[Federal Register Volume 81, Number 5 (Friday, January 8, 2016)]
[Rules and Regulations]
[Pages 1028-1113]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-33074]



[[Page 1027]]

Vol. 81

Friday,

No. 5

January 8, 2016

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; Final Rule

  Federal Register / Vol. 81 , No. 5 / Friday, January 8, 2016 / Rules 
and Regulations  

[[Page 1028]]


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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: Final rule.

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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 machines or BVM). EPCA also requires the U.S. Department of 
Energy (DOE) to periodically determine whether more-stringent standards 
would be technologically feasible and economically justified, and would 
save a significant amount of energy. In this final rule, DOE is 
amending the energy conservation standards for Class A and Class B 
beverage vending machines. DOE is also amending the definition for 
Class A equipment to more unambiguously differentiate Class A and Class 
B beverage vending machines. In addition, DOE is amending the 
definition of combination vending machine, is defining two new classes 
of combination vending machines, Combination A and Combination B, and 
is promulgating standards for those new classes. Finally, DOE is 
adopting new provisions that DOE will use to verify the appropriate 
equipment class and refrigerated volume during enforcement testing.

DATES: The effective date of this rule is March 8, 2016. Compliance 
with the new and amended standards established for beverage vending 
machines in this final rule is required on and after January 8, 2019. 
The incorporation by reference of certain material listed in this rule 
is approved by the Director of the Federal Register as of March 8, 
2016.

ADDRESSES: 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: www.regulations.gov/#!docketDetail;D=EERE-2013-BT-STD-0022. The www.regulations.gov Web 
page will contain instructions on how to access all documents, 
including public comments, in the docket.
    For further information on how to review the docket, contact Ms. 
Brenda Edwards at (202) 586-2945 or by email: 
[email protected].

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 the General 
Counsel, GC-33, 1000 Independence Avenue SW., Washington, DC, 20585-
0121. Telephone: (202) 586-1777. Email: [email protected].

SUPPLEMENTARY INFORMATION: This final rule incorporates by reference 
into part 431 the following industry standard:
     ASTM 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 obtained from ASTM International, 
100 Barr Harbor Drive, P.O. Box C700, West Conshohocken, PA 19428-2959, 
(877) 909-2786, or go to www.astm.org/.
    See section IV.O for a further discussion of this standard.
    Table of Contents
I. Synopsis of the Final 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 (LCC 
and PBP)
    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
    c. Definition of Transparent and Optional Test Method for 
Determining Equipment Classification
    2. Machines Vending Perishable Goods
    3. Market Characterization
    4. Technology Options
    B. Screening Analysis
    1. Screened-Out Technologies
    2. Remaining Technologies
    C. Engineering Analysis
    1. Baseline Equipment and Representative Sizes
    2. Refrigerants
    a. Refrigerants Used in the Analysis
    b. DOE Approach
    c. Relative Energy Efficiency of Refrigerants
    3. Screened-In Technologies Not Implemented as Design Options
    4. Design Options Analyzed and Maximum Technologically Feasible 
Efficiency Level
    a. Glass Packs
    b. Evaporator Fan Motor Controls
    c. Coils
    d. Compressors
    e. Insulation and Vacuum Insulated Panels
    f. Lighting and Lighting Low Power Modes
    g. Fan Motors
    h. Performance of Design Option Packages
    5. Manufacturer Production Costs
    D. Markups Analysis
    E. Energy Use Analysis
    F. Life-Cycle Cost and Payback Period Analysis
    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. Shipments Analysis
    1. Market Share by Equipment Class
    2. Market Share by Refrigerant
    3. High and Low Shipments Assumptions
    H. National Impact Analysis
    1. Equipment Efficiency Trends
    2. National Energy Savings
    a. Full-Fuel-Cycle Analysis
    3. Net Present Value Analysis
    I. Customer Subgroup Analysis
    J. Manufacturer Impact Analysis
    1. Overview
    2. Government Regulatory Impact Model

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    a. Government Regulatory Impact Model Key Inputs
    b. Government Regulatory Impact Model Scenarios
    3. Discussion of Comments
    K. Emissions Analysis
    L. 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. Social Cost of Other Air Pollutants
    M. Utility Impact Analysis
    N. Employment Impact Analysis
    O. 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 Individual Customers
    a. Life-Cycle Cost and Payback Period
    b. Customer Subgroup Analysis
    c. Rebuttable Presumption Payback
    2. Economic Impacts 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
    8. Summary of National Economic Impacts
    C. Conclusion
    1. Benefits and Burdens of TSLs Considered for BVM Standards
    2. Summary of Annualized Benefits and Costs of the Adopted 
Standards
VI. Procedural Issues and Regulatory Review
    A. Review Under Executive Orders 12866 and 13563
    B. Review Under the Regulatory Flexibility Act
    1. Description of Estimated Number of Small Entities Regulated
    2. Description and Estimate of Compliance Requirements
    3. Duplication, Overlap, and Conflict With Other Rules and 
Regulations
    4. Significant Alternatives to the Rule
    C. Review Under the Paperwork Reduction Act
    D. Review Under the National Environmental Policy Act of 1969
    E. Review Under Executive Order 13132
    F. Review Under Executive Order 12988
    G. Review Under the Unfunded Mandates Reform Act of 1995
    H. Review Under the Treasury and General Government 
Appropriations Act, 1999
    I. Review Under Executive Order 12630
    J. Review Under the Treasury and General Government 
Appropriations Act, 2001
    K. Review Under Executive Order 13211
    L. Review Under the Information Quality Bulletin for Peer Review
    M. Review Under Section 32 of the Federal Energy Administration 
Act of 1974
    N. Congressional Notification
VII. Approval of the Office of the Secretary

I. Synopsis of the Final 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 BVM), the subject of this document. (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, 
Public Law 114-11 (Apr. 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 DOE determines is technologically feasible and 
economically justified. (42 U.S.C. 6295(o)(2)(A)) Furthermore, the new 
or amended standard must result in significant conservation of energy. 
(42 U.S.C. 6295(o)(3)(B)) EPCA also provides that not later than 6 
years after issuance of any final rule establishing or amending a 
standard, DOE must publish either a notice of determination that 
standards for the equipment do not need to be amended, or a notice of 
proposed rulemaking including new proposed energy conservation 
standards. (42 U.S.C. 6295(m)(1))
    In accordance with these and other statutory provisions discussed 
in this document, DOE is adopting new and amended energy conservation 
standards for beverage vending machines. The new and amended standards, 
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 amending the energy conservation standards 
established by the 2009 BVM final rule for Class A and Class B beverage 
vending machines. In addition, DOE is establishing 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. The new 
and amended standards adopted in this final rule will apply to all 
equipment listed in Table I.1 and manufactured in, or imported into, 
the United States starting on January 8, 2019.

 Table I.1--Energy Conservation Standards for Beverage Vending Machines
                  [Compliance Starting January 8, 2019]
------------------------------------------------------------------------
                                            New and amended  energy
                                           conservation  standards **
          Equipment class *             Maximum Daily Energy Consumption
                                           (MDEC)  (kWh/day [dagger])
------------------------------------------------------------------------
Class A..............................  0.052 x V + 2.43 [Dagger]
Class B..............................  0.052 x V + 2.20 [Dagger]
Combination A........................  0.086 x V + 2.66 [Dagger]
Combination B........................  0.111 x V + 2.04 [Dagger]
------------------------------------------------------------------------
* See section IV.A.1 of this final rule 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
  BVM test procedure 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 of this final rule for more details.
[dagger] Kilowatt hours per day.
[Dagger] Trial Standard Level (TSL) 3.

A. Benefits and Costs to Customers

    Table I.2 and Table I.3 present DOE's evaluation of the economic 
impacts of the new and amended 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

[[Page 1030]]

analysis is based upon beverage vending machines that use either 
CO2 (R-744) or propane (R-290). These refrigerants were 
selected for analysis based on the recent actions of the U.S. 
Environmental Protection Agency's (EPA) 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 selection of these refrigerants 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 final 
rule). 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 final rule). 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 EPA's 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 of this final rule for more 
details.
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    Where applicable, 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 New and Amended Energy Conservation Standards on
         Customers of Beverage Vending Machines--CO2 Refrigerant
------------------------------------------------------------------------
                                            Life-cycle
             Equipment class               cost savings   Payback period
                                              (2014$)         (years)
------------------------------------------------------------------------
Class A.................................              65             2.0
Class B.................................              42             1.1
Combination A...........................             990             0.8
Combination B...........................             597             0.5
------------------------------------------------------------------------


 Table I.3--Impacts of New and Amended Energy Conservation Standards on
       Customers of Beverage Vending Machines--Propane Refrigerant
------------------------------------------------------------------------
                                            Life-cycle
             Equipment class               cost  savings      Payback
                                              (2014$)     period (years)
------------------------------------------------------------------------
Class A.................................             * 0             1.1
Class B.................................             361             0.5
Combination A...........................             772             0.7
Combination B...........................             610             0.3
------------------------------------------------------------------------
* In this case, $0 savings is a result of all customers in the no-new-
  standards efficiency distribution already achieving the efficiency
  standard.

    DOE's analysis of the impacts of the new and amended standards on 
customers is described in section V of this document.

B. Impact on Manufacturers

    The industry net present value (INPV) is the sum of the discounted 
cash flows to the industry from the base year through the end of the 
analysis period (2015 to 2048). Using a real discount rate of 8.5 
percent, DOE estimates that the (INPV) for manufacturers of beverage 
vending machines in the case without amended standards is $94.8 million 
in 2014$. Under the adopted standards, DOE expects that manufacturers 
may lose up to 0.8 percent of this INPV, which is approximately $0.7 
million.\6\ Additionally, based on DOE's interviews with the 
manufacturers of beverage vending machines, DOE does not expect 
significant impacts on manufacturing capacity or loss of employment for 
the industry as a whole to result from the standards for beverage 
vending machines.
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    \6\ All monetary values in section I.B of this final rule 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 adopted standards on 
manufacturers is described in section IV.J of this document.

C. National Benefits and Costs \7\
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    \7\ All monetary values in this section are expressed in 2014 
dollars and, where appropriate, are discounted to 2015 unless 
explicitly stated otherwise. Energy savings in this section refer to 
the full-fuel-cycle (FFC) savings (see section IV.H for discussion).
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    DOE's analyses indicate that the adopted energy conservation 
standards for beverage vending machines would save a significant amount 
of energy. Relative to the case without amended standards, the lifetime 
energy savings for Class A, Class B, Combination A, and Combination B 
beverage vending machines purchased in the 30-year period that begins 
in the anticipated year of compliance with the new and amended 
standards (2019-2048) amount to 0.122 quadrillion Btu (quads).\8\ This 
represents a savings of 16 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\ A quad is equal to 10\15\ British thermal units (Btu). The 
quantity refers to FFC energy savings. FFC energy savings includes 
the energy consumed in extracting, processing, and transporting 
primary fuels (i.e., coal, natural gas, petroleum fuels), and, thus, 
presents a more complete picture of the impacts of energy efficiency 
standards. For more information on the FFC metric, see section 
IV.H.1.
    \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 standards for beverage vending machines range from $0.21 
billion (at a 7-percent discount rate) to $0.51 billion (at a 3-percent 
discount rate).\10\ This NPV expresses the estimated total value of 
future operating-cost savings minus the estimated increased equipment 
costs for

[[Page 1031]]

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.H of 
this final rule.
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    In addition, the standards for beverage vending machines are 
projected to yield significant environmental benefits. DOE estimates 
that the standards would result in cumulative greenhouse gas emission 
reductions (over the same period as for energy savings) of 7 million 
metric tons (Mt) \11\ of carbon dioxide (CO2), 4 thousand 
tons of sulfur dioxide (SO2), 13 thousand tons of nitrogen 
oxides (NOX), 32 thousand tons of methane (CH4), 
0.09 thousand tons of nitrous oxide (N2O), and 0.02 tons of 
mercury (Hg).\12\ The cumulative reduction in CO2 emissions 
through 2030 amounts to 1.16 Mt, which is equivalent to the emissions 
resulting from the annual electricity use of more than 160,000 homes.
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    \11\ A metric ton is equivalent to 1.1 short tons. Results for 
NOX and Hg are presented in short tons.
    \12\ DOE calculated emissions reductions relative to the no-new-
standards case, which reflects key assumptions in the Annual Energy 
Outlook 2015 (AEO2015) Reference case, which generally represents 
current legislation and environmental regulations for which 
implementing regulations were available as of October 31, 2014.
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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 Federal interagency 
process.\13\ The derivation of the SCC values is discussed in section 
IV.L of this final rule. Using discount rates appropriate for each set 
of SCC values, DOE estimates that the net present monetary value of the 
CO2 emissions reduction (not including CO2 
equivalent emissions of other gases with global warming potential) is 
between $49 million and $701 million, with a value of $230 million 
using the central SCC case represented by $40.0 per metric ton in 2015. 
DOE also estimates that the net present monetary value of the 
NOX emissions reduction to be $16 million at a 7-percent 
discount rate, and $42.0 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 November 2013. Available at www.whitehouse.gov/sites/default/files/omb/assets/inforeg/technical-update-social-cost-of-carbon-for-regulator-impact-analysis.pdf.
    \14\ DOE estimated the monetized value of NOX 
emissions reductions using benefit per ton estimates from the 
Regulatory Impact Analysis for the Proposed Carbon Pollution 
Guidelines for Existing Power Plants and Emission Standards for 
Modified and Reconstructed Power Plants, published in June 2014 by 
EPA's Office of Air Quality Planning and Standards. (Available at 
http://www3.epa.gov/ttnecas1/regdata/RIAs/111dproposalRIAfinal0602.pdf.) See section IV.L.2 for further 
discussion. For the monetized NOX benefits associated 
with PM2.5 in DOE's primary estimate, the benefit-per-ton 
values are based on an estimate of premature mortality derived from 
the ACS study (Krewski et al. Extended Follow-Up and Spatial 
Analysis of the American Cancer Society Study Linking Particulate 
Air Pollution and Mortality. 2009), which is the lower of the two 
EPA central tendencies. DOE is using the lower value as its primary 
estimate to be conservative when making the policy decision 
concerning whether a particular standard level is economically 
justified. DOE also estimated monetized NOX benefits used 
EPA's higher benefit-per-ton estimates, and the overall benefits are 
over two times larger (see Table V.41). See chapter 14 of the TSD 
for further description of EPA's low and high values and the study 
mentioned above. DOE is currently investigating valuation of avoided 
Hg and SO2 emissions.
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    Table I.4 summarizes the national economic benefits and costs 
expected to result from the adopted standards for beverage vending 
machines.

  Table I.4--Summary of National Economic Benefits and Costs of New and
  Amended Energy Conservation Standards for Beverage Vending Machines*
------------------------------------------------------------------------
                                          Present value
                Category                    (million      Discount rate
                                             2014$)            (%)
------------------------------------------------------------------------
                                Benefits
------------------------------------------------------------------------
Customer Operating Cost Savings........             225              7
                                                    542              3
CO2 Reduction Monetized Value ($12.2/                49              5
 metric ton case) **...................
CO2 Reduction Monetized Value ($40.0/               230              3
 metric ton case) **...................
CO2 Reduction Monetized Value ($62.3/               366              2.5
 metric ton case) **...................
CO2 Reduction Monetized Value ($117/                701              3
 metric ton case) **...................
NOX Reduction Monetized Value [dagger].              16              7
                                                     42              3
Total Benefits [Dagger]................             471              7
                                                    814              3
------------------------------------------------------------------------
                                  Costs
------------------------------------------------------------------------
Customer Incremental Installed Costs...              18              7
                                                     34              3
------------------------------------------------------------------------
                              Net Benefits
------------------------------------------------------------------------
Including CO2 and NOX[dagger] Reduction             453              7
 Monetized Value [Dagger]..............
                                                    780              3
------------------------------------------------------------------------
* This table presents the costs and benefits associated with beverage
  vending machines shipped in 2019-2048. These results include benefits
  to customers that accrue after the last year of analyzed shipments
  (2048) from the equipment purchased during the 30-year analysis
  period. The costs account for the incremental variable and fixed costs
  incurred by manufacturers due to the standard, some of which may be
  incurred in preparation for the rule.
** The CO2 values represent global monetized values of the SCC, in
  2014$, 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] The $/ton values for NOX are described in section IV.L.
[Dagger] Total benefits for both the 3-percent and 7-percent cases are
  derived using the series corresponding to average SCC with a 3-percent
  discount rate ($40.0/metric ton case).


[[Page 1032]]

    The benefits and costs of the adopted 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 prices and installation costs, plus (3) the value of the 
benefits of CO2 and NOX emission reductions, all 
annualized.\15\
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    \15\ To convert the time-series of costs and benefits into 
annualized values, DOE calculated a present value in 2015, the year 
used for discounting the NPV of total consumer costs and savings. 
For the benefits, DOE calculated a present value associated with 
each year's shipments in the year in which the shipments occur 
(e.g., 2020 or 2030), and then discounted the present value from 
each year to 2015. The calculation uses discount rates of 3 and 7 
percent for all costs and benefits except for the value of 
CO2 reductions, for which DOE used case-specific discount 
rates, as shown in Table I.4. Using the present value, DOE then 
calculated the fixed annual payment over a 30-year period, starting 
in the compliance year that yields the same present value.
---------------------------------------------------------------------------

    Although the value of operating cost savings and CO2 
emission reductions are both important, 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, 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 2019-2048. Because 
CO2 emissions have a very long residence time in the 
atmosphere,\16\ the SCC values in future years reflect future 
CO2-emissions impacts that continue beyond 2100.
---------------------------------------------------------------------------

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

    Estimates of annualized benefits and costs of the adopted standards 
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 SCC series that has a value of $40.0 per metric ton 
in 2015),\17\ the estimated cost of the standards in this rule is $1.8 
million per year in increased equipment costs, while the estimated 
annual benefits are $22.2 million in reduced equipment operating costs, 
$12.8 million in CO2 reductions, and $1.6 million in reduced 
NOX emissions. In this case, the net benefit amounts to $35 
million per year. Using a 3-percent discount rate for all benefits and 
costs and the SCC series that has a value of $40.0 per metric ton in 
2015, the estimated cost of the standards is $1.9 million per year in 
increased equipment costs, while the estimated annual benefits are 
$30.2 million per year in reduced operating costs, $12.8 million in 
CO2 reductions, and $2.3 million in reduced NOX 
emissions. In this case, the net benefit amounts to $43 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 0).
---------------------------------------------------------------------------

    DOE also calculated the low net benefits and high net benefits 
estimates by calculating the operating cost savings and shipments at 
the AEO2015 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.3 of this final rule). 
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 New and Amended Standards for Beverage Vending Machines*
----------------------------------------------------------------------------------------------------------------
                                                                          million 2014$/year
                                                    ------------------------------------------------------------
                                    Discount rate                         Low net benefits    High net benefits
                                                     Primary estimate *      estimate *           estimate *
----------------------------------------------------------------------------------------------------------------
                                                    Benefits
----------------------------------------------------------------------------------------------------------------
Customer Operating Cost Savings  7%................  22................  16................  27
                                 3%................  30................  21................  36
CO2 Reduction Monetized Value    5%................  4.................  3.................  4
 ($12.2/metric ton case) **.
CO2 Reduction Monetized Value    3%................  13................  9.................  14
 ($40.0/metric ton case) **.
CO2 Reduction Monetized Value    2.5%..............  19................  14................  21
 ($62.3/metric ton case) **.
CO2 Reduction Monetized Value    3%................  39................  29................  44
 ($117/metric ton case) **.
NOX Reduction Monetized Value    7%................  2.................  1 to 3............  4
 [dagger].
                                 3%................  2.................  2 to 4............  6
Total Benefits [Dagger]........  7% range..........  28 to 63..........  20 to 46..........  36 to 75
                                 7%................  37................  26................  46
                                 3% range..........  36 to 69..........  25 to 51..........  46 to 86
                                 3%................  45................  32................  56
----------------------------------------------------------------------------------------------------------------
                                                      Costs
----------------------------------------------------------------------------------------------------------------
Incremental Equipment Costs....  7%................  1.79..............  1.38..............  2.10
                                 3%................  1.89..............  1.42..............  2.13
----------------------------------------------------------------------------------------------------------------
                                                  Net Benefits
----------------------------------------------------------------------------------------------------------------
Total [Dagger].................  7% range..........  26 to 61..........  18 to 44..........  34 to 73
                                 7%................  35................  25................  44

[[Page 1033]]

 
                                 3% range..........  34 to 70..........  24 to 50..........  44 to 84
                                 3%................  43................  31................  54
----------------------------------------------------------------------------------------------------------------
* 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 AEO2015 Reference case, Low Economic Growth case, and High Economic
  Growth case, 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 appendix 8C of the technical support
  document (TSD).
** 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.
[dagger] The $/ton values used for NOX are described in section IV.L.2. The Primary and Low Benefits Estimates
  used the values at the low end of the ranges estimated by EPA, while the High Benefits Estimate uses the
  values at the high end of the ranges.
[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 adopted standards is 
described in section V.B.3 of this final rule.

D. Conclusion

    Based on the analyses culminating in this final rule, DOE found the 
benefits to the nation of the standards (energy savings, customer LCC 
savings, positive NPV of customer benefit, and emission reductions) 
outweigh the burdens (loss of INPV and LCC increases for some users of 
these equipment). DOE has concluded that the standards in this final 
rule represent the maximum improvement in energy efficiency that is 
technologically feasible and economically justified, and would result 
in significant conservation of energy.
    DOE further notes that equipment achieving these standard levels is 
already commercially available for Class A and Class B beverage vending 
machines. While DOE does not have certification data for combination 
equipment to determine the existence or extent of equipment meeting the 
adopted standard levels, DOE believes that the standard levels adopted 
for combination equipment are reasonable as they are based on 
technology options that are widely available in the BVM market today 
(see section III.D). DOE acknowledges that equipment using the SNAP-
approved refrigerants (i.e., CO2 and propane) meeting the 
current or adopted 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 are currently available. In addition, Class A and Class 
B equipment that meets the new and amended standard levels is currently 
available, although such equipment may not use refrigerants that will 
be acceptable under EPA SNAP at the time of compliance with these new 
and amended standards. While DOE acknowledges that industry experience 
with SNAP-compliant refrigerants is limited, DOE believes that the 
existing industry experience in improving the efficiency of R-134a-
based equipment is applicable and transferable to equipment using 
CO2 or propane as a refrigerant. DOE has addressed the 
technical feasibility and economic implications of meeting the new and 
amended standard levels utilizing CO2 and propane 
refrigerants in the analyses presented in this final rule, and based on 
these analyses, DOE has concluded that the benefits of the new and 
amended standards to the nation (energy savings, positive NPV of 
customer benefits, customer LCC savings, and emission reductions) 
outweigh the burdens (loss of INPV for manufacturers).
    DOE also considered more-stringent energy efficiency levels as 
potential standards. However, DOE 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 
received in response to the 2015 BVM energy conservation standards 
notice of proposed rulemaking (2015 BVM ECS NOPR) and related 
information collected and analyzed during the course of this rulemaking 
effort, DOE is adopting MDEC levels, in terms of kWh/day, that are 
less-stringent than the new and amended standards proposed in the NOPR 
and represent the standard levels resulting in the maximum economic 
benefits for the nation.

II. Introduction

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

A. Authority

    Title III, Part B of the Energy Policy and Conservation Act of 1975 
(EPCA or the Act), Public Law 94-163 (codified as 42 U.S.C. 6291-6309) 
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 machines that are the subject of this rulemaking. (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 established energy conservation standards for 
the covered equipment. This final rule fulfills these statutory 
requirements.
    Pursuant to EPCA, DOE's energy conservation program for covered

[[Page 1034]]

equipment 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 covered 
equipment. (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 equipment complies with standards 
adopted pursuant to EPCA. (42 U.S.C. 6295(s))
    DOE updated its test procedure for beverage vending machines in a 
final rule published July 31, 2015 (2015 BVM test procedure final 
rule). 80 FR 45758. In the 2015 BVM test procedure final rule, DOE 
adopted several amendments and clarifications to the DOE test procedure 
in appendix A and appendix B of subpart Q of 10 CFR part 431. As 
specified in the 2015 BVM test procedure final rule, manufacturers of 
beverage vending machines are 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, including beverage vending 
machines. Any new or amended standard for a covered piece of equipment 
must be designed to achieve the maximum improvement in energy 
efficiency that is technologically feasible and economically justified. 
(42 U.S.C. 6295(o)(2)(A) and (3)(B)) Furthermore, DOE may not adopt any 
standard that would not result in the significant conservation of 
energy. (42 U.S.C. 6295(o)(3)) Moreover, DOE may not prescribe a 
standard: (1) For certain equipment, including beverage vending 
machines, if no test procedure has been established for the equipment, 
or (2) if DOE determines by rule that the standard is not 
technologically feasible or economically justified. (42 U.S.C. 
6295(o)(3)(A)-(B))
    In deciding whether a standard is economically justified, DOE must 
determine whether the benefits of the standard exceed its burdens. (42 
U.S.C. 6295(o)(2)(B)(i)) DOE must make this determination after 
receiving comments on the proposed standard, and by considering, to the 
greatest extent practicable, the following seven statutory factors:
    (1) The economic impact of the standard on manufacturers and 
consumers of the equipment subject to the standard;
    (2) The savings in operating costs throughout the estimated average 
life of the covered equipment in the type (or class) compared to any 
increase in the price, initial charges, or maintenance expenses for the 
covered equipment that are likely to result from the standard;
    (3) The total projected amount of energy (or as applicable, water) 
savings likely to result directly from the standard;
    (4) Any lessening of the utility or the performance of the covered 
equipment likely to result from the standard;
    (5) The impact of any lessening of competition, as determined in 
writing by the Attorney General, that is likely to result from the 
standard;
    (6) The need for national energy and water conservation; and
    (7) Other factors the Secretary of Energy (Secretary) considers 
relevant. (42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII))
    Further, EPCA, as codified, establishes a rebuttable presumption 
that a standard is economically justified if the Secretary finds that 
the additional cost to the consumer of purchasing a piece of equipment 
complying with an energy conservation standard level will be less than 
three times the value of the energy (and, as applicable, water) savings 
during the first year that the consumer will receive as a result of the 
standard, as calculated under the 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 
equipment type. (42 U.S.C. 6295(o)(1)) Also, the Secretary may not 
prescribe an amended or new standard if interested persons have 
established by a preponderance of the evidence that the standard is 
likely to result in the unavailability in the United States in any 
covered equipment type (or class) of performance characteristics 
(including reliability), features, sizes, capacities, and volumes that 
are substantially the same as those generally available in the United 
States. (42 U.S.C. 6295(o)(4))
    Additionally, EPCA specifies requirements when promulgating an 
energy conservation standard for covered equipment that has two or more 
subcategories. DOE must specify a different standard level for a type 
or class of equipment that has the same function or intended use if DOE 
determines that equipment within such group: (A) Consume a different 
kind of energy from that consumed by other covered equipment within 
such type (or class); or (B) have a capacity or other performance-
related feature which other equipment within such type (or class) do 
not have and such feature justifies a higher or lower standard. (42 
U.S.C. 6295(q)(1)) In determining whether a performance-related feature 
justifies a different standard for certain equipment, DOE must consider 
such factors as the utility to the consumer of such a feature and other 
factors DOE deems appropriate. Id. Any rule prescribing such a standard 
must include an explanation of the basis on which such higher or lower 
level was established. (42 U.S.C. 6295(q)(2)) In this final rule, DOE 
is prescribing energy conservation standards for different classes of 
beverage vending machines and DOE's basis for establishing such 
separate classes is discussed in this final rule.
    Federal energy conservation requirements generally supersede State 
laws or regulations concerning energy conservation testing, labeling, 
and standards. (42 U.S.C. 6297(a)-(c)) DOE 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 any 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 equipment. (42 
U.S.C. 6295(gg)(3)(A)-(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

[[Page 1035]]

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 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 is captured in any standard 
established for active mode energy use. As such, the new and amended 
energy conservation standards adopted in this final rule do not 
specifically address standby mode or off mode energy consumption for 
the equipment.

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 (Aug. 
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 
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 conducted this 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). That 
document is available at 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; (5) technology options; (6) distribution 
channels and shipments; (7) impacts of outside regulations; and (8) 
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. DOE published a 
notice to announce the availability of the preliminary analysis TSD and 
a public meeting to discuss the preliminary analysis results. 79 FR 
46379 (Aug. 8, 2014). In the preliminary analysis, DOE discussed and 
requested comment on 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

[[Page 1036]]

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 www.regulations.gov/#!docketDetail;D=EERE-2013-BT-STD-0022. In this final rule, 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 helped DOE 
identify and resolve issues related to the preliminary analyses and 
helped refine the analyses for beverage vending machines.
    DOE presented its updated analyses and proposed new and amended 
standard levels in the 2015 BVM ECS NOPR, which DOE published on August 
19, 2015. 80 FR 50462 (Aug. 19, 2015). On September 29, 2015, DOE held 
a public meeting to discuss the 2015 BVM ECS NOPR and request comments 
on DOE's proposal (BVM ECS NOPR public meeting). DOE received multiple 
comments from interested parties and considered these comments in the 
preparation of the final rule. In response to DOE's 2015 BVM ECS NOPR, 
several interested parties requested additional time to prepare their 
written comments. (AMS, No. 45 at p. 1; NAMA, No. 44 at p. 1; Royal 
Vendors, No. 46 at p. 1; and Coca-Cola, No. 49 at p. 1).\18\ To 
accommodate this request, DOE issued a notice to reopen the 2015 BVM 
ECS NOPR comment period on October 23, 2015 until November 23, 2015. 80 
FR 64370 (Oct. 23, 2015). Relevant comments received during both 
comment periods and the BVM ECS NOPR public meeting, as well as DOE's 
responses, are provided throughout this document.
---------------------------------------------------------------------------

    \18\ DOE will identify comments received in response to the 2015 
BVM ECS NOPR and placed in Docket No. EERE-2013-BT-STD-0022 by the 
commenter, the number of document as listed in the docket maintained 
at www.regulations.gov, and the page number of that document where 
the comment appears (for example: Coca-Cola, No. 52 at p. 2). If a 
comment was made verbally during the BVM ECS NOPR public meeting, 
DOE will also specifically identify those as being located in the 
NOPR public meeting transcript (for example: Coca-Cola, Public 
Meeting Transcript, No. 48 at p. 184).
---------------------------------------------------------------------------

III. General Discussion

    DOE is amending standards for Class A and Class B beverage vending 
machines. DOE is also amending the definition for Class A equipment to 
more unambiguously differentiate Class A and Class B beverage vending 
machines. In addition, DOE is amending the definition of combination 
vending machine, creating two classes of combination vending machine 
equipment, and promulgating 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 new and amended standards.

A. Equipment Classes and Scope of Coverage

    EPCA defines a beverage vending machine as ``a commercial 
refrigerator \19\ that cools bottled or canned beverages and dispenses 
the bottled or canned beverages on payment.'' (42 U.S.C. 6291(40))
---------------------------------------------------------------------------

    \19\ EPCA defines commercial refrigerator, freezer, and 
refrigerator-freezer as ``refrigeration equipment that--
    (i) is not a consumer product (as defined in section 6291 of 
this title);
    (ii) is not designed and marketed exclusively for medical, 
scientific, or research purposes;
    (iii) operates at a chilled, frozen, combination chilled and 
frozen, or variable temperature;
    (iv) displays or stores merchandise and other perishable 
materials horizontally, semivertically, or vertically;
    (v) has transparent or solid doors, sliding or hinged doors, a 
combination of hinged, sliding, transparent, or solid doors, or no 
doors;
    (vi) is designed for pull-down temperature applications or 
holding temperature applications; and
    (vii) is connected to a self-contained condensing unit or to a 
remote condensing unit.'' 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 (Aug. 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 (Aug. 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 Aug. 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 
proposed to modify the definition of Class A to more unambiguously 
differentiate Class A and Class B equipment. In this final rule, DOE is 
using the presence of a transparent front on Class A beverage

[[Page 1037]]

vending machines as a key distinguishing characteristic between Class A 
and Class B equipment and is adopting this distinction as part of the 
Class A equipment class definition.
    In this final rule, DOE is also amending 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 creating two classes of combination vending machines, 
Combination A and Combination B, to differentiate combination vending 
machines based on criteria similar to those 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 final rule for more 
discussion on the equipment classes addressed in this final rule.

B. Test Procedure

    The estimates of energy use and energy saving potential presented 
in the final rule 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 final rule for more discussion.) 
On July 31, 2015, DOE published the 2015 BVM test procedure final rule, 
which amended DOE's test procedure for beverage vending machines. 80 FR 
45758. 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. 
Id. 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.
    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[emsp14][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 standard product,
    (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, and
    (8) 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, 
beginning January 27, 2016, by manufacturers for representations and to 
demonstrate compliance with the BVM energy conservation standards 
adopted in the 2009 BVM final rule, for which compliance was required 
as of August 31, 2012. 80 FR 45758 (July 31, 2015). DOE also adopted 
amended language at 10 CFR 429.52(b) and 10 CFR 431.296 clarifying the 
certification and reporting requirements for beverage vending machines, 
which also became effective August 31, 2015. Id. at 45787.
    Appendix B includes all provisions in appendix A, as well as, 
provisions for testing low power modes. The test procedure found in 
appendix B is to be used in conjunction with the new and amended 
standards established as a result of this final rule. As such, 
manufacturers are not required to use appendix B until the compliance 
date of the new and amended standards established in this final rule. 
Id.
    During the BVM ECS NOPR public meeting and subsequent comment 
period, several interested parties commented about DOE's updated BVM 
test procedure and how equipment are currently tested in the industry. 
ASAP commented in the BVM ECS NOPR public meeting that there may be 
potential ambiguity in the BVM test procedure DOE adopted in 2006 (71 
FR 71340 (Dec. 8, 2006)) with regard to lighting low power modes in 
that some machines may have shown artificially lower energy consumption 
under this test procedure due to lighting controls automatically 
turning off the lights when no one is in the test room. (ASAP, Public 
Meeting Transcript, No. 48 at p. 67) Royal Vendors and SandenVendo 
America (SVA) commented that the current standard is achievable without 
the use of low power modes and that they test all of their equipment 
without low power modes enabled, and do not include payment systems in 
their reported energy consumption. (Royal Vendors, No. 54 at p. 4; SVA, 
No. 53 at p. 2) The National Automatic Merchandising Association (NAMA) 
also commented that at least one manufacturer has achieved the current 
standard level without the use of energy management systems, and that 
reported energy consumption currently does not include payment systems. 
NAMA additionally urged DOE to allow energy management systems to be 
enabled during testing. (NAMA, No. 50 at p. 5) In its written comments, 
NAMA requested that DOE review the European Vending Association's 
Energy Management Protocol Program and stated that it may provide 
additional guidance related to the testing of beverage vending machines 
in Europe that may be applicable to the United States (NAMA, No. 50 at 
p. 14)
    Automated Merchandising Systems (AMS) commented that the revised 
test procedure would adversely affect the daily energy consumption 
(DEC) even though performance has not changed. (AMS, No. 57 at p. 2) 
Specifically, SVA commented that including payment systems in reported 
energy consumption effectively lowers the allowable DEC by 0.2 kWh/day, 
which would account for over 9 percent of allowable energy consumption 
for Class A and 6 percent for Class B. (SVA, No. 53 at p. 4) SVA stated 
in written comments that the inclusion of payment systems in the 
reported energy consumption under the new test procedure would make it 
difficult to meet the current standard. (SVA, No. 53 at p. 2) 
Similarly, Coca-Cola and Royal Vendors stated that allowances for low 
power states are offset by the inclusion of payment systems in the 
reported energy consumption under the new test procedure. (Coca-Cola, 
No. 52 at p. 3; Royal Vendors, No. 54 at p. 1)
    DOE recognizes that the previous DOE BVM test procedure adopted in 
DOE's 2006 test procedure final rule (71 FR 71340 (Dec. 8, 2006)) may 
have allowed for misinterpretation of some aspects of DOE's test 
procedure methodology. However, the clarifications and amendments 
recently adopted in appendix A of the DOE BVM test procedure seeks to 
unambiguously

[[Page 1038]]

clarify how BVM equipment should be configured and tested in accordance 
with the DOE BVM test procedure. 80 FR 45758, 45760 (July 31, 2015). 
Specifically, related to lighting controls, appendix A requires that 
all lights be in the ``on'' state for the full duration of the test. 
However, appendix B, which is required for demonstrating compliance 
with the energy conservation standards adopted in this final rule, 
allows lighting and other accessories that are controlled by an 
accessory low power mode to be turned off (by the accessory low power 
mode) for a period of 6 hours. DOE believes this accurately represents 
the impact of accessory low power modes on BVM DEC. Regarding the 
energy consumption and configuration of payment mechanisms when testing 
beverage vending machines, DOE clarified in the 2015 BVM test procedure 
final rule that energy consumed by BVM payment systems should be 
included in the measured energy consumption of this equipment under 
both appendix A and appendix B.
    In the analysis supporting this final rule, DOE has analyzed 
equipment under appendix B, which accounts for the use of accessory and 
refrigeration low power modes. DOE's analysis also assumes the energy 
consumption of payment mechanisms are accounted for in the DEC of BVM 
equipment. DOE recognizes that some test procedure amendments included 
in appendix B, such as those addressing accessory and lighting low 
power modes, may change the measured energy consumption of covered 
equipment. As such, as stated in the 2015 BVM test procedure final 
rule, use of appendix B is only permitted to demonstrate compliance 
with the new and amended standards adopted in this final rule. 80 FR 
45758, 45760-45761. DOE notes that, on the effective date of this BVM 
ECS final rule, manufacturers may elect to begin using the appendix B 
test procedure prior to the compliance date, provided they use the 
results of such testing to demonstrate compliance with the new and 
amended standards adopted in this final rule. Manufacturers may not use 
the results of testing under appendix B to demonstrate compliance with 
the energy conservation standards adopted in the 2009 BVM final 
rule.\20\
---------------------------------------------------------------------------

    \20\ See DOE's test procedure guidance on this topic at https://www1.eere.energy.gov/buildings/appliance_standards/pdfs/tp_earlyuse_faq_2014-8-25.pdf.
---------------------------------------------------------------------------

    In response to NAMA's comment requesting that DOE allow for the use 
of energy management systems during testing, DOE notes that the revised 
DOE BVM test procedure now allows for the use of lighting and 
refrigeration low power states. In response to NAMA's suggestion that 
DOE consult the European Vending Association's Energy Management 
Protocol Program, DOE appreciates the suggestion from NAMA, but notes 
that DOE has already clarified the appropriate configuration and use of 
energy management systems when testing in accordance with the DOE BVM 
test procedure in the recently published 2015 BVM test procedure final 
rule. 80 FR 45758. DOE also notes that EPCA requires that the DOE BVM 
test procedure for beverage vending machines shall be based on ASHRAE 
Standard 32.1-2004, entitled ``Methods of Testing for Rating Vending 
Machines for Bottled, Canned or Other Sealed Beverages.'' 42 U.S.C. 
6395(15)

C. Compliance Dates

    Pursuant to 42 U.S.C. 6295(v)(3), the new and amended standards in 
this final rule will apply to equipment manufactured beginning on 
January 8, 2019, 3 years after the publication date of this final rule 
in the Federal Register. In its analysis, DOE used a 30-year analysis 
period of 2019-2048.
    In written comments submitted in response to the 2015 BVM ECS NOPR, 
Coca-Cola, NAMA, Royal Vendors, and the American Beverage Association 
(ABA) requested that the compliance date for DOE's proposed standards 
be delayed until 2022, 3 years after the compliance date for the new 
EPA SNAP Rules 19 and 20, which list as acceptable the use of 
CO2, propane, and isobutane refrigerants (80 FR 19454, 19491 
(April 10, 2015)) and phase out the use of R-134a refrigerant for BVM 
applications (80 FR 42870, 42917-42920 (July 20, 2015)), respectively. 
(Coca-Cola, No. 52 at p. 1; NAMA, No. 50 at p. 2; Royal Vendors, No. 54 
at p. 2; ABA No. 63 at p. 3) During the written comment period 
following the publication of the 2015 BVM ECS NOPR, DOE also received 
1,140 identical form letters (hereafter referred to as the Form 
Letters) from interested parties (the Form Letter Writers) regarding 
several aspects of DOE's proposal. In the Form Letter, commenters 
echoed the request for an extension of the compliance date to 2022. 
(The Form Letter Writers, No. 64 and 65 at p. 1)
    In response to the request for an alternative compliance date for 
the new and amended BVM standards established as a result of this 
rulemaking, DOE notes that it does not have the discretion to deviate 
from the compliance period for beverage vending machines established 
under EPCA. Pursuant to 42 U.S.C. 6295(v), any energy conservation 
standard prescribed for beverage vending machines ``shall apply to 
[equipment] manufactured 3 years after the date of publication of a 
final rule establishing the energy conservation standard.'' As such, 
DOE is not authorized to accommodate the request of commenters and 
maintains that compliance of the new and amended standards adopted in 
this final rule is required beginning 3 years after the publication 
date of this final rule in the Federal Register, or on January 8, 2019.

