[Federal Register Volume 81, Number 17 (Wednesday, January 27, 2016)]
[Rules and Regulations]
[Pages 4748-4802]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-00068]



[[Page 4747]]

Vol. 81

Wednesday,

No. 17

January 27, 2016

Part II





Department of Energy





-----------------------------------------------------------------------





10 CFR Parts 429 and 431





Energy Conservation Program: Energy Conservation Standards for 
Commercial Prerinse Spray Valves; Final Rule

  Federal Register / Vol. 81 , No. 17 / Wednesday, January 27, 2016 / 
Rules and Regulations  

[[Page 4748]]


-----------------------------------------------------------------------

DEPARTMENT OF ENERGY

10 CFR Parts 429 and 431

[Docket Number EERE-2014-BT-STD-0027]
RIN 1904-AD31


Energy Conservation Program: Energy Conservation Standards for 
Commercial Prerinse Spray Valves

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

ACTION: Final rule.

-----------------------------------------------------------------------

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 
commercial prerinse spray valves (CPSVs). 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 adopting more-stringent energy conservation standards for 
commercial prerinse spray valves because DOE has determined that the 
amended energy conservation standards for these products would result 
in significant conservation of energy, and are technologically feasible 
and economically justified.

DATES: The effective date of this rule is March 28, 2016. Compliance 
with the amended standards established for commercial prerinse spray 
valves in this final rule is required on and after January 28, 2019.

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: 
www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx?ruleid=100. The www.regulations.gov Web page contains 
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. James Raba, U.S. Department of Energy, Office of Energy 
Efficiency and Renewable Energy, Building Technologies Office, EE-5B, 
1000 Independence Avenue SW., Washington, DC 20585-0121. Telephone: 
(202) 586-8654. Email: [email protected].
    Mr. Peter Cochran, U.S. Department of Energy, Office of the General 
Counsel, GC-33, 1000 Independence Avenue SW., Washington, DC 20585-
0121. Telephone: (202) 586-9496. Email: [email protected].

SUPPLEMENTARY INFORMATION: 

Table of Contents

I. Synopsis of the Final Rule
    A. Benefits and Costs to Consumers
    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 Commercial Prerinse Spray 
Valves
    C. General Rulemaking Comments
III. General Discussion
    A. Product Classes and Scope of Coverage
    B. Test Procedure
    C. Certification, Compliance, Enforcement and Labeling
    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 Consumers
    b. Savings in Operating Costs Compared to Increase in Price (LCC 
and PBP)
    c. Energy and Water Savings
    d. Lessening of Utility or Performance of Products
    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. Market Assessment
    2. Product Classes
    a. Spray Force
    b. Number of Classes
    c. Other Comments
    3. Technology Assessment
    B. Screening Analysis
    C. Engineering Analysis
    1. Engineering Approach
    2. Linear Relationship Spray Force and Flow Rate
    3. Baseline and Max-Tech Models
    4. Proposed CPSV NOPR Standard Levels
    a. Availability of Products
    b. Standard Levels
    5. Manufacturing Cost Analysis
    D. Markups Analysis
    E. Energy and Water Use Analysis
    F. Life-Cycle Cost and Payback Period Analysis
    1. Product Cost
    2. Installation Cost
    3. Annual Energy and Water Consumption
    4. Energy Prices
    5. Water and Wastewater Prices
    6. Maintenance and Repair Costs
    7. Product Lifetime
    8. Discount Rates
    9. Efficiency Distribution in the No-New-Standards Case
    10. Payback Period Analysis
    11. Rebuttable-Presumption Payback Period
    G. Shipments Analysis
    1. Sensitivity Cases
    H. National Impact Analysis
    1. National Energy and Water Savings
    2. Net Present Value Analysis
    I. Consumer Subgroup Analysis
    J. Manufacturer Impact Analysis
    1. Overview
    2. Government Regulatory Impact Model
    a. GRIM Key Inputs
    b. GRIM 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
    3. Comments
    M. Utility Impact Analysis
    N. Employment Impact Analysis
V. Analytical Results and Conclusions
    A. Trial Standard Levels
    B. Economic Justification and Energy Savings
    1. Economic Impacts on Individual Consumers
    a. Life-Cycle Cost and Payback Period
    b. Consumer Subgroup Analysis
    c. Rebuttable Presumption Payback
    2. Economic Impacts on Manufacturers
    a. Industry Cash Flow Analysis Results
    b. Impacts on Employment
    c. Impacts on Manufacturing Capacity
    d. Impacts on Subgroups of Manufacturers
    e. Cumulative Regulatory Burden
    3. National Impact Analysis
    a. Significance of Energy Savings
    b. Net Present Value of Consumer Costs and Benefits
    c. Indirect Impacts on Employment
    4. Impact on Utility or Performance of Products
    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 Commercial 
Prerinse Spray Valve Standards
    2. Summary of Annualized Benefits and Costs of the Amended 
Standards

[[Page 4749]]

VI. Procedural Issues and Regulatory Review
    A. Review Under Executive Orders 12866 and 13563
    B. Review Under the Regulatory Flexibility Act
    1. Statement of the Need for, and Objectives of, the Rule
    2. Statement of the Significant Issues Raised by Public Comments
    3. Response to Comments Submitted by the Small Business 
Administration
    4. Description on Estimated Number of Small Entities Regulated
    5. Description and Estimate of Compliance Requirements
    6. Description of Steps To Minimize Impacts to Small Businesses
    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. Congressional Notification
VII. Approval of the Office of the Secretary

I. Synopsis of the Final Rule

    Title III of the Energy Policy and Conservation Act of 1975 
(EPCA),\1\ sets forth a variety of provisions designed to improve 
energy efficiency. Part B of title III established the ``Energy 
Conservation Program for Consumer Products Other Than Automobiles.'' 
These products include commercial prerinse spray valves (CPSVs), the 
subject of this document.\2\
---------------------------------------------------------------------------

    \1\ All references to EPCA in this document refer to the statute 
as amended through the Energy Efficiency Improvements Act of 2015, 
Public Law 114-11 (Apr. 30, 2015).
    \2\ Because Congress included commercial prerinse spray valves 
in Part B of Title III of EPCA, the consumer product provisions of 
Part B (not the industrial equipment provisions of Part C) apply to 
commercial prerinse spray valves. However, because commercial 
prerinse spray valves are commonly considered to be commercial 
equipment, as a matter of administrative convenience and to minimize 
confusion among interested parties, DOE placed the requirements for 
commercial prerinse spray valves into subpart O of 10 CFR part 431. 
Part 431 contains DOE regulations for commercial and industrial 
equipment.
---------------------------------------------------------------------------

    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 product 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)) Not later than 2 years after such a 
document is issued, DOE must publish a final rule amending the standard 
for the product. (42 U.S.C. 6295(m)(3)
    In accordance with these and other statutory provisions discussed 
in this document, DOE is adopting amended energy conservation standards 
for commercial prerinse spray valves. The amended standards, which are 
expressed in terms of the flow rate (in gallons per minute, gpm) for 
each product class (defined by spray force in ounce-force, ozf), are 
shown in Table I.1. The amended standards will apply to all classes of 
commercial prerinse spray valves listed in Table I.1 that are 
manufactured in, or imported into, the United States on or after 
January 28, 2019.

Table I.1--Amended Energy Conservation Standards for Commercial Prerinse
                              Spray Valves
------------------------------------------------------------------------
                                                                Maximum
                        Product class                          flow rate
                                                                 (gpm)
------------------------------------------------------------------------
1. Product Class 1 (<=5.0 ozf)..............................        1.00
2. Product Class 2 (>5.0 ozf and <=8.0 ozf).................        1.20
3. Product Class 3 (>8.0 ozf)...............................        1.28
------------------------------------------------------------------------

A. Benefits and Costs to Consumers

    Table I.2 presents DOE's evaluation of the economic impacts of the 
amended standards on commercial prerinse spray valves, as measured by 
the average life-cycle cost (LCC) savings and the simple payback period 
(PBP).\3\ The average LCC savings are non-negative for all product 
classes. The PBP for all product classes is also less than the 
projected average CPSV lifetime of approximately 5 years.
---------------------------------------------------------------------------

    \3\ The average LCC savings are measured relative to the no-new-
standards case efficiency distribution, which depicts the CPSV 
market in the compliance year (see section IV.F). The simple PBP, 
which is designed to compare specific efficiency levels, is measured 
relative to the baseline CPSV model (see section IV.C.1).

Table I.2--Impacts of Amended Energy Conservation Standards on Consumers
                   of Commercial Prerinse Spray Valves
------------------------------------------------------------------------
                                                              Simple
                                           Average  LCC       payback
              Product class                   savings     period (years)
                                             (2014$) *          **
------------------------------------------------------------------------
1. Product Class 1 (<=5.0 ozf)..........               0             0.0
2. Product Class 2 (>5.0 ozf and <=8.0                 0             0.0
 ozf)...................................
3. Product Class 3 (>8.0 ozf)...........             547             0.0
------------------------------------------------------------------------
* Product classes 1 and 2 have zero LCC savings because the no-new-
  standards case efficiency distribution (see section IV.F.9) shows the
  entire CPSV market at or above the amended standard for these product
  classes.
** For product classes 1 and 2, because there is no change in the market
  resulting from the standard, DOE represented these PBPs as zero.
  Additionally, in all product classes, because more efficient units do
  not cost more up front, consumers begin saving money as soon as a more
  efficient product is installed (the payback is immediate).

    DOE's analysis of the impacts of the amended standards on consumers 
is described in more detail in section IV.F 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 through 2048). Using a real discount rate of 6.9 
percent,\4\ DOE estimates that the INPV for manufacturers of commercial 
prerinse spray valves in the case without amended standards (referred 
to as the

[[Page 4750]]

no-new-standards case) is $8.6 million in 2014$. Under the amended 
standards adopted in this final rule, DOE expects that manufacturers 
may lose up to 13.1 percent of this INPV, which is equivalent to 
approximately $1.1 million. Additionally, based on its analysis of 
available information, DOE does not expect significant impacts on 
manufacturing capacity or loss of employment.
---------------------------------------------------------------------------

    \4\ The discount rate is an industry average discount rate, 
which was estimated using publically available industry financial 
data for companies that sell CPSVs in the U.S. Data sources are 
listed in section IV.J.
---------------------------------------------------------------------------

    DOE's analysis of the impacts of the amended standards on 
manufacturers is described in more detail in section IV.J of this 
document.

