 may apply for an exemption from all or part of an 
energy conservation standard for a period not longer than 24 months 
after the compliance date of a final rule establishing the standard. 
(42 U.S.C. 6295(t)) Additionally, Section 504 of the Department of 
Energy Organization Act, 42 U.S.C. 7194, provides authority for the 
Secretary to adjust a rule issued under EPCA in order to prevent 
``special hardship, inequity, or unfair distribution of burdens'' that 
may be imposed on that manufacturer as a result of such rule. 
Manufacturers should refer to 10 CFR part 430, subpart E, and part 1003 
for additional details.

C. Review Under the Paperwork Reduction Act of 1995

    Manufacturers of beverage vending machines must certify to DOE that 
their products comply with any applicable energy conservation 
standards. In certifying compliance, manufacturers must test their 
equipment according to the applicable DOE test procedures for beverage 
vending machines, including any amendments adopted for those test 
procedures on the date that compliance is required. DOE has established 
regulations for the certification and recordkeeping requirements for 
all covered customer products and commercial equipment, including 
beverage vending machines. 76 FR 12422 (March 7, 2011). The collection-
of-information requirement for the certification and recordkeeping is 
subject to review and approval by OMB under the Paperwork Reduction Act 
(PRA). This requirement has been approved by OMB under OMB Control 
Number 1910-1400. 80 FR 5099 (January 30, 2015). The public reporting 
burden for the certification is estimated to average 30 hours per 
response, including the time for reviewing instructions, searching 
existing data sources, gathering and maintaining the data needed, and 
completing and reviewing the collection of information.
    Notwithstanding any other provision of the law, no person is 
required to respond to, nor shall any person be subject to a penalty 
for failure to comply with, a collection of information subject to the 
requirements of the PRA, unless that collection of information displays 
a currently valid OMB Control Number.

D. Review Under the National Environmental Policy Act of 1969

    Pursuant to the National Environmental Policy Act (NEPA) of 1969, 
DOE has determined that the proposed rule fits within the category of 
actions included in Categorical Exclusion (CX) B5.1 and otherwise meets 
the requirements for application of a CX. See 10 CFR part 1021, 
appendix B, B5.1(b); 1021.410(b) and appendix B, B(1)-(5). The proposed 
rule fits within the category of actions because it is a rulemaking 
that establishes energy conservation standards for customer products or 
industrial equipment, and for which none of the exceptions identified 
in CX B5.1(b) apply. Therefore, DOE has made a CX determination for 
this rulemaking, and DOE does not need to prepare an Environmental 
Assessment or Environmental Impact Statement for this proposed rule. 
DOE's CX determination for this proposed rule is available at http://cxnepa.energy.gov/.

E. Review Under Executive Order 13132

    Executive Order 13132, ``Federalism,'' imposes certain requirements 
on Federal agencies formulating and implementing policies or 
regulations that preempt State law or that have Federalism 
implications. 64 FR 43255 (August 10, 1999). The Executive Order 
requires agencies to examine the constitutional and statutory authority 
supporting any action that would limit the policymaking discretion of 
the States and to carefully assess the necessity for such actions. The 
Executive Order also requires agencies to have an accountable process 
to ensure meaningful and timely input by State and local officials in 
the development of regulatory policies that have Federalism 
implications. On March 14, 2000, DOE published a statement of policy 
describing the intergovernmental consultation process that it will 
follow in the development of such regulations. 65 FR 13735. DOE has 
examined this proposed rule and has tentatively determined that it 
would not have a substantial direct effect on the States, on the 
relationship between the national government and the States, or on the 
distribution of power and responsibilities among the various levels of 
government. EPCA governs and prescribes Federal preemption of State 
regulations as to energy conservation for the products that are the 
subject of this proposed rule. States can petition DOE for exemption 
from such preemption to the extent, and based on criteria, set forth in 
EPCA (42 U.S.C. 6297(d)). Therefore, Executive Order 13132 requires no 
further action.

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,'' imposes on Federal agencies the general duty 
to adhere to the following requirements: (1) Eliminate drafting errors 
and ambiguity; (2) write regulations to minimize litigation; (3) 
provide a clear legal standard for affected conduct rather than a 
general standard; and (4) promote simplification and burden reduction. 
61 FR 4729 (February 7, 1996). 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

[[Page 50533]]

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 tentatively 
determined that, to the extent permitted by law, this proposed rule 
meets the relevant standards of Executive Order 12988.