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 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 equipment 
or in working prototypes to be technologically feasible. 10 CFR part 
430, subpart C, appendix A, section 4(a)(4)(i).
    After DOE has determined that particular technology options are 
technologically feasible, it further evaluates each technology option 
in light of the following additional screening criteria: (1) 
Practicability to manufacture, install, and service; (2) adverse 
impacts on equipment 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). Additionally, it is DOE policy not to include in its 
analysis any proprietary technology that is a unique pathway to 
achieving a certain efficiency level. Section IV.B of this document 
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 standard levels considered in 
this rulemaking. For further details on the screening analysis for this 
rulemaking, see chapter 4 of the final rule TSD.
    In response to the proposed standard levels in the 2015 BVM ECS 
NOPR, DOE received several comments regarding the technological 
feasibility of those proposed standard levels. In written

[[Page 1039]]

comments, the Appliance Standards Awareness Project (ASAP), Alliance to 
Save Energy (ASE), Natural Resources Defense Council (NRDC), Northwest 
Energy Efficiency Alliance (NEEA), and the Northwest Power and 
Conservation Council (NPCC) (herein referred to as the Energy 
Efficiency Advocates Joint Commenters, or EEA Joint Commenters) 
submitted a joint comment ((herein referred to as the EEA Joint 
Comment) expressing support for DOE's proposed standards. (EEA Joint 
Commenters, No. 56 at p. 1) Conversely, in the BVM ECS NOPR public 
meeting and in written comments, NAMA, SVA, Coca-Cola, Royal Vendors, 
AMS, Seaga Manufacturing (Seaga), and the U.S. Small Business 
Administration's Office of Advocacy (SBA Advocacy) all stated that 
DOE's proposed standards were too aggressive, especially in light of 
EPA SNAP regulations concurrent with DOE's rulemaking. (NAMA, No. 50 at 
p. 1; SVA, No. 53 at p. 10; Coca-Cola, No. 52 at p. 1; Royal Vendors, 
AMS, and Seaga, Public Meeting Transcript, No. 48 at pp. 175, 177; SBA 
Advocacy, No. 61 at p. 3) ABA requested that DOE coordinate with EPA to 
ensure the proposed standards are technologically and economically 
feasible relative to ENERGY STAR equipment specifications. (ABA, No. 63 
at p. 3) The European Vending Association stated that adopting a 
standard more stringent than ENERGY STAR was not justifiable in Europe 
and it would not be feasible for DOE to adopt more stringent standards 
(EVA, No. 60 at p. 1) NAMA, SVA, and SBA Advocacy stated that the 
proposed standards are not technologically feasible or economically 
justified and will cause substantial negative impacts on the industry 
if enacted. (NAMA, No. 50 at p. 1; SVA, No. 53 at p. 10; SBA Advocacy, 
No. 61 at p. 3) AMS, SVA, and Royal Vendors stated in the BVM ECS NOPR 
public meeting and in written comments that compliance with DOE's 
proposed standards is unattainable, and Royal Vendors added that 
compliance would require cutting 1 kWh/day from its Class A machines 
and 1.5 kWh/day from its Class B machines. (AMS, SVA, and Royal 
Vendors, Public Meeting Transcript, No. 48 at p. 175; Royal Vendors, 
No. 54 at p. 1)
    In the BVM ECS NOPR public meeting, Coca-Cola inquired about the 
manufacturer of the CO2 unit that DOE examined and found to 
meet the 2009 standard, and expressed doubt that an existing 
CO2 machine would be able to meet the proposed standard. 
(Coca-Cola, Public Meeting Transcript, No. 48 at pp. 96-101) Similarly, 
SVA and SBA Advocacy expressed agreement that the current standards 
could be met using any refrigerant but disagreement that the efficiency 
levels in the NOPR TSD could be met. (SVA, No. 53 at p. 3; SBA 
Advocacy, No. 61 at p. 3) SVA additionally expressed disagreement with 
DOE's assumption that all baseline Class A and Class B propane 
equipment and Class A CO2 equipment would be able to meet 
EL1 because it believes many of DOE's proposed design options have 
already been implemented to meet the 2009 standard. (SVA, No. 53 at p. 
7) AMS commented that it would not be able to meet even the 2009 
standard for class A with CO2 refrigerant, and further 
stated that it might be possible to meet trial standard level (TSL) 1 
for Class A with substantial design changes. AMS additionally commented 
that it may be possible for it to meet TSL 2 for Combination A 
equipment using CO2 and TSL 3 with propane with substantial 
design changes. (AMS, No. 57 at p. 4) In written comments, the Form 
Letter Writers stated DOE has not provided proof that CO2 
machines meeting the proposed standards are already available. (The 
Form Letter Writers, No. 64 and 65 at p. 1) Further, in the Form 
Letters, commenters stated the combination vending machines have not 
been tested to the proposed standard. (The Form Letter Writers, No. 64 
and 65 at p. 1)
    In the BVM ECS NOPR public meeting, SVA stated that the proposed 
standards do not leave room for any new or innovative features which 
consume energy. (SVA, Public Meeting Transcript, No. 48 at p. 174) In 
its written comment, Coca-Cola stated that the proposed standards would 
make it difficult for suppliers to offer equipment with display panels 
for equipment interaction, video content, or advertising, and would 
therefore reduce utility of the equipment. (Coca-Cola, No. 52 at p. 4)
    DOE appreciates the support for DOE's proposed standard levels from 
the EEA Joint Commenters. Regarding the concerns raised by Coca-Cola, 
NAMA, Royal Vendors, AMS, Seaga, and SBA Advocacy DOE has revised its 
engineering and economic analyses based on the specific feedback of 
interested parties. DOE believes that its analyses accurately reflect 
the capabilities of existing current equipment designs and component 
design options. Specifically, DOE compared its engineering outputs to 
empirical DEC data gathered from the units that DOE selected for 
testing and teardowns, as well as to certified DEC data included in the 
Compliance Certification Management System (CCMS) and ENERGY 
STAR[supreg] directories in order to confirm the validity and accuracy 
of its engineering analysis inputs and results. Chapter 3 of the final 
rule TSD contains plots of the relevant ENERGY STAR and CCMS 
certification data, while Chapter 5 of the final rule TSD discusses 
DOE's methodology in selecting units for testing and teardown.
    DOE also revised certain assumptions regarding the cost of more-
efficient components and the cost to maintain, repair, and/or replace 
those more-efficient components to better reflect the BVM market today 
and throughout the analysis period. Component costs, as well as 
maintenance, repair, and replacement costs are discussed in chapters 5 
and 8 of the final rule TSD, respectively. Based on these revised 
analyses, DOE is adopting in this final rule new and amended standards 
for beverage vending machines that are less stringent than the MDEC 
levels proposed in the 2015 BVM ECS NOPR. As discussed further in 
section V, the MDEC levels adopted in this final rule represent the 
standard levels for each equipment class with the maximum net benefits 
for the nation. DOE's engineering and economic analyses presented in 
this final rule represent the best available data on BVM performance 
and costs and include substantial input from interested parties 
received throughout the course of the rulemaking. As such, DOE believes 
the MDEC standard levels adopted in this final rule are technologically 
feasible and economically justified. DOE also analyzed these adopted 
standard levels against the reported and tested DEC values of currently 
available equipment and notes that there are several models of Class A 
and Class B equipment that would meet the amended MDEC levels under 
either appendix A or appendix B (that is, with or without low power 
modes employed). While DOE acknowledges that not all of these models 
use refrigerants that will be required in 2019 when compliance with the 
amended standards is required, DOE notes that at least one BVM model 
using CO2 as a refrigerant are listed in the ENERGY STAR 
database that comply with the amended MDEC standard for Class B 
equipment adopted in this final rule.
    In response to ABA and EVA's comments suggesting that DOE 
coordinate with ENERGY STAR and highlighting the technological 
feasibility of the ENERGY STAR standard levels, DOE notes that DOE 
coordinates closely with EPA's ENERGY STAR program. Regarding the 
technological feasibility of the new and amended standards

[[Page 1040]]

adopted in this final rule as compared to ENERGY STAR levels, DOE is 
obligated to adopt the standard levels that represent the maximum 
improvement in energy efficiency that is technologically feasible and 
economically justified, subject to specific criteria established by 
EPCA. (42 U.S.C. 6295(o)(2) and (3)(B)) DOE specifically analyzed the 
technological feasibility and economic benefits of the current ENERGY 
STAR levels for Class A and Class B equipment (and comparable levels 
for Combination equipment) as TSL 1. DOE's analysis considers only 
those technology options considered to be technologically feasible, as 
discussed in section III.D.2 and IV.B. Therefore, by definition, all 
ELs and TSLs analyzed by DOE represent technologically feasible energy 
consumption levels for beverage vending machines. Based on DOE's 
analysis, as discussed further in section V.B, DOE found TSL 3 to 
result in the maximum economic benefits for the nation. Therefore, 
while the current ENERGY STAR are also technologically feasible, TSL 3 
represents the maximum improvement in energy efficiency that is 
technologically feasible and economically justified, based on DOE's 
analysis.
    In response to the Form Letter Writers statement that DOE has not 
provided proof that CO2 machines meeting the proposed 
standards are already available, DOE recognizes that there was a 
statement in the 2015 BVM ECS NOPR that may have been misinterpreted by 
some to indicate that Class B equipment using CO2 as a 
refrigerant was available that met the standard level proposed in the 
NOPR. Specifically, in both the 2015 BVM ECS NOPR public meeting and in 
written comments, Coca-Cola stated that it does not believe that there 
is a beverage vending machine with a CO2 refrigeration 
system that is capable of meeting the proposed standards, even with 
credits for low power modes. (Coca-Cola, No. 52 at p. 2; Coca-Cola, 
Public Meeting Transcript, No. 48 at p. 184) In this final rule, DOE 
clarifies that the sentence in the 2015 BVM ECS NOPR was intended to 
read ``Class B equipment that utilizes CO2 as a refrigerant 
and Class B equipment that meets the proposed standard level is 
currently available.'' 80 FR 50462, 50467 (August 19, 2015). However, 
regarding the standard adopted in this final rule, DOE reiterates that 
at least one BVM model using CO2 refrigerant is listed in 
the ENERGY STAR data base that meets the amended Class B standard 
level, and it is possible that additional units would meet the amended 
standard level when tested until the new appendix B test procedure 
adopted in the 2015 BVM test procedure final rule. 80 FR 45758 (July 
31, 2015). BVM models of Class A and combination equipment using 
CO2 refrigerant have not yet been developed, so a similar 
comparison is not possible.
    In response to commenters concerns regarding combination equipment, 
DOE notes that combination equipment manufacturers are currently not 
required to report their DEC or comply with any energy conservation 
standards and, as such, DOE does not have the data that would be needed 
to perform a similar comparative analysis of the analytically-
determined performance levels from the engineering analysis versus 
certification or testing data. However, DOE notes that the design 
options that DOE modeled in the engineering analysis as included at the 
adopted standard levels for Combination A and Combination B equipment 
are commonly available technologies that are also included in the 
packages of design options analyzed at the amended standard levels for 
Class A and B. That is, DOE believes that all Combination A and 
Combination B equipment should be able to meet the new energy 
conservation standard levels using the same technology options and 
equipment designs that would be employed by Class A and Class B 
equipment in meeting the amended standard levels adopted for the 
equipment. This determination was made based on an assessment of the 
commonalities in design present between the analogous classes, for 
example the presence of a transparent front and lighting in Class A and 
Combination A machines, and the use of a fully insulated cabinet and 
zone cooling in Class B and Combination B machines. A full discussion 
of DOE's analysis of the performance potential of combination vending 
machines is contained in Chapter 5 of the TSD.
    In response to SVA and Coca-Cola's concerns regarding the ability 
of BVM models that feature digital display screens or other innovative, 
interactive designs, DOE notes that compliance with the new and amended 
standards is assessed based on the tested DEC, as measured in 
accordance with appendix B of the recently updated DOE BVM test 
procedure (80 FR 45758 (July 31, 2015)), and appropriate sampling plans 
(10 CFR 429.52(a)). In both appendix A and appendix B of the recently 
amended DOE BVM test procedure, DOE adopted specific provisions 
clarifying the configuration of BVM models featuring external customer 
display signs, lights, or digital screens, among other accessories and 
components. 80 FR 45758, 45778-45780 (July 31, 2015). Specifically, the 
DOE BVM test procedure specifies that external customer display signs, 
lights, or digital screens should be de-energized or, if they cannot be 
de-energized without impacting the primary functionality of the 
equipment, placed in the external accessory standby mode (if available) 
or the lowest energy consuming state (if no external accessory standby 
mode is available) that maintains such functionality. 10 CFR 431.292. 
As the incremental energy consumption of display signs and digital 
screens referred to by Coca-Cola and SVA potentially are not included 
in the measured DEC for such BVM models, DOE does not believe that 
innovation of manufacturers to include such features and accessories 
will be affected by the newly adopted test procedure or the standard 
levels adopted in this final rule. If any BVM manufacturers produce a 
BVM model with any features or accessories that cannot be accommodated 
by the DOE BVM test procedure or believe that application of the DOE 
BVM test procedure would produce results that are not adequately 
representative of the energy consumption of the equipment, the 
manufacturer of that equipment may submit a petition for a test 
procedure waiver in accordance with the provisions in 10 CFR 
431.401.\21\
---------------------------------------------------------------------------

    \21\ DOE issued a final rule amending its regulations governing 
petitions for waiver and interim waiver from DOE test procedures for 
consumer products and commercial and industrial equipment. 79 FR 
26591 (May 9, 2014). This final rule became effective on June 9, 
2014.
---------------------------------------------------------------------------

2. Maximum Technologically Feasible Levels
    When DOE proposes to adopt an amended standard for a type or class 
of covered equipment, it must determine the maximum improvement in 
energy efficiency or maximum reduction in energy use that is 
technologically feasible for such equipment. (42 U.S.C. 6295(p)(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 III.D.2 of this final rule and in chapter 5 of 
the final rule TSD.

[[Page 1041]]

E. Energy Savings

1. Determination of Savings
    For each TSL, DOE projected energy savings from application of the 
TSL to beverage vending machines purchased in the 30-year period that 
begins in the year of compliance with any new and amended standards 
(2019-2048).\22\ 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 the equipment would likely evolve in 
the absence of new and amended energy conservation standards.
---------------------------------------------------------------------------

    \22\ Each TSL is composed of specific efficiency levels for each 
equipment class. The TSL considered for this final rule are 
described in section V.A. DOE also presents a sensitivity analysis 
that considers impacts for equipment shipped in a 9-year period.
---------------------------------------------------------------------------

    DOE used its NIA spreadsheet models to estimate energy savings from 
new and amended standards for beverage vending machines. The NIA 
spreadsheet model (described in section IV.H of this document) 
calculates savings in site energy, which is the energy directly 
consumed by equipment 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.\23\ DOE's approach is based on the calculation of an FFC 
multiplier for each of the energy types used by covered equipment. For 
more information on FFC energy savings, see section IV.H.2 of this 
document.
---------------------------------------------------------------------------

    \23\ 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 any covered equipment, 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 all the 
TSLs considered in this rulemaking, including the adopted standards, 
are nontrivial; therefore, DOE considers them ``significant'' within 
the meaning of section 325 of EPCA.

F. Economic Justification

1. Specific Criteria
    As noted above, 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 has 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.J of 
this document. DOE first uses an annual cash-flow approach to determine 
the quantitative impacts. This step includes both a short-term 
assessment--based on the cost and capital requirements during the 
period between when a regulation is issued and when entities must 
comply with the regulation--and a long-term assessment over a 30-year 
period. The industry-wide impacts analyzed include: (1) The INPV, which 
values the industry on the basis of expected future cash flows; (2) 
cash flows by year; (3) changes in revenue and income; and (4) other 
measures of impact, as appropriate. Second, DOE analyzes and reports 
the impacts on different types of manufacturers, including impacts on 
small manufacturers. Third, DOE considers the impact of standards on 
domestic manufacturer employment and manufacturing capacity, as well as 
the potential for standards to result in plant closures and loss of 
capital investment. Finally, DOE takes into account cumulative impacts 
of various DOE regulations and other regulatory requirements on 
manufacturers.
    For individual 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 (LCC and 
PBP)
    EPCA requires DOE to consider the savings in operating costs 
throughout the estimated average life of the covered equipment in the 
type (or class) compared to any increase in the price of, or in the 
initial charges for, or maintenance expenses of, the covered equipment 
that are likely to result from a standard. (42 U.S.C. 
6295(o)(2)(B)(i)(II)) DOE conducts this comparison in its LCC and PBP 
analysis.
    The LCC is the sum of the purchase price of a piece of equipment 
and the operating cost (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 discount rates appropriate for 
customers. 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.
    The PBP is the estimated amount of time (in years) it takes 
customers to recover the increased purchase cost (including 
installation) of a more-efficient piece of equipment through lower 
operating costs. DOE calculates the PBP by dividing the change in 
purchase cost due to a more-stringent standard by the change in annual 
operating cost for the year that standards are assumed to take effect.
    For its LCC and PBP analysis, DOE assumed that customers will 
purchase the covered equipment in the first year of compliance with 
amended standards. The LCC savings for the considered efficiency levels 
are calculated relative to the case that reflects projected market 
trends in the absence of amended standards. DOE identifies the 
percentage of customers estimated to experience an LCC increase, as 
well as calculates the average LCC savings associated with a particular 
standard level. DOE's LCC and PBP analyses are discussed in further 
detail in section IV.F of this document.
c. Energy Savings
    Although significant conservation of energy is a separate statutory 
requirement for adopting an energy conservation standard, EPCA requires 
DOE, in determining the economic justification of a standard, to 
consider the total projected energy savings that are expected to result 
directly from the

[[Page 1042]]

standard. (42 U.S.C. 6295(o)(2)(B)(i)(III)) As discussed in section 
IV.H of this document, DOE uses the NIA spreadsheet models to project 
NES.
d. Lessening of Utility or Performance of Equipment
    In establishing equipment classes, 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)) DOE determined 
based on the data available that the standards adopted in this final 
rule will not reduce the utility or performance of the equipment under 
consideration in this rulemaking.
e. Impact of Any Lessening of Competition
    EPCA directs DOE to consider the impact of any lessening of 
competition, as determined in writing by the Attorney General that is 
likely to result from a standard. (42 U.S.C. 6295(o)(2)(B)(i)(V)) It 
also directs the Attorney General to determine the impact, if any, of 
any lessening of competition likely to result from a 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 transmitted 
a copy of its proposed rule to the Attorney General with a request that 
the Department of Justice (DOJ) provide its determination on this 
issue. DOE received no adverse comments from DOJ regarding the proposed 
rule.
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)) The energy savings from the 
adopted standards are likely to provide improvements to the security 
and reliability of the nation's energy system. Reductions in the demand 
for electricity also may result in reduced costs for maintaining the 
reliability of the nation's electricity system. DOE conducts a utility 
impact analysis to estimate how standards may affect the nation's 
needed power generation capacity, as discussed in section IV.M of this 
document.
    The adopted standards also are 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 potential standards may 
affect these emissions, as discussed in section IV.K of this final 
rule; the emissions impacts are reported in section V.B.6 of this 
document. DOE also estimates the economic value of emissions reductions 
resulting from the considered TSLs, as discussed in section IV.L of 
this document.
g. Other Factors
    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 customer of a piece of equipment 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 analyses 
generate values used to calculate the effect the new and amended energy 
conservation standards have on the PBP for customers. These analyses 
include, but are not limited to, the 3-year PBP contemplated under the 
rebuttable-presumption test. In addition, DOE routinely conducts an 
economic analysis that considers the full range of impacts to 
customers, manufacturers, the Nation, and the environment, as required 
under 42 U.S.C. 6295(o)(2)(B)(i). The results of this analysis serve as 
the basis for DOE's evaluation of the economic justification for a 
potential standard level (thereby supporting or rebutting the results 
of any preliminary determination of economic justification). The 
rebuttable presumption payback calculation is discussed in section IV.F 
of this final rule.

IV. Methodology and Discussion of Related Comments

    This section addresses the analyses DOE has performed for this 
rulemaking with regard to beverage vending machines. Each component of 
DOE's analysis is discussed in the following subsections, and DOE 
summarizes and responds to associated comments received in response to 
the NOPR.
    DOE used several analytical tools to estimate the impact of the 
standards considered in this document. The first tool is a spreadsheet 
that calculates the LCC savings and PBP of potential amended or new 
energy conservation standards. The NIA uses a second spreadsheet set 
that provides shipments forecasts and calculates NES and NPV of total 
customer costs and savings expected to result from potential energy 
conservation standards. DOE uses the third spreadsheet tool, the 
Government Regulatory Impact Model (GRIM), to assess manufacturer 
impacts of potential standards. These three spreadsheet tools are 
available on the DOE Web site for this rulemaking: https://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/73. Additionally, DOE used output from the latest version of 
EIA's AEO, a widely known energy forecast for the United States, for 
the emissions and utility impact analyses.

A. Market and Technology Assessment

    DOE develops information in the market and technology assessment 
that provides an overall picture of the market for the equipment 
concerned, including the purpose of the equipment, the industry 
structure, manufacturers, market characteristics, and technologies used 
in the equipment. This activity includes both quantitative and 
qualitative assessments, based primarily on publicly available 
information.
    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 key findings of DOE's market assessment are summarized 
below. See chapter 3 of the final rule TSD for further discussion of 
the market and technology assessment.
1. Equipment Classes
    In this final rule, DOE is amending the energy conservation 
standards established by the 2009 BVM final rule for Class A and Class 
B beverage vending machines. DOE believes that Class A and Class B 
equipment classes continue to provide distinct utility to customers and 
have different energy profiles and applicable design options, as 
described below. As such, DOE has determined that it is appropriate to

[[Page 1043]]

separately analyze and regulate Class A and Class B equipment. As noted 
previously, DOE is amending the definition for Class A equipment to 
more clearly and unambiguously describe the equipment characteristics 
that distinguishing Class A from Class B equipment. Specifically, DOE 
distinguishes Class A equipment from Class B equipment based on the 
presence of a transparent front. DOE is also amending 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.\24\ 
In addition, DOE is defining two new equipment classes, Combination A 
and Combination B, as well as establishing 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 
(Aug. 31, 2009). In considering standards for combination vending 
machines as part of this rulemaking, DOE determined that the presence 
of a transparent front is an important differentiating feature for 
combination equipment, similar to Class A and Class B beverage vending 
machines.
---------------------------------------------------------------------------

    \24\ 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 beverage vending machines. In the amended 
definition for combination vending machine, 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.
---------------------------------------------------------------------------

    Table IV.1 summarizes the new and amended definitions for the four 
equipment classes analyzed in this final rule. The definitions, as well 
as the general characteristics and differentiating features, of the 
four equipment classes adopted in this final rule are described in the 
following subsections of this document. In addition, the following 
subsections address any comments received from interested parties on 
DOE's proposed definitions presented in the 2015 BVM ECS NOPR and DOE's 
response to those comments.
---------------------------------------------------------------------------

    \25\ DOE notes that in the 2015 BVM ECS NOPR, DOE proposed to 
the definition of Class A to include the term ``combination beverage 
vending machine.'' In this final rule, DOE is adopting a definition 
of Class A that, instead, references the term ``combination vending 
machine,'' as that is the defined term for combination equipment at 
10 CFR 431.292. DOE notes that this minor editorial change does not 
affect the meaning or scope of the definition, just ensure 
consistency between all of the definition pertinent to the 
regulation of this equipment.

       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 vending
                                        machine and in which 25 percent
                                        or more of the surface area on
                                        the front side of the beverage
                                        vending machine is
                                        transparent.\25\
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 equipment. The distinguishing 
criterion between these two equipment classes is whether the equipment 
is fully cooled. 10 CFR 431.292.
    When the definitions of Class A and Class B were established as 
part of the 2009 final rule, 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 [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. 78 FR 33262 (June 4, 
2013).
    Throughout the course of this rulemaking and the parallel DOE BVM 
test procedure rulemaking, DOE has discussed and received comments on 
the most appropriate, clear, and unambiguous definitions for Class A 
and Class B beverage vending machines. Specifically, in the 2014 DOE 
BVM test procedure NOPR, DOE proposed to define ``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 [deg]F above the integrated average temperature 
of the standard test packages.'' 79 FR 46908, 46934 (Aug. 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 
2014 BVM test procedure NOPR, several interested parties recommended 
that DOE consider an alternative differentiation between equipment 
types to better capture differences in energy consumption. In a joint 
comment submitted on behalf of the California investor-owned utilities 
(Pacific Gas and Electric Company (PG&E), Southern California Gas 
Company (SCGC), San Diego Gas and Electric (SDG&E), Southern California 
Edison (SCE), and Arizona Public Service (APS); hereafter referred to 
as CA IOUs) commenters 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. (Docket No. EERE-2013-BT-TP-0045, 
CA IOUs, No. 0005 at p. 1) SVA also supported this position. (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. (Docket No. EERE-2013-BT-

[[Page 1044]]

TP-0045, AMS, Public Meeting Transcript, No. 0004 at p. 54; Docket No. 
EERE-2013-BT-TP-0045, Coca-Cola, No. 0010 at p. 4; Docket No. EERE-
2013-BT-TP-0045, Coca-Cola, No. 0010 at p. 4; Docket No. EERE-2013-BT-
TP-0045, SVA, No. 0008 at p. 2; Docket No. EERE-2013-BT-TP-0045, NEEA, 
No. 0009 at p. 1)
    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 responded to the comments presented by 
interested parties in response to the 2014 BVM test procedure NOPR and 
proposed an alternative approach to differentiate Class A and Class B 
equipment in the 2015 BVM ECS NOPR. Specifically, in the 2015 BVM ECS 
NOPR, DOE proposed 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 vending machine and in which 25 
percent or more of the surface area on the front side of the beverage 
vending machine is transparent.
    DOE did not propose in the 2015 BVM ECS NOPR to substantively 
modify the definition of Class B, since Class B is defined as the 
mutually exclusive converse of Class A. However, DOE made a minor 
editorial change to include the term ``that'' to improve readability of 
the definition. 80 FR 50462, 50474-50475 (Aug. 19, 2015).
    DOE also noted in the 2015 BVM ECS NOPR that 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. DOE 
added that it 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 believed 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 product arrangement is horizontal or 
vertical, would result in virtually identical equipment categorization. 
Finally, DOE also noted that, since DOE's engineering analysis 
considers typical, representative equipment designs for each equipment 
class (see section IV.C), the cooling method, the presence of a 
transparent or opaque front,\26\ and product arrangement are linked in 
DOE's engineering analysis, as shown in Table IV.2. Id.
---------------------------------------------------------------------------

    \26\ In this notice, DOE uses the terms ``solid front,'' 
``opaque front,'' and ``non-transparent'' front interchangeably to 
refer to equipment that does not meet DOE's definition of Class A or 
Combination A. That is, equipment where greater than 75 percent of 
the material used to construct the front of the beverage vending 
machine does not meet the definition of ``transparent'' adopted in 
this final rule.

    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.
----------------------------------------------------------------------------------------------------------------

    In response to DOE's 2015 BVM ECS NOPR, NAMA and Royal Vendors, in 
their written comments, stated that the presence of a transparent front 
does not always correlate with fully-cooled equipment, and that at 
least one manufacturer has developed fully-cooled vending machines with 
solid fronts. (NAMA, No. 50 at p. 3; Royal Vendors, No. 54 at p. 3) SVA 
expressed disagreement with DOE's proposed definition of Class A 
equipment because it stated that not all fully-cooled beverage vending 
machines have a transparent panel and that this may discourage the 
production of Class B equipment due to the more stringent proposed 
standards for Class B. (SVA, No. 53 at p. 1) AMS stated that the 
presence of a transparent front does not necessarily reflect the design 
intent or energy consumption characteristics of the machine (AMS, No. 
57 at p. 2)
    NAMA also expressed concern that the transparency requirement 
excludes the use of digital video display screens in Class A equipment 
(NAMA, No. 50 at p. 3) SVA agreed with NAMA and expressed its belief 
that vending machines with digital video display screens should be 
considered as Class A instead of Class B equipment (SVA, Public Meeting 
Transcript, No. 48 at p. 19) Conversely, the CA IOUs expressed their 
belief that equipment with transparent and opaque video screen fronts 
should be regulated as separate equipment classes, with non-transparent 
screens classified as Class B and transparent screens classified as 
Class A. (CA IOUs, No. 58 at p. 1)
    In determining the best way to clarify the differentiation of Class 
A and Class B equipment, DOE considered all comments submitted by 
interested parties, as well as the manner in which equipment is 
currently categorized by DOE and industry. It is DOE's continued 
understanding that the cooling method is significantly correlated with 
the product configuration and presence of a transparent front. 
Therefore, differentiating Class A and Class B equipment based on 
either the product's configuration or the transparency of the front 
side of the BVM, rather than the cooling method, would preserve the 
same utility in each class of equipment. The presence of a transparent 
front provides a specific utility 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. In this 
manner, the presence of a transparent front is inherently related to 
the cooling method of a beverage vending machine (i.e., whether or not 
the equipment is ``fully cooled''). DOE acknowledges that there may be 
some fully cooled beverage vending machines that have an opaque front 
and, as such, will be subject to the energy conservation standard for 
Class B. For example, in the 2015 BVM ECS NOPR,

[[Page 1045]]

DOE pointed to test data that demonstrated some equipment with opaque 
fronts and small refrigerated volumes experience temperature 
differentials of less than 2 [deg]F between the next-to-vend and 
furthest from next-to-vend beverage locations and are, therefore, 
effectively ``fully cooled.'' 80 FR 50462, 50478 (Aug. 19, 2015). 
However, DOE believes that the Class B standards are more appropriate 
for such equipment because the insulating quality of the transparent 
versus non-transparent front has a larger impact on energy consumption 
than the cooling method.
    DOE believes that the presence of a transparent front provides the 
customer with the specific utility of being able to see all the 
available the product selections and choose from the larger number of 
merchandise options that are provided by Class A equipment. In 
addition, DOE notes that the presence of a transparent material on the 
front side of a beverage vending machine has a larger impact on the 
energy consumption of a given beverage vending machine than the cooling 
method or equipment product arrangement. Thus, while DOE continues to 
believe that the presence of a transparent front, a ``fully cooled'' 
refrigerated volume, and horizontal product placement are all 
representative characteristics of most Class A equipment, DOE believes 
that defining equipment classes based on the feature that is most 
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.
    While DOE acknowledges that there may be some opaque front 
equipment that is fully cooled, DOE believes that it is more 
appropriate for such equipment to be treated as Class B. Because an 
opaque, insulated panel has significantly different heat transfer 
characteristics than a transparent glass front, a BVM model that is 
insulated on all six sides should use less energy than a similar BVM 
model with a transparent front. That is, DOE believes energy 
consumption and the presence of a transparent front are correlated.
    DOE performed a sensitivity analysis using the engineering analysis 
spreadsheet to compare the impact of a transparent front versus solid 
front on DEC with the impact of a fully cooled refrigerated volume 
versus a zone cooled refrigerated volume on DEC. Specifically, DOE 
compared the analytically derived performance of two specific sets of 
representative units differing only in one design characteristic--
either a transparent front or a fully cooled interior. That is, DOE 
modeled the following three BVM unit configurations:
    (1) A BVM unit with a fully cooled refrigerated volume and a 
transparent front
    (2) a BVM unit with a fully cooled refrigerated volume and a solid 
front
    (3) a BVM unit with a zone cooled refrigerated volume and a 
transparent front.
    DOE compared the modeled DEC of number 1) and number 2) to 
determine the impact of a transparent front and compared number 1) and 
number 3) to determine the impact of the cooling method. The results of 
this analysis indicated that the difference in energy consumption 
between a BVM model that has a transparent front as compared to a model 
that does not is greater than the difference in energy consumption 
between a BVM model that is fully cooled as compared to one that is 
not. Based on this analysis, DOE has determined that the presence of a 
transparent front is closely correlated to the utility associated with 
Class A equipment and directly corresponds to the energy consumption of 
the equipment. Because the cooling method and the presence of a glass 
or solid front are correlated in practice for the vast majority of 
equipment, DOE believes that clarifying DOE's equipment class 
definitions using the presence of a transparent front (an unambiguous 
equipment characteristic based on customer utility) will not result in 
significant changes to the classification of BVM models that are 
currently available on the market.
    Similarly, regarding the treatment of digital screens, DOE agrees 
with CA IOUs that the transparency of BVM models equipped with digital 
screens should be ascertained as it is for BVM models with conventional 
glass or panel materials. That is, transparency should be determined 
for all the materials between the refrigerated volume and the ambient 
environment and 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.
    DOE believes that this is the most appropriate and reasonable 
treatment of equipment with digital screens because the energy 
consumption of BVM models with opaque digital screens is more similar 
to the energy consumption of BVM models with opaque, insulated fronts 
than to BVM models with transparent fronts. That is, as noted by SVA in 
the BVM ECS NOPR public meeting, the panel behind any external customer 
display signs or digital screens is typically insulated. (SVA, Public 
Meeting Transcript, No. 48 at p. 24-25) DOE notes that external 
customer digital screens and customer display signs are not required to 
be energized during the testing of beverage vending machines, in 
accordance with the newly adopted BVM test procedure. 80 FR 45758, 
45778-45780 (July 31, 2015). Accordingly, the energy consumption and 
heat transfer characteristics of a BVM model with an external, opaque 
digital screen is much more similar to the energy consumption and heat 
transfer characteristics of a BVM model with an opaque, insulated front 
than a BVM model with a transparent front.
    Regarding equipment with transparent digital screens, DOE 
acknowledges the statement by CA IOUs that equipment with transparent 
display screens where all materials between the refrigerated space and 
external ambient environment meet the definition of transparent will be 
treated as part of the transparent surface area under DOE's definition. 
As such, equipment with large transparent display screens (such as, 
potentially, holograms projected onto glass) that still enabled the BVM 
user to see the refrigerated merchandise inside the BVM refrigerated 
compartment and constitute at least 25 percent of the front side of the 
beverage vending machine would be categorized as a Class A beverage 
vending machine. However, DOE notes that it is not aware of any such 
technology on the market today.
    Consequently, in this final rule, DOE maintains that only BVM 
models where at least 25 percent of the surface area on the front side 
of the beverage vending machine is transparent, and that is not a 
combination vending machine, will 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, then the 
beverage vending machine will be considered to be Class B. DOE notes 
that the amended Class A definition only considers transparent area on 
the front side of beverage vending machine and transparency must be 
determined for the entire panel, as described in section IV.A.1.c.
    As interested parties did not suggest any alternative definitions 
or differentiating characteristics, DOE believes that modifying the 
definitions of Class A and Class B to rely on the presence of a 
transparent front allows for the most clear and unambiguous 
differentiation of equipment classes.