C. National Benefits and Costs \5\
---------------------------------------------------------------------------

    \5\ 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 savings (see section IV.H for discussion).
---------------------------------------------------------------------------

    DOE's analyses indicate that the amended energy conservation 
standards for commercial prerinse spray valves would save a significant 
amount of energy and water. Relative to the no-new-standards case, the 
lifetime energy savings for commercial prerinse spray valves purchased 
in the 30-year period that begins in the compliance year (2019-2048) 
amounts to 0.10 quadrillion Btu (quads) \6\ and 119.57 billion gallons 
of water. This represents a savings of 8 percent relative to the energy 
use of these products in the no-new-standards case. This also 
represents a savings of 8 percent relative to the water use of these 
products in the no-new-standards case.
---------------------------------------------------------------------------

    \6\ A quad is equal to 10\15\ British thermal units (Btu). The 
quantity refers to full-fuel-cycle (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.
---------------------------------------------------------------------------

    The cumulative net present value (NPV) of total consumer costs and 
savings of the standards for commercial prerinse spray valves ranges 
from $0.72 billion (at a 7-percent discount rate) to $1.48 billion (at 
a 3-percent discount rate). This NPV expresses the estimated total 
value of future operating-cost savings minus the estimated increased 
product costs for commercial prerinse spray valves purchased in 2019-
2048.
    In addition, the standards for commercial prerinse spray valves are 
projected to yield significant environmental benefits. DOE estimates 
that the standards will result in cumulative emission reductions (from 
2019-2048) of 5.87 million metric tons (Mt) \7\ of carbon dioxide 
(CO2), 1.79 thousand tons of sulfur dioxide 
(SO2), 14.70 thousand tons of nitrogen oxides 
(NOX), 47.37 thousand tons of methane (CH4), 0.04 
thousand tons of nitrous oxide (N2O), and 0.01 tons of 
mercury (Hg).\8\ The cumulative reduction in CO2 emissions 
through 2030 amounts to 1.86 Mt, which is equivalent to the emissions 
resulting from the annual electricity use of about 255,000 homes.
---------------------------------------------------------------------------

    \7\ A metric ton is equivalent to 1.1 short tons. Results for 
NOX and Hg are presented in short tons.
    \8\ 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.
---------------------------------------------------------------------------

    The value of the CO2 reductions is calculated using a 
range of values per metric ton of CO2 (otherwise known as 
the Social Cost of Carbon, or SCC) developed by a recent Federal 
interagency working group.\9\ The derivation of the SCC values is 
discussed in section IV.L of this document. 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 $0.04 billion and $0.59 billion. 
DOE also estimates that the net present monetary value of the 
NOX emissions reduction is between $24 and $53 million at a 
7-percent discount rate, and between $52 and $117 million at a 3-
percent discount rate.\10\
---------------------------------------------------------------------------

    \9\ 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: http://www.whitehouse.gov/sites/default/files/omb/inforeg/scc-tsd-final-july-2015.pdf).
    \10\ DOE estimated the monetized value of NOX 
emissions reductions using benefit per ton estimates from the 
Regulatory Impact Analysis titled, ``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. Note that the agency is presenting a national benefit-
per-ton estimate for particulate matter emitted from the Electricity 
Generating Unit sector based on an estimate of premature mortality 
derived from the ACS study (Krewski et al., 2009). If the benefit-
per-ton estimates were based on the Six Cities study (Lepuele et 
al., 2011), the values would be nearly two-and-a-half times larger. 
Because of the sensitivity of the benefit-per-ton estimate to the 
geographical considerations of sources and receptors of emissions, 
DOE intends to investigate refinements to the agency's current 
approach of one national estimate by assessing the regional approach 
taken by EPA's Regulatory Impact Analysis for the Clean Power Plan 
Final Rule. Note that DOE is currently investigating valuation of 
avoided SO2 and Hg emissions.
---------------------------------------------------------------------------

    Table I.3 summarizes the national economic benefits and costs 
expected to result from the amended standards for commercial prerinse 
spray valves.

  Table I.3--Summary of National Economic Benefits and Costs of Amended
  Energy Conservation Standards for Commercial Prerinse Spray Valves *
------------------------------------------------------------------------
                                           Present value
                Category                     (million      Discount rate
                                              2014$)            (%)
------------------------------------------------------------------------
                                Benefits
------------------------------------------------------------------------
Operating Cost Savings..................             718               7
                                                   1,476               3
CO2 Reduction Monetized Value ($12.2/                 44               5
 metric ton case) **....................
CO2 Reduction Monetized Value ($40.0/                195               3
 metric ton case) **....................
CO2 Reduction Monetized Value ($62.3/                308             2.5
 metric ton case) **....................
CO2 Reduction Monetized Value ($117/                 594               3
 metric ton case) **....................
NOX Reduction Monetized Value [dagger]..              24               7
                                                      52               3
                                         -------------------------------
Total Benefits [dagger][dagger].........             937               7
                                                   1,724               3
------------------------------------------------------------------------

[[Page 4751]]

 
                                  Costs
------------------------------------------------------------------------
Manufacturer Conversion Costs [dagger]..          1 to 2             N/A
------------------------------------------------------------------------
                   Total Net Benefits [dagger][dagger]
------------------------------------------------------------------------
Including Emissions Reduction Monetized              937               7
 Value..................................
                                                   1,724               3
------------------------------------------------------------------------
* This table presents the costs and benefits associated with commercial
  prerinse spray valves shipped in 2019-2048. These results include
  benefits to consumers which accrue after 2048 from the products
  purchased in 2019-2048. 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%, 3%, and 2.5% discount rates, respectively. The fourth case
  represents the 95th percentile of the SCC distribution calculated
  using a 3% discount rate. The SCC time series incorporate an
  escalation factor.
[dagger] The $/ton values used for NOX are described in section IV.L.
  DOE estimated the monetized value of NOX emissions reductions using
  benefit per ton estimates from the Regulatory Impact Analysis titled,
  ``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. DOE is presenting a national benefit-per-ton estimate for
  particulate matter emitted from the Electric Generating Unit sector
  based on an estimate of premature mortality derived from the ACS study
  (Krewski et al., 2009). If the benefit-per-ton estimates were based on
  the Six Cities study (Lepuele et al., 2011), the values would be
  nearly two-and-a-half times larger. Because of the sensitivity of the
  benefit-per-ton estimate to the geographical considerations of sources
  and receptors of emissions, DOE intends to investigate refinements to
  the current approach of one national estimate by assessing the
  regional approach taken by EPA's Regulatory Impact Analysis for the
  Clean Power Plan Final Rule.
[dagger][dagger] Total Benefits for both the 3% and 7% cases are derived
  using the series corresponding to average SCC with 3-percent discount
  rate ($40.0/t case).

    The benefits and costs of the amended standards, for commercial 
prerinse spray valves 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 annualized national economic value of 
the benefits from consumer operation of products that meet the amended 
standards (consisting primarily of operating cost savings from using 
less energy and water, minus increases in product purchase and 
installation costs, which is another way of representing consumer NPV); 
and (2) the annualized monetary value of the benefits of CO2 
and NOX emission reductions.\11\
---------------------------------------------------------------------------

    \11\ 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.3. 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. consumer 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 commercial prerinse spray valves shipped in 2019-2048. 
Because CO2 emissions have a very long residence time in the 
atmosphere,\12\ the SCC values in future years reflect future 
CO2-emissions impacts that continue beyond 2100.
---------------------------------------------------------------------------

    \12\ 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).
---------------------------------------------------------------------------

    Estimates of annualized benefits and costs of the amended standards 
are shown in Table I.4. Using a 7-percent discount rate for benefits 
and costs other than CO2 reduction (for which DOE used a 3-
percent discount rate, along with the average SCC series that has a 
value of $40.0 per metric ton in 2015), there are no increased product 
costs associated with the standards adopted in this final rule. The 
benefits under the 7% discount rate case are $71 million per year in 
reduced product operating costs, $11 million per year in CO2 
reductions, and $2 million to $5 million per year in reduced 
NOX emissions. In this case, the net benefit amounts to 
approximately $84 million per year. Using a 3-percent discount rate for 
all benefits and costs as well as the average SCC series that has a 
value of $40.0 per metric ton in 2015, there are still no increased 
product costs associated with the amended standards in this rule, while 
the benefits are $82 million per year in reduced operating costs, $11 
million in CO2 reductions, and $3 million to $7 million in 
reduced NOX emissions. In this case (3% discount rate), the 
net benefit amounts to approximately $96 million per year.

[[Page 4752]]



                          Table I.4--Annualized Benefits and Costs of Amended Standards for Commercial Prerinse Spray Valves *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                      Million 2014$/year
                                                                     -----------------------------------------------------------------------------------
                                              Discount rate                                            Low net  benefits          High net  benefits
                                                                          Primary  estimate *             estimate *                  estimate *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings...  7%..............................  71........................  66........................  74
                                    3%..............................  82........................  76........................  86
CO2 Reduction at $12.2/t **.......  5%..............................  3.........................  3.........................  3
CO2 Reduction at $40.0/t **.......  3%..............................  11........................  11........................  11
CO2 Reduction at $62.3/t **.......  2.5%............................  16........................  16........................  16
CO2 Reduction at $117/t **........  3%..............................  33........................  33........................  33
NOX Reduction Monetized Value       7%..............................  2.........................  2.........................  5
 [dagger].
                                    3%..............................  3.........................  3.........................  7
                                   ---------------------------------------------------------------------------------------------------------------------
Total Benefits [dagger][dagger]...  7% plus CO2 range...............  77 to 106.................  71 to 101.................  82 to 112
                                    7%..............................  84........................  79........................  90
                                    3% plus CO2 range...............  89 to 118.................  82 to 112.................  96 to 126
                                    3%..............................  96........................  89........................  104
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                          Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Manufacturer Conversion Costs       7%..............................  0.08 to 0.13..............  0.08 to 0.13..............  0.08 to 0.13
 [dagger][dagger][dagger].
                                    3%..............................  0.05 to 0.08..............  0.05 to 0.08..............  0.05 to 0.08
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Total Net Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total                               7% plus CO2 range...............  77 to 106.................  71 to 101.................  82 to 112
 [dagger][dagger][dagger][dagger].
                                    7%..............................  84........................  79........................  90
                                    3% plus CO2 range...............  89 to 118.................  82 to 112.................  96 to 126
                                    3%..............................  96........................  89........................  104
--------------------------------------------------------------------------------------------------------------------------------------------------------
* This table presents the annualized costs and benefits associated with commercial prerinse spray valves shipped in 2019-2048. These results include
  benefits to consumers which accrue after 2048 from the products purchased in 2019-2048. The results account for the incremental variable and fixed
  costs incurred by manufacturers due to the amended 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 Annual Energy Outlook 2015 (AEO2015) reference case, low estimate, and high
  estimate, respectively.
** 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.
[dagger] The $/ton values used for NOX are described in section IV.L. DOE estimated the monetized value of NOX emissions reductions using benefit per
  ton estimates from the Regulatory Impact Analysis titled, ``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 DOE's Primary Estimate and Low Net
  Benefits Estimate, the agency is presenting a national benefit-per-ton estimate for particulate matter emitted from the Electric Generating Unit
  sector based on an estimate of premature mortality derived from the ACS study (Krewski et al., 2009). For DOE's High Net Benefits Estimate, the
  benefit-per-ton estimates were based on the Six Cities study (Lepuele et al., 2011), which are nearly two-and-a-half times larger than those from the
  ACS study. Because of the sensitivity of the benefit-per-ton estimate to the geographical considerations of sources and receptors of emission, DOE
  intends to investigate refinements to the agency's current approach of one national estimate by assessing the regional approach taken by EPA's
  Regulatory Impact Analysis for the Clean Power Plan Final Rule.
[dagger][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.
[dagger][dagger][dagger] The lower value of the range represents costs associated with the Sourced Components conversion cost scenario. The upper value
  represents costs for the Fabricated Components scenario.
[dagger][dagger][dagger][dagger] Total benefits for both the 3 percent and 7 percent cases are derived using the series corresponding to the average SCC
  with 3 percent discount rate. 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. Manufacturer Conversion Costs are not included in the net
  benefits calculations.

    DOE's analysis of the national impacts of the amended standards is 
described in sections IV.H, IV.K, and IV.L of this document.

D. Conclusion

    Based on the analyses conducted for this final rule, DOE found the 
benefits to the nation of the standards (energy and water savings, 
consumer LCC savings, positive NPV of consumer benefit, and emission 
reductions) outweigh the burdens (loss of INPV). 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.

II. Introduction

    The following sections briefly discusses the statutory authority 
underlying this final rule, as well as some of the relevant historical 
background related to the establishment of standards for commercial 
prerinse spray valves.