G. Review Under the Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) 
requires each Federal agency to assess the effects of Federal 
regulatory actions on State, local, and Tribal governments and the 
private sector. Public Law 104-4, sec. 201 (codified at 2 U.S.C. 1531). 
For a proposed regulatory action likely to result in a rule that may 
cause the expenditure by State, local, and Tribal governments, in the 
aggregate, or by the private sector, of $100 million or more in any one 
year (adjusted annually for inflation), section 202 of UMRA requires a 
Federal agency to publish a written statement that estimates the 
resulting costs, benefits, and other effects on the national economy. 
(2 U.S.C. 1532(a), (b)) The UMRA also requires a Federal agency to 
develop an effective process to permit timely input by elected officers 
of State, local, and Tribal governments on a proposed ``significant 
intergovernmental mandate,'' and requires an agency plan for giving 
notice and opportunity for timely input to potentially affected small 
governments before establishing any requirements that might 
significantly or uniquely affect them. On March 18, 1997, DOE published 
a statement of policy on its process for intergovernmental consultation 
under UMRA. 62 FR 12820. DOE's policy statement is also available at 
www.energy.gov/gc/office-general-counsel.
    Although this proposed rule, which proposes new and amended energy 
conservation standards for beverage vending machines, does not contain 
a Federal intergovernmental mandate, it may require annual expenditures 
of $100 million or more by the private sector. Specifically, the 
proposed rule would likely result in a final rule that could require 
expenditures of $100 million or more, including: (1) Investment in 
research and development and in capital expenditures by BVM 
manufacturers in the years between the final rule and the compliance 
date for the amended standards; and (2) incremental additional 
expenditures by customers to purchase higher-efficiency beverage 
vending machines, starting at the compliance date for the applicable 
standard.
    Section 202 of UMRA authorizes a Federal agency to respond to the 
content requirements of UMRA in any other statement or analysis that 
accompanies the proposed rule. 2 U.S.C. 1532(c). The content 
requirements of section 202(b) of UMRA relevant to a private sector 
mandate substantially overlap the economic analysis requirements that 
apply under section 325(o) of EPCA and Executive Order 12866. The 
analyses described throughout the Preamble section of the NOPR and the 
``Regulatory Impact Analysis'' section of the TSD for this proposed 
rule respond to those requirements.
    Under section 205 of UMRA, the Department is obligated to identify 
and consider a reasonable number of regulatory alternatives before 
promulgating a rule for which a written statement under section 202 is 
required. 2 U.S.C. 1535(a). DOE is required to select from those 
alternatives the most cost-effective and least burdensome alternative 
that achieves the objectives of the proposed rule unless DOE publishes 
an explanation for doing otherwise, or the selection of such an 
alternative is inconsistent with law. As required by 42 U.S.C. 6295(o) 
and (v), this proposed rule would establish new and amended energy 
conservation standards for beverage vending machines 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 
this proposed rule.

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

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

I. Review Under Executive Order 12630

    Pursuant to Executive Order 12630, ``Governmental Actions and 
Interference with Constitutionally Protected Property Rights,'' 53 FR 
8859 (March 15, 1988), DOE has determined that this proposed rule would 
not result in any takings that might require compensation under the 
Fifth Amendment to the U.S. Constitution.

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

    Section 515 of the Treasury and General Government Appropriations 
Act, 2001 (44 U.S.C. 3516 note) provides for Federal agencies to review 
most disseminations of information to the public under information 
quality guidelines established by each agency pursuant to general 
guidelines issued by OMB. OMB's guidelines were published at 67 FR 8452 
(February 22, 2002), and DOE's guidelines were published at 67 FR 62446 
(October 7, 2002). DOE has reviewed this NOPR under the OMB and DOE 
guidelines and has concluded that it is consistent with applicable 
policies in those guidelines.

K. Review Under Executive Order 13211

    Executive Order 13211, ``Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use,'' 66 FR 28355 
(May 22, 2001), requires Federal agencies to prepare and submit to OIRA 
at OMB, a Statement of Energy Effects for any proposed significant 
energy action. A ``significant energy action'' is defined as any action 
by an agency that promulgates or is expected to lead to promulgation of 
a final rule, and that: (1) Is a significant regulatory action under 
Executive Order 12866, or any successor order; and (2) is likely to 
have a significant adverse effect on the supply, distribution, or use 
of energy; or (3) is designated by the Administrator of OIRA as a 
significant energy action. For any proposed significant energy action, 
the agency must give a detailed statement of any adverse effects on 
energy supply, distribution, or use should the proposal be implemented, 
and of reasonable alternatives to the action and their expected 
benefits on energy supply, distribution, and use.
    DOE has tentatively concluded that this regulatory action, which 
sets forth proposed energy conservation standards for beverage vending 
machines, is not a significant energy action because the

[[Page 50534]]

proposed standards are not likely to have a significant adverse effect 
on the supply, distribution, or use of energy, nor has it been 
designated as such by the Administrator at OIRA. Accordingly, DOE has 
not prepared a Statement of Energy Effects on this proposed rule.