[[Page 1046]]

Further, DOE believes referencing the presence of a transparent front 
to identify Class A equipment generally aligns with DOE's and 
industry's interpretation of Class A machines to date. DOE notes that 
the amended Class A and Class B definitions are effective on the 
effective date of this final rule.
b. Combination Vending Machines
    In the 2009 BVM final rule, DOE established a definition for 
combination vending machines (74 FR 44914, 44920 (Aug. 31, 2009)). That 
definition describes a combination 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, 45765-45767 
(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 final rule. Id. at 45765-45767.
    As such, in consideration of the input from various commenters 
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 proposed in the 2015 BVM 
ECS NOPR an amended definition of ``combination vending machine.'' 
Specifically, DOE proposed 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 vending machine based on 
whether a compartment is designed to be refrigerated, as demonstrated 
by the presence of temperature controls. 80 FR 50462, 50478-50480 (Aug. 
19, 2015).
    DOE also proposed 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 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 the 2015 BVM ECS NOPR, DOE 
proposed to define two new equipment classes at 10 CFR 431.292, 
Combination A and Combination B, and defined 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.
    Id.
    In response to DOE's proposed new and amended definitions for 
Combination A, Combination B, and combination vending machine, several 
interested parties raised questions about DOE's proposed definitions. 
In particular, AMS stated that machines intended to dispense both 
refrigerated and unrefrigerated products have an insulated tray between 
the refrigerated and unrefrigerated compartments and are defined as 
combination vending machines by their company. (AMS, Public Meeting 
Transcript, No. 48 at p. 18) AMS also stated that its combination 
vending machines only have temperature controls for the compartment 
intended to be refrigerated and therefore do not meet DOE's proposed 
definition for combination vending machines. (AMS, No. 57 at p. 2) 
Steven Chesney of Seaga inquired if a non-cooled refrigerated 
compartment attached to a separate cabinet with a refrigerated 
compartment would be considered as a combination vending machine. 
(Steven Chesney, Public Meeting Transcript, No. 48 at p. 26) EVA 
commented that DOE should use ``simple and understandable'' definitions 
and consider defining them similar to the European definitions. (EVA, 
No. 60 at p. 2)
    In response to AMS's comments regarding their combination vending 
machine designs, featuring an insulated shelf separating refrigerated 
and non-refrigerated compartments and temperature controls in the 
compartment intended to be refrigerated, DOE notes that this is in fact 
consistent with its proposed definition for combination vending 
machines, provided the insulated shelf is a ``solid partition'' and 
does not allow for air transfer between the compartments outside of the 
product delivery chute. To clarify, DOE notes that the combination 
vending machine definition only requires temperature controls in the 
compartment that is designed to be refrigerated.
    In response to Mr. Chesney's inquiry regarding whether two separate 
cabinets attached to each other would constitute a combination vending 
machine, DOE clarifies that, consistent with all equipment, compliance 
for each model is based on how that model is distributed in commerce. 
That is, if the vending machine: (1) Is distributed in commerce as a 
single piece of equipment and (2) includes at least one compartment 
that was designed to be refrigerated (demonstrated by the presence of 
temperature controls) and at least one compartment that is not designed 
to be refrigerated (and, therefore, does not include temperature 
controls) separated by a solid partition, such equipment meets the 
definition of combination vending machine and would be classified as 
either Combination A or Combination B for the purposes of compliance 
with DOE's energy conservation standards. Such equipment may share the 
same product deliver chute or include separate product delivery chutes.
    In response to EVA's suggestion that DOE use simple and 
understandable definitions, similar to those in the European vending 
market, DOE researched the definitions used in Europe to describe 
beverage vending machines and was not able to find consistent 
definitions or terminology that are publically available and such 
definitions were note provided in EVA's comments. However, DOE 
continues to believe that the definitions adopted in this final rule 
represent the clearest and most unambiguous approach to differentiating 
equipment classes for the U.S. market.
    In response to DOE's 2015 BVM ECS NOPR, NAMA stated that DOE's 
proposed definition of combination vending machines is inconsistent 
with industry practice and the EPA's ENERGY STAR definition and 
requested that DOE change this definition to be consistent with 
industry practice. NAMA specifically stated that very few vending 
machines have a [fully-

[[Page 1047]]

extending] solid partition, and that instead many of them allow air to 
comingle between the unrefrigerated and refrigerated compartments. NAMA 
additionally stated that the unrefrigerated space pulls down to nearly 
the same temperature as the refrigerated volume over time in machines 
it considers to be combination vending machines. (NAMA, No. 50 at p. 1) 
In the Form Letters, commenters stated the definition of combination 
vending machines were not consistent with terms used in industry. (The 
Form Letter Writers, No. 64 and 65 at p. 1)
    In response to comments from NAMA and the Form Letter Writers that 
DOE's definition of combination vending machine should be consistent 
with the ENERGY STAR or other industry definitions for such equipment, 
DOE notes that the ENERGY STAR definition of combination vending 
machines is identical to the current DOE definition for combination 
vending machine. DOE is not aware of any other specific industry 
definitions that are relevant for this equipment, and notes that the 
``industry'' terms mentioned by The Form Letter Writers were not 
provided in comments. As noted previously, DOE believes the existing 
definition could be made more clear and unambiguous to improve the 
consistency of equipment definition for regulatory purposes. In 
addition, in response to NAMA's observation that typical combination 
vending machines do not have a fully extending solid partition, DOE 
notes that the definition of combination specifies that such equipment 
have two compartments, separated by a solid partition, but that such 
equipment may also include a common product delivery chute. DOE agrees 
with NAMA that, for many designs of combination equipment on the market 
today, the common product delivery chute may prevent the solid 
partition separating the refrigerated and non-refrigerated compartments 
from fully extending from front to back and side to side. That is, the 
solid partition need not thermally isolate the refrigerated 
compartment(s) from the non-refrigerated compartment(s) provided any 
air exchange between compartments occurs only unintentionally through 
the common product delivery chute. If a vending machine model were to 
feature openings in the solid partition designed to allow for air 
transfer between the compartments, other than the product delivery 
chute, such equipment would not be considered a combination vending 
machine as it would not include any ``non-refrigerated'' compartments. 
That is, DOE interprets the designed presence of openings in the solid 
partition as a means of ``intentional refrigeration'' of that 
compartment. Therefore, equipment that is designed for air transfer 
between compartments is treated as Class A or Class B, depending on 
whether or not the equipment featured a transparent front (see sections 
IV.A.1.a and IV.A.1.c)
    Based on the comments submitted by interested parties, DOE is 
adopting, in this final rule, the amended definition for combination 
vending machine and new definitions for Combination A and Combination 
B, as proposed in the 2015 BVM ECS NOPR. As noted in the 2015 BVM test 
procedure final rule, DOE believes that both appendix A and appendix B 
of the amended DOE BVM test procedure are applicable to combination 
vending machines. 80 FR 45758 (July 31, 2015). Specifically, appendix A 
of the DOE 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. Id. 
However, beginning on the compliance date of this final rule, 
manufacturers of combination vending machines will be required to use 
appendix B of the DOE 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.
c. Definition of Transparent and Optional Test Method for Determining 
Equipment Classification
    In the 2015 BVM ECS NOPR, DOE proposed a quantitative criterion to 
clearly determine whether a BVM model ``has a transparent front'' based 
on the percentage of transparent surface area on the front side of the 
beverage vending machine. Specifically, DOE proposed the procedure by 
which DOE would (1) determine the surface area of beverage vending 
machines and (2) determine whether such surface area is transparent. 
However, DOE noted that these procedures would not be required for 
rating and certification of specific BVM models. Under the proposal, 
manufacturers would be able to certify equipment as Class A, Class B, 
Combination A, or Combination B based on knowledge of the specific 
equipment dimensions and characteristics. However, DOE would use these 
procedures in enforcement testing to verify the appropriate equipment 
classification for all cases. As such, DOE also noted that where the 
appropriate equipment classification is not abundantly clear, 
manufacturers may elect to perform the test to ensure they are 
categorizing their equipment properly. To clarify that such procedures 
are only optional for manufacturers, DOE proposed to add such 
procedures to the product-specific enforcement provisions at 10 CFR 
429.134. 80 FR 50462, 50476-50480 (Aug. 19, 2015).
    Specifically, to determine the surface area, DOE proposed to 
specify 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 also 
proposed to specify that the transparent surface area would consist of 
all areas composed of transparent material on the front side of a 
beverage vending machine, and that the non-transparent surface area 
would consist of all areas composed of material that is not transparent 
on the front side of a beverage vending machine, where 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. 80 FR 50462, 50476 (Aug. 19, 2015).

[[Page 1048]]

[GRAPHIC] [TIFF OMITTED] TR08JA16.000

    In the 2014 BVM ECS NOPR, DOE also noted that the 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) would be considered in the 
calculation of transparent and non-transparent surface area for a 
beverage vending machine, as shown in Figure IV.2. 80 FR at 50479 (Aug. 
19, 2015).

[[Page 1049]]

[GRAPHIC] [TIFF OMITTED] TR08JA16.001

    For both Class A and Combination A beverage vending machines, in 
the 2015 BVM ECS NOPR, DOE also proposed a specific definition and 
criteria to determine whether a material is transparent. Specifically, 
DOE proposed to adopt the definition of transparent that is applicable 
to commercial refrigeration equipment,\27\ as adopted in the 2014 
commercial refrigeration equipment test procedure final rule. 10 CFR 
431.62; 79 FR 22277, 22286-22287, and 22308 (April 21, 2014). Under 
this definition, the term ``transparent'' would apply 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. With regard to beverage vending 
machines, DOE also clarified that, when determining material 
properties, that the transparency of the BVM cabinet materials should 
be determined with consideration of all the materials used to construct 
the wall segment(s), since 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. 80 FR 50462, 50477 (Aug. 19, 2015).
---------------------------------------------------------------------------

    \27\ As a beverage vending machine is defined as a type of 
commercial refrigerator, DOE believes that it is consistent and 
appropriate to use the same definition of transparent for both 
commercial refrigeration equipment and beverage vending machines.
---------------------------------------------------------------------------

    In response to DOE's proposed definition of transparent and 
optional test method for determining the relative transparent surface 
area, DOE received several comments and suggestions from interested 
parties. The CA IOUs recommended that DOE more clearly define the 
equipment classes being regulated using the term, ``transparent.'' The 
CA IOUs also recommended that DOE amend its definition of Class A 
equipment to take into account possible fluctuations in transparency of 
the front. (CA IOUs, No. 58 at p. 1) Similarly, in written comments, 
NAMA and Royal Vendors stated that the 45 percent light transmittance 
criterion for the determination of transparency of the glass front of a 
vending machine is acceptable at this time, but may not be so in the 
future if better low-emissivity coatings are developed. (NAMA, No. 50 
at p. 3; Royal Vendors, No. 54 at p. 3) In written comments, Royal 
Vendors stated also that the definition of Class A would apply to a 
unit in which at least 25 percent of the front surface area is 
transparent, but that the definition of transparency would not always 
be met by equipment Royal Vendors considers to be ``Class A.'' (Royal 
Vendors, No. 54 at p. 3)
    In response to the comments submitted by the CA IOUs regarding the 
treatment of certain equipment with respect to the term 
``transparent,'' DOE clarifies that the definition of transparent 
adopted in this final rule is applicable to all classes of beverage 
vending machines. In particular, the

[[Page 1050]]

definition of transparent is pertinent to differentiating Class A 
equipment from Class B equipment and Combination A equipment from 
Combination B equipment. Similarly, DOE also uses the term to determine 
equipment classification for commercial refrigeration equipment, the 
definition of transparent adopted in this final rule is pertinent only 
to beverage vending machines.
    In response to the comments by CA IOUs, NAMA, and Royal Vendors 
regarding the suitability of the 45 percent threshold for light 
transmittance, DOE notes that it has considered the current and 
potential future characteristics of advanced, high-performing glass and 
acrylic products featuring low-emissivity coatings, low solar heat 
gain, or other features that may impact the overall light transmittance 
of the material. 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, 64301-64302 (Oct. 28, 2013). However, after conducting 
market research regarding the visible transmittance of typical 
materials used in commercial refrigeration equipment manufacturing, as 
well as new high-performing glass products that could be used in such 
an application, DOE adopted a threshold of 45 percent in the 2014 CRE 
test procedure final rule. 79 FR 22277, 22287 (April 21, 2014). In 
support of this BVM ECS final rule, DOE conducted additional research 
into the glass and acrylic products typically used by manufacturers to 
produce Class A and Combination A beverage vending machines, as well as 
any new, high-performing glass products that may have been introduced 
since DOE's review for the 2014 CRE test procedure final rule. Based on 
its review, 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. DOE will 
continue to monitor the BVM and CRE market for any new materials 
integrated into equipment designs that meet DOE's intent of allow 
customers to view the merchandise contained within the refrigerated 
space but do not meet DOE's definition of transparent and, if 
necessary, revise the definition of transparent accordingly.
    Therefore, in this final rule, DOE is adopting a definition of 
transparent applicable to materials with greater than or equal to 45 
percent light transmittance based testing in accordance with ASTM 
Standard E 1084-86 (Reapproved 2009). DOE reiterates that this test 
method is optional and is not required for equipment certification or 
testing by manufacturers. Specifically, manufacturers may continue to 
specify the appropriate equipment class without determining the light 
transmittance of materials based on testing in accordance with ASTM 
Standard E 1084-86 (Reapproved 2009) However, if the transparency of a 
material is in question, the determination of the light transmittance 
of a transparent material must be determined in accordance with ASTM 
Standard E 1084-86 (Reapproved 2009) and DOE will use this test method 
to determine equipment classification in enforcement testing.
2. Machines Vending Perishable Goods
    In response to DOE's 2015 BVM ECS NOPR, NAMA and Royal Vendors 
stated that vending machines that vend perishable goods should be 
regulated under a separate equipment class because they must maintain 
temperatures that do not allow for a refrigeration low power mode 
credit. (NAMA, No. 50 at p. 5; Royal Vendors, No. 54 at p. 4) 
Conversely, SVA expressed agreement with DOE's position that vending 
machines that vend perishable goods do not require a separate equipment 
classification. (SVA, No. 53 at p. 2)
    DOE notes that there are beverage vending machines that are capable 
of vending certain perishable products that 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 throughout this 
rulemaking, 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 implementing a 
separate class for such equipment in this final rule. 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 agrees with SVA that beverage vending machines that may be 
configured to, or capable of, vending perishable goods do not require a 
separate equipment class or separate energy conservation standards. 
Specifically, as noted in comments provided by interested parties in 
response to the framework document, including Witterns, Crane, AMS, and 
NAMA (see preliminary TSD chapter 2) DOE understands that the same BVM 
models may be configured to vend perishable or non-perishable goods. 
DOE also believes, based on market research and input from interested 
parties, that, if the BVM model is configured to vend perishable goods, 
the refrigeration low power mode that may be installed on the machine 
as distributed in commerce is simply disabled or overridden for that 
particular installation. DOE additionally understands that 
installations where beverage vending machines are configured to vend 
perishable goods represent a minority of installations, a position 
supported in public comments provided by Royal Vendors and NAMA (see 
preliminary TSD chapter 2).
3. Market Characterization
    As part of the market and technology assessment, DOE identified and 
characterized relevant trade associations, manufacturers and their 
market shares, and current regulatory programs and non-regulatory 
initiatives related to BVM energy use. Details

[[Page 1051]]

related to this characterization are in chapter 3 of the final rule 
TSD.
    In response to the 2015 BVM ECS NOPR, DOE received several comments 
related to the role that the ENERGY STAR program plays in the U.S. BVM 
market. In the BVM ECS NOPR public meeting and in written comments, EEA 
Joint Commenters expressed the belief that minimum efficiency standards 
and the ENERGY STAR program are complementary and that, by nature of 
being mandatory, DOE's energy conservation standards program is able to 
save more energy than ENERGY STAR alone. (EEA Joint Commenters, No. 56 
at p. 4; EEA Joint Commenters, Public Meeting Transcript, No. 48 at p. 
118) The Form Letter Writers stated standards would eliminate the 
current ENERGY STAR specification as the most efficient which would 
remove the credibility of the ENERGY STAR Industry. (The Form Letter 
Writers, No. 64 and 65 at p. 1) SVA expressed its belief at the BVM ECS 
NOPR public meeting that voluntary standards such as ENERGY STAR are 
more effective in driving the market towards more efficient equipment 
than DOE's mandatory standards. (SVA, Public Meeting Transcript, No. 48 
at p. 117) In written comments, Royal Vendors, NAMA, and Coca-Cola 
stated that ENERGY STAR certification is required by a majority of 
equipment purchasers, and that DOE's proposed standards would trigger a 
revision to ENERGY STAR to further reduce allowable energy consumption 
below the DOE standard. These stakeholders added that a revision to the 
ENERGY STAR standard in response to DOE's BVM ECS rulemaking would make 
it more difficult to meet their customers' expectations for the ENERGY 
STAR label. Coca Cola added that manufacturers may devote more 
resources to developing technologies that can immediately meet newly-
revised ENERGY STAR standards, instead of investing in the development 
of technologies that may result in more significant energy savings in 
the long term. (Royal Vendors, No. 54 at p. 7; NAMA, No. 50 at p. 14; 
Coca-Cola, No. 52 at p. 3).
    DOE thanks the EEA Joint Commenters and SVA for their comments 
regarding the efficacy of ENERGY STAR in driving the market towards 
increased efficiency and agrees with the EEA Joint Commenters' 
assessment of ENERGY STAR and DOE's energy conservation standards as 
being complementary and more effective than voluntary standards alone. 
In response to comments regarding potential revision to ENERGY STAR 
standards as a result of today's rulemaking, DOE notes that ENERGY STAR 
is a voluntary program that exists to help customers identify energy-
efficient equipment on the market and save on energy costs. 
Specifically, the ENERGY STAR program includes only those equipment 
that exceeds mandated minimum standards that DOE is required by statute 
to set and enforce. Due to its nature as a voluntary program, DOE does 
not consider the impact of its energy conservation standards on 
potential updates to ENERGY STAR standards in its analysis. DOE 
coordinates with EPA on ENERGY STAR in order to reevaluate the ENERGY 
STAR specifications when DOE promulgates new or amended standards.
    DOE also received several comments in response to the 2015 BVM ECS 
NOPR's request for updated estimates for the market share of 
combination vending machines. AMS commented that it only manufactures 
Class A machines and that its production volume is split roughly evenly 
between Class A and Combination A machines. (AMS, No. 57 at p. 2) In 
its written submission, NAMA stated that it did not have data to 
estimate the market share of combination vending machines specifically, 
but it estimated that beverage vending machines are approximately 60 
percent of the total market for vending machines.
    DOE thanks these stakeholders for their submission of specific data 
and has incorporated it into the analysis.
4. Technology Options
    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 (see section I.B) 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 can 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. 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 currently available equipment uses R-134a 
for its refrigerant, and R-134a will no longer be available for BVM 
applications at the time compliance will 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 final rule 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 defrost mechanism
     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 final rule 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, detailed in chapter 3 of the final rule TSD. DOE 
then applied the screening criteria to determine which technologies 
were unsuitable for further consideration in this rulemaking. Chapter 4 
of the final rule TSD contains details about DOE's screening criteria.

[[Page 1052]]

    DOE uses the following four screening criteria to determine which 
technology options are suitable for further consideration in an energy 
conservation standards rulemaking:
    (1) Technological feasibility. DOE considers only those 
technologies incorporated in commercial equipment or in working 
prototypes to be technologically feasible.
    (2) Practicability to manufacture, install, and service. If it is 
determined that mass production and reliable installation and servicing 
of a technology in commercial equipment could not be achieved on the 
scale necessary to serve the relevant market at the time of the 
projected compliance date of the standard, then that technology will 
not be considered further.
    (3) Impacts on equipment utility or product availability. If it is 
determined that a technology would have significant adverse impact on 
the utility of the product to significant subgroups of customers or 
would result in the unavailability of any covered equipment type with 
performance characteristics (including reliability), features, sizes, 
capacities, and volumes that are substantially the same as equipment 
generally available in the United States at the time, it will not be 
considered further.
    (4) Adverse impacts on health or safety. If it is determined that a 
technology would have significant adverse impacts on health or safety, 
it will not be considered further.
    10 CFR part 430, subpart C, appendix A, 4(a)(4) and 5(b).
    In sum, if DOE determines that a technology, or a combination of 
technologies, fails to meet one or more of the above four criteria, it 
will be excluded from further consideration in the engineering 
analysis. The reasons for eliminating any technology are discussed 
below.
    The subsequent sections address DOE's evaluation of each technology 
option against the screening analysis criteria and DOE's determination 
of technology options excluded (``screened out'') based on the 
screening criteria.
1. Screened-Out Technologies
    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.
2. Remaining Technologies
    Through a review of each technology, DOE concludes that all of the 
other identified technologies listed in this section IV.B.2 met all 
four screening criteria to be examined further as design options in 
DOE's final rule analysis. In summary, DOE did not screen out the 
following technology options:
     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
     higher efficiency defrost mechanisms
     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
    DOE determined that these technology options are technologically 
feasible because they are being used or have previously been used in 
commercially available equipment or working prototypes. DOE also finds 
that all of the remaining technology options meet the other screening 
criteria (i.e., practicable to manufacture, install, and service and do 
not result in adverse impacts on customer utility, equipment 
availability, health, or safety). For additional details, see chapter 4 
of the final rule TSD.

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.
    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 2015 BVM ECS NOPR, 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 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 and outbound freight 
costs. Typical manufacturer markups are presented in chapter 5 of the 
final rule TSD.

[[Page 1053]]

    DOE revised the engineering analysis presented in the 2015 BVM ECS 
NOPR based on the feedback from stakeholders, additional industry 
research, and responses to recent regulatory changes implemented by 
EPA's SNAP program. In particular, DOE revised its assumptions for the 
thermal modeling of combination vending machines to account for some 
cooling in the compartment that is not designed to be refrigerated, 
incorporated higher production costs associated with specific 
requirements for beverage vending machines using flammable refrigerants 
(propane), and revised which design options were included in Class A 
and Class B baseline configurations. In addition, DOE adjusted the 
efficiency of CO2 compressors relative to R-134a 
compressors, increased the amount of LED lighting accounted for in 
place of T8 lighting, decreased the impact attributed to enhanced 
coils, incorporated a single-pane glass pack for Combination A vending 
machines at baseline, removed the most-efficient compressor design 
option from the 2015 BVM ECS NOPR, and updated its cost estimates for 
several design options.
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, preliminary analysis, and NOPR 
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.
    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 final rule. 
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 final rule 
TSD.
    Based on input from manufacturers at the BVM ECS NOPR public 
meeting as well as feedback received in the preliminary analysis phase 
of the rulemaking, DOE adjusted the assumptions it used in its analysis 
of baseline level for Class A and Class B beverage vending machines, 
for which there are current standards. In this final rule, DOE began 
its engineering analysis by analyzing equipment designs that had levels 
of energy consumption much higher than allowed by the standard level 
set in the 2009 final rule. DOE's analysis then implemented all 
applicable design options (including some which likely were implemented 
in order to meet the 2009 final rule standard levels) in order of 
ascending payback period. Such an approach results in equipment designs 
that better reflect the current BVM market. To determine the MPC for a 
beverage vending machine that is minimally-compliant with the current 
BVM standards each size, refrigerant, and equipment class combination 
DOE analyzed, DOE linearly interpolated between the energy consumption 
levels just above (more consumptive) and just below (less consumptive) 
than the standard. Additional design options were then added as part of 
the design option engineering analysis. This methodology represents the 
approach that a new entrant to the market, or an existing manufacturer 
conducting a redesign, would take to meet the new standard analyzed in 
this rule, and allows cost and price associated with meeting the 
current standard with appendix B of the amended test procedure. See 
Table Table IV.4 for an example of this methodology.
    Most of the design options analyzed in this final rule 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, the one that its analysis shows 
to be the most cost-efficient.
    After the NOPR stage, stakeholders provided comments regarding 
DOE's analysis of baseline equipment. In written comments, AMS 
commented that the baseline level calculated for Combination A beverage 
vending machines is far more efficient than the performance of actual 
machines in use today. Specifically, AMS stated that machines it 
manufactures, which would meet DOE's proposed definition of a 
Combination A vending machine, were tested, they would consume 8.09 
kWh/day as opposed to the 6.18 kW/day baseline that DOE presented in 
the NOPR TSD. (AMS, No. 57, at p. 10) AMS specifically stated that 
converting a Class A machine to a Combination A machine only reduces 
energy by 25 percent even though the refrigerated volume was reduced by 
60 percent and urged DOE to reconsider its assumptions for baseline 
combination vending machines. (AMS, No. 57 at p. 11)
    DOE appreciates the submission of specific data by stakeholders and 
used this data to better inform its rulemaking activities. In response 
to comments and data submitted after the 2015 BVM ECS NOPR, DOE has 
refined its engineering model for Combination A vending machines to 
better account for air comingling between the compartment(s) that are 
designed to be refrigerated and the compartment(s) that are not 
designed to be refrigerated, which effectively increases the heat load 
associated with the non-refrigerated volumes and, correspondingly, 
energy consumption. DOE notes that the results of this updated analysis 
now more closely align with AMS's reported test results.
2. Refrigerants
    At the time of the final rule analysis, hydrofluorocarbon (HFC) 
refrigerants, and specifically R-134a, were used in most beverage 
vending machines on the market 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,\28\

[[Page 1054]]

and information DOE obtained through confidential manufacturer 
interviews (see section IV.J), DOE has come to understand that 
CO2 refrigerant is used in a small but growing portion of 
the BVM market.
---------------------------------------------------------------------------

    \28\ One example of such a public statement is available at 
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. BVM market are changing as a result of two recent 
rulemaking actions by EPA 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 
BVM applications, 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 of 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 Register on July 20, 2015. 80 FR 42870, 42917-42920 (July 
20, 2015). This rule changes the status of R-134a for new beverage 
vending machines to unacceptable beginning on January 1, 2019. 
Therefore, equipment complying with the amended BVM standards DOE is 
adopting in this final rule will do so using the refrigerants allowable 
under the newly amended SNAP listings.
    Due in large part to the EPA SNAP rulemaking, DOE received a number 
of stakeholder comments related to refrigerants in this rulemaking. In 
particular, commenters addressed which refrigerants were likely to be 
used in the future, DOE's approach to analyzing the different 
refrigerants, and the relative energy efficiency of the different 
refrigerants.
a. Refrigerants Used in the Analysis
    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 refrigerants such as hydrocarbons, 
including propane, were only recently listed as acceptable alternatives 
for use in refrigerated beverage vending applications in the United 
States with EPA's recent publication of final Rule 19. Although DOE is 
not aware of any BVM models that are currently commercially available 
using propane as a refrigerant, DOE accounted for the use of propane as 
an alternative refrigerant, in addition to CO2, as a 
potential refrigerant for BVM application. This was based on use of 
propane as a refrigerant in other similar, self-contained commercial 
refrigeration applications.
    DOE did not receive any comments disagreeing with the use of these 
two refrigerants in the analysis. In response to DOE's 2015 BVM ECS 
NOPR request for comment, SVA stated that it has no plans to use 
isobutane as a refrigerant. (SVA, No. 53 at p. 5) SVA stated that it is 
in the early stages of research and development (R&D) for propane 
refrigerants and is concerned about EPA and UL requirements that 
restrict BVM placement, as well as significant equipment and facilities 
costs associated with flammable refrigerants. AMS commented that 
beverage vending machines with propane refrigeration systems require 
spark-proof motors to maintain safe operation in the event of a 
refrigerant leak. AMS stated that these motors are roughly three times 
the cost of non-spark proof motors and that this and other changes 
would add several hundred dollars to the cost of each machine. (SVA, 
No. 53 at p. 5; AMS, No. 57 at p. 8)
    DOE thanks SVA and AMS for their comments. DOE has reviewed the 
relevant section of the UL 541 standard regarding flammable 
refrigerants in BVM applications and agrees with AMS that additional 
related costs should be accounted for in order to appropriately reflect 
the cost of procuring motors in compliance with the UL requirements. 
Accordingly, DOE has revised its cost model to account for the 
increased cost of the motors required by this standard.
b. DOE Approach
    In the engineering analysis for this final rule, DOE first 
conducted an 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 new 
and amended standards will be required.
    In conducting its CO2 analysis, 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, in its final rule analysis, 
DOE used a 10-percent compressor power increase, based on a separate 
analytical comparison of HFC and CO2 compressors and 
feedback from manufacturers, 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. Additionally, as 
mentioned above, DOE reviewed the requirements in UL 541 Supplement SA, 
and accordingly included an additional MPC factor representative of 
changes that may be needed to vend motors and other electronic 
components in order to comply with the UL requirements for all units 
modeled with propane refrigerant. 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 final rule, please see chapter 5 of the final 
rule TSD.
    In the BVM ECS NOPR public meeting and in written comments, EEA 
Joint Commenters and the CA IOUs requested that DOE treat more 
efficient refrigerants as a design option in its engineering analysis 
rather than conducting the analysis such that the proposed standards 
could be met by either CO2 or propane. The EEA Joint 
Commenters expressed the belief that

[[Page 1055]]

DOE's refrigerant-neutral approach overestimates cost and 
underestimates potential energy savings as a result of any update to 
the standard. (EEA Joint Commenters, No. 56 at p. 2; CA IOUs, No. 58 at 
p. 2; EAA Joint Commenters, Public Meeting Transcript, No. 48 at pp. 8, 
43)
    DOE thanks the CA IOUs and EEA Joint Commenters for their comments. 
However, as noted by DOE in the BVM ECS NOPR public meeting, DOE's 
analysis for beverage vending machines has taken a refrigerant-neutral 
approach to maintain diversity and customer choice with regard to 
refrigerant in the BVM market. For example, Coca-Cola acknowledged in 
the BVM ECS NOPR public meeting that its choice for the North American 
business unit was CO2 as a refrigerant. (Coca-Cola, Public 
Meeting Transcript, No. 48 at p. 48-50). Coca-Cola's statement is 
consistent with DOE's understanding that BVM customers may select 
different refrigerants for a variety of reasons and DOE does not wish 
the standards adopted as a result of this final rule to limit the 
availability or viability of certain SNAP-approved refrigerants in the 
BVM market. Therefore, in this final rule analysis, DOE has maintained 
a refrigerant-neutral analysis approach that ensures equitability 
across refrigerant platforms and continued availability of 
CO2 as a refrigerant option for beverage vending machines. 
That is, DOE has maintained an analysis approach that independently 
analyzes CO2- and propane-refrigerant equipment so that the 
economic results can be analyzed individually. Such an approach results 
in selection of new and amended standard levels that result in the 
highest NPV for both refrigerants and that does not disadvantage 
another refrigerant.
c. Relative Energy Efficiency of Refrigerants
    NAMA and Royal Vendors commented in their written submissions that 
CO2 systems consume approximately 15 percent more energy 
than their R-134a counterparts and cautioned that data may not be 
available due to the lack of current use. (NAMA, No. 50 at p. 5; Royal 
Vendors, No. 54 at p. 4) SBA Advocacy agreed that CO2 is 
about 15 percent less efficient than R-134a and, therefore, claimed 
that it is not a technologically feasible alternative. (SBA Advocacy, 
No. 61 at p. 3) EVA also commented that CO2 is 15 percent 
less efficient than an R-134a unit and the cost in Europe for ``a 
cooling unit operating on CO2 is double that of an R-134a 
unit as a result of a lack of availability of CO2 
compressors.'' (EVA, No. 60 at p. 2) SVA commented that its experience 
with CO2 refrigeration systems indicates comparable 
efficiency performance to R-134a systems if optimized solely for 
steady-state conditions but stated that these systems must be designed 
for pull-down requirements associated with equipment reload at higher 
ambient temperature and/or humidity conditions, and that this causes 
CO2 systems tend to be about 5 percent less energy efficient 
than R-134a. (SVA, No. 53 at p. 3) Additionally, AMS commented that it 
had no direct knowledge with CO2 but that its limited 
testing with propane showed equal or only slightly better efficiency 
than R-134a. (AMS, No. 57 at p. 4)
    DOE thanks these stakeholders for their comments. It is DOE's 
understanding that the difference in performance between equipment 
using the different refrigerants is primarily a result of the different 
compressor efficiencies. DOE has incorporated these differences into 
its analysis and notes that its analytical results are in line with 
comments provided and specifically that the efficiency penalty 
associated with CO2 refrigeration systems in the analysis is 
bounded by the estimates provided. Additional information about these 
results is in the compressors section of IV.C.4 and in chapter 5 of the 
final rule TSD.
3. Screened-In Technologies Not Implemented as Design Options
    DOE removed several screened-in technologies from consideration in 
the engineering analysis due to lack of data, lack of availability, 
competing effects, or lack of measurable energy savings when tested to 
the DOE test procedure. The technologies included higher efficiency fan 
blades for evaporator and condenser fans, low-pressure differential 
evaporators, improvements to anti-sweat heaters, higher efficiency 
defrost mechanisms, variable speed compressors, and microchannel heat 
exchangers. More information about these technologies and the reasons 
they were removed from consideration can be found in chapter 5 of the 
final rule TSD.
    DOE received several comments regarding one of the technologies it 
removed from consideration in the engineering analysis, variable speed 
compressors. In response to DOE's request for comment on the use of 
variable speed compressors in beverage vending machines, AMS commented 
that although it had used variable speed compressors for energy savings 
in the past, this technology was no longer available for BVM 
applications due to the small market. (AMS, No. 57 at p. 3) SVA 
commented that it is not aware of any variable speed CO2 
compressors. (SVA, No. 53 at p. 5) In the BVM ECS NOPR public meeting 
and written comments, CA IOUs and the EEA Joint Commenters stated their 
belief that the three operating modes of beverage vending machines 
(pull-down, steady-state, and low power mode) make them good candidates 
for variable speed compressors to reduce energy consumption and 
inquired as to why DOE chose to exclude them as design options. (CA 
IOUs and EEA Joint Commenters, Public Meeting Transcript, No. 48 at p. 
35) In its written comments, the CA IOUs requested that DOE consider 
variable speed compressors as a design option. (CA IOUs, No. 58 at p. 
2)
    DOE thanks these stakeholders for their comments and notes that 
manufacturers are not precluded from exploring variable speed 
compressors as a means to meet the updated energy conservation 
standards for beverage vending machines. However, manufacturer comments 
are consistent with DOE's conclusion in the 2015 BVM ECS NOPR that 
there are currently no variable speed compressors with operating 
capacity ranges applicable to beverage vending machines available on 
the market that use refrigerants other than R-134a, which will not be 
available for use in vending machine applications by the compliance 
date of this rulemaking due to EPA's SNAP regulations. Because DOE is 
required to set energy conservation standards that are both 
technologically feasible and economically justified, DOE did not 
include variable speed compressors as a design option in its analysis.
4. Design Options Analyzed and Maximum Technologically Feasible 
Efficiency Level
    In response to the 2015 BVM ECS NOPR, DOE received comments with 
specific feedback regarding several of the design options analyzed, 
including glass packs, improved insulation and vacuum insulated panels, 
higher efficiency lighting, lighting low power modes, fan motors, 
evaporator fan controls, coils, and higher efficiency compressors.
a. Glass Packs
    In written comments, Coca-Cola expressed its belief that enhanced 
glass packs, specifically those using three panes of glass, are not 
economically justified for the energy savings delivered. Coca-Cola 
further stated that some of its current Class A equipment with 
CO2 refrigeration systems use

[[Page 1056]]

double pane, argon-filled, low E glass and cannot accommodate triple 
pane glass pack without a major redesign. (Coca-Cola, No. 52 at p. 3) 
Similarly, Royal Vendors commented that its Class A machines currently 
use double-pane, argon-filled, low-emissivity glass and cannot 
accommodate triple-pane glass packs without major redesigns, large 
development costs, and substantial machine cost increases. (Royal 
Vendors, No. 54 at p. 2) SVA also commented that enhanced glass packs 
are not economically justified. (SVA, No. 53 at p. 4)
    DOE thanks Coca-Cola, Royal Vendors, and SVA for their comments and 
has increased the cost associated with the enhanced glass pack design 
option from that used during the NOPR, in order to better represent the 
economic ramifications of implementing that design option. DOE notes 
that the engineering analysis in this final rule considers the enhanced 
glass pack design option, which is a triple-paned glass pack, as 
technologically feasible, but that the economic analysis does not deem 
it to be part of the least-cost approach to meeting the new standard 
levels at any analysis point. Additionally, DOE accounted for the cost 
of equipment redesign and production equipment cost increases in its 
manufacturer impact and customer subgroup analyses (See sections IV.J 
and IV.I, respectively).
b. Evaporator Fan Motor Controls
    Royal Vendors stated in written comments that its machines already 
use evaporator fan controls to meet the current standards. (Royal 
Vendors, No. 54 at p. 2)
    DOE thanks Royal Vendors for their comment and agrees that most 
equipment on the market today makes use of evaporator fan motor 
controls. Accordingly, in DOE's engineering analysis in this final 
rule, the evaporator fan motor controls design option is implemented in 
the baseline level for all Class A and most Class B analysis points. 
See section IV.C.1 for information on how DOE established baseline 
levels for Class A and Class B equipment in this analysis.
c. Coils
    In their written comments, SVA questioned DOE's assumption of 14 
percent energy savings due to enhanced evaporator coils, and stated 
their general belief that predicted efficiency improvements based on 
software modeling are typically optimistic compared to test results. 
SVA also stated that for its Class A equipment, it already uses 
enhanced evaporator coils to meet the current standard, and that 
enhanced condenser coils reduce equipment utility. (SVA, No. 53 at pp. 
3-4)
    DOE thanks SVA for their comments and has revised the cost and 
energy improvement associated with enhanced coils in this final rule. 
DOE additionally notes that in all of the final rule analysis points, 
the resulting reduction in DEC attributable to changes in the 
evaporator coil is shown to be well less than 10 percent. In addition, 
DOE notes that such ``enhanced'' evaporator and condenser coil options 
are already commonly implemented and commercially-available design 
options.
d. Compressors
    DOE received several comments regarding different compressors. 
Specifically, DOE received comments regarding the higher efficiency 
compressor design option and regarding CO2 compressors. In 
the BVM ECS NOPR public meeting, SVA expressed doubt that a beverage 
vending machine with the compressor that DOE considered as baseline in 
its engineering model would be able to meet the 2009 standard, and 
stated that DOE should instead consider the Embraco FFU130HAX 
compressor as the baseline efficiency level. SVA additionally stated 
that CO2 compressors capable of reducing energy consumption 
to the degree indicated in DOE's 2015 BVM ECS NOPR analysis do not 
exist on the market. (SVA, Public Meeting Transcript, No. 48 at pp. 63-
72) In written comments, Royal Vendors stated that it is not aware of 
any compressors with higher efficiency than the Embraco FFU130HAX for 
R-134a or the Sanden SRABB for CO2 and that therefore DOE 
should not consider a more efficient compressor as a design option to 
reduce energy consumption. (Royal Vendors, No. 54 at p. 1) In its 
written comments, Coca-Cola similarly stated that the assumed ability 
to move to higher efficiency compressors does not exist. (Coca-Cola, 
No. 52 at p. 3)
    While, through testing and teardowns, DOE has observed equipment on 
the current market that meets the current energy conservation standards 
that uses compressors other than the Embraco FFU130HAX, DOE agrees with 
stakeholder comments in that it is not currently aware of a compressor 
available for use in beverage vending machines in the United States 
that is more efficient than the Embraco FFU130HAX. Accordingly, DOE has 
removed from the analysis the design option that represented a higher 
efficiency compressor. Additionally, the engineering analysis now 
includes the ``Improved single speed reciprocating compressor'' design 
option (which corresponds to the FFU130HAX, adjusted according to the 
refrigerant-specific analysis) in all Class A baseline equipment 
configurations.
    Regarding CO2 compressors, in written comments, AMS 
commented that CO2 refrigerant has a significant efficiency 
penalty, and that it is aware of only one supplier that makes 
CO2 compressors in the capacity range required for BVM 
applications. (AMS, No. 57 at p. 8) Coca-Cola also stated in its 
written comments that it is aware of only one CO2 compressor 
supplier in the U.S. for beverage vending machines. (Coca-Cola, No. 52 
at p. 2) Additionally, in the BVM ECS NOPR public meeting, Coca-Cola 
stated that it was aware of six CO2 compressors, all early 
in the technology curve, and suggested that DOE take into account 
potential rapid improvements in efficiency for CO2 
compressors as a result of maturing engineering and supply chains into 
account in its analysis. (Public Meeting Transcript, No. 48 at p. 51)
    DOE thanks Coca-Cola and AMS for their comments. DOE is aware that 
there is currently a limited selection of CO2 compressors 
available to BVM manufacturers in the United States. Based on the 
feedback received, CO2 compressors were analyzed in the 
final rule engineering analysis as using 10 percent more energy than an 
R-134a compressor of similar design, as opposed to the 6 percent value 
used in the 2015 BVM ECS NOPR engineering.
e. Insulation and Vacuum Insulated Panels
    Royal Vendors commented that the only design options considered by 
DOE in this rulemaking that it has not already implemented to meet 
existing energy conservation standards are increased insulation 
thickness and vacuum insulated panels, and stated that increased 
insulation thickness would require large investments in redesign and 
new foaming fixtures. Royal Vendors additionally stated that it does 
not know the viability of vacuum insulated panels. (Royal Vendors, No. 
54 at p. 2) Coca-Cola commented that vacuum insulated panels are highly 
costly to implement and that its supply base has not worked to develop 
this option. (Coca-Cola, No. 52 at p. 3) EEA Joint Commenters stated 
that DOE's analysis may overestimate the cost and underestimate the 
performance of vacuum insulated panels due to possibly outdated 
information. (EEA Joint Commenters, No. 56 at p. 3) SVA commented that 
they are already using increased insulation thickness on their