A. Authority

    Title III, Part B of EPCA established the Energy Conservation 
Program for Consumer Products Other Than Automobiles. As part of this 
program, EPCA prescribed energy conservation standards for commercial 
prerinse spray valves, which are the subject of this rulemaking. (42 
U.S.C. 6292(dd)) Under 42 U.S.C. 6295(m), DOE must

[[Page 4753]]

periodically review its already established energy conservation 
standards for a covered product no later than 6 years from the issuance 
of a final rule establishing or amending a standard for the product. 
After publishing a notice of proposed rulemaking (NOPR) including new 
proposed standards, DOE must publish a final rule amending the standard 
for the product no later than 2 years after the NOPR is issued. (42 
U.S.C. 6295(m)(3)(A) This final rule fulfills this statutory 
requirement.
    Pursuant to EPCA, DOE's energy conservation program for covered 
products consists essentially of four parts: (1) Testing, (2) labeling, 
(3) the establishment of Federal energy conservation standards, and (4) 
certification and enforcement procedures. The Secretary of Energy 
(Secretary) or the Federal Trade Commission (FTC), as appropriate, may 
prescribe labeling requirements for commercial prerinse spray valves. 
(42 U.S.C. 6294(a)(5)(A))
    Subject to certain criteria and conditions, DOE is required to 
develop test procedures to measure the energy efficiency, energy use, 
or estimated annual operating cost of each covered product. (42 U.S.C. 
6293(b)(3)) Manufacturers of covered products must use the prescribed 
DOE test procedure as the basis for certifying to DOE that their 
products comply with the applicable energy conservation standards 
adopted under EPCA and when making representations to the public 
regarding the energy use or efficiency of those products. (42 U.S.C. 
6293(c) and 6295(s)) Similarly, DOE must use these test procedures to 
determine whether the products comply with standards adopted pursuant 
to EPCA. (42 U.S.C. 6295(s)) The DOE test procedure for commercial 
prerinse spray valves appears at title 10 of the Code of Federal 
Regulations (CFR) part 431, subpart O. DOE released a pre-publication 
notice of the test procedure final rule for commercial prerinse spray 
valves (CPSV TP final rule) on December 18, 2015.\13\
---------------------------------------------------------------------------

    \13\ The pre-publication Federal Register notice of the CPSV TP 
final rule issued by DOE is available on DOE's Web site at http://energy.gov/sites/prod/files/2015/12/f27/CPSV%20TP%20Final%20Rule.pdf. Following publication in the Federal 
Register, the CPSV TP final rule will be available at 
www.regulations.gov under Docket # EERE-2014.BT-TP-0055.
---------------------------------------------------------------------------

    DOE must follow specific statutory criteria for prescribing new or 
amended standards for covered products, including commercial prerinse 
spray valves. Any new or amended standard for a covered product must be 
designed to achieve the maximum improvement in energy efficiency that 
is technologically feasible and economically justified. (42 U.S.C. 
6295(o)(2)(A)) Furthermore, DOE may not adopt any standard that would 
not result in the significant conservation of energy. (42 U.S.C. 
6295(o)(3)(B)) Moreover, DOE may not prescribe a standard for certain 
products, including commercial prerinse spray valves, if no test 
procedure has been established for the product (42 U.S.C. 
6295(o)(3)(A)) In deciding whether a proposed 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 products subject to the standard;
    (2) The savings in operating costs throughout the estimated average 
life of the covered products in the type (or class) compared to any 
increase in the price, initial charges, or maintenance expenses for the 
covered products that are likely to result from the standard;
    (3) The total projected amount of energy (or as applicable, water) 
savings likely to result directly from the standard;
    (4) Any lessening of the utility or the performance of the covered 
products likely to result from the standard;
    (5) The impact of any lessening of competition, as determined in 
writing by the Attorney General, that is likely to result from the 
standard;
    (6) The need for national energy and water conservation; and
    (7) Other factors the 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 product complying 
with an energy conservation standard level will be less than three 
times the value of the energy and water savings the consumer will 
receive during the first year that the standard applies, as calculated 
under the applicable test procedure. (42 U.S.C. 6295(o)(2)(B)(iii))
    EPCA, as codified, also contains what is known as an ``anti-
backsliding'' provision, which prevents the Secretary from prescribing 
any amended standard that either increases the maximum allowable energy 
use or decreases the minimum required energy efficiency of a covered 
product. (42 U.S.C. 6295(o)(1)) Also, the Secretary may not prescribe 
an amended or new standard if interested persons have established by a 
preponderance of the evidence that the standard is likely to result in 
the unavailability in the United States in any covered product type (or 
class) of performance characteristics (including reliability), 
features, sizes, capacities, and volumes that are substantially the 
same as those generally available in the United States at the time of 
the Secretary's finding. (42 U.S.C. 6295(o)(4))
    Additionally, EPCA specifies requirements when promulgating an 
energy conservation standard for a covered product that has two or more 
subcategories. DOE must specify a different standard level for a type 
or class of products that has the same function or intended use if DOE 
determines that products within such group: (1) Consume a different 
kind of energy from that consumed by other covered products within such 
type (or class); or (2) have a capacity or other performance-related 
feature which other products within such type (or class) do not have 
and such feature justifies a higher or lower standard. (42 U.S.C. 
6295(q)(1)) In determining whether a performance-related feature 
justifies a different standard for a group of products, DOE shall 
consider such factors as the utility to the consumer of such a feature 
and other factors DOE deems appropriate. Id. Any rule prescribing such 
a standard must include an explanation of the basis on which such 
higher or lower level was established. (42 U.S.C. 6295(q)(2))
    Federal energy conservation requirements generally supersede State 
laws or regulations concerning energy conservation testing, labeling, 
and standards. (42 U.S.C. 6297(a)-(c)) California, however, has a 
statutory exemption to preemption for commercial prerinse spray valve 
standards adopted by the California Energy Commission before January 1, 
2005. (42 U.S.C. 6297(c)(7)) As a result, while federal commercial 
prerinse spray valve standards, including any amended standards that 
may result from this rulemaking, apply in California, California's 
commercial prerinse spray valve standards also apply as they are exempt 
from preemption. DOE may also 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)).

[[Page 4754]]

    Finally, pursuant to the amendments contained in the Energy 
Independence and Security Act of 2007 (EISA 2007), Public Law 110-140, 
any final rule for new or amended energy conservation standards 
promulgated after July 1, 2010, is required to address standby mode and 
off mode energy use. (42 U.S.C. 6295(gg)(3)) Specifically, when DOE 
adopts a standard for a covered product 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 
a single standard, or, if that is not feasible, adopt a separate 
standard for such energy use for that product. (42 U.S.C. 
6295(gg)(3)(A)-(B)) DOE's recently updated test procedures for 
commercial prerinse spray valves do not address standby mode and off 
mode energy use, because they are not applicable for this product. 
Accordingly, in this rulemaking, DOE only addresses active mode energy 
consumption because commercial prerinse spray valves only consume 
energy and water in active mode.

B. Background

1. Current Standards
    In a final rule published on October 18, 2005 (2005 CPSV final 
rule), DOE codified the current energy conservation standard for 
commercial prerinse spray valves that was prescribed by the Energy 
Policy Act of 2005 (EPAct 2005), Public Law 109-58 (August 8, 2005). 70 
FR 60407, 60410. The 2005 CPSV final rule established that all 
commercial prerinse spray valves manufactured on or after January 1, 
2006, must have a flow rate of not more than 1.6 gpm. Id.
2. History of Standards Rulemaking for Commercial Prerinse Spray Valves
    DOE initiated the current rulemaking on September 11, 2014, by 
issuing an analytical Framework document (2014 CPSV Framework document) 
that explained the issues, analyses, and analytical approaches that DOE 
anticipated using to develop energy conservation standards for 
commercial prerinse spray valves. 79 FR 54213. DOE held a public 
meeting on September 30, 2014 to discuss the 2014 CPSV Framework 
document, and solicited comments from interested parties regarding 
DOE's analytical approach. DOE received comments that helped identify 
and resolve issues pertaining to the 2014 CPSV Framework document 
relevant to this rulemaking.
    DOE published a NOPR for the CPSV energy conservation standards 
rulemaking on July 9, 2015 (CPSV NOPR). 80 FR 39486. DOE held a public 
meeting on July 28, 2015 to present the CPSV NOPR, which included the 
engineering analysis, downstream economic analyses, manufacturer impact 
analysis, and proposed standards. In the public meeting, DOE also 
sought comments from interested parties on these subjects, and 
facilitated interested parties' involvement in the rulemaking. At the 
public meeting, and during the comment period, DOE received comments 
that helped DOE identify issues and refine the analyses presented in 
the CPSV NOPR for this final rule.
    Based on the issues raised in response to the CPSV NOPR, DOE 
published a notice of data availability (NODA) for the CPSV energy 
conservation standards rulemaking on November 20, 2015 (CPSV NODA).\14\ 
80 FR 72608. In the CPSV NODA, DOE described revisions to its analyses 
of commercial prerinse spray valves in the following areas: (1) 
Engineering, (2) manufacturer impacts, (3) LCC and PBP, and (4) 
national impacts. DOE also presented updated trial standard level (TSL) 
combinations. DOE sought comments on all aspects of the updated 
analyses. During the CPSV NODA comment period, DOE received comments in 
response to issues raised in the CPSV NODA.
---------------------------------------------------------------------------

    \14\ DOE initially published the CPSV NODA on November 12, 2015. 
80 FR 69888. Due to errors in the CPSV NODA, DOE withdrew the 
document and published a corrected NODA on November 20, 2015. 80 FR 
72608.
---------------------------------------------------------------------------

    This final rule responds to issues raised by commenters in response 
to the 2014 CPSV Framework document, CPSV NOPR, and CPSV NODA.

C. General Rulemaking Comments

    In response to the CPSV NOPR, Alliance for Water Efficiency (AWE) 
recommended that this rulemaking be postponed until the stakeholders 
develop and agree upon a cleaning performance test that mimics ``real 
world'' performance. (AWE, No. 28 at p. 6) \15\ As discussed 
previously, under 42 U.S.C. 6295(m), the agency must periodically 
review its already established energy conservation standards for a 
covered product. DOE codified the current energy conservation standard 
for commercial prerinse spray valves in the 2005 CPSV final rule. 
Therefore, DOE is required to conduct a review of CPSV energy 
conservation standards, and cannot postpone this rulemaking further. A 
discussion of the CPSV test procedure is provided in section III.B of 
this document.
---------------------------------------------------------------------------

    \15\ A notation in this form provides a reference for 
information that is in the docket of DOE's rulemaking to amend 
energy conservation standards for commercial prerinse spray valves. 
(Docket No. EERE-2014-BT-STD-0027, which is maintained at 
www.regulations.gov). This particular notation refers to a comment: 
(1) Submitted by AWE; (2) appearing in document number 28 of the 
docket; and (3) appearing on page 6 of that document.
---------------------------------------------------------------------------

    In response to the CPSV NODA, DOE received a comment from the 
Plumbing Manufacturers Institute (PMI) requesting the comment period 
for the CPSV NODA be extended. PMI cited the short duration of the 
comment period, as well as the Thanksgiving holiday to support their 
request for an extension. (PMI, No. 41 at p. 1) DOE chose to maintain 
the comment period at 14 days, which DOE believes is sufficient time to 
review the updated analyses and provide comment. Additionally, while 
input data was updated in response to comments received, the analytical 
framework remained unchanged.
    PMI further commented that the process by which DOE obtained data 
to develop energy conservation standards lacked transparency. PMI 
stated that DOE should have formed a working group. (PMI, No. 43 at p. 
1) DOE disagrees with PMI's comment that DOE's regular notice-and-
comment rulemaking process lacks transparency with regards to data 
collection. DOE solicited comments and data from interested parties in 
response to the 2014 CPSV Framework document, the CPSV NOPR, and the 
CPSV NODA. Based on data obtained during these public comment periods, 
DOE revised its analyses and proposed standards.