L. Review Under the Information Quality Bulletin for Peer Review

    On December 16, 2004, OMB, in consultation with the Office of 
Science and Technology Policy (OSTP), issued its Final Information 
Quality Bulletin for Peer Review (the Bulletin). 70 FR 2664 (January 
14, 2005). The Bulletin establishes that certain scientific information 
shall be peer reviewed by qualified specialists before it is 
disseminated by the Federal Government, including influential 
scientific information related to agency regulatory actions. The 
purpose of the bulletin is to enhance the quality and credibility of 
the Government's scientific information. Under the Bulletin, the energy 
conservation standards rulemaking analyses are ``influential scientific 
information,'' which the Bulletin defines as ``scientific information 
the agency reasonably can determine will have or does have a clear and 
substantial impact on important public policies or private sector 
decisions.'' Id. at 2667.
    In response to OMB's Bulletin, DOE conducted formal in-progress 
peer reviews of the energy conservation standards development process 
and analyses and has prepared a Peer Review Report pertaining to the 
energy conservation standards rulemaking analyses. Generation of this 
report involved a rigorous, formal, and documented evaluation using 
objective criteria and qualified and independent reviewers to make a 
judgment as to the technical/scientific/business merit, the actual or 
anticipated results, and the productivity and management effectiveness 
of programs and/or projects. The ``Energy Conservation Standards 
Rulemaking Peer Review Report'' dated February 2007 has been 
disseminated and is available at the following Web site: 
www1.eere.energy.gov/buildings/appliance_standards/peer_review.html.

VII. Public Participation

A. Attendance at the Public Meeting

    The time, date, and location of the public meeting are listed in 
the DATES and ADDRESSES sections at the beginning of this NOPR. If you 
plan to attend the public meeting, please notify Ms. Brenda Edwards at 
(202) 586-2945 or [email protected].
    Please note that foreign nationals visiting DOE Headquarters are 
subject to advance security screening procedures that require advance 
notice prior to attendance at the public meeting. Any foreign national 
wishing to participate in the meeting should advise DOE as soon as 
possible by contacting [email protected] to initiate the 
necessary procedures.
    DOE requires visitors to have laptops and other devices, such as 
tablets, checked upon entry into the building. Any person wishing to 
bring these devices into the Forrestal Building will be required to 
obtain a property pass. Visitors should avoid bringing these devices, 
or allow an extra 45 minutes to check in. Please report to the 
visitor's desk to have devices checked before proceeding through 
security.
    Due to the REAL ID Act implemented by the Department of Homeland 
Security (DHS), there have been recent changes regarding ID 
requirements for individuals wishing to enter Federal buildings from 
specific states and U.S. territories. Driver's licenses from the 
following states or territory will not be accepted for building entry 
and one of the alternate forms of ID listed below will be required. DHS 
has determined that regular driver's licenses (and ID cards) from the 
following jurisdictions are not acceptable for entry into DOE 
facilities: Alaska, American Samoa, Arizona, Louisiana, Maine, 
Massachusetts, Minnesota, New York, Oklahoma, and Washington. 
Acceptable alternate forms of Photo-ID include: U.S. Passport or 
Passport Card; an Enhanced Driver's License or Enhanced ID-Card issued 
by the states of Minnesota, New York or Washington (Enhanced licenses 
issued by these states are clearly marked Enhanced or Enhanced Driver's 
License); a military ID or other Federal government issued Photo-ID 
card.
    In addition, you can attend the public meeting via webinar. Webinar 
registration information, participant instructions, and information 
about the capabilities available to webinar participants will be 
published on DOE's Web site at: http://www1.eere.energy.gov/buildings/appliance_standards/product.aspx/productid/24. Participants are 
responsible for ensuring their systems are compatible with the webinar 
software.

B. Procedure for Submitting Requests To Speak and Prepared General 
Statements for Distribution

    Any person who has an interest in the topics addressed in this 
NOPR, or who is a representative of a group or class of persons that 
has an interest in these issues, may request an opportunity to make an 
oral presentation at the public meeting. Such persons may hand-deliver 
requests to speak to the address shown in the ADDRESSES section at the 
beginning of this NOPR between 9:00 a.m. and 4:00 p.m., Monday through 
Friday, except Federal holidays. Requests may also be sent by mail or 
email to: Ms. Brenda Edwards, U.S. Department of Energy, Building 
Technologies Program, Mailstop EE-2J, 1000 Independence Avenue SW., 
Washington, DC 20585-0121, or [email protected]. Persons who 
wish to speak should include with their request a computer diskette or 
CD-ROM in WordPerfect, Microsoft Word, PDF, or text (ASCII) file format 
that briefly describes the nature of their interest in this rulemaking 
and the topics they wish to discuss. Such persons should also provide a 
daytime telephone number where they can be reached.
    DOE requests persons scheduled to make an oral presentation to 
submit an advance copy of their statements at least one week before the 
public meeting. DOE may permit persons who cannot supply an advance 
copy of their statement to participate, if those persons have made 
advance alternative arrangements with the Building Technologies 
Program. As necessary, requests to give an oral presentation should ask 
for such alternative arrangements.