[[Page 1057]]

Class B equipment to meet the existing standard. (SVA, No. 53 at p. 4).
    DOE has accounted for redesign and increased materials costs in its 
manufacturer impact and engineering analyses, respectively. (See 
sections IV.J and chapter 12 of the TSD for information on the 
manufacturer impact analysis.) In response to Royals' comment 
concerning the viability of vacuum insulated panels in BVM 
applications, DOE notes that proof of concept for enhanced insulation 
to increase energy efficiency has been shown in related industries such 
as commercial refrigerator manufacturing and serves as a basis on which 
to assess technological feasibility. Regarding Coca-Cola's comment, DOE 
has quantified the costs to implement vacuum insulated panels, which it 
agrees to be sizably higher at this time than those of traditional foam 
insulation, and has incorporated those costs into its engineering 
analysis. In response to the comment by EEA Joint Commenters regarding 
the cost and performance of vacuum insulated panels, DOE notes that it 
has continued research into this technology in concurrent rulemakings 
and that its assessment for beverage vending machines is based on the 
most up to date information that it has obtained through manufacturer 
interviews and other sources.
f. Lighting and Lighting Low Power Modes
    Regarding lighting, CA IOUs in the BVM ECS NOPR public meeting and 
EEA Joint Commenters in their written comment expressed the belief that 
DOE should have accounted for a greater variation in LED lighting 
system efficiency rather than considering it as a single efficiency 
tier. (CA IOUs and the EEA Joint Commenters, Public Meeting Transcript, 
No. 48 at p. 59; CA IOUs, No. 58 at p. 4) In written comments, Royal 
Vendors stated that it is already using LED lighting in its Class A 
machines to meet the current standard. (Royal Vendors, No. 54 at p. 1)
    DOE thanks the CA IOUs, EEA Joint Commenters, and Royal Vendors for 
their comments. DOE acknowledges that there are a range of LED 
efficiencies available on the market and notes that several design 
options in the analysis could be implemented to different extents, 
including, for example, lighting systems, thicker insulation, and 
various types of controls (e.g., accessory and refrigeration low power 
modes). In its engineering model, DOE used representative values for 
the energy consumption of each design option, including lighting 
systems, for each equipment class. DOE notes that manufacturers are 
free to choose whichever design path they wish in order to meet current 
and future energy conservation standards. DOE analyzes and orders 
design options based on its determination of the relative cost-
effectiveness of each design option. DOE notes that its engineering 
analysis agrees with Royal Vendors and accounts for the use of LED 
lighting in order to meet the baseline level at many Class A analysis 
points.
    Regarding lighting low power modes, in the BVM ECS NOPR public 
meeting, SVA expressed the belief that test results currently included 
in certification directories and showing high levels of efficiency may 
have been developed using lighting low power modes. (SVA, Public 
Meeting Transcript, No. 48 at p. 66) Also in the public meeting, SVA 
expressed doubt that the 6-hour allowance for lighting low power states 
under the updated test procedure could account for as steep a drop in 
energy consumption as DOE's analysis shows. (SVA, Public Meeting 
Transcript, No. 48 at p. 66) In its written comments, SVA estimated 
that 20 percent energy savings over a baseline model was possible if 
LED lighting systems are used in conjunction with lighting controls, 
and 10 percent energy savings were possible if lighting controls are 
used with T-8 lighting systems. (SVA, No. 53 at p. 4) SVA also stated 
that it only uses one LED bulb in its Class A equipment while DOE 
assumes two LED bulbs in its engineering model. (SVA, No. 53 at p. 4)
    DOE thanks SVA for its comments, and especially appreciates the 
submission of specific data on potential energy savings as a result of 
increased efficiency lighting. With regard to SVA's comment on the 
number of LED bulbs, DOE notes that its engineering model is based on 
equipment configurations equipment found in teardowns, and that it 
believes to be generally representative of the beverage vending machine 
market due to the presence of similar configurations across multiple 
manufacturers. DOE acknowledges that individual models may not have the 
same components. Additionally, DOE revisited the specifications of 
models available on the markets and, after additional review of 
available data, in its final rule analysis, DOE increased the linear 
footage of LED fixtures used within the case to replace T8 lighting in 
Class B and Combination B analyses to 8 total feet of LED fixtures, and 
maintained the values for Class A and Combination A at 6 total feet of 
LED fixtures.
g. Fan Motors
    In the BVM ECS NOPR public meeting, SVA commented that 9 watt fan 
motors are unrealistic for BVM applications and provided more detail in 
its written comments, stating that it uses 4 watt fan motors for its 
evaporator and condenser fans. In written comments, SVA also stated 
that its Class B equipment already implements PSC condenser fan motors 
and that ECM condenser fan motors are not economically justified. (SVA, 
Public Meeting Transcript, No. 488 at p. 174; SVA, No. 53 at p. 4) In 
written comments, Royal Vendors stated that it is already using ECM 
evaporator fan motors and PSC condenser fan motors to meet the current 
standards and added that converting from PSC to ECM condenser fan 
motors would not yield significant energy savings for the added cost. 
(Royal Vendors, No. 54 at p. 1)
    In response to SVA's comment regarding fan power draw, DOE notes 
that it used fan motor wattage values that were shown to be typical of 
the BVM market as evidenced by their inclusion in numerous models 
examined during DOE's teardown analysis. DOE thanks Royal Vendors for 
its comment regarding the use of fan motor design options and notes 
that it has reviewed the energy consumption model in its engineering 
analysis and that Royal's and SVA's comments generally align with DOE's 
engineering analysis with ECM evaporator fan motors often being among 
the more cost-effective design options and ECM condenser fan motors 
being among the least cost-effective.
h. Performance of Design Option Packages
    DOE also received several more general comments regarding the 
design options being used by manufacturers and the maximum 
technologically feasible level. In the BVM ECS NOPR public meeting and 
in written submission, SVA commented that it was already implementing 
many of DOE's proposed design options to meet existing ENERGY STAR 
levels and that it would not be able to come close to meeting DOE's 
proposed standard levels. SVA stated that many of the design options 
DOE analyzed are not technologically feasible or economically justified 
and that the remaining design options for Class A equipment are 
automatic lighting controls and refrigeration low power modes, which it 
believes would yield approximately 5 percent energy savings. SVA listed 
the

[[Page 1058]]

remaining design options for Class B equipment as including automatic 
lighting controls, enhanced evaporator coils, LED lighting, and 
refrigeration low power states. (SVA, No. 53 at pp. 3-4; Public Meeting 
Transcript, No. 48 at 173)
    AMS commented in its written submission that it has already 
incorporated several design options to meet the 2009 energy 
conservation standards and that reducing daily energy consumption by an 
additional 25 percent is not feasible with present technologies and 
would require drastic changes to overall cabinet sizes and door design. 
(AMS, No. 57 at p. 9) Similarly, Royal Vendors commented that it has 
already employed most of the design options considered by DOE in its 
analysis to meet the 2009 standards and therefore does not believe it 
can meet the proposed standard using any refrigerant. (Royal Vendors, 
No. 54 at p. 4) NAMA commented that most manufacturers have already 
employed most of the design options considered by DOE and specifically 
stated that some manufacturers already use ECM evaporator fan motors, 
split capacitor condenser fan motors, LED lighting, and evaporator fan 
controls to meet the current standard. (NAMA, No. 50 at p. 5) Coca-Cola 
commented that many vending machines with CO2 refrigeration 
systems that it purchases are already using LED lighting, ECM 
evaporator fan motors, and PSC condenser fan motors to meet ENERGY 
STAR. Coca-Cola additionally stated that while LEDs can save energy, 
ECM condenser fan motors have minimal impact on energy consumption. 
(Coca-Cola, No. 52 at p. 3)
    SVA commented that many of the design options considered by DOE are 
not technologically feasible, are not economically justified, or 
otherwise have a negative impact on equipment utility, citing the 
rebuttable presumption that the cost to the customer will be less than 
three times the value of the energy savings during the first year for 
energy conservation standards to be economically justified (Title 42 
U.S.C. 6295(o)) and stated that this should preclude DOE from 
considering design options that do not yield an energy cost savings of 
at least one third of their incremental cost. (SVA, No. 53 at p. 3) 
Additionally, in the BVM ECS NOPR public meeting, SVA expressed the 
belief that DOE should have more fully disclosed the data used in its 
analysis and that DOE's assumptions are generally off base with regard 
to manufacturer capability. (SVA, Public Meeting Transcript, No. 48 at 
p. 181)
    In response to stakeholder comments, DOE has revised its 
engineering model to better represent which design options are already 
being used to meet the existing standard and therefore not be 
considered as potential sources of further incremental energy savings. 
In response to SVA's comment regarding the economic justification of 
design options, DOE notes that it includes in the engineering analysis 
all technologies that have survived the screening analysis. At the 
engineering analysis phase, DOE only screens out those technologies 
that are not technologically feasible; are not practical to 
manufacture, install, and service; do not impact equipment utility or 
equipment availability; and do not adversely affect health and safety 
(see section IV.B). DOE considers the economic implications of any 
screened-in design options in its downstream analyses and sets new and 
amended standard levels based on any improvements in efficiency that 
are economically justified based on the new costs and benefits accrued 
by the nation, as well as the specific impacts on manufacturers (see 
section IV.J) and certain customer subgroups (see section IV.I). In the 
LCC and PBP analyses, DOE considers the time, in years, it takes for 
the cumulative energy savings from more efficient equipment to recover 
any incremental increase in equipment cost necessary to achieve those 
efficiency improvements. DOE notes that the PBP analysis is assessed 
based on the total incremental equipment cost necessary to achieve a 
given efficiency level and the commensurate energy savings, rather than 
determining the PBP of individual design options. 42 U.S.C. 
6295(o)(2)(B)(iii) DOE further discusses the methodology for the PBP 
analysis in section IV.F and presents the results of such analyses in 
section V.B.1.a.
    The design options included in this final rule analysis are shown 
in Table IV.4.

     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.
------------------------------------------------------------------------

    An example of the results of the engineering analysis for a Class A 
BVM model with CO2 refrigerant and a medium refrigerated 
volume is provided in Table IV.4 of this notice.

    Table IV.4--Example of Design Option Analysis--Class A Medium CO2
                               Refrigerant
------------------------------------------------------------------------
                                                         Design option
    DEC (kWh/day)         MPC ($)         MSP ($)            added
------------------------------------------------------------------------
8.598...............       $1,736.52       $2,340.77  High Energy Use;
                                                       with SPM fan
                                                       motors, no energy
                                                       controls, T8
                                                       lighting, double-
                                                       pane glass pack,
                                                       1'' insulation,
                                                       etc.
7.552...............        1,740.50        2,345.63  Evaporator Fan
                                                       Controls.

[[Page 1059]]

 
5.555...............        1,755.03        2,363.36  Improved Single
                                                       Speed
                                                       Reciprocating
                                                       Compressor.
5.126...............        1,759.01        2,368.22  Automatic Lighting
                                                       Controls.
4.604...............        1,764.90        2,375.40  Permanent Split
                                                       Capacitor
                                                       Evaporator Fan
                                                       Motor.
4.348...............        1,770.79        2,382.59  Permanent Split
                                                       Capacitor
                                                       Condenser Fan
                                                       Motor.
3.867...............        1,786.90        2,402.24  LED Lighting.
3.792...............        1,789.48        2,405.38  Baseline--Interpol
                                                       ated--Exactly
                                                       Meets Current
                                                       Standards;
                                                       Includes all
                                                       Design Options
                                                       Above le.
3.751...............        1,790.88        2,407.10  Refrigeration Low
                                                       Power State.
3.487...............        1,806.03        2,425.57  Enhanced
                                                       Evaporator Coil.
3.372...............        1,830.10        2,454.94  Electronically-
                                                       Commutated
                                                       Evaporator Fan
                                                       Motor.
3.267...............        1,857.71        2,488.62  1.125'' Thick
                                                       Insulation.
2.966...............        1,984.86        2,643.75  Enhanced Glass
                                                       Pack.
------------------------------------------------------------------------

5. Manufacturer Production Costs
    In its engineering analysis, DOE estimates costs for manufacturers 
to produce equipment at the baseline energy use level and at 
increasingly higher levels of energy efficiency. In this final rule, 
DOE based the manufacturer production cost model upon data from 
physical disassembly of units available on the market, corroborated 
with information from manufacturer literature, discussions with 
industry experts, input from manufacturer interviews (see section IV.J 
of this final rule), and other sources. The baseline units modeled in 
the engineering analysis only 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 final rule TSD 
provides a detailed description of the manufacturing cost analysis.
    DOE received comments regarding the selection of units for teardown 
and regarding the MPCs that resulted from the analysis. Specifically, 
in written comments, NAMA expressed concern that no combination vending 
machines were directly torn down and tested and requested that DOE 
perform such testing before regulations are imposed on this equipment 
class. (NAMA, No. 50 at p. 4) And, in its written comments, SVA 
expressed agreement with DOE's assumed markups for Class A and Class B 
equipment but added that it believes MPCs are underestimated. (SVA, No. 
53 at p. 2)
    In response to NAMA, DOE agrees that additional teardowns might 
have provided further information regarding combination vending 
machines. However, difficulty in procuring combination vending 
equipment ultimately made such teardowns impracticable. Instead, DOE 
used data gathered through teardowns of Class A and Class B machines 
and extended those data to the analysis of combination machines, 
drawing on the inherent physical and design similarities between the 
analogous equipment classes. In response to SVA, DOE notes that its MPC 
estimates are built up as the sum of individual component and system 
cost estimates, which have been subjected to numerous rounds of 
stakeholder review in previous stages of this rulemaking. DOE has 
incorporated into its cost modeling analysis all specific, actionable 
cost information received at each stage of the rulemaking. DOE 
additionally notes that as mentioned elsewhere in this final rule, it 
has updated its cost model for propane units to account for motors and 
other components that comply with applicable UL standards, and that 
this has had the net result of increasing MPC values for those units.

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 estimated markups for 
baseline and all higher efficiency levels that are applied to the MSPs 
from the engineering analysis to obtain final customer purchase prices. 
The markups analysis developed appropriate markups (e.g., manufacturer 
markups, retailer markups, distributor markups, contractor markups) in 
the distribution chain and sales taxes to convert the MPC estimates 
derived in the engineering analysis to customer prices, which were then 
used in the LCC and PBP analysis and in the manufacturer impact 
analysis. At each step in the distribution channel, companies mark up 
the price of the equipment to cover business costs and profit margin.
    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 final rule 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
    Chapter 6 of the final rule TSD provides details on DOE's 
development of markups for beverage vending machines.

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

[[Page 1060]]

LCC and PBP analysis (section IV.F of this final rule) 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.H of this 
final rule).
    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. In the 2015 BVM ECS NOPR, 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. 80 FR 5050462, 50486 (Aug. 19, 2015).
    To determine the AEC of BVM units installed indoors, DOE estimated 
that the DEC modeled in the engineering analysis and measured according 
to the DOE test procedure is representative of the average energy 
consumption for that equipment every day of the year. DOE believes this 
is a reasonable assumption, as beverage vending machines installed 
indoors are typically subject to relatively constant temperature and 
relative humidity conditions consistent with the nominal DOE test 
conditions (75 [deg]F and 45 percent relative humidity). DOE estimated 
that Class A and Combination A beverage vending machines and a majority 
of Class B and Combination B beverage vending machines will all be 
installed inside. Id.
    However, DOE understands that some Class B and Combination B 
beverage vending machines are installed outdoors and will be subject to 
potentially more variable ambient temperature and relative humidity 
conditions than BVM units installed indoors. Therefore, in the 2015 BVM 
ECS NOPR, DOE modeled the AEC of BVM units installed outdoors based on 
a linear relationship that was developed between the DEC determined in 
accordance with the DOE test procedure, as modeled in the engineering 
analysis, and the AEC for Class B and Combination B beverage vending 
machines installed outdoors. DOE developed this linear regression based 
on analysis performed in support of the 2009 BVM rulemaking, where 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) DOE then 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. Id.
    Regarding DOE's analysis of Class B and Combination B beverage 
vending machines installed outdoors, DOE's NOPR analysis did not 
consider the incremental energy use of any electric resistance heating 
elements energized to prevent freezing in cold temperatures, as DOE 
lacked sufficient data to do so and such energy use is not directly 
affected by improved efficiency levels considered by DOE because the 
technology options DOE considered in the engineering analysis do not 
include any design changes that would impact the energy use of 
resistance heaters. As such, DOE noted that accounting for the energy 
use of cold weather heaters would not significantly impact the energy 
use analysis, LCC analysis, or NIA results. Id.
    In the 2015 BVM ECS NOPR, DOE estimated, based on publicly 
available data from college campuses,\29\ that 16 percent of Class B 
machines were installed outdoors. DOE believes that 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. Id.
---------------------------------------------------------------------------

    \29\ Beverage vending machine Outdoor Location and Elevated 
(90[emsp14][deg]F) Outdoor Temperature Analysis. Lawrence Berkeley 
National Laboratory. June 2014. Available at http://eetd.lbl.gov/sites/all/files/lbnl-6744e.pdf.
---------------------------------------------------------------------------

    In addition, 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 Combination 
B equipment. However, DOE based its energy use analysis on a 
``representative size'' beverage vending machine for each equipment 
class, determined based on a weighted average of the equipment sizes 
modeled in the engineering analysis. Id. at 50487.
    In response to DOE's energy use analysis presented in the NOPR, 
Seaga stated the belief that DOE should not consider the number of 
Class A machines installed outside to be negligible, but did not 
provide any additional data (Seaga, Public Meeting Transcript, No. 48 
at p. 84). NAMA also noted the lack of college campuses from the 
Northeast and Deep South in the dataset that DOE used and recommended 
that DOE expand its data collection to include these two regions of the 
country. (NAMA, No. 50 at p. 7) Royal Vendors agreed with DOE that use 
of cold weather heaters should not be considered in the NIA. (Royal 
Vendors, No. 54 at p. 5) Similarly, AMS expressed agreement with DOE's 
analysis with regard to its methodology in calculating annual energy 
consumption. (AMS, No. 57 at p. 5)
    DOE appreciates AMS and Royal Vendor's support of DOE's energy use 
assessment methodology and treatment of cold weather heaters, 
respectively. In response to Seaga and NAMA's concerns regarding the 
number and type of beverage vending machines located outdoors, DOE 
believes that the data from six colleges and universities around the 
country are sufficiently representative of the general BVM population 
because college campuses typically 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 final rule TSD for a full 
discussion of the building types represented in the sample from college 
campuses). DOE appreciates the comments from Seaga and NAMA but, 
without data to improve DOE's estimates of outdoor BVM installations, 
DOE was not able to identify any data or information supporting such 
claims. DOE acknowledges that these trends could underestimate the 
outdoor instances of outdoor Class A machines and specific regional 
installation trends. However, DOE continues to believe that, on 
average, the majority of outdoor BVM installations across the country 
are Class B or Combination B units and that the number of Class A 
outdoor installations is small. In addition, DOE acknowledges that the 
six-school sample may underrepresent certain climatic regions in the 
United States. However, DOE does not have reason to believe that the 
installation trends for BVM in those regions would be significantly 
different from those in the regions represented in the data. Therefore, 
in this final rule, DOE maintained the assumption that 16 percent of 
Class B beverage vending machines are installed outside.
    In the 2015 BVM ECS NOPR, DOE also requested comments on any other 
variables that it should account for in its estimate of national energy 
use. In response, DOE received several comments regarding the effect of 
dirty coils in field installations. Mr. Richard Kenelly of CoilPod LLC 
commented that dirty coils lead to reduced performance

[[Page 1061]]

and higher energy use (CoilPod LLC, No. 42 at p. 1) and added that 
energy consumption may be reduced 45 to 50 percent after coils are 
cleaned (CoilPod LLC, Public Meeting Transcript, No. 48 at p. 53). SVA 
added that increased condenser efficiency is often achieved by 
increasing fin density that can lead to accelerated coil fouling, which 
decreases energy consumption under actual use conditions. (SVA, Public 
Meeting Transcript, No. 54 at p. 54). USelectIt (USI) agreed with SVA's 
statement that increased fin density is used to increase condenser coil 
efficiency and that because customers don't generally clean their 
coils, they have implemented technology that runs the condenser fan 
motors backwards in an attempt to automatically clean the coils. USI 
also agreed with SVA that under real-world conditions, efficiency would 
decrease substantially due to coil degradation and that including 
higher efficiency condenser coils may work against DOE's intended goal 
of energy savings, as the higher fin density of these coils makes them 
more difficult to clean (USI, Public Meeting Transcript, No. 54 at p. 
5). In written comments, Coca-Cola, Royal Vendors, and SVA expressed 
concern that increasing coil fin density will hinder performance in the 
field due to increased fouling and shorter equipment life. Royal 
Vendors provided the specific example of higher compressor strain due 
to higher static pressure and increased coil restriction in the case of 
increased fin density (Coca-Cola, No. 52 at p. 3; Royal Vendors, No. 54 
at pp. 2, 6; SVA, No. 53 at p. 6).
    DOE understands the importance of proper maintenance, including 
cleaning of the condenser coil, on the energy use and lifetime of 
beverage vending machines. DOE has accounted for regular maintenance of 
BVM equipment in the LCC model, which accounts for an annual 
preventative maintenance cost that includes coil cleaning, cleaning the 
exterior of the machine and machine components, and inspection of the 
refrigeration system (see section IV.F and chapter 8 of the TSD). DOE 
notes that BVM manufacturers and distributors encourage regular coil 
cleaning in their operation manuals.\30\ In addition, some 
manufacturers and distributors require adherence to the operations 
manual in order to maintain the warranty on the equipment,\31\ which 
DOE believes may compel such regular preventative maintenance. While 
DOE acknowledges that some BVM operators may not adhere to the 
recommended maintenance schedule, manufacturers do not have control 
over the actions of BVM operators.
---------------------------------------------------------------------------

    \30\ See e.g., Dixie Narco. Glassfront BevMax 3 Vender Technical 
Manual. Crane. http://69.129.141.51:8080/RD/techbulletins.nsf/
e667893fe32caf4785256bcd0066752b/67ec964a7ec11a7f85257346004b668b/
$FILE/Bev%20Max%203%20CC%20Man%20260.01.pdf or Sma's Club http://scene7.samsclub.com/is/content/samsclub/633055_P1pdf.
    \31\ See e.g., Drop's Vending www.dropsvending.com/Merchant2/merchant.mvc?Screen=TERMPOL or Royal http://royalvendors.com/wp-content/uploads/2014/05/Domestic-Vender-Warranty.pdf.
---------------------------------------------------------------------------

    Furthermore, DOE does not have authority to address such 
application-based usage as part of these equipment standards, which are 
applied at the point of manufacture when the coil is clean. Therefore, 
DOE is electing not to consider the impact of failure to clean 
condenser coils or otherwise properly maintain BVM equipment in the 
field in the energy use analysis. DOE notes that BVM operators may 
install and operate their equipment in any number of inadvisable ways 
that may have an impact on energy use of the equipment. However, in 
this analysis, DOE is accounting for the anticipated energy use of 
beverage vending machines in the field as intended by manufacturers and 
distributors. DOE believes that BVM manufacturers, who are subject to 
these standards, should not be held responsible for any failure by BVM 
operators to properly operate BVM equipment in the field. DOE also 
notes that, were DOE to account for the impact of coil fouling in the 
energy use analysis, it would likely affect all equipment classes and 
ELs equivalently and, thus, would not affect the LCC analysis or NIA 
results because only costs that vary with efficiency levels (ELs) 
(incremental costs) lead to changes in these results.
    In addition, CA IOUs requested that DOE provide state level energy 
savings projections for its proposed standard (CA IOUs, No. 58 at p. 6) 
In response to this request, DOE notes that it is obligated by EPCA to 
consider the national benefits and costs, including the total national 
energy savings, of any new or amended standards to determine whether 
such standards are technologically feasible and economically justified. 
EPCA does not require DOE to consider such state-specific information 
in considering and promulgating Federal standards. (42 U.S.C. 6295 
(o)(2)) Furthermore, DOE does not believe that such detailed analysis 
would significantly improve the analysis or affect the outcome of such 
analysis. Therefore, DOE did not perform a state-level analysis and has 
based the standards analysis conducted in this final rule on the 
national aggregate impacts on customer, manufacturers, and the nation 
in performing the analyses required by 42 U.S.C. 6295(o)(2).
    Chapter 7 of the final rule TSD provides additional details on 
DOE's energy use analysis for beverage vending machines.

F. Life-Cycle Cost and Payback Period Analysis

    New or amended energy conservation standards usually decrease 
equipment operating expenses and increase the initial purchase 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, 
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 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 an LCC and PBP spreadsheet model that 
incorporates 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

[[Page 1062]]

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 2015 BVM ECS NOPR, based on historical price trends 
that projected the MSP to decline by almost 2 percent from the 2014 MSP 
estimates through the 2019 assumed compliance date of new or amended 
standards.
    DOE re-examined the data available and updated the price trend 
analysis for this final rule analysis. DOE continued to use the 
automatic merchandising machines PPI and 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 BVM shipments. Using these data for the BVM 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 almost 2 
percent. DOE used this revised price trend in the final rule 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 state-level EIA 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 2015 (AEO2015) was used 
as the 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 these 
average energy prices from data that are published annually based on 
EIA Form 826. DOE then used EIA's AEO2015 price projections to estimate 
state-level 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.
    In response to the 2015 BVM ECS NOPR, Coca-Cola asked if 
electricity prices from EIA used in the analysis are based on a 
national average or if any kind of weighting or regionality was taken 
into account. Coca-Cola also inquired whether DOE considered marginal 
costs of electricity (Coca-Cola, Public Meeting Transcript, No. 48 at 
p. 110). DOE notes that the LCC and PBP analysis uses state-level 
electricity prices in its Monte Carlo approach, and as such inherently 
includes regional variability in prices. DOE has considered using 
marginal costs of electricity but opted to use average electricity 
prices by state in this final rule analysis because compiling and 
utilizing marginal rates for the commercial sector across the nation is 
extremely complex, and data is difficult to obtain.
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 
potentially less reliable than conventional, baseline technologies.
    DOE based repair costs for baseline equipment on data in a Foster-
Miller Inc.\32\ report with adjustments to account for LED lighting. 
Maintenance costs include both preventative maintenance and annualized 
cost of refurbishment. DOE estimated that beverage vending machines 
undergo refurbishment every 4.5 years based on two ENERGY STAR reports 
indicating that beverage vending machines are refurbished every 4 to 5 
years. DOE used RSMeans \33\ data for preventative maintenance costs 
and used data from the 2009 BVM final rule \34\ for the annualized cost 
of refurbishment.
---------------------------------------------------------------------------

    \32\ Foster-Miller, Inc. Vending Machine Service Call Reduction 
Using the VendingMiser. February 18, 2002. Report BAY-01197. 
Waltham, MA.
    \33\ RSMeans Facilities Maintenance & Repair 2010, 17th Annual 
Edition. 2009. Kingston, MA.
    \34\ 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. Available online at 
www.regulations.gov under Docket No. EERE-2006-STD-0125.
---------------------------------------------------------------------------

    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.
    In the 2015 BVM ECS NOPR, DOE requested comment on the maintenance 
and repair costs modeled in the LCC analysis, especially additional 
data regarding differences in maintenance or repair costs that vary as 
a function of refrigerant, equipment class, or efficiency level. DOE 
received two comments. Royal Vendors commented that maintenance and 
repair costs will be higher for units using new refrigerants than they 
currently are for R-134a units, and that more efficient components are 
more expensive, thus higher efficiency levels should have higher 
maintenance costs. However, Royal Vendors did not supply supporting 
data. (Royal Vendors, No. 54 at p. 6) AMS commented that they had 
observed no measurable differences in cost or frequency of service 
calls for higher efficiency Class A machines. (AMS, No. 57 at pp. 5-6)
    In response to these comments, in this final rule analysis DOE 
included higher maintenance costs for more efficient machines which 
implemented such design options as enhanced condenser coils, improved 
compressors, and high performance fans. Please see chapter 8 of the 
final rule TSD for more information regarding maintenance and repair 
costs.
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 (Aug. 31, 2009). For this final rule, 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. As 
discussed in section IV.F.3, this estimate is based

[[Page 1063]]

on a 2010 ENERGY STAR webinar,\35\ 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 
\36\ (RTF), which observed the age of the units in service to be 
approximately 8 years on average.
---------------------------------------------------------------------------

    \35\ EPA. Always Count Your Change, How ENERGY STAR Refrigerated 
Vending Machines Save Your Facility Money and Energy. 2010. 
www.energystar.gov/ia/products/vending_machines/Vending_Machine_Webinar_Transcript.pdf.
    \36\ 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.
---------------------------------------------------------------------------

    Refurbishment costs are included in the maintenance costs presented 
in section IV.F.3 of this final rule, and a discussion of how 
maintenance and repair costs are derived is in chapter 8 of the final 
rule TSD. 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 final rule.
    At the NOPR stage, DOE requested 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. In addition, 
DOE requested 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. 
DOE also requested comment on the applicability of this assumption to 
all equipment classes.
    DOE received several additional comments on equipment lifetime in 
response to the NOPR analysis. AMS generally agreed with DOE's 
methodology and results for equipment lifetime (AMS, No.57 at p. 6), 
but AMS also noted that new component types with unproven reliability 
records may either shorten or lengthen BVM lifetimes. (AMS, No. 57 at 
p. 6) Royal Vendors commented that the evaporator fan and condenser fan 
will have shorter life with increased fan density, thereby decreasing 
performance and shortening compressor lifetime. (Royal Vendors, No. 54 
at p. 6) NAMA commented that the lifetime of machine could be longer in 
the future because BVM owners will retrofit instead of buy new 
machines. (NAMA, No. 50 at p. 8)
    DOE appreciates these comments, and maintained its average lifetime 
assumption of approximately 13.5 years for this final rule. However, 
DOE did compensate for the effects of enhanced evaporator and condenser 
fans in the repair and maintenance costs component of the LCC and PBP 
analysis. In this analysis, while the shorter life of these fans does 
not shorten the overall life of the BVM equipment, the costs to 
maintain more efficient equipment is greater.
    DOE notes that assumptions regarding equipment lifetime and 
refurbishment cycles also affect DOE's shipments model, which is 
discussed in section IV.G of this final rule.
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 
adopted 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 will 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.H) and impacts on manufacturers (in 
the MIA, discussed in section IV.J) recognizing that a range of 
efficiencies currently exist in the marketplace 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 \37\ 
and ENERGY STAR databases,\38\ these data were used to determine the 
efficiency distribution of models within the equipment class, which 
only included Class B CO2 equipment. 80 FR 50462, 50492 
(Aug. 19, 2015).
---------------------------------------------------------------------------

    \37\ www.regulations.doe.gov/ccms.
    \38\ 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), DOE assumed all equipment would 
be ENERGY STAR-compliant or use design options consistent with ENERGY 
STAR equipment in the no-new-standards case. That is, DOE assumed that 
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 and other 
sealed-system components, as opposed to building or purchasing 
separate, less efficient, components for any new propane models. This 
analysis approach 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. Id.
    For Combination A and Combination B beverage vending machines, DOE 
notes that very little data exists regarding the efficiency 
distribution of such equipment. However, because most manufacturers of 
Combination A and Combination B equipment also produce Class A and/or 
Class B equipment, DOE employed a methodology to estimate the 
efficiency distribution of existing Combination A and Combination B 
equipment based on the known efficiency of Class A and Class B 
equipment. Therefore, based on the same analytical 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 set of design options 
reflected in the efficiency distribution for Class A and Class B 
equipment that is currently available on the market. However, DOE notes 
that there are some BVM manufacturers that produce only Class A and/or 
Class B equipment and these manufacturers typically produce the most 
efficient units. Therefore, DOE assumed that the design option set 
corresponding to the ENERGY STAR levels for Class A and Class B

[[Page 1064]]

equipment, which is the most common design, represented the maximum 
efficiency for combination equipment and higher efficiency Class A and 
Class B models did not have commensurate combination equipment 
platforms. Therefore, equivalent market share for combination equipment 
and the remaining shipments were equally distributed between the 
``ENERGY STAR equivalent'' efficiency level and the baseline efficiency 
level, or EL 0. Id.
    To project this efficiency distribution over the analysis time 
frame in the no-new-standards case, DOE assumed that the efficiency 
distribution that currently exists in the market will be maintained 
over the analysis period (2019-2048). Id.
    In response to the 2015 BVM ECS NOPR analysis, DOE received 
comments from interested parties regarding DOE's efficiency 
distribution assumptions. In particular, AMS commented that it sells 
Combination A machines with and without features found in their ENERGY 
STAR Class A machines and that less than 10 percent of its customers 
purchase more efficient models because the company does not see the 
energy savings benefits themselves. (AMS, No. 57 at p. 7) NAMA also 
expressed concern that DOE's definition for combination vending 
machines may make the assumption that Combination A and Combination B 
machines have similar efficiency distributions to their Class A and 
Class B counterparts false. (NAMA, No. 50 at p. 9)
    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. Consistent 
with AMS and NAMA's comments, 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 defined the baseline efficiency distribution 
for Combination A and Combination B equipment as significantly less 
efficient than Class A and Class B equipment. That is, Combination A 
and Combination B equipment is assumed to fall between the baseline 
efficiency unit (the least efficient combination unit that could be 
produced) and the EL with comparable design options to the ENERGY STAR 
EL for Class A and Class B equipment. DOE notes that this is 
significantly less efficient than the baseline efficiency distribution 
for Class A and Class B equipment, as this equipment is not assumed to 
have shipments below ENERGY STAR and in some cases has shipments of BVM 
models with efficiency levels far exceeding the ENERGY STAR 
requirement.
    DOE also notes that the values in the ENEGY STAR and CCMS databases 
represent values gathered under the existing DOE test procedure, or 
appendix A. Because this final rule analysis is conducted based on 
testing in accordance with appendix B, DOE elected to translate the 
existing equipment efficiency data to be representative of testing 
under appendix B. To do this, DOE calculated the average energy 
savings, in kWh/day, for accessory low power mode and refrigeration low 
power mode for those equipment classes represented in the ENERGY STAR 
and CCMS databases,\39\ as these are the test procedure provisions in 
appendix B that affect the measured DEC of covered equipment. The 
energy savings from accessory and refrigeration low power mode will 
vary based on the specific technologies and components implemented in 
each different BVM model. However, DOE believes that the design options 
and technologies modeled in the engineering analysis are representative 
of typical equipment available in the market; therefore, the average 
energy savings for the accessory and refrigeration low power mode 
generated based on the engineering analysis are similarly 
representative of the average change in daily energy consumption that 
BVM models with low power modes would observe when testing in 
accordance with appendix B. That is, DOE's analysis calculates the 
average change in measured DEC when testing under appendix B, with low 
power modes enabled, compared to appendix A, for the typical BVM model.
---------------------------------------------------------------------------

    \39\ While DOE performed this analysis for both Class A and 
Class B equipment represented in the CCMS and ENERGY STAR database, 
only Class B CO2 units are relevant for DOE's analysis, 
as all Class A units in the ENERGY STAR and CCMS databases use R-
134a refrigerant.
---------------------------------------------------------------------------

    To adjust the CCMS and ENERGY STAR certified ratings, DOE assumed 
that all ENERGY STAR-certified equipment would have both accessory low 
power mode and lighting low power mode. DOE notes that ENERGY STAR 
prescribes that either accessory or refrigeration low power mode (or 
both) be present in order for a model to qualify for ENERGY STAR 
certification. Therefore, all ENERGY STAR models are offset by the 
average energy savings resulting from the use of low power modes when 
testing under appendix B (0.21 kWh/day for Class B equipment). DOE 
assumed that the models that were certified in CCMS but were not ENERGY 
STAR-qualified did not have low power modes and, thus, their energy 
consumption was not adjusted.
    Some commenters observed that some certified ratings in the CCMS or 
ENERGY STAR databases may be based on testing of equipment without 
accounting for the energy consumption of money processing equipment 
and/or without lighting fully energized for the duration of the test, 
as is currently required under appendix A (see section III.B). DOE 
notes that the recently published 2015 BVM test procedure final rule 
adopted a new appendix A that clarifies the treatment of certain 
accessories, including lighting, under the DOE test procedure. 
Specifically, appendix A provides 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 
and the energy consumption of payment mechanisms is to be accounted for 
the DEC for each BVM model. 80 FR 45758 (July 31, 2015). DOE also notes 
that appendix A of the amended BVM test procedure must currently be 
used to certify equipment with existing energy conservation standards. 
While DOE acknowledges that some manufacturers may have previously 
misinterpreted the DOE test procedure and certified equipment without 
lighting fully illuminated and/or without money processing equipment in 
place, DOE notes that the analysis supporting the standard levels 
adopted in this final rule was done based on a modeled engineering 
analysis, which was validated based on testing DOE conducted in 
accordance with the amended BVM test procedure adopted in the 2015 BVM 
test procedure final rule. Based on the engineering analysis and 
testing results, DOE maintains that equipment can meet the current and 
amended standard levels when testing in accordance with the 2015 BVM 
test procedure final rule test procedure amendments. In addition, DOE 
notes that the CCMS and ENERGY STAR databases are only used to inform 
the distribution of equipment efficiencies currently available in the 
market. As DOE does not have information on whether and which specific 
models may have been testing without lighting fully illuminated and/or 
without money processing devices in place, DOE declines to modify the 
DEC values found in the CCMS and ENERGY STAR databases to account for 
these potential misinterpretations. However, DOE did conduct a 
sensitivity analysis to

[[Page 1065]]

determine the impact of any artificially reduced DEC values in the CCMS 
and ENERGY STAR databases and found that it did not have a significant 
impact on the feasibility or cost-effectiveness of the analyzed TSLs.
    For equipment that are not represented in DOE's combined BVM models 
database, the efficiency distributions assumed in the final rule are 
estimated based on the ENERGY STAR and CCMS database, knowledge of the 
market, test data, and comments received from manufacturers. 
Specifically, for Class A CO2 equipment and Class A and 
Class B propane equipment, these models were all assumed to be designed 
based on a similar ENERGY STAR-compliant R-134a design platform for the 
given or similar equipment class. This analysis approach resulted in 
selection of the baseline efficiency level for Class A CO2 
equipment, EL1 for Class A propane equipment, and primarily EL2 for 
Class B propane equipment.\40\ Chapter 8 of this final rule TSD 
provides more detail about DOE's approach to developing no-new-
standards case efficiency distributions.
---------------------------------------------------------------------------

    \40\ DOE assumed that 85 percent of the market would enter at 
the ENERGY STAR level (EL2), with the remaining 15 percent 
distributed between the lower ELs (EL1 and EL0), to reflect the fact 
that some manufacturers may elect to trade off the increased 
efficiency of propane equipment with other more efficient design 
options to reduce cost. This assumption for Class B equipment also 
reflects the larger spread in efficiency currently observed in the 
market, as compared to Class A equipment.
---------------------------------------------------------------------------

7. Split Incentives
    DOE understands 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 will not directly reap any 
energy cost savings from more-efficient equipment. However, DOE 
believes that BVM owners will 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.
    In response to the 2015 BVM ECS NOPR, NAMA and AMS commented that 
operators of vending machines typically do not pay the energy costs 
associated with the machine, which are instead borne by the business or 
institution where the machine is installed. (NAMA, Public Meeting 
Transcript, No. 48 at p. 108; AMS, No. 57 at p. 6) DOE is aware of this 
``split incentive'' issue and its impact on the perceived cost-
effectiveness of savings in the marketplace. However, as noted above, 
in this analysis DOE has assumed BVM owners will seek to modify 
existing financial arrangements and contracts to pass on higher 
equipment costs to the users who pay the energy 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 
will be impacted by the higher equipment cost and receives the energy 
cost savings. In the MIA, DOE also accounts for the ability of 
manufacturers to pass on higher equipment costs to customers (see 
section IV.J).