III. General Discussion

A. Product Classes and Scope of Coverage

    EPCA defines the term ``commercial prerinse spray valve'' as a 
``handheld device designed and marketed for use with commercial 
dishwashing and ware washing equipment that sprays water on dishes, 
flatware, and other food service items for the purpose of removing food 
residue before cleaning the items.'' (42 U.S.C. 6291(33)(A) In the CPSV 
TP final rule, DOE modified the CPSV definition to clarify the scope of 
coverage, and adopted the following definition: ``Commercial prerinse 
spray valve'' is defined as a handheld device that has a release to 
close valve and is suitable for removing food residue from food service 
items before cleaning them in commercial dishwashing and ware washing 
equipment. The analyses conducted for this final rule were based on the 
scope of coverage provided by this amended definition.
    When evaluating and establishing energy conservation standards, DOE 
divides covered products into product classes by the type of energy 
used, or by

[[Page 4755]]

capacity or other performance-related features that justify a different 
standard. In making a determination whether a performance-related 
feature justifies a different standard, DOE considers such factors as 
the utility of the feature to the consumer and other factors DOE 
determines are appropriate. (42 U.S.C. 6295(q))
    Currently, all covered commercial prerinse spray valves are 
included in a single product class that is subject to a 1.6-gpm 
standard for maximum flow rate. 10 CFR 431.266. In the CPSV NOPR, DOE 
proposed three separate product classes based on spray force. DOE 
believes that spray force is a performance-related feature of 
commercial prerinse spray valves, and that each of the defined spray 
force ranges is associated with unique consumer utility for specific 
CPSV applications. (42 U.S.C. 6295(q)) DOE also requested comments from 
interested parties. See section IV.A.2 for more discussion on the 
product classes addressed in this final rule.

B. Test Procedure

    In addition to establishing the current maximum flow rate for 
commercial prerinse spray valves, EPCA also prescribed that the test 
procedure for measuring flow rate for commercial prerinse spray valves 
be based on American Society for Testing and Materials (ASTM) Standard 
F2324, ``Standard Test Method for Pre-Rinse Spray Valves.'' (42 U.S.C. 
6293(b)(14)) In a final rule published December 8, 2006, DOE 
incorporated by reference ASTM Standard F2324-03 as the DOE test 
procedure for commercial prerinse spray valves. 71 FR 71340, 71374. In 
a final rule published on October 23, 2013, DOE incorporated by 
reference ASTM Standard F2324-03 (2009) for testing commercial prerinse 
spray valves, which reaffirmed the 2003 version. 78 FR 62970, 62980.
    In 2013, ASTM amended Standard F2324-03 (2009) to replace the 
cleanability test with a spray force test, based on research conducted 
by the U.S. Environmental Protection Agency's (EPA) WaterSense[supreg] 
program.\16\ The most current version of the ASTM industry standard is 
the version published in 2013, ASTM Standard F2324-13.
---------------------------------------------------------------------------

    \16\ EPA WaterSense program, WaterSense Specification for 
Commercial Prerinse Spray Valves Supporting Statement. Version 1.0 
(Sept. 19, 2013). Available at: www.epa.gov/watersense/partners/prsv_final.html.
---------------------------------------------------------------------------

    DOE published the NOPR for the CPSV test procedure on June 23, 2015 
(CPSV TP NOPR). 80 FR 35874. In the CPSV TP NOPR, DOE proposed to 
incorporate by reference relevant portions of the amended ASTM Standard 
F2324-13, requiring spray force and flow rate to be measured in 
accordance with the industry standard. Additionally, DOE proposed a 
clarification to the definition of ``commercial prerinse spray valve'' 
as well as adding a new definition for ``spray force.'' For commercial 
prerinse spray valves with multiple spray settings, DOE proposed that 
both flow rate and spray force be measured for each available spray 
setting. DOE also proposed modifications to the rounding requirements 
for flow rate and added rounding requirements for spray force. Finally, 
DOE proposed modification of the sampling plan to remove the provisions 
related to determining representative values where customers would 
favor higher values. DOE presented the CPSV TP NOPR in the public 
meeting on July 28, 2015.
    DOE issued a pre-publication notice for the final rule for the CPSV 
TP on December 18, 2015. The final rule incorporates by reference 
relevant portions of the latest version of the industry testing 
standard from the ASTM Standard F2324-13, including the procedure for 
measuring spray force, revises the definitions of ``commercial prerinse 
spray valve'' and ``basic model,'' clarifies the test procedure for 
products with multiple spray settings, establishes rounding 
requirements for flow rate and spray force measurements, and removes 
irrelevant portions of the statistical methods for certification, 
compliance, and enforcement of commercial prerinse spray valves. The 
amended standards adopted in this final rule were based on testing 
conducted in accordance with the amended test procedure adopted in the 
CPSV TP final rule.

C. Certification, Compliance, Enforcement and Labeling

    This final rule establishes three separate product classes for 
commercial prerinse spray valves based on spray force. DOE recognizes 
that some commercial prerinse spray valves contain multiple spray 
settings and may fall into more than one product class. If the spray 
settings on a CPSV unit fall into multiple product classes, 
manufacturers must certify separate basic models for each product class 
and may only group individual spray settings into basic models within 
each product class. The tested spray force for each spray setting 
determines which product class definition applies to each spray 
setting. Therefore, a commercial prerinse spray valve that contains 
multiple spray settings, or is sold with multiple spray faces, may be 
classified as more than one product class. In this case, the commercial 
prerinse spray valve is required to meet the appropriate energy 
conservation standard for each product class.
    With regards to labeling, in the CPSV NOPR public meeting, the 
Natural Resource Defense Council (NRDC) questioned whether the 
institution of product classes for commercial prerinse spray valves 
will affect product labeling, and more specifically, whether the 
product class in which a commercial prerinse spray valve is categorized 
needs to be represented on product literature. (NRDC, Public Meeting 
Transcript, No. 23 at p. 110) NRDC also requested guidance on how 
commercial prerinse spray valves will be labeled if the proposal of 
multiple product classes were adopted. (NRDC, Public Meeting 
Transcript, No. 23 at p. 110)
    This final rule does not include labeling requirements for 
commercial prerinse spray valves. Accordingly, this final rule does not 
require manufacturers to include product class information on product 
labels. However, DOE notes that any representations of flow rate are 
required to be determined in accordance with the DOE test procedure and 
applicable sampling plans.

D. Technological Feasibility

1. General
    In each energy conservation standards rulemaking, DOE conducts a 
screening analysis based on information gathered on all current 
technology options and prototype designs that could improve the 
efficiency of the products that are the subject of the rulemaking. As 
the first step in such an analysis, DOE develops a list of technology 
options for consideration in consultation with manufacturers, design 
engineers, and other interested parties. DOE then determines which of 
those means for improving efficiency are technologically feasible. DOE 
considers technologies incorporated in commercially available products 
or in working prototypes to be technologically feasible. 10 CFR part 
430, subpart C, appendix A, section 4(a)(4)(i)
    After DOE 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 product utility or availability; and (3) adverse impacts on 
health or safety. 10 CFR part 430, subpart C, appendix A, section

[[Page 4756]]

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 (EL). Section IV.B of this 
document discusses the results of the screening analysis for commercial 
prerinse spray valves, particularly the technology options DOE 
considered, those it screened out, and those that are the basis for the 
standards considered in this rulemaking. For further details on the 
screening analysis for this rulemaking, see chapter 4 of the final rule 
technical support document (TSD).
2. Maximum Technologically Feasible Levels
    When DOE adopts an amended standard for a type or class of covered 
product, it must determine the maximum improvement in energy efficiency 
or maximum reduction in energy use that is technologically feasible for 
such product. (42 U.S.C. 6295(p)(1)) Accordingly, in the engineering 
analysis, DOE determined the maximum technologically feasible (max-
tech) improvements in efficiency for commercial prerinse spray valves 
using the design parameters for the most efficient products available 
on the market or in working prototypes. The max-tech levels that DOE 
determined for this rulemaking are described in section IV.C.3 of this 
document and in chapter 5 of the final rule TSD.

E. Energy Savings

1. Determination of Savings
    For each TSL, DOE projected energy savings from the application of 
the TSL to commercial prerinse spray valves purchased in the 30-year 
period that begins in the year of compliance with any amended standards 
(2019-2048).\17\ The savings are measured over the entire lifetime of 
products purchased in the 30-year analysis period. DOE quantified the 
energy savings attributable to each TSL as the difference in energy 
consumption between each standards case and the no-new-standards case. 
The no-new-standards case represents a projection of energy consumption 
that reflects how the market for a product would likely evolve in the 
absence of amended energy conservation standards.
---------------------------------------------------------------------------

    \17\ DOE also presents a sensitivity analysis that considers 
impacts for products shipped in a 9-year period.
---------------------------------------------------------------------------

    DOE used its national impact analysis (NIA) spreadsheet models to 
estimate energy savings from amended standards for commercial prerinse 
spray valves. The NIA spreadsheet model (described in section IV.H of 
this document) calculates savings in site energy, which is the energy 
directly consumed by products at the locations where they are used. DOE 
calculates national energy savings (NES) in terms of primary energy 
savings, which is the savings in energy that is used to generate and 
transmit the site energy, 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.\18\ DOE's 
approach is based on the calculation of an FFC multiplier for each of 
the energy types used by covered products. For more information on FFC 
energy savings, see section IV.H.1 of this document. For natural gas, 
the primary energy savings are considered to be equal to the site 
energy savings.
---------------------------------------------------------------------------

    \18\ 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 more stringent standards for commercial prerinse spray 
valves, 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 EPCA, 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 
amended standards, are nontrivial, and, therefore, DOE considers them 
``significant'' within the meaning of section 325 of EPCA.

F. Economic Justification

1. Specific Criteria
    As previously noted, 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)(I)-(VII)) The 
following sections discuss how DOE has addressed each of those seven 
factors in this rulemaking.
a. Economic Impact on Manufacturers and Consumers
    In determining the impacts of an amended standard on manufacturers, 
DOE conducts a manufacturer impact analysis (MIA), as discussed in 
section IV.J. 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) 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 consumers, measures of economic impact include the 
changes in LCC and PBP associated with amended standards. These 
measures are discussed further in the following section. For consumers 
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 
consumers 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 product 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 product 
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 product (including 
its installation) and the operating cost (including water, energy, 
maintenance, and repair expenditures) discounted over the lifetime of 
the product. The LCC analysis requires a variety of inputs, such as 
product prices; product energy and water consumption; energy and water 
and wastewater prices; maintenance and repair costs; product lifetime; 
and discount rates appropriate for consumers. To account for