C. Conduct of the Public Meeting

    DOE will designate a DOE official to preside at the public meeting 
and may also use a professional facilitator to aid discussion. The 
meeting will not be a judicial or evidentiary-type public hearing, but 
DOE will conduct it in accordance with section 336 of EPCA (42 U.S.C. 
6306). A court reporter will be present to record the proceedings and 
prepare a transcript. DOE reserves the right to schedule the order of 
presentations and to establish the procedures governing the conduct of 
the public meeting. There shall not be discussion of proprietary 
information, costs or prices, market share, or other commercial matters 
regulated by U.S. anti-trust laws. After the public meeting, interested 
parties may submit further comments on the proceedings, as well as on 
any aspect of the rulemaking, until the end of the comment period.
    The public meeting will be conducted in an informal, conference 
style. DOE will present summaries of comments received before the 
public meeting, allow time for prepared general statements by 
participants, and encourage all interested parties to share

[[Page 50535]]

their views on issues affecting this rulemaking. Each participant will 
be allowed to make a general statement (within time limits determined 
by DOE), before the discussion of specific topics. DOE will allow, as 
time permits, other participants to comment briefly on any general 
statements.
    At the end of all prepared statements on a topic, DOE will permit 
participants to clarify their statements briefly and comment on 
statements made by others. Participants should be prepared to answer 
questions by DOE and by other participants concerning these issues. DOE 
representatives may also ask questions of participants concerning other 
matters relevant to this rulemaking. The official conducting the public 
meeting will accept additional comments or questions from those 
attending, as time permits. The presiding official will announce any 
further procedural rules or modification of the above procedures that 
may be needed for the proper conduct of the public meeting.
    A transcript of the public meeting will be included in the docket, 
which can be viewed as described in the Docket section at the beginning 
of this NOPR and will be accessible on the DOE Web site. In addition, 
any person may buy a copy of the transcript from the transcribing 
reporter.

D. Submission of Comments

    DOE will accept comments, data, and information regarding this 
proposed rule before or after the public meeting, but no later than the 
date provided in the DATES section at the beginning of this NOPR. 
Interested parties may submit comments, data, and other information 
using any of the methods described in the ADDRESSES section at the 
beginning of this NOPR.
    Submitting comments via regulations.gov. The www.regulations.gov 
Web page will require you to provide your name and contact information. 
Your contact information will be viewable to DOE Building Technologies 
staff only. Your contact information will not be publicly viewable 
except for your first and last names, organization name (if any), and 
submitter representative name (if any). If your comment is not 
processed properly because of technical difficulties, DOE will use this 
information to contact you. If DOE cannot read your comment due to 
technical difficulties and cannot contact you for clarification, DOE 
may not be able to consider your comment.
    However, your contact information will be publicly viewable if you 
include it in the comment itself or in any documents attached to your 
comment. Any information that you do not want to be publicly viewable 
should not be included in your comment, nor in any document attached to 
your comment. Otherwise, persons viewing comments will see only first 
and last names, organization names, correspondence containing comments, 
and any documents submitted with the comments.
    Do not submit to www.regulations.gov information for which 
disclosure is restricted by statute, such as trade secrets and 
commercial or financial information (hereinafter referred to as 
Confidential Business Information (CBI)). Comments submitted through 
www.regulations.gov cannot be claimed as CBI. Comments received through 
the Web site will waive any CBI claims for the information submitted. 
For information on submitting CBI, see the Confidential Business 
Information section below.
    DOE processes submissions made through www.regulations.gov before 
posting. Normally, comments will be posted within a few days of being 
submitted. However, if large volumes of comments are being processed 
simultaneously, your comment may not be viewable for up to several 
weeks. Please keep the comment tracking number that www.regulations.gov 
provides after you have successfully uploaded your comment.
    Submitting comments via email, hand delivery/courier, or mail. 
Comments and documents submitted via email, hand delivery, or mail also 
will be posted to www.regulations.gov. If you do not want your personal 
contact information to be publicly viewable, do not include it in your 
comment or any accompanying documents. Instead, provide your contact 
information in a cover letter. Include your first and last names, email 
address, telephone number, and optional mailing address. The cover 
letter will not be publicly viewable as long as it does not include any 
comments.
    Include contact information each time you submit comments, data, 
documents, and other information to DOE. If you submit via mail or hand 
delivery/courier, please provide all items on a CD, if feasible, in 
which case it is not necessary to submit printed copies. No 
telefacsimiles (faxes) will be accepted.
    Comments, data, and other information submitted to DOE 
electronically should be provided in PDF (preferred), Microsoft Word or 
Excel, WordPerfect, or text (ASCII) file format. Provide documents that 
are not secured, that are written in English, and that are free of any 
defects or viruses. Documents should not contain special characters or 
any form of encryption and, if possible, they should carry the 
electronic signature of the author.
    Campaign form letters. Please submit campaign form letters by the 
originating organization in batches of between 50 to 500 form letters 
per PDF or as one form letter with a list of supporters' names compiled 
into one or more PDFs. This reduces comment processing and posting 
time.
    Confidential Business Information. Pursuant to 10 CFR 1004.11, any 
person submitting information that he or she believes to be 
confidential and exempt by law from public disclosure should submit via 
email, postal mail, or hand delivery/courier two well-marked copies: 
One copy of the document marked ``confidential'' including all the 
information believed to be confidential, and one copy of the document 
marked ``non-confidential'' with the information believed to be 
confidential deleted. Submit these documents via email or on a CD, if 
feasible. DOE will make its own determination about the confidential 
status of the information and treat it according to its determination.
    Factors of interest to DOE when evaluating requests to treat 
submitted information as confidential include: (1) A description of the 
items; (2) whether and why such items are customarily treated as 
confidential within the industry; (3) whether the information is 
generally known by or available from other sources; (4) whether the 
information has previously been made available to others without 
obligation concerning its confidentiality; (5) an explanation of the 
competitive injury to the submitting person which would result from 
public disclosure; (6) when such information might lose its 
confidential character due to the passage of time; and (7) why 
disclosure of the information would be contrary to the public interest.
    It is DOE's policy that all comments may be included in the public 
docket, without change and as received, including any personal 
information provided in the comments (except information deemed to be 
exempt from public disclosure).