G. Shipments Analysis

    DOE uses forecasts of annual equipment shipments to calculate the 
national impacts of standards (NES and NPV) and to calculate the future 
cash flows of manufacturers.\41\ For beverage vending machines, DOE 
developed shipments forecasts based on an analysis of key market 
drivers and industry trends for this 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.
---------------------------------------------------------------------------

    \41\ 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 2015 BVM ECS NOPR analysis, DOE estimated historical 
shipments between the years of 1998 and 2006 based on the 2009 BVM 
final rule shipments model, increased 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 A or Combination B equipment. 74 FR 
44914, 44928 (Aug. 31, 2009) DOE estimates that combination machines 
represent 18 percent of total BVM shipments, as discussed further in 
section IV.G.1. DOE also referenced the ENERGY STAR shipment data to 
estimate shipments of new beverage vending machines between the years 
of 2005 and 2012 to corroborate DOE's historical shipments estimates 
during this period. These historical shipment estimates were used to 
build up a stock of BVM equipment with a representative distribution of 
ages, and DOE estimated a stock of 3.1 million BVM units in the United 
States in 2006. 80 FR 50462, 50493 (Aug. 19, 2015).
    Between 2006 and 2014, DOE estimated that annual shipments declined 
linearly from 118,000 in 2006 to 45,000 in 2014, consistent with 
comments from manufacturers received in during manufacturer interviews 
conducted during the NOPR phase of this rulemaking (see section IV.J of 
this final rule). Based on these shipments, the estimated stock in 2014 
is approximately 2.2 million units, compared to a stock of 
approximately 3 million in 2006. In the 2015 BVM ECS NOPR, DOE noted 
that if shipments were maintained at 2014 levels of around 45,000 units 
per year over the 30-year analysis period, this would result in an 80-
percent reduction 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. Lacking any data indicating or 
supporting a significant reduction in availability or deployment of 
beverage vending machines, DOE assumed that shipments would recover 
over time to maintain reasonably constant stocks of beverage vending 
machines into the future. Id.
    In both the BVM ECS NOPR analysis and this final rule analysis, DOE 
modeled future shipments of new beverage vending machines from 2014 
through 2048 based on data from Vending Times Census of the Industry 
2014 \42\ that reported BVM stock trends in the commercial and 
industrial building sectors, as well as specific commercial and 
industrial building sectors where 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

[[Page 1066]]

Consumption Survey (CBECS),\43\ and an average increase in number of 
buildings was calculated by comparing 2012 CBECS data to historical 
2003 CBECS data. The estimated stock in 2048 based on this method was 
1.8 million, a 20-percent decrease from the 2.2 million estimated in 
2014. To estimate the shipments of new beverage vending machines based 
on these stock projections, DOE assumed the minimum growth rate 
necessary to result in a stock of 1.8 million in 2048, which resulted 
in a growth rate of 3.7 percent annually throughout the analysis 
period. Id at 50494.
---------------------------------------------------------------------------

    \42\ Vending Times Census of the Industry 2014. Available at 
www.vendingtimes.com.
    \43\ 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
                                   Average  annual %      number  of
    Commercial and industrial      reduction in  BVM   buildings  (Est.
        building sector *                stock         from  CBECS 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 final rule TSD.

    At the 2015 BVM ECS NOPR stage, DOE requested comment on the 
several assumptions regarding historical shipments between 1998 and 
2014 and also requested 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.
    In response, AMS offered that it manufactures only Class A and 
Combination A machines and that its shipment volumes are split roughly 
50-50 between the two (AMS, No. 57 at p. 3). AMS also commented that 
DOE's shipments assumption contradict a 2014 ENERGY STAR publication 
which reports 54,000 shipments for that year. AMS noted that this does 
not include combination machines, and claimed that even the estimated 
54,000 value is likely underestimated. (AMS, No. 57 at p. 7) SVA 
commented that historical shipments between 1998 and 2014 had a 
downward trend. (SVA, No. 53 at p. 8) Regarding existing BVM stock 
assumptions, NAMA provided an average estimate of 2.5 machines 
installed per ``customer location.'' (NAMA, No. 50 at p. 11)
    In response to these comments submitted by interested parties, DOE 
revised the historical shipments model to reference the most current 
ENERGY STAR market penetration reports, including the 2014 report cited 
by AMS. As AMS noted that the previous estimate of 45,000 is likely too 
low, DOE has updated the shipments in 2014 to be consistent with the 
shipments of ENERGY STAR-qualified units reported by ENERGY STAR 
(54,000 units), but scaled this number to reflect the shipments of 
combination equipment and non-ENERGY STAR-qualified Class A and Class B 
equipment. Specifically, DOE increased the 54,000 estimate by 18 
percent to account for shipments of combination equipment and by 11 
percent to represent the shipments of non-ENERGY-STAR-qualified 
units,\44\ resulting 71,443 units shipped in 2014. DOE agrees with 
SVA's comment regarding the consistent downward trend of shipments 
between 1198 and 2014 and notes that DOE's shipments model reflects 
this industry trend. DOE believes the referenced ENERGY STAR reports 
represent the best available data to estimate historical BVM shipments.
---------------------------------------------------------------------------

    \44\ DOE estimates that in 2014 89 percent of Class A and B 
equipment were ENERGY STAR-qualified based on the relative number of 
models available in the CCMS and ENERGY STAR databases in 2014.
---------------------------------------------------------------------------

    At the NOPR stage DOE also requested comment on its assumptions 
regarding future shipments. Specifically, DOE requested comment on the 
stock of BVM units likely to be available in the United States and in 
particular commercial and industrial building sectors over time. DOE 
also requested comment on its assumptions regarding the likely 
reduction in stock in different commercial and industrial building 
sectors in which beverage vending machines are typically installed and 
on any other factors that might influence an overall reduction in BVM 
stock.
    In response to these requests, DOE received several comments 
regarded future shipments. In the BVM ECS NOPR public meeting and in 
written comments, NAMA expressed concern regarding DOE's assumed 
reduction in shipments due to health initiatives and stated that the 
industry is moving towards healthier options. NAMA additionally stated 
that the ability to place whatever the operator wants in a given 
machine would negate the need to remove the machine itself due to a 
soda ban. NAMA referenced an industry census study by Technomic, Inc. 
projecting growth in future revenues and asked DOE to re-evaluate 
assumptions regarding shipments. (NAMA, No. 50 at p. 9; NAMA, Public 
Meeting Transcript, No. 48 at p. 129) Reinforcing that comment, the EEA 
Joint Commenters argued that DOE may be underestimating total number of 
shipments over time because an increase in healthy options that are 
being offered in vending machines may actually cause shipments to 
increase over time, but did not provide supporting data. (EEA Joint 
Commenters, No. 56 at p. 4)
    In written comments, NAMA commented that it is not aware of any 
situations that would result in further reduction to BVM stock other 
than micromarket expansion. However,

[[Page 1067]]

NAMA expressed its belief that this trend may not be as significant as 
once thought, or as DOE suggested in the 2015 BVM ECS NOPR. NAMA cited 
a 15 percent growth in conversion from beverage vending machines to 
micromarkets and estimated there to be 10,000 micromarkets currently in 
existence in the United States. NAMA stated that it was unable to 
provide data as to how the increased presence of micromarkets would 
affect future shipments. (NAMA, No. 50 at pp. 10-11)
    Conversely, SVA stated that new technologies such as micromarkets 
are resulting in the replacement of coin operated vending machines with 
bottle coolers. (SVA, Public Meeting Transcript, No. 48 at p. 133) In 
written comments, SVA expressed the belief that the current downward 
trend in beverage vending machine shipments in the United States will 
continue for the foreseeable future and recommended that DOE work to 
improve its understanding of equipment life, a significant driver of 
projected shipment calculations. (SVA, No. 53 at p. 9) SVA stated that 
tightening equipment budgets and increasing prices would result in 
increased equipment life, and if equipment life decreases, the stock of 
beverage vending machines in the United States would continue to 
decrease. SVA cited a downward trend in shipments between 1998 and 
2014, and expressed strong disagreement with DOE's assumption that this 
trend would reverse. SVA additionally stated that due to the limited 
time allowed to submit comments, it was not able to provide data on 
shipments by equipment class. SVA stated its belief that micromarkets 
will continue to displace beverage vending machines and have an 
increasingly negative impact on shipments. (SVA, No. 53 at pp. 7-8)
    DOE 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. At 
the 2015 BVM ECS NOPR stage, DOE requested comment on the impact of the 
EPA SNAP rules on future shipments of beverage vending machines, by 
equipment class, refrigerant, and efficiency level. With respect to the 
impact of new refrigerants on shipments, Royal Vendors, AMS, and NAMA 
all commented that added machine costs due to alternative refrigerants 
as a result of EPA SNAP, combined with the increased efficiency 
required by DOE's proposed standards, would decrease new machine 
purchases in favor of refurbishments. (Royal Vendors, No. 54 at p. 8; 
AMS, No. 57 at p. 3; NAMA, No. 50 at p. 8) Conversely, NEEA expressed 
the belief that EPA SNAP compliance would lead to an increase in new 
shipments, as refurbishment may not be practical when switching 
refrigerants. (NEEA, Public Meeting Transcript, No. 48 at p. 135) 
Related to refurbishments, SVA stated in the BVM ECS NOPR public 
meeting that beverage vending machines can be refurbished from R-134a 
to CO2 but not to propane due to different safety concerns 
for flammable refrigerants. (SVA, Public Meeting Transcript, No. 48 at 
p. 136)
    In response to comments received from interested parties, DOE 
revised certain aspects of the shipments model in its final rule 
analysis. Primarily, DOE revised the shipments model to more explicitly 
account for refurbished beverage vending machines and their impact on 
overall shipments, as DOE understands this is an important factor 
driving current and future shipments of beverage vending machines. 
Specifically, DOE revised the BVM shipments model to calculate the 
stock of beverage vending machines that survive from 1 year to the next 
according to the following Eq. IV.1:
SurvivingStock = [Sigma]aU(t,a) + Unew(t) - Uretirements (t) + 
Urefurbishments (t) [Eq.IV.1]

Where:

U(t,a) = total stock of age a in a given year t,
Unew(t) = new shipments of BVM units in year t (units with age a = 
0),
Uretirements(t) = retirements of BVM units in year t (units with 
various age a >= 13.4),
Urefurbishments(t) = refurbishments of BVM units in year t (units 
with various age 30 >= a >= 1),
a = age of stock in years, and
t = year.

    DOE's shipments model assumes as increasing trend in refurbishing 
existing equipment beginning in 2009 and continuing through 2024, after 
which refurbishments return to pre-2009 levels. DOE notes that the 
impact of this increased refurbishment rate serves only to delay 
shipments of new equipment, rather than depress shipments permanently.
    In addition, DOE revised its assumptions regarding the consistent 
growth of shipments beginning in 2014, in light of the impact of the 
new EPA SNAP regulations on the BVM market. While DOE does not have 
data to suggest the impact of changes in refrigerant availability on 
future shipments, DOE acknowledges the comments received from 
interested parties expressing their concern and belief that added 
machine costs due to alternative refrigerants as a result of EPA SNAP 
combined with the increased efficiency required by DOE's proposed 
standards would decrease new machine purchases in favor of 
refurbishments after both regulations go into effect. However, between 
2014 and 2019, DOE agrees with NEEA that EPA SNAP and the pending 
compliance date of DOE's amended standards adopted herein may actually 
act to increase shipments in the near term, as BVM owners opt to 
replace aging equipment in advance of the required design changes that 
will occur in 2019. DOE expects that some customers may act in 
anticipation of the likely increase in equipment prices that may occur 
as a result of the design changes necessary to comply with EPA SNAP 
regulations and DOE's new and amended energy conservation standards.
    DOE also notes that many beverage vending machines that were 
refurbished beginning in 2009 to increase their life will be 4.5 years 
older, the typical average ``refurbishment'' cycle, and the additional 
retirement of those older refurbished machines may increase the number 
of retirements beginning in 2014 and thus, may also increase shipments 
from 2014 through 2024. However, DOE also acknowledges that BVM owners 
may also choose to refurbish existing equipment prior to the EPA SNAP 
compliance date and assumes that a significant amount of refurbishments 
will occur through 2024. Notably, DOE's shipments model assumes that 
greater than 50 percent of equipment that would otherwise reach the end 
of its life and be retired will instead be refurbished, delaying 
purchases of new equipment, until after 2024. DOE believes this 
assumption effectively captures the likely behavior of customers who 
may choose to refurbish existing R-134a equipment in anticipation of 
new R-134a equipment no longer being available following the compliance 
date of the EPA SNAP regulations.
    In 2019, when EPA's SNAP regulations are anticipated to take 
effect, DOE estimated that shipments will decline dramatically to 2014 
levels, which represents the lowest annual shipments in any year from 
1998 through the end of the analysis period. In the succeeding three 
years, consistent with manufacturer expectations, DOE believes that BVM 
shipments will stagnate while manufacturers, customers, and the market 
respond and acclimate to the new EPA SNAP regulations and their effect 
on equipment availability and price. In

[[Page 1068]]

2022, DOE anticipates that shipments will increase, beginning to 
recover the aging and depleted BVM stock. DOE notes that, based on 
DOE's assumptions regarding the choice of customers to refurbish or 
delay purchases of new BVM equipment in response to the increased cost 
of BVM units that are compliant with EPA SNAP and DOE's new and amended 
standards, the BVM shipments model estimates that the BVM stock in 2022 
will have decreased 46 percent compared to the existing stock in 2014. 
DOE believes that, by this time, customers and the marketplace will 
have adapted to the new alternative refrigerants and, thus, will begin 
to return to typical purchasing and refurbishment cycles. Therefore, to 
replace retiring units, DOE's final rule shipments model assumes 
increases in shipments through 2035, with the most significant growth 
occurring between 2022 and 2028.
    Beyond 2035, DOE estimates that growth in shipments will slowly 
decline as shipments return to a more consistent, static-lifetime 
``replacement'' scenario as older equipment permanently leaves the 
market. DOE estimates shipments will remain flat from 2045 through the 
end of the analysis period at around 135,000 units per year, resulting 
in a final stock of 1.8 million in 2048, as projected by DOE based on 
the Vending Times data. This represents a 20-percent decrease from 2014 
levels, primarily due to replacement by bottle coolers and 
micromarkets,\45\ which is consistent with SVA's comment that 
micromarkets will continue to displace beverage vending machines and 
have an increasingly negative impact on shipments.
---------------------------------------------------------------------------

    \45\ The term bottle cooler refers to a specific type of self-
contained commercial refrigerator with transparent doors designed 
for pull-down applications. Such equipment is specifically defined 
as a ``commercial refrigerator designed for pull-down applications'' 
at 10 CFR 431.62. Micromarkets are small, self-service, convenience 
store-like establishments and typically feature a bottle cooler for 
selling bottled and canned beverages, among other snacks, which are 
paid for at a central payment kiosk. See www.vending.org/images/pdfs/micro-market/Tech_W7_bulletin_Micro_Market_v4.0.pdf.
---------------------------------------------------------------------------

    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 
final rule are appropriate and represent the best available information 
about future shipments of beverage vending machines.
    DOE believes it is reasonable to model increasing shipments between 
2022 and 2035 to recover BVM stock in the United States, given the 
commitment by major bottlers to alternative refrigerants.\46\ DOE notes 
that major bottlers represent approximately 90 percent of the BVM 
market \47\ and, as such, anticipates consistent or increasing demand 
for alternative refrigerant BVM units over time. DOE notes that 
increasing shipments to maintain reasonable stock \48\ and availability 
of BVM units in the marketplace is also consistent with the opinions of 
NAMA and the EEA Joint Commenters regarding the availability of healthy 
options in BVM merchandise and, thus, continued relevance of beverage 
vending machines in all industry sectors, including schools, office 
buildings, and other public locations.
---------------------------------------------------------------------------

    \46\ See e.g., R744, ``Coca-Cola to approve 9 models of CO2 
vending machine--exclusive interview,'' Available online 
www.r744.com/news/view/3466; 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; and PepsiCo (2015). 
``Performance with Purpose.'' 2015 Atmosphere Conference.
    \47\ Northwest Power and Conservation Council Regional Technical 
Forum. 2007. Characterization of Energy Efficiency Opportunities in 
Vending Machines for the Northwestern US Market. Available at http://rtf.nwcouncil.org//meetings/2007/08/RTF%20Vending%20Characterization%20Study_Revised%20Report_072407.pdf.

    \48\ As noted in the 2015 BVM ECS NOPR, DOE assumed an average 
0.55-percent reduction in BVM stock overtime, based on projected 
data from Vending Times Census of the Industry 2014 and CBECS 
building growth trends. DOE believes that further reductions in BVM 
stock would represent a dramatic shift in the availability of BVM 
units in the United States and, thus, purchasing trends of consumers 
who currently purchase a variety of snacks and beverages from such 
vending machines. See chapter 10 of the final rule TSD for more 
information.
---------------------------------------------------------------------------

    In response to the specific comments received from NAMA and the EEA 
Joint Commenters, DOE has reviewed its assumptions regarding the 
rationale for certain reductions in different market segments. DOE 
agrees with commenters 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.\49\ However, DOE also 
acknowledges that the increasing trend of micromarkets to replace 
beverage vending machines in some applications and notes that Vending 
Times reports that installations of such micromarkets nearly doubled 
between 2012 and 2013 and anticipates similar growth between 2013 and 
2014.\50\ As such, DOE believes that its projected reductions in 
certain BVM industry sectors to be reasonable, but more likely driven 
by replacement by mircomarkets than any health food trends or soda 
bans. In addition, DOE notes that these industry-segment-specific 
declines are primarily illustrative and serve only to support the 
overall 0.55 percent annual reduction in stock modeled for the industry 
as a whole. DOE believes that this overall trend in BVM stock continues 
to be valid, as supported by comments from manufacturers anticipating 
continuing declines in BVM stock and shipments.
---------------------------------------------------------------------------

    \49\ Vending Times Census of the Industry 2013 and 2014. 
Available at www.vendingtimes.com.
    \50\ Vending Times Census of the Industry 2014. Available at 
www.vendingtimes.com.
---------------------------------------------------------------------------

    For more information on DOE's shipments estimates, the shipments 
analysis assumptions, and details on the calculation methodology, refer 
to chapter 9 of the final rule TSD.
1. 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 2015 BVM ECS NOPR, DOE assumed the market share 
assigned to each of the equipment classes shown in Table IV.6.

    Table IV.6--Market Share of Each Equipment Class Assumed in NOPR
                                Analysis
------------------------------------------------------------------------
                                                            NOPR market
                     Equipment class                        share  (%)
------------------------------------------------------------------------
Class A.................................................            54.3
Class B.................................................            27.7
Combination A...........................................             9.3
Combination B...........................................             8.7
------------------------------------------------------------------------

    In the NOPR analysis, DOE 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

[[Page 1069]]

classes will change over time and, if so, in what direction and on what 
basis. 80 FR 50462, 50494-50495 (Aug. 19, 2015).
    DOE did not receive any comments in response to the NOPR on these 
market distributions and, as such, is maintaining the market share 
distribution modeled in the NOPR in the shipments model for this final 
rule.
2. Market Share by Refrigerant
    Once DOE has defined shipments by equipment class, DOE also defined 
the shipments within each equipment class by refrigerant. In the 2015 
BVM ECS NOPR, DOE based its assumptions regarding the relative 
shipments of each refrigerant based on recent regulatory actions under 
EPA's SNAP program, which listed propane and certain 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 the NOPR, DOE 
modeled a shipments scenario assuming that all shipments of new BVM 
equipment will use CO2 or propane as a refrigerant beginning 
on January 1, 2019, the effective date of the status change of R-134a 
as required by Final Rule 20. 80 FR 50462, 50495 (Aug. 19, 2015).
    Given the greater market experience with CO2, DOE 
assumed that CO2 will represent 60 percent of the market and 
propane will 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 market has already seen evolution towards the 
widespread use of CO2. Id.
    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 
final rule 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.\51\ Id.
---------------------------------------------------------------------------

    \51\ See e.g., Docket No. EPA-HQ-OAR-2014-0198, The 
Environmental Investigation Agency, No. 0134.
---------------------------------------------------------------------------

    In its written comments, SVA stated that the relative market share 
of each refrigerant by equipment class depended heavily on the ability 
of manufacturers to develop economically sound equipment that meets UL 
standards for flammable refrigerants. (SVA, No. 53 at p. 9) In the BVM 
ECS NOPR public meeting, Coca-Cola stated that its refrigerant 
preference for the North American market is CO2 and noted 
that Japan (another large vending market) is already using 
CO2. Also in the public meeting, SVA expressed commitment to 
CO2 but also stated it was beginning to explore propane, and 
Wittern stated that it was pursuing propane over CO2 due to 
the higher operating pressures of CO2 refrigeration systems, 
which labor the compressors and decrease efficiency. (Coca-Cola, SVA, 
and Wittern, Public Meeting Transcript, No. 48 at pp. 48-55)
    In response to comments submitted by interested parties, DOE 
reviewed its assumptions regarding the relative distribution of 
shipments of CO2 and propane BVM equipment. DOE believes 
that its 2015 BVM ECS NOPR assumptions regarding the increased market 
share of CO2 equipment relative to propane equipment are 
consistent with the statements made by commenters regarding the 
existing use and preference for CO2 equipment, as well as 
the additional safety certifications that will be necessary for propane 
equipment. Specifically, DOE accounted for the fact that beverage 
vending machines with propane refrigerant must meet all requirements of 
Supplement SA to the 7th edition of UL Standard 541, ``Refrigerated 
Vending Machines,'' dated December 30, 201, which specifically 
addresses flammable refrigerants in vending machines, as required by 
EPA SNAP's Rule 19 final rule. 80 FR 19454, 19460 (April 10, 2015). 
However, consistent with Wittern's observation regarding the relative 
efficiency of propane as a refrigerant compared to CO2, DOE 
believes it is reasonable to assume that propane will gain a 
significant market share by 2019 as some manufacturers elect to take 
advantage of propane's increased efficiency as a refrigerant in BVM 
applications. In summary, DOE appreciates comments from interested 
parties and believes they are generally consistent with DOE's 
assumptions in the NOPR. As such, DOE is maintaining the distribution 
of shipments by refrigerant modeled in the NOPR with no modification.
    DOE's shipments analysis and assumptions are discussed in more 
detail in chapter 9 of the final rule TSD.
3. High and Low Shipments Assumptions
    DOE recognizes that there is considerable uncertainty in 
forecasting future shipments of beverage vending machines. As such, in 
addition to the primary shipments scenario presented above, DOE 
estimated low and high shipments scenarios as sensitivities on the 
primary scenario. For the high and low shipments scenarios, DOE assumed 
the market share by equipment class and refrigerant as in the default 
shipments scenario, while the magnitude of total shipments of new 
beverage vending machines is varied among the scenarios. DOE's low 
shipments scenario modeled lower shipments from 2014 through 2019 than 
DOE estimated in the NOPR to reflect comments that the increased cost 
of equipment (due to both EPA SNAP requirements and DOE's proposed 
standards) would cause a decrease in new machine purchases in favor of 
refurbishments. In 2019, when EPA's SNAP regulations will take effect, 
DOE estimated that shipments would return to 2014 levels, before 
beginning to recover in 2022 at the reduced growth rate, reflecting the 
potential increased refurbishment cycles and commensurate increased 
lifetime for existing BVM equipment. DOE also assumed that BVM 
shipments recover only to approximately 100,000 shipments per year and 
result in a stock of 1.3 million at the end of the analysis period, a 
40-percent reduction in units installed in the United States. DOE notes 
that this stock reduction is consistent with the projected stock based 
on the Vending Times data of a 2 percent annual reduction over the 
analysis period,\52\ without adjusting for the growth in buildings over 
the analysis period calculated based on CBECS.
---------------------------------------------------------------------------

    \52\ Vending Times Census of the Industry 2013 and 2014. 
Available at www.vendingtimes.com.
---------------------------------------------------------------------------

    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 million 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 increase in advance of SNAP, consistent with 
the default shipments scenario, as BVM customers act

[[Page 1070]]

preemptively to purchase remaining R-134a equipment before it is no 
longer allowed beginning in 2019. Then, following 2019, the high 
shipments scenario assumes that shipments stagnate before growing 
rapidly again beginning in 2022 to recover over the next 5 years. DOE 
believes this scenario represents the case where shipments of BVM units 
increase over time based on the increased offerings of healthy options 
in beverage vending machines and demand from bottlers for such 
alternative refrigerant BVM units, consistent with comments by NAMA and 
Coca-Cola, respectively. These two sensitivity scenarios are discussed 
in more detail in chapter 9 of the final rule TSD.

H. National Impact Analysis

    The NIA assesses the NES and the national NPV from a perspective of 
total customer costs and savings that would be expected to result from 
new or amended standards at specific efficiency levels (i.e., TSL) for 
each equipment class of beverage vending machines.\53\ (``Customer'' in 
this context refers to customers of the equipment being regulated, in 
this case the purchaser of the BVM) DOE calculated the NES and NPV 
based on projections of annual shipments, along with the annual energy 
consumption and total installed cost data from the energy use and LCC 
analyses.\54\ For the present analysis, DOE projected 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).
---------------------------------------------------------------------------

    \53\ The NIA accounts for impacts in the 50 states and U.S. 
territories.
    \54\ For the NIA, DOE adjusts the installed cost data from the 
LCC analysis to exclude sales tax, which is a transfer.
---------------------------------------------------------------------------

    DOE evaluates the impacts of new and amended standards by comparing 
a no-new-standards case projections with the standards case 
projections. The no-new-standards case characterizes energy use and 
customer costs for each equipment class in the absence of new or 
amended energy conservation standards. For this projection, DOE 
considered historical trends in efficiency and various forces that are 
likely to affect the mix of efficiencies over time. DOE compared the 
no-new-standards case with projections characterizing the market for 
each equipment class if DOE adopted new or amended standards at 
specific energy efficiency levels (i.e., the TSLs or standards cases) 
for that class. For the standards cases, DOE considers how a given 
standard would likely affect the market shares of equipment with 
efficiencies less than the standard.
    DOE used a spreadsheet model to calculate the energy savings and 
the national customer costs and savings from each TSL. Interested 
parties can review DOE's analyses by changing various input quantities 
within the spreadsheet. The NIA spreadsheet model uses 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 AEO2015 Reference case. In addition, DOE analyzed 
scenarios that used inputs from the AEO2015 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 final rule 
TSD.
    A detailed description of the procedure to calculate NES and NPV 
and inputs for this analysis are provided in chapter 10 of the final 
rule TSD.
    Table IV.7 summarizes the inputs and methods DOE used for the NIA 
analysis for the final rule. Discussion of these inputs and methods 
appears following Table IV.7. See chapter 10 of the final rule TSD for 
further details.

    Table IV.7--Summary of Inputs and Methods for the National Impact
                                Analysis
------------------------------------------------------------------------
                Inputs                               Method
------------------------------------------------------------------------
Shipments............................  Annual shipments from shipments
                                        model.
Compliance Date of Standard..........  2019.
Efficiency Trends....................  No-new-standards case:
                                       Standards cases:
Annual Energy Consumption per Unit...  Annual weighted-average values
                                        are a function of energy use at
                                        each TSL.
Total Cost per Unit..................  Annual weighted-average values
                                        are a function of cost at each
                                        TSL.
                                       Incorporates projection of future
                                        equipment prices based on
                                        historical data.
Annual Energy Cost per Unit..........  Annual weighted-average values as
                                        a function of the annual energy
                                        consumption per unit and energy
                                        prices.
Repair and Maintenance Cost per Unit.  Repair cost and maintenance costs
                                        provided from LCC analysis.
Energy Prices........................  AEO2015 forecasts (to 2040) and
                                        extrapolation through 2078.
Energy Site-to-Primary and FFC         A time-series conversion factor
 Conversion.                            based on AEO2015.
Discount Rate........................  3% and 7%.
Present Year.........................  2015.
Price Learning.......................  Projection of future price trends
                                        for BVM equipment.
Lifetime.............................  Weibull distribution for
                                        equipment lifetime.
------------------------------------------------------------------------

1. Equipment Efficiency Trends
    A key component of the NIA is the trend in energy efficiency 
projected for the no-new-standards case and each of the standards 
cases. Section IV.F.6 of this final rule describes how DOE developed an 
energy efficiency distribution for the no-new-standards case (which 
yields a shipment-weighted average efficiency) for each of the 
considered equipment classes for the first year of the forecast period.
    DOE developed a distribution of efficiencies in the no-new-
standards case for the 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 will 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)

[[Page 1071]]

Equipment efficiencies in the no-new-standards case that do not meet 
the standard level under consideration will ``roll-up'' to meet the new 
standard level; and (2) equipment efficiencies above the standard level 
under consideration will not be affected. 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 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 potential impacts on 
efficiency distributions in this final rule analysis, as DOE does not 
have data or information to suggest how efficiency distributions of 
different equipment classes or refrigerants will change over time and, 
if so, in what direction and on what basis as a result of potential 
changes.
2. National Energy Savings
    The inputs for determining the NES are (1) annual energy 
consumption per unit, (2) shipments, (3) 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.\55\ 
Cumulative energy savings are the sum of the annual NES over the period 
in which equipment shipped in 2019-2048 are in operation.
---------------------------------------------------------------------------

    \55\ 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 final rule, 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 AEO2015 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 from the compliance year 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 final rule, and the FFC multipliers that 
were applied, are described in appendix 10D of the TSD. NES results are 
presented in terms of both primary and FFC savings; the savings by TSL 
are summarized in terms of FFC savings in section I.C of this final 
rule.
3. Net Present Value Analysis
    The inputs for determining NPV are: (1) Total annual equipment 
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 equipment 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 
equipment costs.
    For the NPV analysis, DOE calculates increases in total equipment 
costs as the difference in total equipment 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 used 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

[[Page 1072]]

future consumption flows to their present.

I. Customer Subgroup Analysis

    In analyzing the impact of new or amended standards on commercial 
customers, DOE evaluated 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. 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. 
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 savings of any major customer subgroup.
    Two stakeholders commented on the 2015 BVM ECS NOPR subgroup 
analysis. AMS commented that because those who purchase the machines do 
not usually pay for electricity, PBP numbers for subgroup ``do not 
really exist'' (i.e., energy savings are only realized by site owners). 
(AMS, No. 57 at Page 6) NAMA suggested that subgroups might include 
vending machine operating companies because ``most corporate and 
manufacturing facilities provide vending machines to their employees 
through vending machine companies.'' (NAMA, No. 50 at p. 12)
    In response to the comment from AMS, DOE notes that the money saved 
by more efficient equipment through lower operating costs is accounted 
for in the split incentives approach. DOE believes that the subgroup to 
which NAMA refers can be represented by the manufacturing and/or 
industrial facilities that purchase their own beverage vending machines 
because each group would likely have lower electricity prices and 
higher discount rates than the typical customer.
    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 final rule 
and described in detail in chapter 12 of the final rule TSD.

J. 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 equipment 
characteristics, impacts on particular subgroups of firms, and 
important market and equipment trends. The complete MIA is outlined in 
chapter 12 of the final rule 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 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 beverage vending 
machines, 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,\56\ corporate annual reports, the U.S. Census 
Bureau's Economic Census,\57\ and Hoover's reports,\58\ to develop the 
industry profile.
---------------------------------------------------------------------------

    \56\ U.S. Securities and Exchange Commission. Annual 10-K 
Reports. Various Years. http://sec.gov.
    \57\ 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.
    \58\ Hoovers Inc. Company Profiles. Various Companies. 
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 beverage vending machines. 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 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 beverage vending machines in the United States, DOE 
identified five manufacturers that qualify as small businesses, one of 
which is a foreign manufacturer with domestic-sited subsidiary that 
serves as its marketing arm in the United States. The BVM small 
manufacturer subgroup is discussed in chapter 12 of the final

[[Page 1073]]

rule TSD and in section IV.J of this final rule.
    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. The GRIM results are shown 
in section IV.J.2.b of this final rule. Additional details about the 
GRIM, the discount rate, and other financial parameters can be found in 
chapter 12 of the final rule 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 final rule and further detailed in chapter 5 of the final rule 
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 equipment markups were 
validated and revised with manufacturers during manufacturer 
interviews. DOE notes that, since all BVM equipment will 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.H of this final rule and 
chapter 10 of the final rule TSD for additional details.
Product and Capital Conversion Costs Associated With Energy 
Conservation Standards for Beverage Vending Machines
    An amended energy conservation standard will 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 will 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 will 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 type (i.e., Class A, Class 
B, Combination A, Combination B).
    As detailed in section IV.G of this final rule, 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 3 years leading up to the amended energy 
conservation standard year of 2019).
    Table IV.8 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 will not carry any additional 
capital conversion costs.

[[Page 1074]]



                  Table IV.8--Per-Manufacturer Capital Conversion Costs for Key Design Options
                                                 [million 2014$]
----------------------------------------------------------------------------------------------------------------
                                                          Capital conversion costs (million 2014$)
               Design option               ---------------------------------------------------------------------
                                                Class A         Class B       Combination A      Combination B
----------------------------------------------------------------------------------------------------------------
Evaporator Fan Controls...................           * N/A            0.04                  0               0.04
1.125 Inch Thick Insulation...............            0.07            0.09                  0               0.09
Enhanced Glass Pack.......................            0.06           * N/A                  0              * N/A
Vacuum Insulated Panels...................            0.14            0.17                  0               0.18
----------------------------------------------------------------------------------------------------------------
* N/A = Not Applicable.

    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 \59\ and ENERGY STAR \60\ 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, because of the inherent 
commonalities of design and manufacture between Class A and Combination 
A equipment and between Class B and Combination B equipment, 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.
---------------------------------------------------------------------------

    \59\ ``CCMS.'' CCMS. January 19, 2015. Accessed January 19, 
2015. www.regulations.doe.gov/certification-data/.
    \60\ ENERGY STAR Certified Vending Machines. June 6, 2013. 
Accessed January 19, 2015. www.energystar.gov/products/certified-products.
---------------------------------------------------------------------------

    Table IV.9 contains the per-platform product conversion costs 
associated with key design options for each equipment class.

                    Table IV.9--Per-Platform Product Conversion Costs for Key Design Options
                                                 [million 2014$]
----------------------------------------------------------------------------------------------------------------
                                                          Product conversion costs (million 2014$)
               Design option               ---------------------------------------------------------------------
                                                Class A         Class B       Combination A      Combination B
----------------------------------------------------------------------------------------------------------------
Evaporator Fan Controls...................           * N/A            0.02              0.004               0.02
Enhanced Evaporator Coil..................            0.02            0.01              * N/A               0.01
Enhanced Glass Pack.......................            0.06           * N/A              0.004              * N/A
1.125 Inch Thick Insulation...............            0.02            0.02              0.004               0.02
Vacuum Insulated Panels...................            0.06            0.06              0.004               0.06
----------------------------------------------------------------------------------------------------------------
* 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 IV.J.2.a of this final rule. For additional information on the 
estimated product and capital conversion costs, see chapter 12 of the 
final rule TSD.
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 
CO2 or propane. Although this industry investment (detailed 
below) is not a result of the amended DOE energy conservation 
standards, 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 CO2 and 
propane. DOE estimated that each BVM manufacturer will need to invest 
$750,000 to update their equipment to comply with Rule 20 if they have 
no compliant equipment today. DOE assumed this one-time investment 
applied to all eight manufacturers, resulting in an industry cost of $6 
million.\61\ DOE believes that this estimate falls on the high end of 
the range of potential costs because there are manufacturers that 
already have SNAP-compliant equipment on the market today, and those 
manufacturers will 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 will 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 will 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. 
Accordingly, the costs related to

[[Page 1075]]

complying with EPA Rule 20 have been incorporated into the baseline to 
which DOE analyzed these adopted standards. As such, all the costs to 
industry that occur in the standards case relate to the impact of the 
adopted energy conservations standards.
---------------------------------------------------------------------------

    \61\ 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.
---------------------------------------------------------------------------

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 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 will 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.10.