[[Page 4757]]

uncertainty and variability in specific inputs, such as product 
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 
consumers to recover the increased purchase cost (including 
installation) of a more-efficient product through lower operating 
costs. DOE calculates the PBP by dividing the change in purchase cost 
due to a more-stringent standard by the change in annual operating cost 
for the year that standards are assumed to take effect.
    For its LCC and PBP analysis, DOE assumes that consumers will 
purchase the covered products 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's LCC and PBP analysis 
is discussed in further detail in section IV.F.
c. Energy and Water 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 and water savings that are expected 
to result directly from the standard. (42 U.S.C. 6295(o)(2)(B)(i)(III)) 
As discussed in section III.E, DOE uses the NIA spreadsheet models to 
project national energy and water savings.
d. Lessening of Utility or Performance of Products
    In determining whether a proposed standard is economically 
justified, DOE evaluates any lessening of the utility or performance of 
the considered products. (42 U.S.C. 6295(o)(2)(B)(i)(IV)) Based on data 
available to DOE, the standards adopted in this final rule would not 
reduce the utility or performance of the products under consideration 
in this rulemaking.
e. Impact of Any Lessening of Competition
    EPCA directs DOE to consider the impact of any lessening of 
competition, as determined in writing by the Attorney General of the 
United States (Attorney General), that is likely to result from a 
standard. (42 U.S.C. 6295(o)(2)(B)(i)(V)) DOE transmitted a copy of its 
proposed rule to the Attorney General with a request that the 
Department of Justice (DOJ) provide its 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)). On September 4, 2015, DOJ provided its 
determination to DOE that the amended standards for commercial prerinse 
spray valves are unlikely to have a significant adverse impact on 
competition. DOE has included this determination from DOJ at the end of 
this final 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 
amended 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.
    The amended standards are also likely to result in environmental 
benefits in the form of reduced emissions of air pollutants and 
greenhouse gases (GHGs) associated with energy production and use. DOE 
conducts an emissions analysis to estimate how standards may affect 
these emissions, as discussed in section IV.K. DOE also estimates the 
economic value of emissions reductions resulting from the considered 
TSLs, as discussed in section IV.L.
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)) 
No other factors were considered in this analysis.
2. Rebuttable Presumption
    As set forth in 42 U.S.C. 6295(o)(2)(B)(iii), EPCA creates a 
rebuttable presumption that an energy conservation standard is 
economically justified if the additional cost to the consumer of a 
product that meets the standard is less than three times the value of 
the first year's energy and water savings resulting from the standard, 
as calculated under the applicable DOE test procedure. DOE's LCC and 
PBP analyses generate values used to calculate the effect the amended 
energy conservation standards would have on the PBP for consumers. 
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 consumers, 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 an amended 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.11 of this document.

IV. Methodology and Discussion of Related Comments

    This section addresses the analyses DOE has performed for this 
rulemaking with regard to commercial prerinse spray valves. Separate 
subsections address each component of DOE's analyses.
    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 the amended energy 
conservation standards. The NIA uses a second spreadsheet set that 
provides shipments forecasts and calculates NES and NPV of total 
consumer costs and savings expected to result from amended energy 
conservation standards. DOE uses a third spreadsheet tool, the 
Government Regulatory Impact Model (GRIM), to assess manufacturer 
impacts of amended 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=100.
    Additionally, DOE used a version of the Energy Information 
Administration's (EIA) National Energy Modeling System (NEMS) for the 
emission and utility impact analyses. The NEMS model simulates the 
energy sector of the U.S. economy. EIA uses NEMS to prepare the AEO, a 
widely-known baseline energy forecast for the United States.\19\
---------------------------------------------------------------------------

    \19\ For more information on NEMS, refer to The National Energy 
Modeling System: An Overview 2009, DOE/EIA-0581 (Oct. 2009) 
(Available at: https://www.eia.gov/forecasts/aeo/info_nems_archive.cfm).
---------------------------------------------------------------------------

    The version of NEMS used for appliance standards analysis, which 
makes minor modifications to the AEO version, is called NEMS-BT.\20\ 
NEMS-

[[Page 4758]]

BT accounts for the interactions among the various energy supply and 
demand sectors and the economy as a whole.
---------------------------------------------------------------------------

    \20\ EIA approves the use of the name ``NEMS'' to describe only 
an AEO version of the model without any modification to code or 
data. Because the present analysis entails some minor code 
modifications and runs the model under various policy scenarios that 
deviate from AEO assumptions, the name ``NEMS-BT'' refers to the 
model as used here. (BT stands for DOE's Building Technologies 
Office.)
---------------------------------------------------------------------------

A. Market and Technology Assessment

    DOE develops information in the market and technology assessment 
that provides an overall picture of the market for commercial prerinse 
spray valves, including the purpose of the products, the industry 
structure, manufacturers, market characteristics, and technologies used 
in the products. This activity includes both quantitative and 
qualitative assessments, based primarily on publicly-available 
information. The subjects addressed in the market and technology 
assessment for this rulemaking include: (1) Market assessment, (2) 
product classes, (3) technology assessment, and (4) impact on 
compliance, certification and enforcement. The key findings of DOE's 
market assessment are summarized in the following sections. See chapter 
3 of the final rule TSD for further discussion of the market and 
technology assessment.
1. Market Assessment
    As part of the market assessment, DOE examined manufacturers, trade 
associations, and the quantities and types of products sold and offered 
in the market. DOE reviewed relevant literature to develop an 
understanding of the CPSV industry in the United States, including 
market research data, government databases, retail listings, and 
industry publications (e.g., manufacturer catalogs). Using this 
information, DOE assessed the overall state of the industry, CPSV 
manufacturer model-based market shares, shipments, general technical 
information on commercial prerinse spray valves, and industry trends.
    In comments to the CPSV NOPR, T&S Brass suggested that information 
and data acquired through the WaterSense program be considered, as the 
program set a reasonable efficiency goal and established the groundwork 
for a viable CPSV efficiency program. (T&S Brass, No. 33 at p. 3) AWE 
stated that the WaterSense research seems to be ignored by DOE. (AWE, 
No. 28 at p. 7)
    For this rulemaking, DOE performed market research using various 
reports and databases, including the WaterSense database that lists the 
spray force of WaterSense labeled products. DOE used the spray force 
results from the WaterSense labeled products as input to the 
engineering analysis (see chapter 5 of the final rule TSD). Also, DOE 
used the WaterSense field study report: (1) To characterize the CPSV 
market; (2) to perform a sensitivity analysis of water pressure for 
testing commercial prerinse spray valves as part of the CPSV test 
procedure rulemaking; \21\ and (3) as inputs to the energy and water 
use analysis (see chapter 7 of the final rule TSD).
---------------------------------------------------------------------------

    \21\ The water pressure sensitivity analysis is available at 
www.regulations.gov under docket number EERE-2014-BT-TP-0055.
---------------------------------------------------------------------------

    To characterize the market, DOE analyzed the model-based market 
shares of major manufacturers based on the number of basic models \22\ 
observed through the DOE Compliance Certification Management System 
(CCMS) database, WaterSense database, and Web searches.\23\ DOE 
concluded that the CPSV market includes 46 basic models from 13 
manufacturers. Chapter 3 of the final rule TSD provides more details on 
the CPSV market.
---------------------------------------------------------------------------

    \22\ Basic model means all units of a given type of covered 
product (or class thereof) manufactured by one manufacturer, having 
the same primary energy source, and having essentially identical 
electrical, physical, and functional (or hydraulic) characteristics 
that affect energy use, energy efficiency, water use, or water 
efficiency. 10 CFR 431.262.
    \23\ U.S. Department of Energy. Compliance Certification 
Database (available at http://www.regulations.doe.gov/certification-data/); U.S. EPA, Water Sense (available at www.epa.gov/watersense/product_search.html).
---------------------------------------------------------------------------

    Additionally, DOE also characterized the efficiency (flow rate) 
distribution of commercial prerinse spray valves currently on the 
market. DOE performed this analysis in the CPSV NOPR, and presented it 
during the CPSV NOPR public meeting. DOE's analysis indicated a wide 
range of CPSV flow rates on the market with rated flow rates between 
0.59 and 1.60 gpm. DOE received a comment during the CPSV NOPR public 
meeting regarding the efficiency distribution. T&S Brass stated that 
consumer satisfaction was not represented in DOE's analysis, and that 
consumer satisfaction is very high at the upper range of the market 
flow rate distribution. (T&S Brass, Public Meeting Transcript, No. 23 
at p. 31) T&S Brass further commented that the showerhead-type 
commercial prerinse spray valves represent the majority of the market 
and highest level of customer satisfaction because these units prevent 
splash-back. (T&S Brass, Public Meeting Transcript, No. 23 at pp. 42-
43)
    While consumer satisfaction is not directly referenced in the 
efficiency distribution graph presented by DOE in the CPSV NOPR, DOE 
has acknowledged consumer satisfaction and consumer utility as 
important aspects to consider when establishing product classes for 
commercial prerinse spray valves. This is described further in the 
product class section of this document (section IV.A.2). Additionally, 
in response to comments from interested parties, DOE updated both its 
engineering analysis and downstream analysis to account for the shower-
type commercial prerinse spray valves and its majority market 
shipments. The updated engineering analysis is presented in section 
IV.C of this document, and the updated shipments analysis is presented 
in section IV.G of this document.
2. Product Classes
    When evaluating and establishing energy conservation standards, DOE 
considers dividing covered products into classes by (a) the type of 
energy used, (b) the capacity of the product, or (c) other performance-
related features that justify different standard levels. (42 U.S.C. 
6295(q)) Currently, DOE regulates all covered commercial prerinse spray 
valves as a single product class that is subject to a 1.6-gpm standard 
for flow rate. 10 CFR 431.266. DOE, however, has determined that spray 
force is a performance-related feature that justifies different 
standard levels. Consequently, this final rule establishes three 
product classes based on spray force ranges: (1) Product class 1 (less 
than or equal to 5.0 ounce-force, or ozf), (2) product class 2 (greater 
than 5.0 ozf but less than or equal to 8.0 ozf), and (3) product class 
3 (greater than 8.0 ozf). These are the same product classes that were 
proposed in the CPSV NOPR, but with a different naming convention.
a. Spray Force
    In the CPSV NOPR and public meeting, DOE presented data indicating 
a strong correlation between spray force and flow rate, as described 
further in section IV.C.2 of this final rule and in chapter 5 of the 
TSD. Specifically, units with higher spray force have inherently higher 
flow rates, and units with lower spray force have inherently lower flow 
rates. This direct relationship provided justification for creating 
multiple product classes defined by ranges of spray force.
    In the CPSV NOPR, DOE cited a WaterSense field study that found 
that low water pressure, or spray force, can be a source of user 
dissatisfaction for some applications.\24\ DOE also received

[[Page 4759]]

multiple comments in response to the 2014 CPSV Framework document 
stating that spray force is a performance related feature that could be 
used to define product classes. The Advocates commented that product 
classes must be considered to distinguish commercial prerinse spray 
valves, and that DOE could consider using spray force as one way to 
delineate separate product classes. (Advocates, No. 11 at p. 2) The CA 
IOUs urged DOE to consider user satisfaction when considering the 
efficiency metric, as some field surveys have shown that users that are 
dissatisfied with efficient commercial prerinse spray valves will 
substitute them with those that likely increase overall water 
consumption. Therefore, CA IOUs suggested either incorporating spray 
force into the efficiency metric, or alternatively, using spray force 
to establish product classes as a way to account for differentiating 
products. (CA IOUs, No. 14 at p. 1) T&S Brass commented that the 
applications of commercial prerinse spray valves could vary from 
rinsing to cleaning baked-on food, and that the different applications 
might require different spray forces. T&S Brass stated that it offers a 
variety of prerinse spray valves that have different design features 
based on end users' applications. (T&S Brass, Public Meeting 
Transcript, No. 6 at p. 40) In response to the CPSV NOPR, Chicago 
Faucets commented that spray force is useful for predicting customer 
satisfaction. (Chicago Faucets, No. 26 at p. 2)
---------------------------------------------------------------------------

    \24\ EPA WaterSense, Prerinse Spray Valves Field Study Report, 
at 24-25 (Mar. 31, 2011) (Available at: www.epa.gov/watersense/docs/final_epa_prsv_study_report_033111v2_508.pdf).
---------------------------------------------------------------------------