E. Issues on Which DOE Seeks Comment

    Although DOE welcomes comments on any aspect of this proposal, DOE 
is particularly interested in receiving comments and views of 
interested parties concerning the following issues:
    1. DOE requests comment on the proposed amendment to the Class A 
equipment class definition. Specifically, DOE requests comment on 
whether the

[[Page 50536]]

presence of a transparent front is always correlated with fully cooled 
equipment.
    2. DOE requests comment on the proposed optional test protocol to 
determine transparent and non-transparent surface areas and whether 
Class A equipment typically has at least 25 percent of the surface area 
on the front side of the unit that is transparent or if another 
quantitative threshold would be more appropriate.
    3. DOE requests comment on the proposed definition of transparent. 
Specifically, whether 45 percent light transmittance is an acceptable 
value for the glass or other transparent materials that are typically 
used to construct the front panel on Class A equipment.
    4. DOE requests comment on the proposed amendment to the definition 
of ``combination vending machine.''
    5. DOE requests comment on the proposed definition for Combination 
A and Combination B.
    6. DOE also requests comment on DOE's proposal to apply the 
optional test protocol for determining the surface area and 
transparency of materials to combination vending machines, except that 
the surface areas surrounding the refrigerated compartments that are 
not designed to be refrigerated would be excluded.
    7. DOE requests comment on its updated estimate of market share for 
combination vending machines.
    8. DOE requests comment on its position that machines capable of 
vending perishable goods do not warrant separate classes due to their 
physical similarity to refrigerated beverage vending machines used to 
vend non-perishable products.
    9. DOE requests feedback on the manufacturer markup values used to 
convert MPC to MSP.
    10. DOE requests comment on whether equipment is tested with all 
lighting and accessories on for the duration of the test and no low 
power modes or energy management systems enabled.
    11. DOE requests information on whether the current standard level 
for Class A and Class B machines is achievable without the use of any 
energy management systems.
    12. To refine its engineering analysis for beverage vending 
machines further, DOE requests comment and data from interested parties 
on several topics related to the refrigerants analyzed in the 
engineering analysis and their relative performance characteristics. 
Specifically, DOE requests information on the efficiency of 
CO2 and propane compressors in BVM applications.
    13. DOE requests comment on the conclusion that both the current 
standard level and all of the efficiency levels analyzed could be met 
by equipment using any refrigerant.
    14. DOE requests information on the additional costs associated 
with CO2 and propane refrigeration systems, respectively, 
including but not limited to additional costs for the compressor, 
evaporator, condenser, and refrigerant tubing.
    15. DOE requests comment and information on the use of propane, 
isobutane, and other hydrocarbon refrigerants in current commercially 
available BVM models or on significant research and development efforts 
on the part of domestic BVM manufacturers to commercialize this 
technology in the near future.
    16. DOE requests comment on the likelihood of manufacturers using 
propane versus isobutane refrigerant since both have been added to the 
list of acceptable substitutes for use in BVM applications by EPA SNAP. 
If it is likely that isobutane would also be implemented in BVM 
applications, DOE requests similar information on the efficiency of 
isobutane compressors and additional costs associated with isobutane 
refrigeration systems, including but not limited to additional costs 
for the compressor, evaporator, condenser, and refrigerant tubing.
    17. DOE requests comment on whether the conversion to use of any 
alternative refrigerant may impact the availability or relevance of any 
design options currently observed in equipment on the market.
    18. DOE requests data on the use of variable speed compressors in 
beverage vending machines.
    19. DOE requests comment on distribution channels for beverage 
vending machines.
    20. DOE requests comment on the conclusion that data from college 
campuses are reasonably representative of BVM locations nationally and 
on their use in estimating the proportion of Class B and Combination B 
beverage vending machines installed outdoors.
    21. DOE requests comment on its decision to disregard the 
adjustment factors calculated in the preliminary analysis thereby 
simplifying the energy use analysis by using the national average AEC 
values.
    22. DOE requests comment regarding whether the analysis should 
account for the impact of any incremental energy use associated with 
cold weather heaters on the national average energy consumption of 
Class B and Combination B equipment.
    23. DOE also requests data on the incidence and control methodology 
of cold weather heaters in BVM equipment installed in cold climates.
    24. DOE requests comment on the energy use analysis methodology 
used to estimate the AEC of Class A, Class B, Combination A, and 