               Table IV.10--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 will 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 equipment class. Under this scenario, as the cost of production 
goes up, manufacturers are generally required to reduce the markups on 
their minimally compliant equipment 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. Discussion of Comments
    During the 2015 BVM ECS NOPR public meeting and in public comments 
submitted in response to the 2015 BVM ECS NOPR, manufacturers, trade 
organizations, and SBA Advocacy provided several comments on the 
potential impact of amended energy conservation standards on 
manufacturers. These comments are outlined below. DOE notes that these 
comments helped to update the analysis reflected in this final rule.
    Relating to DOE's 2015 BVM ECS NOPR estimates of industry 
conversion costs associated with compliance with amended energy 
conservation standards, Seaga commented that DOE is underestimating 
industry conversion costs because different bottlers may want different 
refrigerants. (Seaga, No. 48 at p. 177)
    As part of the manufacturer impact analysis, DOE evaluated the 
level of energy conservation standards-related expenditures that will 
be needed to comply with each considered efficiency level in each 
equipment class. DOE notes that these conversion costs are based on 
manufacturer feedback on costs associated with individual design 
options, which are common to both CO2 and propane machines. 
These individual design option costs were scaled to reflect industry 
conversion costs per design option and equipment type (ie., Class A, 
Class B, Combination A, Combination B) using the count of manufacturers 
currently producing beverage vending machines of each equipment type 
and the count of current platforms of each equipment type. These 
industry conversion cost estimates were then allocated by refrigerant 
using assumptions developed in the Shipments Analysis related to the 
distribution of refrigerants in the BVM industry by 2019 (see section 
IV.G.2 for a description of DOE's methodology for forecasting future 
BVM shipments by refrigerant type). As DOE's shipments forecasts by 
refrigerant assume a significant market share for both CO2 
and propane equipment, DOE accounts for manufacturers' decisions to 
produce beverage vending machines using both CO2 and propane 
in its estimates of industry conversion costs.
    In response to the 2015 BVM ECS NOPR, AMS expressed concern 
relating to the fact that EPA's enforcement of SNAP includes 
remanufactured equipment, in addition to new refrigerated beverage 
vending machines, while DOE energy conservation standards apply only to 
new machines. AMS believes this inconsistency will contribute to the 
cumulative regulatory burdens faced by BVM manufacturers. (AMS, No.48 
at p. 137) Additionally, NAMA stated that compliance with both EPA SNAP 
rule 20 and proposed rule would be very costly to the industry. (NAMA, 
No. 50 at p. 13) The Form Letter Writers stated the standards were not 
technologically feasible or economically justified because of the 
burden on small businesses who also have to meet new EPA mandates as 
well as new DOE testing procedures (The Form Letter Writers, No. 64 and 
65 at p. 1)
    DOE recognizes that EPA regulations that restrict the use of HFC 
refrigerants will lead to changes in production costs for BVM 
manufacturers, necessitate investments, and will, accordingly, 
contribute to the cumulative regulatory burdens incurred by 
manufacturers as a result of amended DOE energy conservation standards. 
DOE notes that although EPA SNAP Rule 20 lists certain refrigerants as 
unacceptable in refurbished machines as of July 20, 2016, R-134a is not 
among the unacceptable refrigerants. Therefore, because manufacturers 
are currently capable of producing beverage vending

[[Page 1076]]

machines with R-134a, DOE believes that the cumulative regulatory 
burdens associated with EPA's enforcement of SNAP on refurbished 
beverage vending machines will be minimal, on both large and small 
manufacturers. Moreover, DOE's statutory authority to prescribe new and 
amended energy conservation standards only applies to the point of 
manufacture, and as such, DOE does not have the authority to extend 
such standards to refurbished equipment.
    DOE accounted for the forthcoming R-134a phase out by estimating 
refrigerant-specific design pathways, cost efficiency curves and the 
upfront investments needed to adapt equipment, production lines, and 
facilities to the use of propane and CO2. DOE used a 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 or CO2 to 
market. DOE integrated this cost into both the no-new-standards and 
standards case estimates of INPV. See section IV.J.2.a 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 final rule. 
DOE also independently analyzed the impact of the adopted new and 
amended standards on small business in the Regulatory Flexibility 
Analysis, presented in section VI.B.
    Also relating to cumulative regulatory burdens, Royal Vendors 
commented that the vending industry has experienced numerous regulatory 
and economic challenges in the past 5-10 years and that DOE's proposed 
standards would cause undue hardship on the vending industry. (Royal 
Vendors, No. 54 at p. 2)
    In response to stakeholder feedback relating to the 2015 BVM ECS 
NOPR, DOE has updated its engineering analysis and standard efficiency 
levels for this final rule, resulting in less burdensome standard 
levels for all product classes of beverage vending machines relative to 
the 2015 BVM ECS NOPR proposal. DOE investigates cumulative regulatory 
burden impacts associated with this rulemaking in more detail in 
section V.B.2.e of this notice, and in chapter 12 of the final TSD.
    Regarding the impacts of the standard levels proposed in the 2015 
BVM ECS NOPR on small domestic BVM manufacturers, Seaga noted that the 
proposed standards would make it difficult for small manufacturers to 
remain in the industry. (Seaga, No. 48 at p. 177) Similarly, AMS 
commented that the investments in engineering and development to meet 
DOE's proposed standard may require it to abandon the vending machine 
market. (AMS, No. 57 at p. 10) Additionally, SBA Advocacy's 
conversations with small businesses on their projected compliance costs 
[associated with the standard levels proposed in the 2015 BVM ECS NOPR] 
yielded estimates exceeding $1,000,000 per small manufacturer. (SBA 
Advocacy, No. 61 at p. 2) SBA Advocacy stated further that, to ensure 
that the cost implications of complying with the SNAP rule are 
considered in DOE's analysis, it recommends that a sensitivity analysis 
be done. (SBA Advocacy, No. 61 at p. 3)
    DOE recognizes that small manufacturers may be disproportionately 
impacted by energy conservation standards relative to other 
manufacturers in the industry. Again, DOE notes that, in response to 
stakeholder feedback relating to the 2015 BVM ECS NOPR, it has updated 
its engineering analysis and standard efficiency levels for this final 
rule, resulting in less burdensome standard levels for all equipment 
classes of beverage vending machines relative to the 2015 BVM ECS NOPR 
proposal.
    DOE believes that the $1,000,000 per small manufacturer compliance 
cost estimate cited by SBA Advocacy is inclusive of the both ECS-
related conversion costs and SNAP-related upfront investments. DOE 
accounted for the forthcoming R-134a phaseout required by EPA SNAP by 
estimating refrigerant-specific design pathways, cost efficiency curves 
and the upfront investments needed to adapt equipment, production 
lines, and facilities to the use of propane and CO2 (see 
section IV.C.2 for information relating to refrigerant-specific design 
pathways and cost efficiency curves). DOE estimated an upfront cost of 
$750,000 per manufacturer to comply with Rule 20 using refrigerants 
propane and CO2 refrigerants (this cost is independent of 
product and capital conversion costs associated with DOE standards 
compliance), and incorporated this cost in the GRIM in both the no-new-
standards case and the standards case. This allowed DOE to isolate the 
incremental impact of amended energy conservation standards on BVM 
manufacturers, while still accounting for the impact of the 2019 R-134a 
phaseout on the industry. See section IV.J.2 for further details on 
DOE's modeling of ECS-related conversion costs and SNAP-related upfront 
investments. Additionally, DOE's analysis of the impacts of the final 
rule standard levels on small manufacturers is detailed in sections 
V.B.2 and VI.B.
    Finally, SBA commented that DOE set the baseline for Combination A 
and Combination B equipment classes as the least efficient combination 
of technologies analyzed in the engineering analysis. As a result, SBA 
Advocacy believes DOE could be overstating benefits at higher TSLs 
because the baseline represents equipment that is less efficient than 
actual equipment on the market and may not represent a reasonable 
combination of technologies. (SBA Advocacy, No. 61 at p. 2)
    Since there are currently no energy-related regulatory standards 
for Combination A and Combination B beverage vending machines, the 
baseline for these equipment classes is defined as the level of 
efficiency representing the least-efficient technology currently found 
in the BVM market for each design option analyzed. Starting with the 
least efficient technology results in an analysis where manufacturers 
must incorporate more design options and accrue greater conversion 
costs to reach an amended standard. This approach results in estimates 
of manufacturer conversion costs related to ECS compliance which fall 
in the high end of the range of potential costs.
    DOE notes that, in written comments in response to the 2015 BVM ECS 
NOPR, AMS commented that the baseline level calculated for Combination 
A beverage vending machines is far more efficient than the performance 
of actual machines in use today (see section IV.C.1 the full discussion 
of this comment). In the final rule analysis, DOE made additional 
analytical adjustments to the engineering analysis, and as such, the 
baseline performance of the combination equipment showed better 
agreement with the figure suggested by AMS.

K. Emissions Analysis

    The emissions analysis consists of two components. The first 
component estimates the effect of potential energy conservation 
standards on power sector and site (where applicable) combustion 
emissions of CO2, NOX, SO2, and Hg. 
The second component estimates the impacts of potential standards on 
emissions of two additional 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.

[[Page 1077]]

    The analysis of power sector emissions uses marginal emissions 
factors that were derived from data in AEO2015. The methodology is 
described in chapters 13 and 15 of the final rule TSD.
    Combustion emissions of CH4 and N2O are 
estimated using emissions intensity factors published by the EPA, GHG 
Emissions Factors Hub.\62\ The FFC upstream emissions are estimated 
based on the methodology described in chapter 15 of the final rule 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.
---------------------------------------------------------------------------

    \62\ Available at 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 in terms of units of carbon dioxide equivalent 
(CO2eq). Gases are converted to CO2eq by 
multiplying each ton of gas by the gas' global warming potential (GWP) 
over a 100-year time horizon. Based on the Fifth Assessment Report of 
the Intergovernmental Panel on Climate Change,\63\ DOE used GWP values 
of 28 for CH4 and 265 for N2O.
---------------------------------------------------------------------------

    \63\ IPCC, 2013: 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.)]. Cambridge 
University Press, Cambridge, United Kingdom and New York, NY, USA. 
Chapter 8.
---------------------------------------------------------------------------

    The AEO incorporates the projected impacts of existing air quality 
regulations on emissions. AEO2015 generally represents current 
legislation and environmental regulations, including recent government 
actions, for which implementing regulations were available as of 
October 31, 2014. 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 (D.C.). (42 U.S.C. 7651 et seq.) SO2 
emissions from 28 eastern States and D.C. were also limited under the 
Clean Air Interstate Rule (CAIR). 70 FR 25162 (May 12, 2005). CAIR 
created an allowance-based trading program that operates along with the 
Title IV program. In 2008, CAIR was remanded to EPA by the U.S. Court 
of Appeals for the District of Columbia Circuit, but it remained in 
effect.\64\ In 2011, EPA issued 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,\65\ 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.\66\ On October 23, 2014, the D.C. Circuit lifted the 
stay of CSAPR.\67\ Pursuant to this action, CSAPR went into effect (and 
CAIR ceased to be in effect) as of January 1, 2015.
---------------------------------------------------------------------------

    \64\ 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).
    \65\ See EME Homer City Generation, LP v. EPA, 696 F.3d 7, 38 
(D.C. Cir. 2012), cert. granted, 81 U.S.L.W. 3567, 81 U.S.L.W. 3696, 
81 U.S.L.W. 3702 (U.S. June 24, 2013) (No. 12-1182).
    \66\ 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.
    \67\ See Georgia v. EPA, Order (D.C. Cir. filed October 23, 
2014) (No. 11-1302).
---------------------------------------------------------------------------

    EIA was not able to incorporate CSAPR into AEO2015, so it assumes 
implementation of CAIR. Although DOE's analysis used emissions factors 
that assume that CAIR, not CSAPR, is the regulation in force, 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 negligible 
reductions in power sector SO2 emissions will occur 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 (Feb. 16, 2012). In the MATS rule, EPA established a 
standard for hydrogen chloride as a surrogate for acid gas hazardous 
air pollutants (HAP), and also established a standard for 
SO2 (a non-HAP acid gas) as an alternative equivalent 
surrogate standard for acid gas HAP. The same controls are used to 
reduce HAP and non-HAP acid gas; thus, SO2 emissions 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. AEO2015 
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, which are used to reduce acid gas 
emissions, also reduce SO2 emissions. Under the MATS, 
emissions will be far below the cap 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.\68\ Therefore, DOE believes that energy conservation standards 
will generally reduce SO2 emissions in 2016 and beyond.
---------------------------------------------------------------------------

    \68\ 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 determined that the 
remand of the MATS rule does not change the assumptions regarding 
the impact of energy efficiency standards on SO2 
emissions. 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.
---------------------------------------------------------------------------

    CAIR established a cap on NOX emissions in 28 eastern 
States and the District of Columbia.\69\ Energy conservation standards 
are expected to have little effect on NOX 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 from other 
facilities. However, standards would be expected to reduce 
NOX emissions in the States not affected by the caps, so DOE 
estimated NOX

[[Page 1078]]

emissions reductions from the standards in this final rule for these 
States.
---------------------------------------------------------------------------

    \69\ 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 limit mercury emissions from power plants, but they do not 
include emissions caps and, as such, DOE's energy conservation 
standards would likely reduce Hg emissions. DOE estimated mercury 
emissions reduction using emissions factors based on AEO2015, which 
incorporates the MATS.
    In response to the 2015 BVM ECS NOPR, CoilPod commented that DOE's 
estimate of emissions reduction is overstated as it does not take into 
account coil degradation that occurs in real-world use. They 
additionally cited a government report finding that bottlers have no 
incentive to clean the coils on their vending machines because the 
establishments in which they are installed pay the electricity costs. 
(CoilPod, Public Meeting Transcript, No. 48 at pp. 53-55)
    DOE's calculation of emissions savings is based on the amount of 
energy saved. Coil degradation has little impact on emissions savings 
because it is based on incremental savings. Both baseline and more 
efficient equipment will be impacted by coil fouling, and the energy 
savings differential between the no-new-standards case and the 
standards case would largely remain the same.

L. Monetizing Carbon Dioxide and Other Emissions Impacts

    As part of the development of this 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 analogous 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 of CO2 and 
NOX emissions and presents the values considered in this 
final rule.
    For this final rule, DOE relied on a set of values for the social 
cost of carbon (SCC) that was developed by a Federal interagency 
process. The basis for these values is summarized in the next section, 
and a more detailed description of the methodologies used is provided 
as an appendix to chapter 14 of the final rule 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 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)(6) of Executive Order 12866, ``Regulatory 
Planning and Review,'' 58 FR 51735 (Oct. 4, 1993), 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 challenges. A 
report from the National Research Council \70\ points out that any 
assessment will suffer from uncertainty, speculation, and lack of 
information about: (1) Future emissions of GHGs; (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 questions of science, economics, and 
ethics and should be viewed as provisional.
---------------------------------------------------------------------------

    \70\ 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 values 
appropriate for that year. The NPV 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 Federal 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.

[[Page 1079]]

c. Current Approach and Key Assumptions
    After the release of the interim values, the interagency group 
reconvened on a regular basis to generate improved SCC estimates. 
Specially, 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 (IPCC). 
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.
    In 2010, 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, was included to represent higher-than-expected impacts 
from climate 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,\71\ although preference is given to consideration of the 
global benefits of reducing CO2 emissions. Table IV.11 
presents the values in the 2010 interagency group report,\72\ which is 
reproduced in appendix 14A of the final rule TSD.
---------------------------------------------------------------------------

    \71\ It is recognized that this calculation for domestic values 
is approximate, provisional, and highly speculative. There is no a 
priori reason why domestic benefits should be a constant fraction of 
net global damages over time.
    \72\ 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) (Available at: 
www.whitehouse.gov/sites/default/files/omb/inforeg/for-agencies/Social-Cost-of-Carbon-for-RIA.pdf).

                     Table IV.11--Annual SCC Values From 2010 Interagency Report, 2010-2050
                                           [2007$ 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 document were generated using the most 
recent versions of the three integrated assessment models that have 
been published in the peer-reviewed literature, as described in the 
2013 update from the interagency working group (revised July 2015).\73\ 
Table IV.12 shows the updated sets of SCC estimates from the latest 
interagency update in 5-year increments from 2010 to 2050. The full set 
of annual SCC estimates between 2010 and 2050 is reported in appendix 
14B of the final rule 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.
---------------------------------------------------------------------------

    \73\ 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 www.whitehouse.gov/sites/default/files/omb/inforeg/scc-tsd-final-july-2015.pdf.

           Table IV.12--Annual SCC Values From 2013 Interagency Update (Revised July 2015), 2010-2050
                                           [2007$ per metric ton CO2]
----------------------------------------------------------------------------------------------------------------
                                                                           Discount rate
                                                 ---------------------------------------------------------------
                                                        5%              3%             2.5%             3%
                      Year                       ---------------------------------------------------------------
                                                                                                       95th
                                                      Average         Average         Average       percentile
----------------------------------------------------------------------------------------------------------------
2010............................................              10              31              50              86

[[Page 1080]]

 
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 previously 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. There are a number of analytical 
challenges that 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.\74\
---------------------------------------------------------------------------

    \74\ In November 2013, OMB announced a new opportunity for 
public comment on the interagency technical support document 
underlying the revised SCC estimates. 78 FR 70586 (Nov. 26, 2013). 
In July 2015 OMB published a detailed summary and formal response to 
the many comments that were received. www.whitehouse.gov/blog/2015/07/02/estimating-benefits-carbon-dioxide-emissions-reductions. It 
also stated its intention to seek independent expert advice on 
opportunities to improve the estimates, including many of the 
approaches suggested by commenters.
---------------------------------------------------------------------------

    In summary, in considering the potential global benefits resulting 
from reduced CO2 emissions, DOE used the values from the 
2013 interagency report (revised July 2015), adjusted to 2014$ using 
the implicit price deflator for gross domestic product (GDP) from the 
Bureau of Economic Analysis. For each of the four sets of SCC cases 
specified, the values for emissions in 2015 were $12.2, $40.0, $62.3, 
and $117 per metric ton avoided (values expressed in 2014$). 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.
    A number of stakeholders represented by the U.S. Chamber of 
Commerce stated that DOE should not use SCC values to establish 
monetary figures for emissions reductions until the SCC undergoes a 
more rigorous notice, review, and comment process. (The Associations, 
No. 62 at p. 4)
    In conducting the interagency process that developed the SCC 
values, 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. Key 
uncertainties and model differences transparently and consistently 
inform the range of SCC estimates. These uncertainties and model 
differences are discussed in the interagency working group's reports, 
which are reproduced in appendix 14A and 14B of the final rule TSD, as 
are the major assumptions. The 2010 SCC values have been used in a 
number of Federal rulemakings upon which the public had opportunity to 
comment. In November 2013, OMB announced a new opportunity for public 
comment on the TSD underlying the revised SCC estimates. See 78 FR 
70586 (Nov. 26, 2013). OMB issued a revision to the 2013 SCC estimates 
in July of 2015. DOE stands ready to work with OMB and the other 
members of the interagency working group on further review and revision 
of the SCC estimates as appropriate.
2. Social Cost of Other Air Pollutants
    As noted previously, DOE has estimated how the considered energy 
conservation standards would reduce site NOX emissions 
nationwide and decrease power sector NOX emissions in those 
22 States not affected by the CAIR.
    DOE estimated the monetized value of NOX emissions 
reductions using benefit per ton estimates from the ``Regulatory Impact 
Analysis for the Proposed Carbon Pollution Guidelines for Existing 
Power Plants and Emission Standards for Modified and Reconstructed 
Power Plants,'' published in June 2014 by EPA's Office of Air Quality 
Planning and Standards.\75\ The report includes high and low values for 
NOX (as PM2.5) for 2020, 2025, and 2030 
discounted at 3 percent and 7 percent,\76\ which are presented in 
chapter 14 of the final rule TSD. DOE assigned values for 2021-2024 and 
2026-2029 using, respectively, the values for 2020 and 2025. DOE 
assigned values after 2030 using the value for 2030.
---------------------------------------------------------------------------

    \75\ http://www3.epa.gov/ttnecas1/regdata/RIAs/111dproposalRIAfinal0602.pdf. See Tables 4-7, 4-8, and 4-9 in the 
report.
    \76\ For the monetized NOX benefits associated with 
PM2.5, the related benefits (derived from benefit-per-ton 
values) are primarily based on an estimate of premature mortality 
derived from the ACS study (Krewski et al., 2009), which is the 
lower of the two EPA central tendencies. Using the lower value is 
more conservative when making the policy decision concerning whether 
a particular standard level is economically justified. If the 
benefit-per-ton estimates were based on the Six Cities study 
(Lepuele et al., 2012), the values would be nearly two-and-a-half 
times larger. (See chapter 14 of the final rule TSD for further 
description of the studies mentioned above.)
---------------------------------------------------------------------------

    DOE multiplied the emissions reduction (tons) in each year by the 
associated $/ton values and then discounted each series using discount 
rates of 3 percent and 7 percent as appropriate.

[[Page 1081]]

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

M. Utility Impact Analysis

    The utility impact analysis estimates several effects on the 
electric power industry that would result from the adoption of new or 
amended energy conservation standards. The utility impact analysis 
estimates the changes in installed electrical capacity and generation 
that would result for each TSL. The analysis is based on published 
output from the NEMS associated with AEO2015. NEMS produces the AEO 
Reference case, as well as a number of side cases that estimate the 
economy-wide impacts of changes to energy supply and demand. DOE uses 
published side cases to estimate the marginal impacts of reduced energy 
demand on the utility sector. These marginal factors are estimated 
based on the changes to electricity sector generation, installed 
capacity, fuel consumption and emissions in the AEO Reference case and 
various side cases. Details of the methodology are provided in the 
appendices to chapters 13 and 15 of the final rule TSD.
    The output of this analysis is a set of time-dependent coefficients 
that capture the change in electricity generation, primary fuel 
consumption, installed capacity and power sector emissions due to a 
unit reduction in demand for a given end use. These coefficients are 
multiplied by the stream of electricity savings calculated in the NIA 
to provide estimates of selected utility impacts of new or amended 
energy conservation standards.

N. Employment Impact Analysis

    DOE considers employment impacts in the domestic economy as one 
factor in selecting a standard. Employment impacts from new or amended 
energy conservation standards include both direct and indirect impacts. 
Direct employment impacts are changes in the number of employees at the 
plants that produce the covered equipment, along with affiliated 
distribution and service companies. The MIA addresses those impacts.
    Indirect employment impacts are changes in national employment that 
occur due to the shift in expenditures and capital investment caused by 
the purchase and operation of more-efficient appliances. Indirect 
employment impacts from standards consist of the net jobs created or 
eliminated in the national economy, other than in the manufacturing 
sector being regulated, caused by: (1) Reduced spending by end users on 
energy; (2) reduced spending on new energy supply by the utility 
industry; (3) increased customer spending on new equipment to which the 
new standards apply; 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).\77\ 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.\78\ 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 due to shifts in economic activity resulting from energy 
conservation standards.
---------------------------------------------------------------------------

    \77\ Data on industry employment, hours, labor compensation, 
value of production, and the implicit price deflator for output for 
these industries are available upon request by calling the Division 
of Industry Productivity Studies (202-691-5618) or by sending a 
request by email to [email protected].
    \78\ See Bureau of Economic Analysis, Regional Multipliers: A 
User Handbook for the Regional Input-Output Modeling System (RIMS 
II), U.S. Department of Commerce (1992).
---------------------------------------------------------------------------

    DOE estimated indirect national employment impacts for the standard 
level adopted in this final rule using an input/output model of the 
U.S. economy called Impact of Sector Energy Technologies version 4.0 
(ImSET).\79\ 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 most relevant to industrial, commercial, and residential 
building energy use.
---------------------------------------------------------------------------

    \79\ Livingston OV, SR Bender, MJ Scott, and RW Schultz. ImSET 
4.0: Impact of Sector Energy Technologies Model Description and 
User's Guide. 2015. Pacific Northwest National Laboratory, Richland, 
WA. Report No. PNNL-24563.
---------------------------------------------------------------------------

    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 over-estimate actual job 
impacts over the long run for this rule. Therefore, DOE generated 
results for near-term timeframes (2020 and 2025), where these 
uncertainties are reduced. For more details on the employment impact 
analysis, see chapter 16 of the final rule TSD.
    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.

O. Description of Materials Incorporated by Reference

    In this final rule DOE is incorporating 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 adopted 
Class A definition. Copies of ASTM standards may be purchased from ASTM 
International, 100 Barr Harbor Drive, P.O. 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 of DOE's analyses with 
respect to the considered energy conservation standards for beverage 
vending machines. It addresses the TSLs examined by DOE, the projected 
impacts of each of these levels if adopted as energy conservation 
standards for beverage vending machines, and the standards levels that 
DOE is adopting in this final rule. Additional details regarding DOE's 
analyses are contained in the final rule TSD supporting this notice.

[[Page 1082]]

A. Trial Standard Levels

    DOE analyzed 8 ELs for Class A equipment, 12 ELs for Class B 
equipment, 15 ELs for Combination A equipment, and 13 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 that is hypothetically 
representative of the next version of ENERGY STAR. That is, for the 
given equipment class, DOE selected the EL comprising TSL 2 to be 5 or 
10 percent better than TSL 1, depending on the improvement potential in 
different equipment classes. That is, TSL 2 represents EL 2 for Class A 
(5-percent improvement over TSL 1), EL 4 for Class B (10-percent 
improvement over TSL 1), and EL 3 for Combination A and Combination B 
(10-percent improvement over TSL 1).
    (3) TSL 3 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.
    (4) TSL 4 was selected to be an interim analysis point 
corresponding to the EL halfway between TSL 3 and 5 (rounding up when 
between ELs).
    (5) TSL 5 corresponds to the max tech EL.
    In response to DOE's TSL selection presented in the 2015 BVM ECS 
NOPR, the CA IOUs commented in their written submission that DOE should 
consider an intermediate efficiency tier between TSL 4 and TSL 5 for 
Class A and Combination A and supported TSL 4 for Class B and 
Combination B equipment. (CA IOUs, No. 58 at p. 5) In response to CA 
IOUs suggestion, DOE notes that DOE has revised the TSL selection 
criteria for this final rule. Specifically, because the final rule 
analysis resulted in the maximum NVP at a 7-percent discount rate 
occurring at lower ELs for all equipment classes than in the NOPR, DOE 
revised TSL 3 to represent the TSL with maximum NPV at a 7-percent 
discount rate instead of TSL 4, as proposed in the 2015 BVM ECS NOPR. 
Therefore, DOE has defined TSL 4 as an interim analysis point 
consisting of the EL halfway between TSL 3 and TSL 5 for all equipment 
classes. While, in the final rule analysis, TSL 3 and TSL 4 consist of 
lower ELs than DOE's proposed TSL 4 presented in the 2015 BVM ECS NOPR, 
DOE notes that the TSL 4 analysis point now reflects an interim 
analysis point between the TSL with maximum NPV at a 7-percent discount 
rate and max tech, as requested by the commenters. DOE also notes that, 
based on the revised final rule analyses, ELs beyond TSL 3 for 
equipment Class A result in increased LCC compared to baseline 
equipment and a negative NPV.
    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              Base-line    TSL 1      TSL 2      TSL 3      TSL 4      TSL 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Class A.................................             30.0  EL.........................          0          1          2        * 1          4          8
                                                           DEC........................       4.21       4.00       3.79       4.00       3.37       2.60
Class B.................................             23.4  EL.........................          0          2          4          6          9         12
                                                           DEC........................       4.87       4.38       3.90       3.41       2.68       1.94
Combination A...........................             10.3  EL.........................          0          1          3         11         13         15
                                                           DEC........................       7.89       7.49       6.70       3.55       2.76       2.10
Combination B...........................              4.3  EL.........................          0          1          3          9         11         13
                                                           DEC........................       4.58       4.35       3.89       2.52       2.06       1.46
--------------------------------------------------------------------------------------------------------------------------------------------------------
* DOE notes that the EL selected for TSL 3 for Class A equipment is EL 1, which is the same EL selected for TSL1 for Class A equipment.

    In this final rule, 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]ft\3\) of measured 
refrigerated volume,
V is the representative value of refrigerated volume (ft\3\) 
calculated for the equipment, and
B is an offset factor expressed in kWh/day.

    Coefficients A and B are uniquely derived for each equipment class 
based on a linear equation passing between the daily energy consumption 
values for equipment of different refrigerated volumes. For the A and B 
coefficients, DOE used the unique energy consumption values of the 
small, medium, and large or medium and large size BVM units for Class A 
and Class B or Combination A and Combination 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.

[[Page 1083]]



 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..  0.074 x V + 3.15..  0.192 x V + 5.91..  0.202 x V + 3.71
1...............................  0.052 x V + 2.43..  0.066 x V + 2.83..  0.182 x V + 5.62..  0.192 x V + 3.52
2...............................  0.050 x V + 2.30..  0.059 x V + 2.52..  0.163 x V + 5.03..  0.172 x V + 3.15
3...............................  0.052 x V + 2.43..  0.052 x V + 2.20..  0.086 x V + 2.66..  0.111 x V + 2.04
4...............................  0.044 x V + 2.05..  0.041 x V + 1.73..  0.067 x V + 2.07..  0.091 x V + 1.67
5...............................  0.034 x V + 1.58..  0.029 x V + 1.25..  0.051 x V + 1.58..  0.064 x V + 1.18
----------------------------------------------------------------------------------------------------------------

    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 
the 2015 BVM ECS NOPR, DOE proposed a calculation method to be adopted 
at 10 CFR 429.52(a)(3) for determining the representative value of 
refrigerated volume for each BVM model. 80 FR 50507-50508 (Aug. 19, 
2015). In response to DOE's proposal, SVA expressed support for DOE's 
proposal to clarify the calculation of refrigerated volume. (SVA, No. 
53 at p. 10) DOE appreciates SVA's support and, in this final rule, is 
adopting provisions to specify that the representative value of 
refrigerated volume must be determined as the mean of the measured 
refrigerated volume of each tested unit. Manufacturers must use this 
calculated value for determining the appropriate standard level for 
that model.
    In addition, in the 2015 BVM ECS NOPR, DOE proposed provisions to 
assess whether the representative value of refrigerated volume, as 
certified by manufacturers, is valid. 80 FR 50507-50508 (Aug. 19, 
2015). DOE did not receive any comments on this proposal and, 
therefore, is adopting the proposal for determining if the certified 
value of refrigerated volume is valid as described in the 2015 BVM ECS 
NOPR with no modifications.
    Under the adopted provisions, DOE will 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 is 
considered valid. Based on whether the representative value of 
refrigerated volume is valid, DOE will do one of the following:
    (1) If the representative value of refrigerated volume, as 
certified by manufacturers, is valid, DOE will use the certified value 
to determine the MDEC for that model; or
    (2) If the representative value of refrigerated volume is invalid, 
DOE will use its results from the tested unit or units as the basis for 
calculating the MDEC for that BVM model.
    Additionally, DOE notes that these sampling and enforcement 
provisions are effective March 8, 2016, as such, applicable to both the 
existing standards, as well as any new and amended standards adopted as 
a result of this final rule.

B. Economic Justification and Energy Savings

1. Economic Impacts on Individual Customers
    DOE analyzed the economic impacts on BVM customers by looking at 
the effects that potential new and amended standards at each TSL would 
have on the LCC and PBP. DOE also examined the impacts of potential 
standards on customer subgroups. These analyses are discussed in the 
following subsections.
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 no-new-standards 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 negative impact (net cost).
    DOE also performed a PBP analysis as part of the LCC analysis. The 
PBP is the number of years it takes for a 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 final rule 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 assumed 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 case 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 no-new-
standards 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 
displayed in Table V.3 through Table V.18.

[[Page 1084]]



                                                Table V.3--Average LCC and PBP Results for Class A, CO2*
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                               Average costs (2014$)
                                                                                 ------------------------------------------------   Simple
                                                                         % of                    First                              payback     Average
                           TSL                                EL       baseline    Installed    year's     Lifetime                period **   lifetime
                                                                      energy use     cost      operating   operating      LCC       (years)     (years)
                                                                                                 cost        cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
--......................................................           0         100       2,817         487       4,991       7,807  ..........        13.5
1,3.....................................................           1          95       2,832         480       4,910       7,742         2.0        13.5
2.......................................................           2          90       2,867         505       5,157       8,025         N/A        13.5
--......................................................           3          85       2,951         530       5,405       8,356         N/A        13.5
4.......................................................           4          80       3,071         557       5,674       8,744         N/A        13.5
--......................................................           5          75       3,232         549       5,593       8,825         N/A        13.5
--......................................................           6          70       3,467         542       5,512       8,979         N/A        13.5
--......................................................           7          65       3,701         534       5,431       9,132         N/A        13.5
5.......................................................           8          62       3,853         529       5,379       9,232         N/A        13.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The results for each EL are calculated assuming that all customers use equipment at that efficiency level or higher. The PBP is measured relative to
  the baseline equipment.
** Values of N/A indicate paybacks that are not possible, given that more efficient equipment is not only more expensive to purchase, but also costs
  more to operate.


          Table V.4--Average LCC Savings Relative to the No-New-Standards Case Efficiency Distribution
                                                for Class A, CO2
----------------------------------------------------------------------------------------------------------------
                                                                                      Life-cycle cost savings
                                                                                 -------------------------------
                                                                   % of baseline       % of       Average  life-
                       TSL                              EL          energy use    customers that    cycle cost
                                                                                    experience a     savings *
                                                                                     net cost         (2014$)
----------------------------------------------------------------------------------------------------------------
--..............................................               0             100  ..............  ..............
1,3.............................................               1              95               0              65
2...............................................               2              90             100           (217)
--..............................................               3              85             100           (549)
4...............................................               4              80             100           (937)
--..............................................               5              75             100         (1,018)
--..............................................               6              70             100         (1,171)
--..............................................               7              65             100         (1,325)
5...............................................               8              62             100         (1,424)
----------------------------------------------------------------------------------------------------------------
* 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$)
                                                                                 ------------------------------------------------   Simple
                                                                         % of                    First                              payback     Average
                           TSL                                EL       baseline    Installed    year's     Lifetime                period **   lifetime
                                                                      energy use     cost      operating   operating      LCC       (years)     (years)
                                                                                                 cost        cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
--......................................................           0         100       2,908         513       5,246       8,154  ..........        13.5
1,3.....................................................           1          95       2,916         505       5,165       8,081         1.1        13.5
2.......................................................           2          90       2,925         497       5,084       8,010         1.2        13.5
--......................................................           3          85       2,937         464       4,748       7,686         0.6        13.5
4.......................................................           4          80       2,960         457       4,668       7,627         0.9        13.5
--......................................................           5          75       3,030         515       5,243       8,274         N/A        13.5
--......................................................           6          70       3,215         507       5,162       8,377         N/A        13.5
--......................................................           7          65       3,399         534       5,431       8,830         N/A        13.5
5.......................................................           8          62       3,519         529       5,379       8,897         N/A        13.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The results for each EL are calculated assuming that all customers use equipment at that efficiency level or higher. The PBP is measured relative to
  the baseline equipment.
** Values of N/A indicate paybacks that are not possible, given that more efficient equipment is not only more expensive to purchase, but also costs
  more to operate.


[[Page 1085]]


          Table V.6--Average LCC Savings Relative to the No-New-Standards Case Efficiency Distribution
                                              for Class A, Propane
----------------------------------------------------------------------------------------------------------------
                                                                                      Life-cycle cost savings
                                                                                 -------------------------------
                                                                   % of baseline       % of       Average  life-
                       TSL                              EL          energy use    customers that    cycle cost
                                                                                    experience a     savings *
                                                                                     net cost         (2014$)
----------------------------------------------------------------------------------------------------------------
--..............................................               0             100  ..............  ..............
1,3.............................................               1              95               0               0
2...............................................               2              90               0              71
--..............................................               3              85               0             395
4...............................................               4              80               0             454
--..............................................               5              75              94           (193)
--..............................................               6              70              96           (296)
--..............................................               7              65             100           (749)
5...............................................               8              62             100           (817)
----------------------------------------------------------------------------------------------------------------
* 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$)
                                                                                 ------------------------------------------------   Simple
                                                                         % of                    First                              payback     Average
                           TSL                                EL       baseline    Installed    year's     Lifetime                period **   lifetime
                                                                      energy use     cost      operating   operating      LCC       (years)     (years)
                                                                                                 cost        cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
--......................................................           0         100       2,320         522       5,354       7,674  ..........        13.5
--......................................................           1          95       2,324         513       5,261       7,585         0.4        13.5
1.......................................................           2          90       2,328         505       5,169       7,496         0.4        13.5
--......................................................           3          85       2,332         496       5,076       7,408         0.4        13.5
2.......................................................           4          80       2,336         507       5,181       7,517         1.0        13.5
--......................................................           5          75       2,340         498       5,089       7,429         0.8        13.5
3.......................................................           6          70       2,348         497       5,073       7,422         1.1        13.5
--......................................................           7          65       2,362         488       4,981       7,343         1.3        13.5
--......................................................           8          60       2,388         456       4,644       7,033         1.0        13.5
4.......................................................           9          55       2,449         532       5,408       7,857         N/A        13.5
--......................................................          10          50       2,665         523       5,315       7,980         N/A        13.5
--......................................................          11          45       2,973         514       5,222       8,195        85.6        13.5
5.......................................................          12          40       3,298         505       5,127       8,425        58.8        13.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The results for each EL are calculated assuming that all customers use equipment at that efficiency level or higher. The PBP is measured relative to
  the baseline equipment.
** Values of N/A indicate paybacks that are not possible, given that more efficient equipment is not only more expensive to purchase, but also costs
  more to operate.


          Table V.8--Average LCC Savings Relative to the No-New-Standards Case Efficiency Distribution
                                                for Class B, CO2
----------------------------------------------------------------------------------------------------------------
                                                                                      Life-cycle cost savings
                                                                                 -------------------------------
                                                                   % of baseline       % of       Average  life-
                       TSL                              EL          energy use    customers that    cycle cost
                                                                                    experience a     savings *
                                                                                     net cost         (2014$)
----------------------------------------------------------------------------------------------------------------
--..............................................               0             100  ..............  ..............
--..............................................               1              95               0               0
1...............................................               2              90               0               0
--..............................................               3              85               0               0
2...............................................               4              80               0               0
--..............................................               5              75               0              38
3...............................................               6              70               8              42
--..............................................               7              65               0             109
--..............................................               8              60               0             375
4...............................................               9              55              99           (448)
--..............................................              10              50              99           (572)
--..............................................              11              45              99           (787)
5...............................................              12              40             100         (1,017)
----------------------------------------------------------------------------------------------------------------
* The calculation includes customers with zero LCC savings (no impact). Parentheses indicate negative values.


[[Page 1086]]


                                              Table V.9--Average LCC and PBP Results for Class B, Propane *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                               Average costs (2014$)
                                                                                 ------------------------------------------------   Simple
                                                                         % of                    First                              payback     Average
                           TSL                                EL       baseline    Installed    year's     Lifetime                 period     lifetime
                                                                      energy use     cost      operating   operating      LCC       (years)     (years)
                                                                                                 cost        cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
--......................................................           0         100       2,359         515       5,283       7,642  ..........        13.5
--......................................................           1          95       2,363         506       5,191       7,553         0.4        13.5
1.......................................................           2          90       2,366         505       5,169       7,535         0.7        13.5
--......................................................           3          85       2,370         496       5,076       7,446         0.6        13.5
2.......................................................           4          80       2,374         487       4,984       7,358         0.6        13.5
--......................................................           5          75       2,379         479       4,891       7,270         0.5        13.5
3.......................................................           6          70       2,384         470       4,798       7,182         0.5        13.5
--......................................................           7          65       2,389         481       4,904       7,293         0.9        13.5
--......................................................           8          60       2,397         480       4,888       7,285         1.1        13.5
4.......................................................           9          55       2,414         471       4,796       7,210         1.3        13.5
--......................................................          10          50       2,538         492       5,000       7,538         7.7        13.5
--......................................................          11          45       2,752         514       5,222       7,974       632.2        13.5
5.......................................................          12          40       2,982         505       5,127       8,109        64.7        13.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The results for each EL are calculated assuming that all customers use equipment at that efficiency level or higher. The PBP is measured relative to
  the baseline equipment.


          Table V.10--Average LCC Savings Relative to the No-New-Standards Case Efficiency Distribution
                                              for Class B, Propane
----------------------------------------------------------------------------------------------------------------
                                                                                      Life-cycle cost savings
                                                                                 -------------------------------
                                                                   % of baseline       % of       Average  life-
                       TSL                              EL          energy use    customers that    cycle cost
                                                                                    experience a     savings *
                                                                                     net cost         (2014$)
----------------------------------------------------------------------------------------------------------------
--..............................................               0             100  ..............  ..............
--..............................................               1              95               0               5
1...............................................               2              90               3               8
--..............................................               3              85               0              96
2...............................................               4              80               0             185
--..............................................               5              75               0             273
3...............................................               6              70               0             361
--..............................................               7              65               1             250
--..............................................               8              60               3             257
4...............................................               9              55               1             333
--..............................................              10              50              59               4
--..............................................              11              45              91           (432)
5...............................................              12              40              93           (566)
----------------------------------------------------------------------------------------------------------------
* The calculation includes customers with zero LCC savings (no impact). Parentheses indicate negative values.