    Furthermore, DOE market research indicates three distinct 
categories of end-user applications for commercial prerinse spray 
valves, which require different levels of spray force: (1) Cleaning 
delicate glassware and removing loose food particles from dishware 
(which requires the least amount of spray force); (2) cleaning wet 
foods; and (3) cleaning baked-on foods (which requires the greatest 
amount of spray force).
    DOE also received general comments regarding the use of spray force 
to define separate product classes for commercial prerinse spray 
valves. T&S Brass recommended that the DOE establish the CPSV 
efficiency goal based only upon maximum flow rate, as this is directly 
related to water conservation. (T&S Brass, No. 33 at p. 3) Chicago 
Faucets commented that the addition of the spray force test into 
mandated Federal law is unnecessary and counterproductive. Chicago 
Faucets believes that the focus should be on water conservation. 
Chicago Faucets stated that the spray force test method has no bearing 
on water conservation and that it was intended as a tool for marketing 
and selling spray valves, and nothing more. (Chicago Faucets, No. 26 at 
p. 2) The North American Association of Food Equipment Manufacturers 
(NAFEM) stated that it appears to them that DOE is requiring 
manufacturers to design commercial prerinse spray valves to meet the 
classification system and spray force requirements which have been pre-
determined by DOE. (NAFEM, PMI, No. 31 at p. 1)
    AWE commented in response to the CPSV NOPR that there is no 
evidence that spray force is the only factor for consumer satisfaction 
and performance in cleaning dishware. (AWE, No. 28 at p. 3) AWE further 
commented that spray force should be excluded from the proposed rule as 
it is irrelevant to efficiency, and that the only measure of valve 
water efficiency is a volumetric measure, stated in gallons per minute. 
(AWE, No. 28 at p. 3) AWE also stated that high spray force can be a 
hindrance to performance for some operations due to excessive splash 
and aerosolizing water. (AWE, No. 28 at p. 4)
    In comments received during the CPSV NOPR public meeting and 
through written submissions, the majority of the interested parties 
opposed DOE's product class structure based on spray force, and 
recommended that DOE maintain a single product class. (Chicago Faucets, 
No. 26 at pp. 1-2; PMI, No. 27 at p. 1; Fisher, No. 30 at p. 1; 
Appliance Standards Awareness Project (ASAP), Northwest Energy 
Efficiency Alliance (NEEA), NRDC, No. 32 at p. 1; Pacific Gas and 
Electric (PG&E), Southern California Edison (SCE), Southern California 
Gas Company (SCGC), San Diego Gas and Electric (SDG&E), No. 34 at pp. 
1-2; AWE, No. 28 at p. 7; T&S Brass, No. 33 at p. 2) PMI, PG&E, SCE, 
SCGC, and SDG&E (collectively, the ``CA IOUs'') and, ASAP and NRDC 
reiterated their comments in favor of a single product class in 
response to the CPSV NODA. (PMI, No. 43 at p. 1; CA IOUs, No. 44 at pp. 
1-2; ASAP and NRDC, No. 45 at p. 1)
    On the other hand, several interested parties supported the 
consideration of spray force for the standard. Fisher stated that the 
standard should focus on flow rate and spray force, but allow the 
consumer to determine which of these performance factors will satisfy 
their requirements. (Fisher, No. 30 at p. 1) ASAP, NEEA, and NRDC 
(collectively, the ``Advocates'') and the CA IOUs commented that they 
support the proposal to add a requirement to measure and report spray 
force. The Advocates and CA IOUs believe that the addition of spray 
force will help stakeholders to better understand CPSV product 
performance and help inform the incorporation of this metric into a 
future rulemaking. Additionally, the Advocates stated that the 
collection of spray force product data will also inform the EPA 
WaterSense program and other efforts to improve water and energy 
efficiency in commercial kitchens. (Advocates, No. 32 at p. 2; CA IOUs, 
No. 34 at p. 3).
    DOE acknowledges that some interested parties generally oppose the 
use of spray force to define separate product classes for commercial 
prerinse spray valves. However, DOE received no comments contradicting 
its conclusion that spray force is a performance-related feature 
related to consumer utility. DOE also acknowledges that there are other 
features that could also affect consumer utility of commercial prerinse 
spray valves, including spray shape and amount of splash back; however, 
these metrics are not as easily quantifiable as spray force, nor can 
they be easily tested or defined. Based on the WaterSense studies, the 
totality of comments received in response to the 2014 CPSV Framework 
document and CPSV NOPR, and additional market research, DOE concludes 
that spray force is a performance-related feature that justifies 
different standard levels. DOE is not establishing a minimum spray 
force requirement in this final rule; rather, spray force is used only 
to define the boundaries between the three product classes.
b. Number of Classes
    To determine the number of product classes, DOE tested and analyzed 
a wide range of CPSV units on the market, spanning multiple 
manufacturers, flow rates, and spray shapes. DOE believes that the 
units analyzed for this rulemaking are representative of the entire 
CPSV market. DOE's test data and additional market research indicated 
three clusters of spray force data points, which DOE used as the basis 
for proposing three separate product classes. Additional details 
regarding this test data is provided in chapter 5 of the final rule 
TSD.
    Product class 1 included units with spray force less than or equal 
to 5.0 ounce-force (ozf), product class 2 included units with spray 
force greater than 5.0 ozf but less than or equal to 8.0 ozf, and 
product class 3 included units with spray force greater than 8.0 ozf.
    DOE received comments regarding the method behind how the product 
classes were established. Specifically, AWE stated that using a scatter 
graph of spray force from different models, then dividing into thirds, 
is not a scientific

[[Page 4760]]

method to classify products. (AWE, No. 28 at p. 3) AWE recommended that 
the classification system not be implemented and believes that it is 
arbitrary, unjustified, and its effect on water use is unknown. (AWE, 
No. 28 at p. 6)
    DOE selected 5.0 ozf as the spray force cut-off between product 
class 1 and product class 2 based on DOE's test data and market 
research, which clearly showed a cluster of CPSV units above and below 
that threshold. One cluster of CPSV units had spray force ranges 
between 4.1 and 4.8 ozf, and the other cluster was between 5.5 and 7.7 
ozf. Additionally, in comments to the 2014 CPSV Framework document, T&S 
Brass suggested a flow rate cut-off of 0.80 gpm between the ``ultra-
low-flow'' and ``low-flow'' commercial prerinse spray valves. (T&S 
Brass, No. 12 at p. 3) A flow rate of 0.80 gpm equates to 5.3 ozf using 
the flow rate-spray force linear relationship determined by DOE. Based 
on these considerations, DOE established the threshold between the two 
classes at 5.0 ozf.
    DOE selected 8.0 ozf as the spray force cut-off between product 
class 2 and product class 3 based on test results of commercial 
prerinse spray valves with shower-type spray shapes. Shower-type spray 
shapes provide the distinct utility of minimizing ``splash back'' which 
can be associated with nozzle-type designs at higher flow rates. In 
addition to the three clusters of data points in the flow rate-spray 
force plot, DOE testing showed that the upper range of the market, in 
terms of flow rate, predominantly includes shower-type units. DOE found 
that the lowest tested spray force of any shower-type unit was 8.1 ozf. 
Additionally, in comments to the 2014 CPSV Framework document, T&S 
Brass suggested a flow rate cut-off of 1.28 gpm between the ``low-
flow'' and ``standard'' commercial prerinse spray valves. (T&S Brass, 
No. 12 at p. 3) A flow rate of 1.28 gpm equates to 8.5 ozf using the 
flow rate-spray force linear relationship determined by DOE. Based on 
these considerations, DOE selected 8.0 ozf to differentiate product 
class 3 units from other commercial prerinse spray valves available on 
the market.
    As described in the CPSV NOPR, DOE believed that each of these 
defined spray force ranges is associated with unique consumer utility 
for specific CPSV applications. Specifically, product class 1 provides 
distinct utility for cleaning delicate glassware and removing loose 
food particles from dishware, product class 2 provides distinct utility 
for cleaning wet foods, and product class 3 provides distinct utility 
for cleaning baked-on foods. DOE believes that these categorizations 
appropriately reflect the various end uses of commercial prereinse 
spray valves and has defined the three product classes accordingly.
c. Other Comments
    In response to the NOPR, interested parties commented that the 
proposed product classes would limit manufacturers' product designs and 
innovation, and create confusion to consumers. (T&S Brass, Public 
Meeting Transcript, No. 23 at pp. 51-52; Chicago Faucets, Public 
Meeting Transcript, No. 23 at pp. 49-51; NAFEM, PMI, No. 31 at p. 1; 
PMI, No. 27 at p. 1; Chicago Faucets, No. 26 at p. 2; T&S Brass, No. 33 
at p. 2; AWE, No. 28 at p. 6; CA IOUs, No. 44 at p. 2) Specifically, 
AWE stated that the classifications could alter the market in a manner 
that deters the use of more efficient and better performing products. 
(AWE, No. 28 at p. 4)
    By maintaining flow rate as the regulated efficiency metric and 
creating three product classes, DOE believes the product class 
structure would not prescribe or limit any particular design options 
for CPSV manufacturers. DOE's technology assessment and screening 
analysis identified multiple possible design options that manufacturers 
could implement to achieve reductions in flow rate, which apply to both 
shower-type and nozzle-type commercial prerinse spray valves. In 
addition, manufacturers would not be precluded from implementing other 
innovative design options that may be developed in the future.
    Additionally, DOE does not expect the product class structure to 
create confusion for the consumer, because DOE market research 
indicates that CPSV marketing materials predominantly highlight the 
spray pattern shape (e.g., solid stream, shower, fan) and flow rate of 
CPSV models. The product class structure does not prescribe any changes 
to the type of information manufacturers can provide in CPSV marketing 
materials.
    CA IOUs stated that different product classes are not marketed to 
consumers that would necessitate three different product standards 
based on spray force. According to the CA IOUs, commercial prerinse 
spray valves are marketed based on physical dimensions, and in some 
cases flow rate. (CA IOUs, No. 34 at pp. 1-2; CA IOUs, No. 44 at p. 2)
    DOE also has not specified any labeling requirements in this final 
rule. DOE only requires that manufacturers provide the information 
contained in the certification reports when certifying that all 
applicable CPSV models are compliant with the standard. DOE is not 
requiring that the product classes be used to market commercial 
prerinse spray valves; the product classes are used to determine the 
applicable standard, and are used for certification, compliance, and 
enforcement purposes. See section III.C for more details on compliance, 
certification and enforcement. Therefore, DOE does not expect that the 
product class structure would alter the market and deter the use of 
higher-efficiency and better performing products, as the representation 
of the commercial prerinse spray valves will continue to be in terms of 
flow rate.
    AWE commented that there is no evidence presented as to how a 
consumer should choose between the different classifications, and that 
consumer choice tends to gravitate towards ``heavy-duty'' under the 
false premise that bigger is better. (AWE, No. 28 at pp. 3-4) The 
Advocates stated that if DOE creates the three product classes, then it 
would drive the market to the ``heavy-duty'' class. The Advocates 
expressed concern that without the benefit of the current distribution 
of CPSV market shares based on flow rate, creating three product 
classes could increase the average flow rate of products sold in the 
market. (Advocates, No. 32 at p. 2; ASAP and NRDC, No. 45 at p. 1)
    DOE realizes that consumers may switch between product classes, and 
the flow rate of commercial prerinse spray valves used by some 
consumers may increase instead of decrease due to energy conservation 
standards. DOE analyzed the effects of product class switching in the 
downstream analyses and evaluated the results of product class 
switching when setting a standard in section V.C.1. A detailed 
description of DOE's method to model product class switching is 
contained in chapter 9 of the final rule TSD.
    DOE received comments on the naming convention used for the 
proposed product classes in the CPSV NOPR. T&S Brass recommended 
changing the product class names because the ``heavy-duty'' term is 
already widely used in the industry to represent products that last 
long. (T&S Brass, Public Meeting Transcript, No. 23 at pp. 110-111) 
During the public meeting, DOE requested that stakeholders provide an 
alternate naming convention for the product classes. Chicago Faucets 
stated that the proposed product class names, especially ``light 
duty,'' may prevent customers from choosing the lower flow products. 
Users prefer durable, heavy duty products, particularly in