Combination B beverage vending machines located indoors and outdoors, 
as applicable.
    25. DOE requests comment on any other variables DOE should account 
for in its estimate of national average energy use for beverage vending 
machines.
    26. DOE requests comment on the maintenance and repair costs 
modeled in the LCC analysis and especially appreciates additional data 
regarding differences in maintenance or repair costs that vary as a 
function of refrigerant, equipment class, or efficiency level.
    27. DOE requests comment on the assumed lifetime of beverage 
vending machines and if the lifetime of beverage vending machines is 
likely to be longer or shorter in the future.
    28. DOE requests comment on its assumption that a beverage vending 
machine will typically undergo two refurbishments during the course of 
its life and if refurbishments are likely to increase or decrease in 
the future.
    29. DOE also requests comment on the applicability of this 
assumption to all equipment classes.
    30. DOE requests further input or evidence regarding any technology 
options considered that would be expected to reduce overall equipment 
lifetimes and if so, by how much.
    31. DOE requests comment on its assumption that all baseline Class 
A and Class B propane and Class A CO2 equipment would be EL 
1.
    32. DOE requests comment on its assumption that Combination A and 
Combination B beverage vending machines have efficiency distributions 
similar to Class A and Class B equipment because manufacturers will use 
the same cabinet and similar components in the combination machines as 
the conventional Class A and Class B equipment.
    33. DOE requests comment on its assumptions regarding historical 
shipments between 1998 and 2014.
    34. DOE also requests data from manufacturers on historical 
shipments, by equipment class, size, and efficiency level, for as many 
years as possible, ideally beginning in 1998 until the present.
    35. DOE requests comment on its assumptions regarding future 
shipments. Specifically, DOE requests comment on the stock of BVM units 
likely to be available in the United

[[Page 50537]]

States or in particular commercial and industrial building sectors over 
time.
    36. DOE also requests comment on the number of beverage vending 
machines that are typically installed in each location or building in 
each industry and if this is likely to increase or decrease over time.
    37. DOE requests comment on its assumptions regarding likely 
reduction in stock in different commercial and industrial building 
sectors in which beverage vending machines are typically installed.
    38. DOE also requests comment on other factors that might be 
influencing an overall reduction in BVM stock and if this trend is 
likely to continue over time.
    39. DOE requests comment on the impact of the EPA SNAP rules on 
future shipments of beverage vending machines, by equipment class, 
refrigerant, and efficiency level.
    40. DOE requests comment on its assumptions regarding the relative 
market share of each refrigerant by equipment class.
    41. DOE requests comment on the high and low shipments scenarios.
    42. DOE requests comment on the impact of the recent EPA SNAP 
rulemakings changing the availability of certain refrigerants for the 
BVM application on future efficiency distributions.
    43. DOE requests comment on the identification and analysis of 
beverage vending machine customer subgroups.
    44. DOE requests manufacturers provide an estimate of the capital 
and product conversion costs associated compliance with DOE amended 
energy conservation standards.
    45. DOE specifically requests feedback from industry regarding the 
product conversion costs associated with standards compliance for 
Combination A and Combination B equipment.
    46. DOE requests manufacturers provide an estimate of the one-time 
investments required to transition to alternative refrigerants, such as 
CO2 and propane.
    47. DOE requests that manufacturers provide sufficient detail such 
that DOE could model and verify these one-time costs related to the 
change in refrigerants, including the specific capital expenditures 
required and the potential redesign costs on a per-platform basis.
    48. DOE requests manufacturers provide information about the 
ability to coordinate one-time investments related to EPA Rule 20 
compliance and conversion costs necessitated by the DOE energy 
conservation standards.
    49. DOE requests comment on the proposal to clarify the calculation 
of the refrigerated volume for each BVM basic model.
    50. DOE requests comments on the total annual direct employment 
levels in the industry for BVM production.
    51. DOE requests comment on its preliminary conclusion that the 
proposed standard levels will not have any negative impact on the 
performance or utility of equipment available in the market.
    52. DOE requests comment regarding any potential impacts on small 
business manufacturers from the proposed standards. In particular, DOE 
seeks further information and data regarding the sales volume and 
annual revenues for small businesses so the agency can be better 
informed about the potential impacts to small business manufacturers of 
the proposed energy conservation standards. DOE will consider any such 
additional information when formulating and selecting TSLs for the 
final rule.