                                             Table V.11--Average LCC and PBP Results for Combination A, CO2*
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                               Average costs (2014$)
                                                                                 ------------------------------------------------   Simple
                                                                         % of                    First                              payback     Average
                           TSL                                EL       baseline    Installed    year's     Lifetime                 period     lifetime
                                                                      energy use     cost      operating   operating      LCC       (years)     (years)
                                                                                                 cost        cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
--......................................................           0         100       2,768         561       5,771       8,539  ..........        13.5
1.......................................................           1          95       2,771         550       5,654       8,424         0.2        13.5
--......................................................           2          90       2,773         539       5,537       8,310         0.2        13.5
2.......................................................           3          85       2,776         528       5,420       8,196         0.2        13.5
--......................................................           4          80       2,781         517       5,303       8,084         0.3        13.5
--......................................................           5          75       2,786         506       5,186       7,972         0.3        13.5
--......................................................           6          70       2,791         495       5,069       7,860         0.3        13.5
--......................................................           7          65       2,796         484       4,952       7,748         0.4        13.5
--......................................................           8          60       2,801         504       5,148       7,949         0.6        13.5
--......................................................           9          55       2,813         493       5,031       7,844         0.7        13.5
--......................................................          10          50       2,832         466       4,753       7,586         0.7        13.5
3.......................................................          11          45       2,856         455       4,636       7,492         0.8        13.5
--......................................................          12          40       2,954         480       4,885       7,839         2.3        13.5
4.......................................................          13          35       3,189         545       5,527       8,716        26.1        13.5
--......................................................          14          30       3,717         534       5,410       9,127        35.0        13.5

[[Page 1087]]

 
5.......................................................          15          27       4,130         526       5,331       9,462        39.4        13.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The results for each EL are calculated assuming that all customers use equipment at that efficiency level or higher. 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 baseline       % of       Average  life-
                       TSL                              EL          energy use    customers that    cycle cost
                                                                                    experience a     savings *
                                                                                     net cost         (2014$)
----------------------------------------------------------------------------------------------------------------
--                                                             0             100  ..............  ..............
1...............................................               1              95               0              57
--..............................................               2              90               0             172
2...............................................               3              85               0             286
--..............................................               4              80               0             398
--..............................................               5              75               0             510
--..............................................               6              70               0             622
--..............................................               7              65               0             733
--..............................................               8              60               0             533
--..............................................               9              55               0             638
--..............................................              10              50               0             896
3...............................................              11              45               0             990
--..............................................              12              40               2             643
4...............................................              13              35              76           (234)
--..............................................              14              30              86           (645)
5...............................................              15              27              93           (980)
----------------------------------------------------------------------------------------------------------------
* The calculation includes customers with zero LCC savings (no impact). Parentheses indicate negative values.


                                          Table V.13--Average LCC and PBP Results for Combination A, Propane *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                               Average costs (2014$)
                                                                                 ------------------------------------------------   Simple
                                                                         % of                    First                              payback     Average
                           TSL                                EL       baseline    Installed    year's     Lifetime                 period     lifetime
                                                                      energy use     cost      operating   operating      LCC       (years)     (years)
                                                                                                 cost        cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
--......................................................           0         100       2,914         561       5,771       8,685  ..........        13.5
1.......................................................           1          95       2,915         550       5,654       8,569         0.1        13.5
--......................................................           2          90       2,916         539       5,537       8,453         0.1        13.5
2.......................................................           3          85       2,917         528       5,420       8,337         0.1        13.5
--......................................................           4          80       2,919         517       5,303       8,222         0.1        13.5
--......................................................           5          75       2,923         506       5,186       8,109         0.2        13.5
--......................................................           6          70       2,928         495       5,069       7,997         0.2        13.5
--......................................................           7          65       2,932         484       4,952       7,884         0.2        13.5
--......................................................           8          60       2,937         473       4,835       7,772         0.3        13.5
--......................................................           9          55       2,943         484       4,939       7,882         0.4        13.5
--......................................................          10          50       2,952         482       4,914       7,866         0.5        13.5
3.......................................................          11          45       2,967         480       4,889       7,855         0.7        13.5
--......................................................          12          40       2,988         444       4,519       7,508         0.6        13.5
4.......................................................          13          35       3,066         469       4,768       7,834         1.7        13.5
--......................................................          14          30       3,433         534       5,410       8,844        19.2        13.5
5.......................................................          15          27       3,765         526       5,331       9,097        24.7        13.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The results for each EL are calculated assuming that all customers use equipment at that efficiency level or higher. The PBP is measured relative to
  the baseline equipment.


[[Page 1088]]


          Table V.14--Average LCC Savings Relative to the No-New-Standards Case Efficiency Distribution
                                           for Combination A, Propane
----------------------------------------------------------------------------------------------------------------
                                                                                      Life-cycle cost savings
                                                                                 -------------------------------
                                                                   % of baseline       % of       Average  life-
                       TSL                              EL          energy use    customers that    cycle cost
                                                                                    experience a     savings *
                                                                                     net cost         (2014$)
----------------------------------------------------------------------------------------------------------------
--..............................................               0             100  ..............  ..............
1...............................................               1              95               0              58
--..............................................               2              90               0             174
2...............................................               3              85               0             290
--..............................................               4              80               0             405
--..............................................               5              75               0             518
--..............................................               6              70               0             630
--..............................................               7              65               0             743
--..............................................               8              60               0             855
--..............................................               9              55               0             745
--..............................................              10              50               0             761
3...............................................              11              45               0             772
--..............................................              12              40               0           1,119
4...............................................              13              35               1             793
--..............................................              14              30              74           (217)
5...............................................              15              27              82           (470)
----------------------------------------------------------------------------------------------------------------
* The calculation includes customers with zero LCC savings (no impact). Parentheses indicate negative values.


                                             Table V.15--Average LCC and PBP Results for Combination B, CO2*
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                               Average costs (2014$)
                                                                                 ------------------------------------------------   Simple
                                                                         % of                    First                              payback     Average
                           TSL                                EL       baseline    Installed    year's     Lifetime                period **   lifetime
                                                                      energy use     cost      operating   operating      LCC       (years)     (years)
                                                                                                 cost        cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
--......................................................           0         100       2,418         511       5,239       7,657  ..........        13.5
1.......................................................           1          95       2,419         502       5,149       7,568         0.1        13.5
--......................................................           2          90       2,420         494       5,058       7,479         0.1        13.5
2.......................................................           3          85       2,422         485       4,968       7,390         0.1        13.5
--......................................................           4          80       2,423         477       4,878       7,301         0.1        13.5
--......................................................           5          75       2,425         468       4,787       7,212         0.2        13.5
--......................................................           6          70       2,429         460       4,697       7,126         0.2        13.5
--......................................................           7          65       2,434         451       4,607       7,040         0.3        13.5
--......................................................           8          60       2,441         452       4,608       7,049         0.4        13.5
3.......................................................           9          55       2,454         444       4,517       6,971         0.5        13.5
--......................................................          10          50       2,467         464       4,717       7,184         1.0        13.5
4.......................................................          11          45       2,491         464       4,718       7,209         1.6        13.5
--......................................................          12          40       2,538         526       5,336       7,874         N/A        13.5
5.......................................................          13          32       3,250         512       5,188       8,438         N/A        13.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The results for each EL are calculated assuming that all customers use equipment at that efficiency level or higher. The PBP is measured relative to
  the baseline equipment.
** Values of N/A indicate paybacks that are not possible, given that more efficient equipment is not only more expensive to purchase, but also costs
  more to operate.


          Table V.16--Average LCC Savings Relative to the No-New-Standards Case Efficiency Distribution
                                             for Combination B, CO2
----------------------------------------------------------------------------------------------------------------
                                                                                      Life-cycle cost savings
                                                                                 -------------------------------
                                                                   % of baseline       % of       Average  life-
                       TSL                              EL          energy use    customers that    cycle cost
                                                                                    experience a     savings *
                                                                                     net cost         (2014$)
----------------------------------------------------------------------------------------------------------------
--..............................................               0             100  ..............  ..............
1...............................................               1              95               0              30
--..............................................               2              90               0              89
2...............................................               3              85               0             179
--..............................................               4              80               0             268
--..............................................               5              75               0             356
--..............................................               6              70               0             443
--..............................................               7              65               0             528
--..............................................               8              60               0             519

[[Page 1089]]

 
3...............................................               9              55               0             597
--..............................................              10              50               2             384
4...............................................              11              45               7             359
--..............................................              12              40              83           (306)
5...............................................              13              32              97           (870)
----------------------------------------------------------------------------------------------------------------
* The calculation includes customers with zero LCC savings (no impact). Parentheses indicate negative values.


                                          Table V.17--Average LCC and PBP Results for Combination B, Propane *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                               Average costs (2014$)
                                                                                 ------------------------------------------------   Simple
                                                                         % of                    First                              payback     Average
                           TSL                                EL       baseline    Installed    year's     Lifetime                period **   lifetime
                                                                      energy use     cost      operating   operating      LCC       (years)     (years)
                                                                                                 cost        cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
--......................................................           0         100       2,538         511       5,239       7,777  ..........        13.5
1.......................................................           1          95       2,539         502       5,149       7,688         0.1        13.5
--......................................................           2          90       2,540         494       5,058       7,598         0.1        13.5
2.......................................................           3          85       2,541         485       4,968       7,509         0.1        13.5
--......................................................           4          80       2,542         477       4,878       7,420         0.1        13.5
--......................................................           5          75       2,543         468       4,787       7,330         0.1        13.5
--......................................................           6          70       2,544         460       4,697       7,241         0.1        13.5
--......................................................           7          65       2,547         451       4,607       7,153         0.1        13.5
--......................................................           8          60       2,552         443       4,516       7,068         0.2        13.5
3.......................................................           9          55       2,561         444       4,517       7,078         0.3        13.5
--......................................................          10          50       2,571         435       4,427       6,998         0.4        13.5
4.......................................................          11          45       2,585         455       4,626       7,212         0.8        13.5
--......................................................          12          40       2,613         456       4,628       7,240         1.4        13.5
5.......................................................          13          32       2,933         512       5,188       8,121         N/A        13.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The results for each EL are calculated assuming that all customers use equipment at that efficiency level or higher. The PBP is measured relative to
  the baseline equipment.
** Values of N/A indicate paybacks that are not possible, given that more efficient equipment is not only more expensive to purchase, but also costs
  more to operate.


          Table V.18--Average LCC Savings Relative to the No-New-Standards Case Efficiency Distribution
                                           for Combination B, Propane
----------------------------------------------------------------------------------------------------------------
                                                                                      Life-cycle cost savings
                                                                                 -------------------------------
                                                                   % of baseline       % of       Average  life-
                       TSL                              EL          energy use    customers that    cycle cost
                                                                                    experience a     savings *
                                                                                     net cost         (2014$)
----------------------------------------------------------------------------------------------------------------
--..............................................               0             100  ..............  ..............
1...............................................               1              95               0              30
--..............................................               2              90               0              89
2...............................................               3              85               0             179
--..............................................               4              80               0             268
--..............................................               5              75               0             358
--..............................................               6              70               0             447
--..............................................               7              65               0             535
--..............................................               8              60               0             620
3...............................................               9              55               0             610
--..............................................              10              50               0             690
4...............................................              11              45               1             476
--..............................................              12              40               3             447
5...............................................              13              32              86           (433)
----------------------------------------------------------------------------------------------------------------
* The calculation includes customers with zero LCC savings (no impact). Parentheses indicate negative values.


[[Page 1090]]

b. Customer 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 customer subgroup analysis indicate that the 
manufacturing/industrial subgroup fares slightly worse than the average 
customer, with that subgroup showing lower LCC savings and longer 
payback periods than a typical customer shows. At TSL 3, all but one 
equipment class have positive LCC savings for the subgroup (Class A, 
Propane has LCC savings of 0), although the savings are not as great in 
magnitude as for all customers. Chapter 11 of the final rule TSD 
provides a more detailed discussion on the customer 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...................................                 47                 65                2.6                2.0
2...................................              (245)              (217)                N/A                N/A
3...................................                 47                 65                2.6                2.0
4...................................              (982)              (937)                N/A                N/A
5...................................            (1,535)            (1,424)                N/A                N/A
----------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.
** Values of N/A indicate paybacks that are not possible, given that more efficient equipment is not only more
  expensive to purchase, but also costs more to operate.


   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                1.3                1.1
2...................................                 53                 71                1.4                1.2
3...................................                  0                  0                1.3                1.1
4...................................                391                454                1.0                0.9
5...................................              (917)              (817)                N/A                N/A
----------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.
** Values of N/A indicate paybacks that are not possible, given that more efficient equipment is not only more
  expensive to purchase, but also costs more to operate.


 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                0.5                0.4
2...................................                  0                  0                2.0                1.0
3...................................                 22                 42                2.0                1.1
4...................................              (506)              (448)                N/A                N/A
5...................................            (1,138)            (1,017)                N/A               58.8
----------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.
** Values of N/A indicate paybacks that are not possible, given that more efficient equipment is not only more
  expensive to purchase, but also costs more to operate.


[[Page 1091]]


   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...................................                  3                  8                1.1                0.7
2...................................                138                185                0.7                0.6
3...................................                272                361                0.7                0.5
4...................................                188                333                2.0                1.3
5...................................              (756)              (566)                N/A               64.7
----------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.
** Values of N/A indicate paybacks that are not possible, given that more efficient equipment is not only more
  expensive to purchase, but also costs more to operate.


 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...................................                 44                 57                0.3                0.2
2...................................                220                286                0.3                0.2
3...................................                716                990                1.1                0.8
4...................................              (529)              (234)                N/A               26.1
5...................................            (1,318)              (980)              874.3               39.4
----------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.
** Values of N/A indicate paybacks that are not possible, given that more efficient equipment is not only more
  expensive to purchase, but also costs more to operate.


 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...................................                 45                 58                0.1                0.1
2...................................                224                290                0.1                0.1
3...................................                505                772                0.9                0.7
4...................................                476                793                2.4                1.7
5...................................              (808)              (470)              546.6               24.7
----------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.


 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...................................                 23                 30                0.2                0.1
2...................................                138                179                0.2                0.1
3...................................                436                597                0.7                0.5
4...................................                168                359                2.7                1.6
5...................................            (1,094)              (870)                N/A                N/A
----------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.
** Values of N/A indicate paybacks that are not possible, given that more efficient equipment is not only more
  expensive to purchase, but also costs more to operate.


[[Page 1092]]


 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...................................                 23                 30                0.1                0.1
2...................................                138                179                0.1                0.1
3...................................                448                610                0.4                0.3
4...................................                282                476                1.3                0.8
5...................................              (658)              (433)                N/A                N/A
----------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.
** Values of N/A indicate paybacks that are not possible, given that more efficient equipment is not only more
  expensive to purchase, but also costs more to operate.

c. Rebuttable Presumption Payback
    As discussed in section III.F.2 of this final rule, 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 3, for all 
equipment classes and both CO2 and propane refrigerants.

     Table V.27--Rebuttable Presumption Payback Periods at TSL 3 for All Refrigerants and Equipment Classes
----------------------------------------------------------------------------------------------------------------
                                                     Rebuttable presumption payback period (years)
             Refrigerant             ---------------------------------------------------------------------------
                                           Class A            Class B         Combination A      Combination B
----------------------------------------------------------------------------------------------------------------
CO2.................................                2.0                0.5                0.7                0.5
Propane.............................                1.1                0.5                0.4                0.3
----------------------------------------------------------------------------------------------------------------

2. Economic Impacts on Manufacturers
    DOE performed an MIA to estimate the impact of new and 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 final rule 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 
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.J and V.B.2.b of this final rule, 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 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 equipment 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

[[Page 1093]]

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$M..............            94.8            94.4            94.7            95.2            98.8           112.6
Change in INPV....................  2014$M *............  ..............           (0.4)           (0.1)             0.4             4.0            17.9
                                    % Change *..........  ..............           (0.4)           (0.1)             0.4             4.2            18.9
Product Conversion Costs..........  2014$M..............  ..............            0.58            0.58            0.58            1.19            3.27
Capital Conversion Costs..........  2014$M..............  ..............            0.30            0.30            0.30            1.14            4.29
Total Conversion Costs............  2014$M..............  ..............            0.88            0.88            0.88            2.33            7.56
Free Cash Flow....................  2014$M..............            10.4            10.1            10.1            10.1             9.5             7.4
                                    % Change *..........  ..............           (3.1)           (3.1)           (3.1)           (8.5)          (28.4)
--------------------------------------------------------------------------------------------------------------------------------------------------------
* 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$M..............            94.8            94.1            94.0            94.0            91.5            79.3
Change in INPV....................  2014$M *............  ..............           (0.6)           (0.8)           (0.7)           (3.2)          (15.5)
                                    % Change *..........  ..............           (0.7)           (0.8)           (0.8)           (3.4)          (16.4)
Product Conversion Costs..........  2014$M..............  ..............             0.6             0.6             0.6             1.2             3.3
Capital Conversion Costs..........  2014$M..............  ..............             0.3             0.3             0.3             1.1             4.3
Total Conversion Costs............  2014$M..............  ..............             0.9             0.9             0.9             2.3             7.6
Free Cash Flow....................  2014$M..............            10.4            10.1            10.1            10.1             9.5             7.4
                                    % Change *..........  ..............           (3.1)           (3.1)           (3.1)           (8.5)          (28.4)
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.

    At TSL 1, DOE estimates the impact on INPV for manufacturers of 
beverage vending machine to range from -$0.6 million to -$0.4 million, 
or a change in INPV of -0.7 percent and -0.4 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 3.1 percent to $10.1 million, compared to the no-new-
standards case value of $10.4 million in the year before the compliance 
date (2018).
    At TSL 1, the industry as a whole is expected to incur $0.6 million 
in product conversion costs and would be expected to incur $0.3 in 
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, LED lighting, a refrigeration low 
power state mode, 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 -$0.8 million to -$0.1 million, 
or a change in INPV of -0.8 percent and -0.1 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 3.1 percent to $10.1 million, compared to the 
no-new-standards case value of $10.4 million in the year before the 
compliance date (2018).
    At TSL 2, the industry as a whole is expected to incur $0.6 million 
in product conversion costs and $0.3 in capital conversion costs to 
manufacturer equipment 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, automatic lighting

[[Page 1094]]

controls, LED lighting, improved single speed reciprocating compressor, 
or a low power state, incorporating a permanent split capacitor 
condenser fan motor, electronically-commutated evaporator fan motor, 
enhanced condenser coil, or evaporator fan controls. 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 -$0.7 million to $0.4 million, 
or a change in INPV of -0.8 percent to 0.4 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 3.1 percent to $10.1 million, compared to the 
no-new-standards case value of $10.4 million in the year before the 
compliance date (2018).
    At TSL 3, the industry as a whole is expected to spend $0.6 million 
in product conversion costs, as well as $0.3 million in capital 
conversion costs to manufacture redesigned platforms. As at TSLs 1 and 
2, DOE's engineering analysis indicates that the most cost-effective 
design options to reach TSL 3 are component swaps and software 
modifications such as incorporating an enhanced evaporator coil, 
automatic lighting controls, LED lighting, improved single speed 
reciprocating compressor, or a low power state, incorporating a 
permanent split capacitor condenser fan motor, electronically-
commutated evaporator fan motor, enhanced condenser coil, or evaporator 
fan controls. Manufacturer feedback indicated that such component swaps 
do not incur large product or capital conversion costs.
    At TSL 4, DOE estimates the impact on INPV for manufacturers of 
beverage vending machines to range from -$3.2 million to $4.0 million, 
or a change in INPV of -3.4 percent to 4.2 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 8.5 percent to $9.5 million, compared to the 
no-new-standards case value of $10.4 million in the year before the 
compliance date (2018).
    At TSL 4, the industry as a whole is expected to spend $1.2 million 
in product conversion costs, as well as $1.1 million in capital 
conversion costs for platform redesigns. At TSL 4, depending on the 
equipment, some manufacturers will likely be required to increase the 
thickness of their equipment's insulation, switch to an electronically-
commutated condenser fan motor and incorporate vacuum insulated panels 
(VIPs). Additionally, many manufacturers of Combination A machines will 
most likely be required to integrate enhanced glass packs or double 
pane glass in order to achieve the required efficiency.
    At TSL 5, DOE estimates the impact on INPV for manufacturers of 
beverage vending machines to range from -$15.5 million to $17.9 
million, or a change in INPV of -16.4 percent to 18.9 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 28.4 percent to $7.4 million, compared to the 
no-new-standards case value of $10.4 million in the year before the 
compliance date (2018).
    At TSL 5, the industry as a whole is expected to spend $3.3 million 
in product conversion costs associated with the research and 
development and testing and certification, as well as $4.3 million in 
one-time investments in PP&E for platform redesigns. The conversion 
cost burden for manufacturers of all equipment 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 approximately a 7-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 2013 Annual Survey of 
Manufacturers,\80\ 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.
---------------------------------------------------------------------------

    \80\ U.S. Census Bureau. Annual Survey of Manufacturers: General 
Statistics: Statistics for Industry Groups and Industries (2013). 
Available at 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 
2013 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 piece of 
equipment 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 equipment covered by 
this rulemaking.
    Because production employment expenditures are assumed to be a 
fixed percentage of cost of goods sold and the MPCs typically increase 
with more efficient equipment, labor tracks the increased prices in the 
GRIM. As efficiency of beverage vending machines increase, so does the 
complexity of the equipment, 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 equipment 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

[[Page 1095]]

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 final rule TSD.
    Using the GRIM, DOE estimates that in the absence of amended energy 
conservation standards, there would be 653 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 7............  0 to 6............  (5) to 46.........  (49) to 233.
 Production Workers in 2019 **.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* No-new-standards case estimates 653 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 
equipment within the United States and would require some additional 
labor to produce more efficient equipment.
    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 United States. 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 U.S. economy, which are 
documented in chapter 16 of the TSD.
c. Impacts on Manufacturing Capacity
    In reference to the amended standard levels proposed in the 2015 
BVM ECS NOPR, DOE received comments from multiple small, domestic BVM 
manufacturers stating that the proposed standards could result in one 
or more small manufacturers exiting the BVM market altogether. As 
detailed in section IV.J.3, DOE notes that, in response to stakeholder 
feedback relating to the 2015 BVM ECS NOPR, it has updated its 
engineering analysis and standard efficiency levels for this final 
rule, resulting in less burdensome standard levels for all equipment 
classes of beverage vending machines relative to the NOPR proposal. DOE 
believes that manufactures will be able to maintain production capacity 
levels sufficient to meet market demand under the final rule standard 
levels.
    Additionally, manufacturers have expressed concern regarding the 
potential strain on technical resources associated with having to 
comply with both DOE amended energy conservation standards and the 
EPA's R-134a phaseout for beverage vending machines (see SNAP Final 
Rule 20 (80 FR 42870, 42917-42920 (July 20, 2015))) by 2019. 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 equipment. 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 R-134a 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 final rule 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. 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 five 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 section VI.B of this final 
rule and chapter 12 of the final rule 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 equipment. 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

[[Page 1096]]

approximately 3 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
------------------------------------------------------------------------
                                                      Expected expenses/
           Regulation             Compliance date(s)        impacts
------------------------------------------------------------------------
Commercial Refrigeration          3/27/2017.........  $43.1 million.
 Equipment 79 FR 17725 (Mar. 28,
 2014).
------------------------------------------------------------------------

    Manufacturers cited ENERGY STAR standards for beverage vending 
machines as a source of regulatory burden. DOE notes that ENERGY STAR 
is a voluntary program that is not federally mandated. As such, DOE 
does not consider the ENERGY STAR program in its analysis of cumulative 
regulatory burden.
    In interviews and in public comments made in response to the 2015 
BVM ECS NOPR, manufactures cited the EPA's SNAP Rule 20 phaseout of 
HFCs in beverage vending machines by 2019 (80 FR 42870 (July 20, 2015)) 
as a major source of additional burden accompanying potential amended 
efficiency standards. As detailed in section IV.J, based on feedback in 
interviews, DOE assumed that each manufacturer would need to invest 
$750,000 to update their equipment 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 no-new-standards 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 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.H.2 of this final rule.
    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.........................           0.012           0.031           0.012           0.070           0.138
    CO2.........................           0.012           0.024           0.012           0.047           0.087
    Propane.....................           0.000           0.008           0.000           0.024           0.051
Class B.........................           0.001           0.010           0.026           0.059           0.091
    CO2.........................           0.000           0.000           0.007           0.026           0.045
    Propane.....................           0.001           0.010           0.019           0.033           0.046
Combination A...................           0.002           0.012           0.051           0.061           0.067
    CO2.........................           0.001           0.007           0.031           0.036           0.040
    Propane.....................           0.001           0.005           0.020           0.024           0.027
Combination B...................           0.001           0.007           0.028           0.035           0.044
    CO2.........................           0.001           0.004           0.017           0.021           0.026
    Propane.....................           0.000           0.003           0.011           0.014           0.018
                                 -------------------------------------------------------------------------------
        Total *.................           0.016           0.061           0.117           0.225           0.340
----------------------------------------------------------------------------------------------------------------
* 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 0.017 quads at TSL 1 to 0.355 
quads at TSL 5.

  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.........................           0.012           0.033           0.012           0.073           0.144
    CO2.........................           0.012           0.025           0.012           0.049           0.091

[[Page 1097]]

 
    Propane.....................           0.000           0.008           0.000           0.025           0.054
Class B.........................           0.001           0.011           0.027           0.061           0.095
    CO2.........................           0.000           0.000           0.007           0.027           0.047
    Propane.....................           0.001           0.011           0.020           0.035           0.048
Combination A...................           0.003           0.013           0.053           0.063           0.070
    CO2.........................           0.002           0.008           0.032           0.038           0.042
    Propane.....................           0.001           0.005           0.021           0.025           0.028
Combination B...................           0.001           0.007           0.029           0.037           0.046
    CO2.........................           0.001           0.004           0.018           0.022           0.027
    Propane.....................           0.000           0.003           0.012           0.015           0.019
                                 -------------------------------------------------------------------------------
        Total *.................           0.017           0.063           0.122           0.235           0.355
----------------------------------------------------------------------------------------------------------------
* Numbers may not add to totals, due to rounding.

    OMB Circular A-4 \81\ 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 
equipment 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.\82\ DOE notes that the review timeframe established in EPCA 
generally does not overlap with the equipment lifetime, equipment 
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.
---------------------------------------------------------------------------

    \81\ U.S. Office of Management and Budget. Circular A-4: 
Regulatory Analysis. September 17, 2003. Available at 
www.whitehouse.gov/omb/circulars_a004_a-4/.
    \82\ 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.........................           0.003           0.007           0.003           0.017           0.033
    CO2.........................           0.003           0.006           0.003           0.011           0.020
    Propane.....................           0.000           0.002           0.000           0.006           0.012
Class B.........................           0.000           0.002           0.006           0.014           0.021
    CO2.........................           0.000           0.000           0.002           0.006           0.010
    Propane.....................           0.000           0.002           0.005           0.008           0.011
Combination A...................           0.001           0.003           0.012           0.014           0.016
    CO2.........................           0.000           0.002           0.007           0.009           0.009
    Propane.....................           0.000           0.001           0.005           0.006           0.006
Combination B...................           0.000           0.002           0.007           0.008           0.010
    CO2.........................           0.000           0.001           0.004           0.005           0.006
    Propane.....................           0.000           0.001           0.003           0.003           0.004
                                 -------------------------------------------------------------------------------
        Total *.................           0.004           0.014           0.028           0.054           0.080
----------------------------------------------------------------------------------------------------------------
* Numbers may not add to totals, due to rounding.

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

[[Page 1098]]

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 final rule TSD.
    The NPV results at a 7-percent discount rate for TSL 5 were 
negative for all equipment classes. 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 3 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 3, with a value of $0.207 billion (2014$) 
at a 7-percent discount rate. TSL 1 showed the second highest total 
NPV, with a value of $0.030 billion (2014$) at a 7-percent discount 
rate. TSL 2, TSL 4 and TSL 5 have a total NPV lower than TSL 1 or 3.

         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.........................           0.021         (0.058)           0.021         (0.213)         (0.645)
    CO2.........................           0.021         (0.074)           0.021         (0.314)         (0.464)
    Propane.....................           0.000           0.016           0.000           0.101         (0.181)
Class B.........................           0.001           0.021           0.047         (0.041)         (0.235)
    CO2.........................           0.000           0.000           0.007         (0.078)         (0.169)
    Propane.....................           0.001           0.021           0.041           0.037         (0.065)
Combination A...................           0.005           0.027           0.085           0.015         (0.075)
    CO2.........................           0.003           0.016           0.056         (0.015)         (0.056)
    Propane.....................           0.002           0.011           0.029           0.030         (0.019)
Combination B...................           0.003           0.016           0.053           0.035         (0.063)
    CO2.........................           0.002           0.009           0.032           0.019         (0.047)
    Propane.....................           0.001           0.006           0.022           0.017         (0.016)
                                 -------------------------------------------------------------------------------
        Total...................           0.030           0.006           0.207         (0.204)         (1.017)
----------------------------------------------------------------------------------------------------------------
* 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.........................           0.054         (0.124)           0.054         (0.450)         (1.281)
    CO2.........................           0.054         (0.163)           0.054         (0.694)         (0.923)
    Propane.....................           0.000           0.039           0.000           0.244         (0.358)
Class B.........................           0.002           0.050           0.116         (0.079)         (0.435)
    CO2.........................           0.000           0.000           0.018         (0.172)         (0.319)
    Propane.....................           0.002           0.050           0.098           0.093         (0.116)
Combination A...................           0.013           0.065           0.208           0.056         (0.117)
    CO2.........................           0.008           0.039           0.137         (0.019)         (0.091)
    Propane.....................           0.005           0.026           0.071           0.075         (0.026)
Combination B...................           0.006           0.038           0.129           0.089         (0.116)
    CO2.........................           0.004           0.023           0.077           0.048         (0.086)
    Propane.....................           0.003           0.015           0.052           0.041         (0.029)
                                 -------------------------------------------------------------------------------
        Total...................           0.076           0.029           0.508        (0.0384)         (1.949)
----------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative numbers.

    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 final rule, this information is 
presented for informational purposes only and is not indicative of any 
change in DOE's analytical methodology or decision criteria.

[[Page 1099]]



         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.........................           0.009         (0.026)           0.009         (0.093)         (0.279)
    CO2.........................           0.009         (0.032)           0.009        (0.0135)         (0.200)
    Propane.....................           0.000           0.006           0.000           0.041         (0.079)
Class B.........................           0.000           0.008           0.019         (0.020)         (0.104)
    CO2.........................           0.000           0.000           0.003         (0.034)         (0.074)
    Propane.....................           0.000           0.008           0.016           0.014         (0.030)
Combination A...................           0.002           0.011           0.034           0.004         (0.035)
    CO2.........................           0.001           0.007           0.022         (0.008)         (0.025)
    Propane.....................           0.001           0.004           0.011           0.012         (0.009)
Combination B...................           0.001           0.006           0.021           0.014         (0.029)
    CO2.........................           0.001           0.004           0.013           0.007         (0.021)
    Propane.....................           0.000           0.003           0.009           0.006         (0.008)
rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
        Total...................           0.012         (0.000)           0.083         (0.096)         (0.446)
----------------------------------------------------------------------------------------------------------------
* 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.........................           0.015         (0.041)           0.015         (0.144)         (0.405)
    CO2.........................           0.015         (0.052)           0.015         (0.216)         (0.290)
    Propane.....................           0.000           0.011           0.000           0.072         (0.115)
Class B.........................           0.001           0.014           0.033         (0.030)         (0.142)
    CO2.........................           0.000           0.000           0.005         (0.055)         (0.102)
    Propane.....................           0.001           0.014           0.028           0.025         (0.040)
Combination A...................           0.004           0.019           0.059           0.011         (0.043)
    CO2.........................           0.002           0.011           0.039         (0.009)         (0.032)
    Propane.....................           0.002           0.008           0.020           0.021         (0.011)
Combination B...................           0.002           0.011           0.037           0.024         (0.040)
    CO2.........................           0.001           0.007           0.022           0.013         (0.029)
    Propane.....................           0.001           0.004           0.015           0.011         (0.011)
rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
        Total...................           0.022           0.003           0.144         (0.138)         (0.630)
----------------------------------------------------------------------------------------------------------------
* 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.N of this final rule, 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 final rule 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 adopted 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 final rule 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.

             Table V.39--Net Short-Term Change in Employment
                                 [Jobs]
------------------------------------------------------------------------
               Trial standard level                    2020       2025
------------------------------------------------------------------------
1.................................................          2          7
2.................................................         22         85
3.................................................         43        173
4.................................................         71        294
5.................................................     * (42)         24
------------------------------------------------------------------------
* Values in parentheses are negative numbers.

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,

[[Page 1100]]

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 
concluded that the new and amended standards in this final rule will 
not lessen the utility or performance of beverage vending machines.
5. Impact of Any Lessening of Competition
    As discussed in section III.F.1.e, the Attorney General of the 
United States (Attorney General) determines the impact, if any, of any 
lessening of competition likely to result from an adopted standard and 
transmits such determination in writing 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)(i)(V) and 
(B)(ii)) To assist the Attorney General in making such determination, 
DOE provided the Department of Justice (DOJ) with copies of the 2015 
BVM ECS NOPR and the TSD for review. In its assessment letter 
responding to DOE, DOJ concluded that the proposed energy conservation 
standards for beverage vending machines are unlikely to have a 
significant adverse impact on competition. The Attorney General's 
assessment is published as an appendix at the end of this final rule.
6. Need of the Nation To Conserve Energy
    Enhanced energy efficiency, where economically justified, improves 
the Nation's energy security, strengthens the economy, and reduces the 
environmental impacts (costs) of energy production. Reduced electricity 
demand due to energy conservation standards is also likely to reduce 
the cost of maintaining the reliability of the electricity system, 
particularly during peak-load periods. As a measure of this reduced 
demand, chapter 15 in the final rule TSD presents the estimated 
reduction in generating capacity, relative to the no-new-standards 
case, for the TSLs that DOE considered in this rulemaking.
    Energy conservation resulting from new and amended standards for 
the BVM equipment classes covered in this final rule will 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 
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.K of this final rule. DOE reports annual CO2, 
NOX, and Hg emissions reductions for each TSL in chapter 13 
of the final rule 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).......            0.97            3.61            6.98           13.39           20.23
NOX (thousand tons).............            1.06            3.97            7.66           14.70           22.22
Hg (tons).......................            0.00            0.01            0.02            0.03            0.05
N2O (thousand tons).............            0.01            0.04            0.09            0.16            0.25
CH4 (thousand tons).............            0.08            0.31            0.60            1.16            1.75
SO2 (thousand tons).............            0.59            2.18            4.22            8.09           12.22
----------------------------------------------------------------------------------------------------------------
                                               Upstream Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......            0.05            0.20            0.39            0.75            1.13
NOX (thousand tons).............            0.78            2.90            5.60           10.74           16.24
Hg (tons).......................            0.00            0.00            0.00            0.00            0.00
N2O (thousand tons).............            0.00            0.00            0.00            0.01            0.01
CH4 (thousand tons).............            4.30           16.01           30.92           59.34           89.70
SO2 (thousand tons).............            0.01            0.04            0.07            0.14            0.21
----------------------------------------------------------------------------------------------------------------
                                                 Total Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......            1.02            3.81            7.37           14.14           21.36
NOX (thousand tons).............            1.84            6.86           13.26           25.44           38.45
Hg (tons).......................            0.00            0.01            0.02            0.03            0.05
N2O (thousand tons).............            0.01            0.05            0.09            0.17            0.26
CH4 (thousand tons).............            4.38           16.32           31.52           60.50           91.45
SO2 (thousand tons).............            0.60            2.22            4.29            8.23           12.43
----------------------------------------------------------------------------------------------------------------

    As part of the analysis for this final rule, 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.L of this final 
rule, 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 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 $117 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

[[Page 1101]]

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 final rule 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    3% discount rate,
                                          average *          average *       rate, average *   95th percentile *
----------------------------------------------------------------------------------------------------------------
                                            Primary Energy Emissions
----------------------------------------------------------------------------------------------------------------
1...................................                  7                 30                 48                 92
2...................................                 24                113                180                344
3...................................                 47                218                347                664
4...................................                 90                418                666              1,275
5...................................                136                631              1,005              1,925
----------------------------------------------------------------------------------------------------------------
                                               Upstream Emissions
----------------------------------------------------------------------------------------------------------------
1...................................                  0                  2                  3                  5
2...................................                  1                  6                 10                 19
3...................................                  3                 12                 19                 37
4...................................                  5                 23                 37                 71
5...................................                  7                 35                 56                107
----------------------------------------------------------------------------------------------------------------
                                                 Total Emissions
----------------------------------------------------------------------------------------------------------------
1...................................                  7                 32                 51                 97
2...................................                 26                119                190                363
3...................................                 49                230                366                701
4...................................                 95                441                703              1,345
5...................................                143                666              1,061              2,031
----------------------------------------------------------------------------------------------------------------
* For each of the four cases, the corresponding SCC value for emissions in 2015 is $12.2, $40.0, $62.3, and $117
  per metric ton (2014$), respectively.

    DOE is aware that scientific and economic knowledge about the 
contribution of CO2 and other GHG emissions to changes in 
the future global climate and the potential resulting damages to the 
world economy continues to evolve rapidly. Thus, any value placed in 
this rulemaking on reducing CO2 emissions is subject to 
change. DOE, together with other Federal agencies, will continue to 
review various methodologies for estimating the monetary value of 
reductions in CO2 and other GHG emissions. This review 
considered 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 final rule 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 final rule. The dollar-per-ton values that DOE 
used are discussed in section IV.L of this final rule. 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. This table presents 
values that use the low dollar-per-ton values, which reflect DOE's 
primary estimate. Results that reflect the range of NOX 
dollar-per-ton values are presented in Table V.44

   Table V.42--Present Value of NOX Emissions Reduction for Potential
                Standards for Beverage Vending Machines *
------------------------------------------------------------------------
                                                     (Million 2014$)
                                               -------------------------
                      TSL                       3% discount  7% discount
                                                    rate         rate
------------------------------------------------------------------------
                         Power Sector Emissions
------------------------------------------------------------------------
1.............................................            3            1
2.............................................           13            5
3.............................................           24            9
4.............................................           47           18
5.............................................           70           27
------------------------------------------------------------------------
                           Upstream Emissions
------------------------------------------------------------------------
1.............................................            2            1
2.............................................            9            3
3.............................................           17            7
4.............................................           33           13
5.............................................           51           19
------------------------------------------------------------------------
                             Total Emissions
------------------------------------------------------------------------
1.............................................            6            2
2.............................................           22            8
3.............................................           42           16
4.............................................           80           31
5.............................................          121           46
------------------------------------------------------------------------
* Results are based on the low benefit-per-ton values.


[[Page 1102]]

7. Other Factors
    The Secretary of Energy, in determining whether a standard is 
economically justified, may consider any other factors that the 
Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)) No 
other factors were considered in this analysis.
8. Summary of National Economic Impacts
    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 3-percent discount rate. The 
CO2 values used in the columns of each table correspond to 
the four sets of SCC values discussed above.