[[Page 4761]]

commercial applications where commercial prerinse spray valves are most 
commonly used. Therefore, Chicago Faucets suggested using ``Level 1'', 
``Level 2'', and ``Level 3'' instead. (Chicago Faucets, No. 26 at p. 3) 
Fisher stated that the terms ``heavy duty'', ``standard duty'', and 
``light duty'' should not be used as the terminology for the different 
product classes. (Fisher, No. 30 at p. 1)
    Based on feedback from interested parties, DOE has renamed the 
product classes in this final rule as product class 1, product class 2, 
and product class 3 instead of ``light-duty,'' ``standard-duty,'' and 
``heavy-duty,'' respectively. DOE also notes that the product class 
names defined by DOE do not restrict how manufacturers may refer to 
their products in marketing literature, provided that such products 
meet the appropriate standard based on DOE's defined product classes.
    Finally, DOE also received comments regarding potential other 
product classes that could be considered in future rulemakings. The 
Advocates commented that there is some market differentiation between 
commercial prerinse spray valves intended for cleaning dishware before 
sanitizing in a commercial dishwasher, and commercial prerinse spray 
valves intended for pot and pan cleaning. The Advocates recommended 
that DOE may wish to consider product classes based on such existing 
market differentiation during the next update to the standards. 
(Advocates, No. 32 at p. 2) CA IOUs stated that the market appears to 
be moving towards different usage type, such as dining and pot cleaning 
spray valves. CA IOUs recommended when DOE begins the process of a new 
energy conservation standard in a future rulemaking, that DOE should 
consider separate standards for dining and pot and pan cleaning. (CA 
IOUs, No. 34 at p. 2; CA IOUs, No. 44 at p. 2)
3. Technology Assessment
    In the CPSV NOPR technology assessment, DOE identified six 
technology options that would improve the efficiency of commercial 
prerinse spray valves, as measured by the CPSV DOE test procedure. 
These include the following: (1) Addition of flow control insert, (2) 
smaller spray hole area, (3) aerators, (4) additional valves, (5) 
changing spray hole shape, and (6) venturi meter to orifice plate 
nozzle geometries.
    DOE received one comment in support of the venturi meter to orifice 
plate nozzle geometry technology option. CA IOUs supported DOE's 
consideration of implementing an orifice plate nozzle design to produce 
a lower flow rather than a venturi meter nozzle with similar inlet and 
outlet dimensions. (CA IOUs, No. 34 at pp. 2-3) AWE, on the other hand, 
opposed design[hyphen]restrictive requirements in a specification 
unless health and/or safety are at risk. Instead, AWE stated that it is 
appropriate to mandate an outcome (e.g., gallons per minute) directly 
related to water and energy efficiency, rather than 
pre[hyphen]determine design parameters. Once the desired outcome is 
defined, manufacturers will innovate and develop products that yield 
the mandated outcomes. (AWE, No. 28, p. 7)
    As part of its rulemaking analysis process, DOE analyzes technology 
options that can be implemented to improve the efficiency of a covered 
product. The technology options identified for commercial prerinse 
spray valves provide feasible means for decreasing flow rate (or 
increasing efficiency) to meet the amended standard. However, DOE does 
not mandate any technology options that can be used to meet the amended 
standard. Manufacturers can use all technologies available to them to 
meet the amended energy conservation standard. In addition, 
manufacturers would also not be precluded from implementing other 
innovative design options that may be developed in the future.
    For this final rule, DOE analyzed the same six technology options 
that were described in the CPSV NOPR. Chapter 3 of the final rule TSD 
provides additional details on all the technology options identified by 
DOE as part of the technology assessment.

B. Screening Analysis

    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. Technologies that are not 
incorporated in commercial products or in working prototypes will not 
be considered further.
    (2) Practicability to manufacture, install, and service. If it is 
determined that mass production and reliable installation and servicing 
of a technology in commercial products 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 product 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 consumers or 
would result in the unavailability of any covered product type with 
performance characteristics (including reliability), features, sizes, 
capacities, and volumes that are substantially the same as products 
generally available in the United States at the time, it will not 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)
    If DOE determines that a technology, or a combination of 
technologies, fails to meet one or more of the previously mentioned 
four criteria, it will be excluded from further consideration in the 
engineering analysis. The reasons for eliminating any technology are 
discussed in the following sections.
    The subsequent sections include comments from interested parties 
pertinent to the screening criteria, DOE's evaluation of each 
technology option against the screening analysis criteria, and whether 
DOE determined that a technology option should be excluded (screened 
out) based on the screening criteria.
    In the CPSV NOPR, DOE screened out the following technology 
options: The addition of a flow control insert, aerators, and 
additional valves. DOE did not receive any comments regarding the 
design options that were screened out. The remaining technology options 
listed in section IV.A.3 met all four screening criteria and were 
analyzed in the CPSV NOPR. DOE did not receive any additional comments 
regarding these technology options. Therefore, DOE did not screen out 
the following technology options for the final rule analysis: (1) 
Smaller spray hole area, (2) changing spray hole shape, and (3) venturi 
meter to orifice plate nozzle geometries.
    DOE determined that these technology options are technologically 
feasible because they are being used or have previously been used in 
commercially available products 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 consumer utility, product 
availability, health, or safety). For additional details, see chapter 4 
of the final rule TSD.

[[Page 4762]]

C. Engineering Analysis

    In the engineering analysis, DOE establishes the relationship 
between the manufacturer production cost (MPC) and improved CPSV 
efficiency. This relationship serves as the basis for cost-benefit 
calculations for individual consumers, manufacturers, and the nation. 
DOE typically structures the engineering analysis using one of three 
approaches: (1) Design option, (2) efficiency level, or (3) reverse 
engineering (or cost assessment). The design-option approach involves 
adding the estimated cost and associated efficiency of various 
efficiency-improving design changes to the baseline to model different 
levels of efficiency. The efficiency-level approach uses estimates of 
costs and efficiencies of products available on the market at distinct 
efficiency levels to develop the cost-efficiency relationship. The 
reverse-engineering approach involves testing products for efficiency 
and determining cost from a detailed bill of materials (BOM) derived 
from reverse engineering representative products.
    For this analysis, DOE structured its engineering analysis for 
commercial prerinse spray valves using a combination of the design 
option approach and the reverse-engineering approach. The analysis is 
performed in terms of incremental increases in efficiency (decreases in 
flow rate) due to the implementation of selected design options, while 
the estimated MPCs for each successive design option are based on 
product teardowns and a bottom-up manufacturing cost assessment. Using 
this hybrid approach, DOE developed the relationship between MPC and 
CPSV efficiency.
    Chapter 5 of the final rule TSD discusses the baseline efficiencies 
for each product class (in terms of flow rate), the design options DOE 
considered, the methodology used to develop manufacturing production 
costs, and the cost-efficiency relationships. The LCC and PBP analysis 
uses the cost-efficiency relationships developed in the engineering 
analysis.
1. Engineering Approach
    For each of the three adopted product classes, DOE selected a 
baseline efficiency (in terms of flow rate) as a reference point from 
which to measure changes resulting from each design option. DOE then 
developed separate cost-efficiency relationships for each product class 
analyzed. The following is a summary of the method DOE used to 
determine the cost-efficiency relationship for commercial prerinse 
spray valves:
    (1) Perform flow rate and spray force tests on a representative 
sample of commercial prerinse spray valves in every product class.
    (2) Develop a detailed BOM for the tested commercial prerinse spray 
valves through product teardowns, and construct a commercial prerinse 
spray valve cost model.
    (3) Use the test data and cost model to calculate the incremental 
increase in efficiency (i.e., decrease in flow rate) and cost increase 
of adding specific design options to a baseline model.
    In response to the CPSV NOPR, NAFEM stated that DOE has not tested 
commercial prerinse spray valves in real life foodservice settings. 
NAFEM believes that consumer satisfaction is essential for the 
companies selling these products. (NAFEM, No. 31 at p. 1)
    DOE has not performed testing in foodservice settings because DOE 
test procedures, not field performance, must be used to determine 
whether the products comply with standards adopted pursuant to EPCA. 
(42 U.S.C. 6295(s)) Instead, DOE conducted multiple commercial prerinse 
spray valve tests according to the amended DOE test procedure.
2. Linear Relationship Spray Force and Flow Rate
    In the CPSV NOPR public meeting, DOE presented the relationship 
between spray force and flow rate. This relationship was determined 
using DOE test data for spray force and flow rate for a wide range of 
commercial prerinse valves. The tested units included the entire 
spectrum of available spray patterns and flow rates that DOE was aware 
of at the time of the analysis. In addition, DOE collected 
supplementary data from DOE's CCMS, the U.S. EPA WaterSense program, 
and FSTC reports. DOE analyzed the collected data and found a strong 
linear relationship between flow rate and spray force.
    DOE received several comments related to the spray force and flow 
rate relationship. NRDC requested that DOE consider identifying the 
configuration of the commercial prerinse spray valves in the spray 
force-flow rate relationship without revealing the individual model. 
(NRDC, Public Meeting Transcript, No. 23 at p. 45) DOE updated the flow 
rate-spray force plot in this final rule to identify commercial 
prerinse spray valves that have shower-type spray patterns. The updated 
relationship can be found in chapter 5 of the final rule TSD.
    T&S Brass stated that the relationship between spray force and flow 
rate does not address consumer satisfaction. Instead, the relationship 
assumes that consumers are satisfied with all products. (T&S Brass, 
Public Meeting Transcript, No. 23 at p. 47)
    DOE acknowledges that different CPSV products may provide different 
levels of consumer satisfaction. DOE believes, however, that the 
amended standards promulgated in this final rule for the three defined 
product classes will maintain the same variety of product features on 
the market as under the current standard. DOE's analysis indicates that 
the amended standards will not result in a loss of consumer utility 
compared to the current standards.
    T&S Brass stated that while the flow rate values for the basic 
models are included in the relationship between spray force and flow 
rate, the impact of market share is not included. Therefore, if market 
share was included, there will be more data points on the higher end of 
flow rate. However, T&S Brass also commented that even with the 
additional data points, the linear relationship will not change. (T&S 
Brass, Public Meeting Transcript, No. 23 at pp. 48-49) Since publishing 
the CSPV NOPR, DOE tested additional units from product class 3, and 
added the test results for the units that were compliant with DOE's 
current CPSV standard (1.6 gpm) to the relationship shown in chapter 5 
of the final rule TSD. The relationship continues to show flow rate 
varies linearly with spray force, irrespective of market share. 
However, based on the comment from T&S Brass, DOE has updated the 
assumption in the shipments analysis to account for more shipments in 
product class 3. This is presented in section IV.G of this document.
3. Baseline and Max-Tech Models
    To analyze design options for energy efficiency improvements, DOE 
defined a baseline model for each product class. Typically, the 
baseline model is a model that meets current energy conservation 
standards. DOE defined the baseline efficiency for all product classes 
as the current Federal standard of 1.6 gpm.
    DOE defined the market baseline for product classes 1 and 2 as the 
greater of (1) the highest flow rate in the class that meets the 
Federal standard, or (2) the flow rate at the upper spray force bound 
of the product class as predicted by the spray force-flow rate linear 
relationship described in chapter 5 of the TSD. The most consumptive 
unit that was tested in product class 1 had a flow rate of 0.97 gpm, 
which exceeds the 0.75 gpm predicted by the linear relationship between 
spray force and flow rate for

[[Page 4763]]

the product class 1 upper spray force bound of 5.0 ozf. DOE rounded the 
market baseline flow rate of product class 1 to 1.00 gpm. The market 
baseline for product class 2, predicted by the spray force-flow rate 
linear relationship, is 1.20 gpm at the upper spray force bound of 8.0 
ozf. DOE did not find any commercial prerinse spray valves in product 
class 2 that exceed this flow rate. For product class 3, the market 
baseline equals the Federal flow rate standard of 1.60 gpm.
    The analysis also identified the lowest flow rate that is 
commercially available within each product class (i.e., the max-tech 
model). DOE determined the max-tech level as the least consumptive 
tested commercial prerinse spray valve in each product class. The max-
tech levels for product classes 1, 2, and 3 are 0.62, 0.73, and 1.13 
gpm, respectively. Finally, DOE also defined intermediate efficiency 
levels between the baseline and max-tech levels for each product class. 
Further information about DOE's efficiency level definitions is 
provided in chapter 5 of the final rule TSD. Table IV.1 through Table 
IV.3 provide the updated efficiency levels for all three product 
classes.