VIII. Approval of the Office of the Secretary

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

List of Subjects

10 CFR Part 429

    Confidential business information, Energy conservation, Household 
appliances, Imports, Reporting and recordkeeping requirements.

10 CFR Part 431

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

    Issued in Washington, DC, on July 30, 2015.
David T. Danielson,
Assistant Secretary of Energy, Energy Efficiency and Renewable Energy.

    For the reasons set forth in the preamble, DOE is proposing to 
amend parts 429 and 431 of chapter II of title 10 of the Code of 
Federal Regulations as set forth below:

PART 429--CERTIFICATION, COMPLIANCE, AND ENFORCEMENT FOR CONSUMER 
PRODUCTS AND COMMERCIAL AND INDUSTRIAL EQUIPMENT

0
1. The authority citation for part 429 continues to read as follows:

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

0
2. Section 429.52 is amended by adding paragraph (a)(3) to read as 
follows:


Sec.  429.52  Refrigerated bottled or canned beverage vending machines.

    (a) * * *
    (3) The representative value of refrigerated volume of a basic 
model reported in accordance with paragraph (b)(2) of this section 
shall be the mean of the refrigerated volumes measured for each tested 
unit of the basic model and determined in accordance with the test 
procedure in Sec.  431.296.
* * * * *
0
3. Section 429.134 is amended by adding paragraph (g) to read as 
follows:


Sec.  429.134  Product-specific enforcement provisions.

* * * * *
    (g) Refrigerated bottled or canned beverage vending machines--(1) 
Verification of refrigerated volume. The refrigerated volume (V) of 
each tested unit of the basic model will be measured pursuant to the 
test requirements of 10 CFR 431.296. The results of the measurement(s) 
will be compared to the representative value of refrigerated volume 
certified by the manufacturer. The certified refrigerated volume will 
be considered valid only if the measurement(s) (either the measured 
refrigerated volume for a single unit sample or the average of the 
measured refrigerated volumes for a multiple unit sample) is within 
five percent of the certified refrigerated volume.
    (i) If the representative value of refrigerated volume is found to 
be valid, the certified refrigerated volume will be used as the basis 
for calculation of maximum daily energy consumption for the basic 
model.
    (ii) If the representative value of refrigerated volume is found to 
be invalid, the average measured refrigerated volume determined from 
the tested unit(s) will serve as the basis for calculation of maximum 
daily energy consumption for the tested basic model.
    (2) Verification of surface area, transparent, and non-transparent 
areas. The percent transparent surface area on the front side of the 
basic model will be measured pursuant to these requirements for the 
purposes of determining whether a given basic model meets the 
definition of Class A or Combination A as presented at 10 CFR 431.292. 
The transparent and non-transparent surface areas shall be determined 
on the front side of the beverage vending machine at the outermost 
surfaces of the beverage

[[Page 50538]]

vending machine cabinet, from edge to edge, excluding any legs or other 
protrusions that extend beyond the dimensions of the primary cabinet. 
Determine the transparent and non-transparent areas on each side of a 
beverage vending machine as described in paragraphs (g)(2)(i) and (ii) 
of this section. For combination vending machines, disregard the 
surface area surrounding any refrigerated compartments that are not 
designed to be refrigerated (as demonstrated by the presence of 
temperature controls), whether or not it is transparent. Determine the 
percent transparent surface area on the front side of the beverage 
vending machine as a ratio of the measured transparent area on that 
side over the sum of the measured transparent and non-transparent 
areas, multiplying the result by 100.
    (i) Determination of transparent area. Determine the total surface 
area that is transparent as the sum of all surface areas on the front 
side of a beverage vending machine that meet the definition of 
transparent at 10 CFR 431.292. When determining whether or not a 
particular wall segment is transparent, transparency should be 
determined for the aggregate performance of all the materials between 
the refrigerated volume and the ambient environment; the composite 
performance of all those materials in a particular wall segment must 
meet the definition of transparent for that area be treated as 
transparent.
    (ii) Determination of non-transparent area. Determine the total 
surface area that is not transparent as the sum of all surface areas on 
the front side of a beverage vending machine that are not considered 
part of the transparent area, as determined in accordance with 
paragraph (g)(2)(i) of this section.