Table V.43--Net Present Value of Customer Savings Combined With Present Value of Monetized Benefits From CO2 and
                                            NOX Emissions Reductions
----------------------------------------------------------------------------------------------------------------
                                            >Customer NPV at 3% discount rate added with (billion 2014$ *):
                                     ---------------------------------------------------------------------------
                 TSL                   SCC case $12.2/    SCC Case $40.0/    SCC case $62.3/     SCC case $117/
                                      metric ton and 3%  metric ton and 3%  metric ton and 3%  metric ton and 3%
                                        low NOX value      low NOX value      low NOX value      low NOX value
----------------------------------------------------------------------------------------------------------------
1...................................              0.088              0.114              0.132              0.179
2...................................              0.077              0.170              0.241              0.414
3...................................              0.599              0.780              0.916              1.251
4...................................            (0.209)              0.137              0.398              1.041
5...................................            (1.685)            (1.162)            (0.767)              0.203
----------------------------------------------------------------------------------------------------------------
                                            Customer NPV at 7% discount rate added with (billion 2014$ *):
----------------------------------------------------------------------------------------------------------------
                 TSL                    SCC case $12.2/    SCC case $40.0/    SCC case $62.3/     SCC case $117/
                                      metric ton and 7%  metric ton and 7%  metric ton and 7%  metric ton and 7%
                                          low NOX value      low NOX value      low NOX value      low NOX value
----------------------------------------------------------------------------------------------------------------
1...................................              0.039              0.065              0.083              0.130
2...................................              0.040              0.133              0.204              0.377
3...................................              0.272              0.453              0.589              0.924
4...................................            (0.078)              0.268              0.530              1.173
5...................................            (0.827)            (0.305)              0.090              1.061
----------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.
Note: The SCC case values represent the global SCC in 2015, in 2014$, for each case.

    In considering the above results, two issues are relevant. First, 
the national operating cost savings are domestic U.S. 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 different time frames for analysis. The 
national operating cost savings is measured for the lifetime of 
equipment shipped in 2019 to 2048. Because CO2 emissions 
have a very long residence time in the atmosphere,\83\ the SCC values 
in future years reflect future climate-related impacts that continue 
beyond 2100.
---------------------------------------------------------------------------

    \83\ The atmospheric lifetime of CO2 is estimated of 
the order of 30-95 years. Jacobson, MZ. ``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 (2005).
---------------------------------------------------------------------------

C. Conclusion

    When considering standards, the new or amended energy conservation 
standards that DOE adopts for any type (or class) of covered equipment 
must be designed to achieve the maximum improvement in energy 
efficiency that the Secretary determines is technologically feasible 
and economically justified. (42 U.S.C. 6295(o)(2)(A)) In determining 
whether a standard is economically justified, the Secretary must 
determine whether the benefits of the standard exceed its burdens by, 
to the greatest extent practicable, considering the seven statutory 
factors discussed previously. (42 U.S.C. 6295(o)(2)(B)(i)). The new or 
amended standard must also result in significant conservation of 
energy. (42 U.S.C. 6295(o)(3)(B))
    In this final rule, 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 final rule. 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 final rule presents the estimated impacts of each TSL 
for these subgroups. DOE discusses the impacts on direct employment in 
BVM manufacturing in section V.B.2 of this final rule, and discusses 
the indirect employment impacts in section V.B.3.c of this final rule.

[[Page 1103]]

1. Benefits and Burdens of TSLs Considered for BVM Standards
    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 FFC 
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                 0.02            0.06            0.12            0.24            0.36
 (quads)........................
NPV of Customer Benefits (2014$
 billion):
    3% Discount Rate............            0.08            0.03            0.51          (0.38)          (1.95)
    7% Discount Rate............            0.03            0.01            0.21          (0.20)          (1.02)
Cumulative Emissions Reduction
 (Total FFC Emissions):
    CO2 (MMt)...................            1.02            3.81            7.37           14.14           21.36
    NOX (kt)....................            1.84            6.86           13.26           25.44           38.45
    Hg (t)......................           0.002            0.01            0.02            0.03            0.05
    N2O (kt)....................            0.01            0.05            0.09            0.17            0.26
    N2O (kt CO2eq)..............            3.28           12.23           23.63           45.34           68.47
    CH4 (kt)....................            4.38           16.32           31.52           60.50           91.45
    CH4 (kt CO2eq)..............          122.70          457.00          882.67        1,693.88        2,560.72
    SO2 (kt)....................            0.60            2.22            4.29            8.23           12.43
Value of Cumulative Emissions
 Reduction (Total FFC
 Emissions):
    CO2 (2014$ million) **......         7 to 97       26 to 363       49 to 701     95 to 1,345    143 to 2,031
    NOX--3% Discount Rate (2014$         6 to 13        22 to 48        42 to 92       80 to 177      121 to 267
     million)...................
    NOX--7% Discount Rate (2014$          2 to 5         8 to 19        16 to 36        31 to 69       46 to 104
     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           0.054         (0.124)           0.054         (0.450)         (1.281)
                                                                       7           0.021         (0.058)           0.021         (0.213)         (0.645)
Class B.................................................               3           0.002           0.050           0.116         (0.079)         (0.435)
                                                                       7           0.001           0.021           0.047          (0.041         (0.235)
Combination A...........................................               3           0.013           0.065           0.208           0.056         (0.117)
                                                                       7           0.005           0.027           0.085           0.015         (0.075)
Combination B...........................................               3           0.006           0.038           0.129           0.089         (0.116)
                                                                       7           0.003           0.016           0.053           0.035         (0.063)
                                                         -----------------------------------------------------------------------------------------------
Total--All Classes......................................               3           0.076           0.029           0.508         (0.384)         (1.949)
                                                                       7           0.030           0.006           0.207         (0.204)         (1.017)
--------------------------------------------------------------------------------------------------------------------------------------------------------
* 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 case without standards           94.1 to 94.4       94.0 to 94.7       94.0 to 95.2       91.5 to 98.8      79.3 to 112.6
     value of 94.8 (million 2014$).......................
    Industry NPV (% Change)..............................       -0.7 to -0.4       -0.8 to -0.1        -0.8 to 0.4        -3.4 to 4.2      -16.4 to 18.9
Customer Mean LCC Savings* (2014$):
    Class A CO2..........................................                 65              (217)                 65              (937)            (1,424)
    Class A Propane......................................                  0                 71                  0                454              (817)
    Class B CO2..........................................                  0                  0                 42              (448)            (1,017)
    Class B Propane......................................                  8                185                361                333              (566)
    Combination A CO2....................................                 57                286                990              (234)              (980)
    Combination A Propane................................                 58                290                772                793              (470)
    Combination B CO2....................................                 30                179                597                359              (870)
    Combination B Propane................................                 30                179                610                476              (433)
Customer Simple PBP** (years):
    Class A CO2..........................................                2.0                N/A                2.0                N/A                N/A
    Class A Propane......................................                1.1                1.2                1.1                0.9                N/A
    Class B CO2..........................................                0.4                1.0                1.1                N/A               58.8

[[Page 1104]]

 
    Class B Propane......................................                0.7                0.6                0.5                1.3               64.7
    Combination A CO2....................................                0.2                0.2                0.8               26.1               39.4
    Combination A Propane................................                0.1                0.1                0.7                1.7               24.7
    Combination B CO2....................................                0.1                0.1                0.5                1.6                N/A
    Combination B Propane................................                0.1                0.1                0.3                0.8                N/A
Distribution of Customer LCC Impacts--Net Cost (%):
    Class A CO2..........................................                  0                100                  0                100                100
    Class A Propane......................................                  0                  0                  0                  0                100
    Class B CO2..........................................                  0                  0                  8                 99                100
    Class B Propane......................................                  3                  0                  0                  1                 93
    Combination A CO2....................................                  0                  0                  0                 76                 93
    Combination A Propane................................                  0                  0                  0                  1                 82
    Combination B CO2....................................                  0                  0                  0                  7                 97
    Combination B Propane................................                  0                  0                  0                  1                 86
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.
** Values of N/A indicate paybacks that are not possible, given that more efficient equipment is not only more expensive to purchase, but also costs
  more to operate.

    DOE also notes that the economic 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 new and amended energy 
conservation standards, 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.\84\
---------------------------------------------------------------------------

    \84\ Sanstad, A. Notes on the Economics of Household Energy 
Consumption and Technology Choice. 2010. Lawrence Berkeley National 
Laboratory, Berkeley, CA. https://www1.eere.energy.gov/buildings/appliance_standards/pdfs/consumer_ee_theory.pdf.
---------------------------------------------------------------------------

    As mentioned previously, in this final rule, 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.
    Accordingly, DOE first considered TSL 5, which 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 0.36 
quads of energy, an amount DOE considers significant. TSL 5 has an 
estimated NPV of customer benefit of negative $1.017 billion using a 7-
percent discount rate, and negative $1.949 billion using a 3-percent 
discount rate.
    The cumulative emissions reductions at TSL 5 are 21.4 million 
metric tons of CO2, 12.4 thousand tons of SO2, 
38.5 thousand tons of NOX, 0.05 tons of Hg, 91.5 thousand 
tons of CH4, and 0.3 thousand tons of N2O. The 
estimated monetary value of the CO2 emissions reductions at 
TSL 5 ranges from $143 million to $2,031 million.
    At TSL 5, the average LCC savings range from negative $1,424 to 
negative $433, depending on equipment class. The fraction of customers 
incurring a net cost range from 82 percent for Combination A machines 
with propane refrigerant to 100 percent for all Class A machines and 
Class B machines with CO2 refrigerant. Accordingly, 
approximately 90 percent of customers purchasing Class B propane 
equipment, Combination A CO2 equipment, Combination B 
CO2, and Combination B propane equipment would incur next 
cost, or 93, 93, 97, and 86 percent of customers, respectively.
    At TSL 5, the projected change in INPV ranges from a decrease of 
$15.5 million to an increase of $17.9 million. If the lower bound of 
the range of impacts is reached, TSL 5 could result in a net loss of up 
to 16.4 percent in INPV for manufacturers.
    Based on these results, the Secretary 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 NPV, negative 
LCC savings, and the negative INPV on manufacturers. Consequently, DOE 
has concluded that TSL 5 is not economically justified.

[[Page 1105]]

    Next DOE considered TSL 4, which saves an estimated total of 0.24 
quads of energy, an amount DOE considers significant. TSL 4 has an 
estimated NPV of customer benefit of negative $0.20 billion using a 7-
percent discount rate, and negative $0.38 billion using a 3-percent 
discount rate.
    The cumulative emissions reductions at TSL 4 are 14.1 million 
metric tons of CO2, 8.2 thousand tons of SO2, 
25.4 thousand tons of NOX, 0.03 tons of Hg, 60.5 thousand 
tons of CH4, and 0.2 thousand tons of N2O. The 
estimated monetary value of the CO2 emissions reductions at 
TSL 4 ranges from $95 million to $1,345 million.
    At TSL 4, the average LCC savings ranges from negative $937 to 
positive $793, depending on equipment class. The fraction of customers 
incurring a net cost range from 0 percent, for Class A propane 
equipment, to 100 percent, for Class A CO2 equipment, 
depending on equipment class. As shown in Table V.46, a large 
percentage of Class B and Combination A CO2 equipment incur 
a net cost, and overall, a majority of customers (53.8 percent) would 
experience a net cost at TSL 4.
    Regarding impacts on manufacturers, at TSL 4, the projected change 
in INPV ranges from a decrease of $3.2 million to an increase of $4.0 
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 3.4 percent in INPV 
for manufacturers.
    Based on these results, the Secretary concludes that at TSL 4 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 NPV, negative 
LCC savings, and the negative INPV on manufacturers. Consequently, DOE 
has concluded that TSL 4 is not economically justified.
    Next DOE considered TSL 3, which saves an estimated total of 0.12 
quads of energy, an amount DOE considers significant. TSL 3 has an 
estimated NPV of customer benefit of $0.20 billion using a 7-percent 
discount rate, and $0.51 billion using a 3-percent discount rate.
    The cumulative emissions reductions at TSL 3 are 7.4 million metric 
tons of CO2, 4.3 thousand tons of SO2, 13.3 
thousand tons of NOX, 0.02 tons of Hg, 31.5 thousand tons of 
CH4, and 0.09 thousand tons of N2O. The estimated 
monetary value of the CO2 emissions reductions at TSL 3 
ranges from $49 million to $701 million.
    At TSL 3, the average LCC savings ranges from $0 to $990, depending 
on equipment class. There are no customers incurring a net cost for 
almost all equipment classes, except for Class B equipment with 
CO2 refrigerant for which 8 percent of customers experience 
a net cost.
    At TSL 3, the projected change in INPV ranges from a decrease of 
$0.7 million to an increase of $0.4 million. If the lower bound of the 
range of impacts is reached, as DOE expects, TSL 3 could result in a 
net loss of up to 0.8 percent in INPV for manufacturers.
    After carefully considering the analysis results and weighing the 
benefits and burdens of TSL 3, DOE believes that setting the standards 
for beverage vending machines at TSL 3 represents the maximum 
improvement in energy efficiency that is technologically feasible and 
economically justified. TSL 3 is technologically feasible because the 
technologies required to achieve these levels already exist in the 
current market and are available from multiple manufacturers. TSL 3 is 
economically justified because the benefits to the nation in the form 
of energy savings, customer NPV at both a 3-percent and 7-percent 
discount rate, and emissions reductions outweigh the costs associated 
with reduced INPV and potential effects of reduced manufacturing 
capacity.
    Therefore, DOE is adopting new and amended energy conservation 
standards for beverage vending machines at TSL 3 as indicated in Table 
V.47.

 Table V.47--Adopted Energy Conservation Standards for Beverage Vending
                                Machines
------------------------------------------------------------------------
                                         Adopted energy  conservation
                                     standards **  maximum  daily energy
         Equipment class *                consumption  (MDEC) kWh/day
                                                   [dagger]
------------------------------------------------------------------------
A..................................  0.052 x V + 2.43 [Dagger]
B..................................  0.052 x V + 2.20 [Dagger]
Combination A......................  0.086 x V + 2.66 [Dagger]
Combination B......................  0.111 x V + 2.04 [Dagger]
------------------------------------------------------------------------
* See section IV.A.1 of the final rule 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) 3.

2. Summary of Annualized Benefits and Costs of the Adopted Standards
    The benefits and costs of the adopted standards can also be 
expressed in terms of annualized values. The annualized net benefit is 
the sum of: (1) The annualized national economic value (expressed in 
2014$) of the benefits from operating equipment that meet the adopted 
standards (consisting primarily of operating cost savings from using 
less energy, minus increases in equipment purchase costs, and (2) the 
annualized monetary value of the benefits of CO2 and 
NOX emission reductions.\85\
---------------------------------------------------------------------------

    \85\ To convert the time-series of costs and benefits into 
annualized values, DOE calculated a present value in 2015, the year 
used for discounting the NPV of total consumer costs and savings. 
For the benefits, DOE calculated a present value associated with 
each year's shipments in the year in which the shipments occur 
(2020, 2030, etc.), and then discounted the present value from each 
year to 2015. The calculation uses discount rates of 3 and 7 percent 
for all costs and benefits except for the value of CO2 reductions, 
for which DOE used case-specific discount rates. Using the present 
value, DOE then calculated the fixed annual payment over a 30-year 
period, starting in the compliance year that yields the same present 
value.
---------------------------------------------------------------------------

    Table V.48 shows the annualized values for beverage vending 
machines under TSL 3, expressed in 2014$. The results under the primary 
estimate are as follows. Using a 7-percent discount rate for benefits 
and costs other than CO2 reductions (for which DOE used a 3-
percent discount rate along with the average SCC series corresponding 
to a value of $40.0 per metric ton in 2015 (2014$)), the estimated cost 
of the adopted standards for BVM equipment is $1.8 million per year in 
increased equipment costs, while the estimated benefits are $22.2 
million per year in reduced equipment operating costs, $12.8 million 
per year in CO2 reductions, and $1.6 million per year in 
reduced NOX emissions. In this case, the net benefit amounts 
to $35 million per year.
    Using a 3-percent discount rate for all benefits and costs and the 
average SCC

[[Page 1106]]

series corresponding to a value of $40.0 per metric ton in 2015 (in 
2014$), the estimated cost of the adopted standards for beverage 
vending machines is $1.9 million per year in increased equipment costs, 
while the estimated annual benefits are $30.2 million in reduced 
operating costs, $12.8 million in CO2 reductions, and $2.3 
million in reduced NOX emissions. In this case, the net 
benefit amounts to $43 million per year.

                          Table V.48--Annualized Benefits and Costs of Adopted Standards (TSL 3) for Beverage Vending Machines
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                    (Million 2014$/year)
                                                                  --------------------------------------------------------------------------------------
                                             Discount rate                                       Low net benefits  estimate  High net benefits  estimate
                                                                        Primary estimate *                   *                            *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Customer Operating Cost Savings....  7%..........................  22.........................  14.........................  27
                                     3%..........................  30.........................  18.........................  36
CO2 Reduction Value ($12.2/metric    5%..........................  4..........................  2..........................  4
 ton) **.
CO2 Reduction Value ($40.0/metric    3%..........................  13.........................  8..........................  14
 ton) **.
CO2 Reduction Value ($62.3/metric    2.5%........................  19.........................  12.........................  21
 ton) **.
CO2 Reduction Value ($117/metric     3%..........................  39.........................  26.........................  44
 ton) **.
NOX Reduction Value [dagger].......  7%..........................  2..........................  1..........................  4
                                     3%..........................  2..........................  2..........................  6
Total Benefits [Dagger]............  7% range....................  28 to 63...................  17 to 41...................  36 to 75
                                     7%..........................  37.........................  23.........................  46
                                     3% range....................  36 to 72...................  22 to 46...................  46 to 86
                                     3%..........................  45.........................  28.........................  56
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                          Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Customer Incremental Equipment       7%..........................  1.79.......................  0.98.......................  2.10
 Costs.
                                     3%..........................  1.89.......................  1.01.......................  2.13
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      Net Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total [Dagger].....................  7% range....................  26 to 61...................  16 to 40...................  34 to 73
                                     7%..........................  35.........................  22.........................  44
                                     3% range....................  34 to 70...................  21 to 45...................  44 to 84
                                     3%..........................  43.........................  27.........................  54
--------------------------------------------------------------------------------------------------------------------------------------------------------
* 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 AEO2015 Reference case,
  Low Economic Growth case, and High Economic Growth case, 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 appendix 8C of the 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.
[dagger] The $/ton values used for NOX are described in section IV.L.2. The Primary and Low Benefits Estimates used the values at the low end of the
  ranges estimated by EPA, while the High Benefits Estimate uses the values at the high end of the ranges.
[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.

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 (Oct. 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 the adopted standards for beverage vending machines 
are intended to address are as follows:
    (1) Insufficient information and the high costs of gathering and 
analyzing relevant information leads 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 equipment that is not captured by the users of such 
equipment. These benefits include externalities related to public 
health, environmental protection and national energy 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 qualify some of the external benefits through 
use of social cost of carbon values.
    The Administrator of the Office of Information and Regulatory 
Affairs (OIRA) in the OMB has determined that this regulatory action is 
not a significant regulatory action under section (3)(f) of Executive 
Order 12866. Section 6(a)(3)(A) of the Executive Order states

[[Page 1107]]

that absent a material change in the development of the planned 
regulatory action, regulatory action not designated as significant will 
not be subject to review under section 6(a)(3) unless, within 10 
working days of receipt of DOE's list of planned regulatory actions, 
the Administrator of OIRA notifies the agency that OIRA has determined 
that a planned regulation is a significant regulatory action within the 
meaning of the Executive order.
    DOE has also reviewed this regulation pursuant to Executive Order 
13563, issued on January 18, 2011. 76 FR 3281 (Jan. 21, 2011). EO 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 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, OIRA 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 final rule 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 a final regulatory flexibility analysis (FRFA) for any 
final rule. 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 (http://energy.gov/gc/office-general-counsel). DOE has prepared the following FRFRA for the equipment that 
are the subject of this rulemaking.
    For manufacturers of BVM equipment, the SBA has set a size 
threshold, which defines those entities classified as ``small 
businesses'' for the purposes of the statute. DOE used the SBA's small 
business size standards to determine whether any small entities would 
be subject to the requirements of the rule. See 13 CFR part 121. The 
size standards are listed by North American Industry Classification 
System (NAICS) code and industry description and are available at 
www.sba.gov/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 of 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),\86\ and ENERGY STAR \87\ databases), individual company Web 
sites, and market research tools (e.g., Hoovers reports \88\) to create 
a list of companies that manufacture or sell equipment 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 equipment covered by this rulemaking, do not meet the 
definition of a ``small business,'' or are foreign-owned.
---------------------------------------------------------------------------

    \86\ ``CCMS.'' CCMS. www.regulations.doe.gov/certification-data/
.
    \87\ ENERGY STAR Certified Vending Machines. June 6, 2013. 
www.energystar.gov/products/certified-products.
    \88\ Hoovers. www.hoovers.com/.
---------------------------------------------------------------------------

    DOE identified eight companies selling BVM equipment 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, 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 market share estimates are based on aggregate information 
compiled through manufacturer interviews. The interview process is 
described in section IV.J.1 of this notice and chapter 12 of the TSD. 
The interview guide used for interviews was published as Appendix 12B 
of the NOPR TSD. The shipments percentages are from shipments analysis, 
which is explained in section IV.G of this notice.
    The remaining 82 percent of BVM shipments are Class A and Class B 
units. Based on data obtained during manufacturer interviews, DOE 
estimated that 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

[[Page 1108]]

large manufacturers: Crane, Royal Vendors, and SVA.
    DOE derived industry conversion using a top-down approach described 
in methodology section IV.J.2.a. Using product platform counts by 
equipment type (i.e., Class A, Class B, Combination A, Combination 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 final standard level, as 
shown in VI.3. The current annual revenue and annual operating profit 
estimates are derived from the GRIM's industry revenue calculations and 
the market share breakdowns of small versus large manufacturers.

Table VI.1--Comparison of Typical Small and Large Manufacturer's Capital
                           Conversion Costs *
------------------------------------------------------------------------
                                         Capital            Capital
                                     conversion costs   conversion costs
       Trial standard level         for typical small  for typical large
                                       manufacturer       manufacturer
                                     (2014$ millions)   (2014$ millions)
------------------------------------------------------------------------
TSL 1.............................               0.03               0.06
TSL 2.............................               0.03               0.06
TSL 3.............................               0.03               0.06
TSL 4.............................               0.11               0.20
TSL 5.............................               0.31               0.70
------------------------------------------------------------------------
* 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 final standard.


Table VI.2--Comparison of Typical Small and Large Manufacturer's Product
                           Conversion Costs *
------------------------------------------------------------------------
                                         Product            Product
                                     conversion costs   conversion costs
       Trial standard level         for typical small  for typical large
                                       manufacturer       manufacturer
                                     (2014$ millions)   (2014$ millions)
------------------------------------------------------------------------
TSL 1.............................               0.06               0.09
TSL 2.............................               0.06               0.09
TSL 3.............................               0.06               0.09
TSL 4.............................               0.12               0.19
TSL 5.............................               0.23               0.54
------------------------------------------------------------------------
* 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 final standard.


                       Table VI.3--Comparison of Conversion Costs for an Average Small and an Average Large Manufacturer at TSL 3
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                            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......................................            0.03            0.06             1.5            26.4             0.5             8.8
Large Manufacturer......................................            0.06            0.09             0.3             5.8             0.1             1.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The conversion period, the time between the final rule publication year and the compliance year for this rulemaking, is 3 years.

    At the established standard level, DOE estimates total conversion 
costs associated with new and amended energy conservation standards for 
an average small manufacturer to be $87,000, which is approximately 1.5 
percent of annual revenue and 26.4 percent of annual operating profit. 
This suggests that an average small manufacturer would need to reinvest 
roughly 8.8 percent of its operating profit per year over the 
conversion period to comply with standards. In addition, DOE found that 
17 of 19 Class A models in the combined CCMS and ENERGY STAR databases 
will be compliant with standards as amended in this final rule, with no 
modification required under appendix A. This includes units from AMS, 
Wittern, and Seaga (all small manufacturers), in addition to Royal, 
Crane, and SandenVendo (all large manufacturers).
    The total conversion costs associated with new and amended energy 
conservation standards for an average large manufacturer is $150,000, 
which is approximately 0.3 percent of annual revenue and 5.8 percent of 
annual operating profit. This suggests that an average large 
manufacturer would need to reinvest roughly 1.9 percent of its 
operating profit per year over the 3-year conversion period.
    Product conversion costs, which include one-time investments such 
as equipment redesigns and industry certification, are a key driver of 
conversion investments to comply with the established level of 
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

[[Page 1109]]

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 notes that all small manufacturers 
manufacturer both conventional (i.e., Class A and Class B equipment) as 
well as combination equipment; there are no small manufacturers that 
manufacturer only combination equipment. DOE's product research 
suggests the combination and conventional equipment from the same 
manufacturer often share design elements, such as cabinet and glass 
pack designs. Manufacturers that produce both combination and 
conventional equipment using shared design elements would experience 
conversion costs lower than those estimated since a single redesign 
effort could be leveraged across models in multiple equipment classes.
    DOE notes that, in response to stakeholder feedback relating to the 
2015 BVM ECS NOPR, it has updated its engineering analysis and standard 
efficiency levels for this final rule, resulting in less burdensome 
standard levels for small manufacturers of beverage vending machines 
relative to the 2015 BVM ECS NOPR proposal. In the 2015 BVM ECS NOPR, 
DOE estimated that the average small manufacturer would incur costs of 
$217,000 as a result of proposed standards. For this final rule, DOE 
estimates that the average small manufacturer will incur costs of 
$87,000 as a result of final standards.
3. Duplication, Overlap, and Conflict With Other Rules and Regulations
    DOE is not aware of any rules or regulations that duplicate, 
overlap, or conflict with today's final rule.
4. Significant Alternatives to the Rule
    DOE received two comments concerning alternative programs. SVA 
expressed the belief that voluntary programs such as ENERGY STAR are 
more effective in driving the market towards more efficient equipment 
than mandatory energy conservation standards. (SVA, Public Meeting 
Transcript, No. 48 at p. 117) ASAP commented that while ENERGY STAR has 
been effective in moving the market towards more efficient equipment, 
DOE's final standards can achieve far greater savings. (ASAP, Public 
Meeting Transcript, No. 48 at p. 118) Neither comment provided any 
supporting data. In addition, SBA Advocacy stated its belief that DOE 
did not adequately analyze the impact of any alternatives presented in 
the RIA on small manufacturers and questioned DOE's analysis of lower 
TSLs as alternatives to the proposed standard if EPCA restricts DOE 
from selecting such less burdensome standards. (SBA Advocacy, No. 61 at 
p. 4).
    DOE thanks SVA and ASAP for their comments regarding the efficacy 
of ENERGY STAR in driving the market towards increased efficiency and 
agrees with the ASAP assessment of ENERGY STAR and DOE's energy 
conservation standards as being complementary and more effective than 
voluntary standards alone. In particular, in response to SVA's comment 
regarding the efficacy of voluntary programs like ENEGY STAR in 
achieving energy savings, DOE considered such alternatives in the 
Regulatory Impact Analysis. However, DOE notes that it is difficult to 
confidently estimate the future impacts of voluntary or market-based 
programs because DOE does not control the stringency of any such 
programs compared to the current equipment efficiency distributions. 
Further, unlike the energy conservation standards adopted in this final 
rule, compliance with such programs or incentives is voluntary, and it 
is therefore difficult to estimate savings since it is unclear if and 
how many manufacturers or customers will choose to participate. In 
addition, as noted by ASAP, the benefits of any such voluntary programs 
would likely be significantly less than DOE's amended energy 
conservation standards, since it is unlikely that there would be 
significant percent market penetration or commensurately more-stringent 
energy efficiency targets for beverage vending machines.
    In response to SBA Advocacy's comment regarding DOE's analysis of 
the impacts of regulatory alternatives on small businesses, the 
discussion in the previous section analyzes impacts on small businesses 
that would result from DOE's final rule, TSL 3. In reviewing 
alternatives to the final rule, DOE examined energy conservation 
standards set at lower efficiency levels. As a result of these updates, 
DOE found that TSL 1 and TSL 2 would not reduce the impacts on small 
business manufacturers (relative to TSL 3) and both would come at the 
expense of a reduction in energy savings and a reduction in consumer 
NPV. TSL 1 achieves 86 percent lower energy savings compared to the 
energy savings at TSL 3. TSL 2 achieves 48 percent lower energy savings 
compared to the energy savings at TSL 3. The estimated conversion costs 
for small business manufacturers are estimated to be the same at TSL 1 
and TSL 2 as at TSL 3 ($87,000).
    Additionally, DOE considered standards at higher efficiency levels, 
corresponding to TSL 4 and TSL 5. TSL 4 achieves approximately 94 
percent higher savings than TSL 3, and TSL 5 achieves approximately 191 
percent higher savings than TSL 3. However, DOE rejected this TSL due 
to the negative NPV results.
    Furthermore, the estimated conversion costs for small business 
manufacturers are significantly higher at TSL 4 and TSL 5 than at TSL 
3. To comply with TSL 4, the average small manufacturer must make 
$228,000 in conversion cost investments, which is $141,000 more than at 
TSL 3. To comply with TSL 5, the average small manufacturer must make 
$542,000 in conversion cost investments, which is $455,000 more than at 
TSL 3.
    DOE believes that establishing standards at TSL 3 balances the 
benefits of the energy savings at TSL 3 with the potential burdens 
placed on beverage vending machine manufacturers, including small 
business manufacturers. Accordingly, DOE is declining to adopt one of 
the other TSLs considered in the analysis, or the other policy 
alternatives detailed as part of the regulatory impacts analysis 
included in chapter 17 of the final rule TSD.
    Regarding SBA Advocacy's comment questioning DOE's analysis of 
lower TSLs are reasonable regulatory alternatives, DOE is following SBA 
Advocacy's public guidance to Federal agencies for how to comply with 
the Regulatory Flexibility Analysis Act, wherein SBA Advocacy states 
that agencies ``should consider a variety of mechanisms to reach the 
regulatory objective without regard to whether that mechanism is 
statutorily permitted.'' \89\
---------------------------------------------------------------------------

    \89\ U.S. Small Business Administration Office of Advocacy. A 
Guide for Government Agencies, How to Comply with the Regulatory 
Flexibility Act. May 2012. https://www.sba.gov/sites/default/files/rfaguide_0512_0.pdf.
---------------------------------------------------------------------------

    DOE also notes that additional compliance flexibilities may be 
available through other means. EPCA provides that a manufacturer whose 
annual gross revenue from all of its operations does not exceed $8 
million may apply for an exemption from all or part of an energy 
conservation standard for a period not longer than 24 months after the 
effective date of a final rule establishing the standard. 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,

[[Page 1110]]

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.
    DOE believes that establishing standards at TSL 3 balances the 
benefits of the energy savings at TSL 3 with the potential burdens 
placed on refrigerated beverage vending machine manufacturers, 
including small business manufacturers. Accordingly, DOE is declining 
to adopt one of the other TSLs considered in the analysis, or the other 
policy alternatives detailed as part of the regulatory impacts analysis 
included in Chapter 17 of this NOPR TSD.

C. Review Under the Paperwork Reduction Act

    Manufacturers of beverage vending machines must certify to DOE that 
their equipment comply with any applicable energy conservation 
standards. In certifying compliance, manufacturers must test their 
equipment according to the DOE test procedures for beverage vending 
machines, including any amendments adopted for those test procedures. 
DOE has established regulations for the certification and recordkeeping 
requirements for all covered consumer products and commercial 
equipment, including beverage vending machines. 76 FR 12422 (March 7, 
2011); 80 FR 5099 (Jan. 30, 2015). 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. 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 final 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, App. B, 
B5.1(b); 1021.410(b) and App. B, B(1)-(5). The final rule fits within 
this category of actions because it is a rulemaking that establishes 
energy conservation standards for consumer 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 rule. DOE's CX 
determination for this rule is available at http://energy.gov/nepa/categorical-exclusion-cx-determinations-cx.

E. Review Under Executive Order 13132

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

F. Review Under Executive Order 12988

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

[[Page 1111]]

intergovernmental consultation under UMRA. 62 FR 12820. DOE's policy 
statement is also available at http://energy.gov/sites/prod/files/gcprod/documents/umra_97.pdf.
    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 final 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 
SUPPLEMENTARY INFORMATION section of this document and the ``Regulatory 
Impact Analysis'' section of the TSD for this final 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 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(d), 
(f), and (o), 6313(e), and 6316(a), this final 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 final 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 final 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 18, 1988), DOE has determined that this final rule would 
not result in any takings that might require compensation under the 
Fifth Amendment to the U.S. Constitution.

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

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

K. Review Under Executive Order 13211

    Executive Order 13211, ``Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use,'' 66 FR 28355 
(May 22, 2001), requires Federal agencies to prepare and submit to OIRA 
at OMB, a Statement of Energy Effects for any 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 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 concluded that this regulatory action, which sets forth new 
and amended energy conservation standards for beverage vending 
machines, is not a significant energy action because the 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 final rule.

L. Review Under the Information Quality Bulletin for Peer Review

    On December 16, 2004, OMB, in consultation with the Office of 
Science and Technology Policy (OSTP), issued its Final Information 
Quality Bulletin for Peer Review (the Bulletin). 70 FR 2664 (Jan. 14, 
2005). The Bulletin establishes that certain scientific information 
shall be peer reviewed by qualified specialists before it is 
disseminated by the Federal Government, including influential 
scientific information related to agency regulatory actions. The 
purpose of the bulletin is to enhance the quality and credibility of 
the 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 FR 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: http://energy.gov/eere/buildings/downloads/energy-conservation-standards-rulemaking-peer-review-report.

M. Review Under Section 32 of the Federal Energy Administration Act of 
1974

    Under section 301 of the Department of Energy Organization Act 
(Pub. L. 95-91; 42 U.S.C. 7101), DOE must comply with section 32 of the 
Federal Energy Administration Act of 1974, as amended by the Federal 
Energy Administration Authorization Act of 1977. (15 U.S.C. 788; FEAA) 
Section 32 essentially provides in relevant part that, where a proposed 
rule authorizes or requires use of commercial standards, the notice of 
proposed rulemaking must inform the public of the use and background of

[[Page 1112]]

such standards. In addition, section 32(c) requires DOE to consult with 
the Attorney General and the Chairman of the Federal Trade Commission 
(FTC) concerning the impact of the commercial or industry standards on 
competition.
    This final rule incorporates testing methods contained in the 
following standard: ASTM Standard E 1084-86, ``Standard Test Method for 
Solar Transmittance (Terrestrial) of Sheet Materials Using Sunlight.'' 
DOE has evaluated this standard and is unable to conclude whether it 
fully complies with the requirements of section 32(b) of the Federal 
Energy Administration Act (i.e., whether they were developed in a 
manner that fully provides for public participation, comment, and 
review).
    DOE has consulted with both the Attorney General and the Chairwoman 
of the FTC about the impact on competition of using the methods 
contained in this standard and has received no comments objecting to 
its use.

N. Congressional Notification

    As required by 5 U.S.C. 801, DOE will report to Congress on the 
promulgation of this rule prior to its effective date. The report will 
state that it has been determined that the rule is a ``major rule'' as 
defined by 5 U.S.C. 804(2).

VII. Approval of the Office of the Secretary

    The Secretary of Energy has approved publication of this final 
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 December 23, 2015.
David J. Friedman,
Principal Deputy Assistant Secretary, Energy Efficiency and Renewable 
Energy.

    For the reasons set forth in the preamble, DOE amends 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 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 divided by 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'';

[[Page 1113]]

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 in alphabetical order 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 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 ASTM 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 paragraph (c) to read as 
follows:


Sec.  431.293  Materials incorporated by reference.

* * * * *
    (c) ASTM. ASTM International, 100 Barr Harbor Drive, P.O. Box C700, 
West Conshohocken, PA 19428-2959, (877) 909-2786, or go to 
www.astm.org.
    (1) ASTM E 1084-86 (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 January 8, 2019, 
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 consumption
           Equipment class                  (kilowatt hours per day)
------------------------------------------------------------------------
Class A..............................  0.055 x V [dagger] + 2.56.
Class B..............................  0.073 x V [dagger] + 3.16.
Combination Vending Machines.........  [RESERVED].
------------------------------------------------------------------------
[dagger] ``V'' is the representative value of refrigerated volume
  (ft\3\) of the BVM model, as calculated pursuant to 10 CFR
  429.52(a)(3).

    (b) Each refrigerated bottled or canned beverage vending machine 
manufactured on or after January 8, 2019, 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 consumption
           Equipment class                  (kilowatt hours per day)
------------------------------------------------------------------------
Class A..............................  0.052 x V [dagger] + 2.43.
Class B..............................  0.052 x V [dagger] + 2.20.
Combination A........................  0.086 x V [dagger] + 2.66.
Combination B........................  0.111 x V [dagger] + 2.04.
------------------------------------------------------------------------
[dagger] ``V'' is the representative value of refrigerated volume
  (ft\3\) of the BVM model, as calculated pursuant to 10 CFR
  429.52(a)(3).

* * * * *

    Note:  The following letter will not appear in the Code of 
Federal Regulations.

U.S. DEPARTMENT OF JUSTICE
Antitrust Division
William J. Baer
Assistant Attorney General
Main Justice Building
950 Pennsylvania Avenue NW.,
Washington, DC 20530-0001
(202) 514-2401 I (202) 616-2645 (Fax)

October 19, 2015

Anne Harkavy
Deputy General Counsel for Litigation,
Regulation and Enforcement
1000 Independence Ave. SW.,
U.S. Department of Energy
Washington, DC 20585

Re: Energy Conservation Standards for Refrigerated Beverage Vending 
Machines; Doc. No. EERE-2013-BT-STD-0022

Dear Deputy General Counsel Harkavy:
    I am responding to your August 20, 2015, letter seeking the views 
of the Attorney General about the potential impact on competition of 
proposed energy conservation standards for refrigerated beverage 
vending machines. Your request was submitted under Section 
325(o)(2)(B)(i)(V) of the Energy Policy and Conservation Act, as 
amended (ECPA), 42 U.S.C. 6295(o)(2)(B)(i)(V), which requires the 
Attorney General to make a determination of the impact of any lessening 
of competition that is likely to result from the imposition of proposed 
energy conservation standards. The Attorney General's responsibility 
for responding to requests from other departments about the effect of a 
program on competition has been delegated to the Assistant Attorney 
General for the Antitrust Division in 28 CFR Sec.  0.40(g).
    In conducting its analysis, the Antitrust Division examines whether 
a proposed standard may lessen competition, for example, by 
substantially limiting consumer choice or increasing industry 
concentration. A lessening of competition could result in higher prices 
to manufacturers and consumers.
    We have reviewed the proposed standards contained in the Notice of 
Proposed Rulemaking (80 Fed. Reg. 50462, Aug. 19, 2015) (NOPR) and the 
related Technical Support Documents. We have also reviewed 
supplementary information submitted to the Attorney General by the 
Department of Energy, as well as materials presented at the public 
meeting held on the proposed standards on September 29, 2015. Based on 
this review, our conclusion is that the proposed energy conservation 
standards for refrigerated beverage vending machines are unlikely to 
have a significant adverse impact on competition.

Sincerely,

William J. Baer

[FR Doc. 2015-33074 Filed 1-7-16; 8:45 am]
 BILLING CODE 6450-01-P