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

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

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

0
5. Section 431.292 is amended by:
0
a. Revising the definitions for ``Class A'' and ``Class B'';
0
b. Adding, in alphabetical order, definitions for ``Combination A'' and 
``Combination B'';
0
c. Revising the definition of ``Combination vending machine''; and
0
d. Adding a definition for ``transparent''.
    The revisions and additions read as follows:


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

* * * * *
    Class A means a refrigerated bottled or canned beverage vending 
machine that is not a combination beverage vending machine and in which 
25 percent or more of the surface area on the front side of the 
beverage vending machine is transparent.
    Class B means a refrigerated bottled or canned beverage vending 
machine that is not considered to be Class A and is not a combination 
vending machine.
    Combination A means a combination vending machine where 25 percent 
or more of the surface area on the front side of the beverage vending 
machine is transparent.
    Combination B means a combination vending machine that is not 
considered to be Combination A.
    Combination vending machine means a bottled or canned beverage 
vending machine containing two or more compartments separated by a 
solid partition, that may or may not share a product delivery chute, in 
which at least one compartment is designed to be refrigerated, as 
demonstrated by the presence of temperature controls, and at least one 
compartment is not.
* * * * *
    Transparent means greater than or equal to 45 percent light 
transmittance, as determined in accordance with the ASTM Standard E 
1084-86 (Reapproved 2009), (incorporated by reference, see Sec.  
431.293) at normal incidence and in the intended direction of viewing.
* * * * *
0
6. Section 431.293 is amended by adding a new paragraph (c) to read as 
follows:


Sec.  431.293  Materials incorporated by reference.

* * * * *
    (c) ASTM. ASTM International, 100 Barr Harbor Drive, PO Box C700, 
West Conshohocken, PA 19428, (877) 909-2786, or go to http://www.astm.org/.
    (1) ASTM E 1084 (Reapproved 2009), ``Standard Test Method for Solar 
Transmittance (Terrestrial) of Sheet Materials Using Sunlight,'' 
approved April 1, 2009, IBR approved for Sec.  431.292.
    (2) [Reserved]
0
7. Section 431.296 is revised to read as follows:


Sec.  431.296  Energy conservation standards and their effective dates.

    (a) Each refrigerated bottled or canned beverage vending machine 
manufactured on or after August 31, 2012 and before [DATE 3 YEARS AFTER 
PUBLICATION OF THE FINAL RULE ESTABLISHING NEW AND AMENDED ENERGY 
CONSERVATION STANDARDS FOR REFRIGERATED BOTTLED OR CANNED BEVERAGE 
VENDING MACHINES IN THE Federal Register], shall have a daily energy 
consumption (in kilowatt hours per day), when measured in accordance 
with the DOE test procedure at Sec.  431.294, that does not exceed the 
following:

------------------------------------------------------------------------
                                                Maximum daily energy
              Equipment class                consumption (kilowatt hours
                                                      per day)
------------------------------------------------------------------------
Class A...................................           0.055 x V * + 2.56
Class B...................................           0.073 x V * + 3.16
Combination Vending Machines..............                   [RESERVED]
------------------------------------------------------------------------
* ``V'' is the representative value of refrigerated volume (ft\3\) of
  the BVM model, as calculated pursuant to 10 CFR 429.52(a)(3).

    (b) Each refrigerated bottled or canned beverage vending machine 
manufactured on or after [DATE 3 YEARS AFTER PUBLICATION OF THE FINAL 
RULE ESTABLISHING NEW AND AMENDED ENERGY CONSERVATION STANDARDS FOR 
REFRIGERATED BOTTLED OR CANNED BEVERAGE VENDING MACHINES FINAL RULE IN 
THE Federal Register], shall have a daily energy consumption (in 
kilowatt hours per day), when measured in accordance with the DOE test 
procedure at Sec.  431.294, that does not exceed the following:

------------------------------------------------------------------------
                                                Maximum daily energy
              Equipment class                consumption (kilowatt hours
                                                      per day)
------------------------------------------------------------------------
Class A...................................           0.041 x V * + 1.92
Class B...................................           0.033 x V * + 1.42
Combination A.............................           0.044 x V * + 1.64
Combination B.............................           0.044 x V * + 1.36
------------------------------------------------------------------------
* ``V'' is the representative value of refrigerated volume (ft\3\) of
  the BVM model, as calculated pursuant to 10 CFR 429.52(a)(3).

[FR Doc. 2015-19919 Filed 8-18-15; 8:45 am]
 BILLING CODE 6450-01-P