         Table IV.1--Efficiency Levels for CPSV Product Class 1
                        [Spray force <= 5.0 ozf]
------------------------------------------------------------------------
                                                             Flow rate
        Efficiency level               Description             (gpm)
------------------------------------------------------------------------
Baseline.......................  Current Federal                    1.60
                                  standard.
Level 1........................  Market minimum.........            1.00
Level 2........................  15% improvement over               0.85
                                  market minimum.
Level 3........................  25% improvement over               0.75
                                  market minimum.
Level 4........................  Maximum technologically-           0.62
                                  feasible (max-tech).
------------------------------------------------------------------------


         Table IV.2--Efficiency Levels for CPSV Product Class 2
                   [5.0 ozf < spray force <= 8.0 ozf]
------------------------------------------------------------------------
                                                             Flow rate
        Efficiency level               Description             (gpm)
------------------------------------------------------------------------
Baseline.......................  Current Federal                    1.60
                                  standard.
Level 1........................  Market minimum.........            1.20
Level 2........................  15% improvement over               1.02
                                  market minimum.
Level 3........................  25% improvement over               0.90
                                  market minimum.
Level 4........................  Maximum technologically-           0.73
                                  feasible (max-tech).
------------------------------------------------------------------------


         Table IV.3--Efficiency Levels for CPSV Product Class 3
                         [Spray force > 8.0 ozf]
------------------------------------------------------------------------
                                                             Flow rate
        Efficiency level               Description             (gpm)
------------------------------------------------------------------------
Baseline.......................  Current Federal                    1.60
                                  standard.
Level 1........................  10% improvement over               1.44
                                  baseline.
Level 2........................  WaterSense level; 20%              1.28
                                  improvement over
                                  baseline.
Level 3........................  Maximum technologically-           1.13
                                  feasible (max-tech).
------------------------------------------------------------------------

    In response to the updates to the engineering analysis in the CPSV 
NODA, CA IOUs stated that DOE should provide a reason for changing the 
efficiency level 2 for product class 3 from 1.24 gpm to 1.28 gpm. (CA 
IOUs, No. 44 at p. 2)
    DOE notes that the flow rate for efficiency level 2 for product 
class 3 remains unchanged at 1.28 gpm since the CPSV NOPR. Instead, DOE 
has only updated the max-tech level of product class 3 since the CPSV 
NOPR. In the CPSV NOPR, the max-tech level for product class 3 was set 
at 1.24 gpm based on test results. After the CPSV NOPR, DOE performed 
additional testing and based on these test results, DOE identified a 
new max-tech level for product class 3. Therefore, DOE revised the max-
tech level in product class 3 from 1.24 gpm to 1.13 gpm.
4. Proposed CPSV NOPR Standard Levels
    In the CPSV NOPR, DOE proposed the standard levels to be 0.65, 
0.97, and 1.24 gpm for light, standard, and heavy-duty product classes, 
respectively. 80 FR 39487. DOE received comments on the loss of product 
availability regarding the proposed standards as well as several other 
comments about the standard levels, which are addressed in the 
following sections.
a. Availability of Products
    AWE commented that the CPSV NOPR proposal has design-restrictive 
requirements and will likely lead to less diverse products on the 
market. (AWE, No. 28 at pp. 6-7) AWE recommended that the rule include 
the use of WaterSense test criteria to determine compliance to any 
Federal minimum standard. (AWE, No. 28 at p. 4) AWE also stated that 
the proposed spray force criteria are in direct conflict with 
WaterSense criteria, and that only 3 of the 22 prerinse spray valves 
currently meeting WaterSense specifications also meet the minimum 
requirements proposed in this rulemaking. AWE commented that the 
remaining 19 products, together with the new WaterSense products about 
to be released, would no longer be compliant with the DOE standard. 
(AWE, No. 28 at p. 5)
    Chicago Faucets expressed a similar concern that the levels 
proposed in the CPSV NOPR are too stringent, stating

[[Page 4764]]

that 86 percent of the products certified to voluntary Federal EPA 
WaterSense requirements will be obsolete and the investments in the 
WaterSense program will not be recovered. Chicago Faucets stated that 
this might lead to limited resources in the future for this product. 
Additionally, Chicago Faucets stated that 60 percent of the models in 
the spray force and flow rate graph presented in the CPSV NOPR would 
not pass the new requirement. Chicago Faucets believes that the more 
stringent requirements could easily disrupt the free market, 
eliminating the majority of the products offered today and restricting 
competition by reducing the number of manufacturers of CPSV products. 
(Chicago Faucets, No. 26 at pp. 2-3) NAFEM also commented that the 
proposed standard will require the manufacturers to abandon current 
products and the investment they made. (NAFEM, No. 28 at p. 1)
    T&S Brass commented that the proposed standard would eliminate 
multi-orifice showerhead-type spray valves. Single-orifice type spray 
valves could have applications where there is a lot of splash back. 
Therefore, customers will be forced into products that they will not be 
satisfied with. (T&S Brass, Public Meeting Transcript, No. 23 at p. 40)
    CA IOUs disagreed with T&S Brass and stated that commercial 
prerinse spray valves with single orifice, multi orifice, or venturi 
meter nozzle designs would be able to meet the 1.24 gpm standard, based 
on their own testing results. Additionally, CA IOUs did not observe any 
splash back issues with a single orifice nozzle design, nor did they 
observe any concerns about splash back based upon customer interviews. 
(CA IOUs, No. 34 at pp. 2-3)
    EPCA establishes that DOE may not prescribe an amended standard if 
interested persons have established by a preponderance of the evidence 
that the standard is likely to result in the unavailability in the 
United States in any covered product type (or class) of performance 
characteristics (including reliability), features, sizes, capacities, 
and volumes that are substantially the same as those generally 
available in the United States. (42 U.S.C. 6295(o)(4)) In this final 
rule, DOE revised the efficiency level definitions and the analysis of 
the trial standard levels (TSL) based on feedback from interested 
parties. The amended standards adopted in this final rule are less 
stringent than those proposed in the CPSV NOPR for all three product 
classes. DOE notes that the amended standards adopted in this final 
rule are set at the market minimum for product class 1 and product 
class 2 at 1.00 gpm and 1.20 gpm respectively. The amended standards 
for these product classes have no impact on the current CPSV market, 
because all CPSV models in those product classes already meet the 
market minimum level. In product class 3, the amended standard is set 
at the WaterSense level of 1.28 gpm, and approximately 55 percent of 
CPSV units in product class 3 already meet this level. The 1.28 gpm 
level maintains the availability of multi-orifice shower-type units on 
the market, as described further in the following section. More 
discussion on the amended standard and the discussion on the TSL 
selections are provided in section IV.C.4.b, and section V.C.1 
respectively.
b. Standard Levels
    DOE also received comments about the standard levels that were 
proposed in the CPSV NOPR. Chicago Faucets expressed concern with the 
flow rate levels proposed in the CPSV NOPR and noted that the proposed 
flow rates are only hundredths of one gallon per minute lower than the 
common flow rates used in the plumbing industry of 1.00 gpm and 1.25 
gpm. (Chicago Faucets, No. 26 at p. 3) Chicago Faucets also commented 
that if DOE were to move forward with the CPSV NOPR approach, DOE 
should use standard levels of 0.65 gpm, 1.00 gpm, and 1.25 gpm for 
light duty, standard duty, and heavy duty, respectively. (Chicago 
Faucets, No. 26 at p. 3)
    The Advocates and CA IOUs recommended that DOE amend the standard 
to be a maximum flow rate of 1.24 gpm for all commercial prerinse spray 
valves. The Advocates and the CA IOUs recommended this flow rate, 
because they believe that 1.24 gpm is a technologically feasible 
efficiency level, and would realize significant water and energy 
savings and still maintain a positive LCC. (Advocates, No. 11 at p. 2) 
Additionally, CA IOUs stated that based on their testing, the 1.24 gpm 
level was feasible for equipment from different manufacturers, while 
also maintaining product performance. (CA IOUs, No. 34 at p. 2) In 
response to the CPSV NODA, the CA IOUs, ASAP and NRDC reiterated that 
DOE should adopt a single 1.24 gpm level for all product classes. (CA 
IOUs, No. 44 at p. 2; ASAP and NRDC, No. 45 at p. 2).
    PMI recommended that DOE replace the proposed three product classes 
with a single product class that contains the 1.28 gpm WaterSense 
level. (PMI, No. 43 at p. 1) AWE stated that setting a Federal maximum 
at 1.28 gpm would prevent WaterSense from establishing a commercial 
prerinse spray valve program with a significantly lower water use 
threshold. (AWE, No. 28 at p. 7) T&S Brass stated if DOE ultimately 
decides to adopt the current EPA WaterSense specification at 1.28 gpm 
for commercial prerinse spray valves, that a reasonable transition 
period from the voluntary to mandatory status would be an effective 
date of January 2020. (T&S Brass, No. 12 at p. 3) Similarly, AWE urged 
DOE to postpone this rulemaking process for at least 2 years to prevent 
an industry-wide backlash against water efficiency. (AWE, No. 28 at pp. 
7-8) AWE further recommended that DOE postpone this rulemaking by at 
least 2 years until additional data can be obtained through the 
WaterSense reporting process. (AWE, No. 28 at pp. 7-8)
    As presented in section I, DOE is adopting standard levels of 1.00 
gpm, 1.20 gpm and 1.28 gpm for product classes 1, 2 and 3, 
respectively. The adopted standards are set at the market minimum level 
for product classes 1 and 2, and at the WaterSense level for product 
class 3. DOE believes that these flow rates are the minimum flow rates 
for each product class that would not induce consumers to switch 
product classes. DOE also notes that the 1.28 gpm standard for product 
class 3 alleviates many of the concerns expressed by interested parties 
because (1) the engineering analysis shows that the 1.28 gpm level is 
technologically feasible; (2) interested parties, including the trade 
organization PMI, certain efficiency advocates and a manufacturer, 
commented that 1.28 gpm would be an appropriate standard level that 
would not negatively impact consumer utility for the highest-flow 
product class, and (3) the 1.28 gpm level represents the WaterSense 
Program criteria, which was developed in a collaborative process 
between EPA and interested parties, including manufacturers. In 
addition, the amended standard standards for product classes 1 and 2 
have no impact on the current CPSV market, because all CPSV models in 
those product classes already meet the market minimum level.
    More discussion on this standard level is in sections V.A and V.C.1 
of this document.
    Regarding the compliance date of the amended standards, EPCA states 
that a manufacturer shall not be required to apply new standards to a 
product with respect to which other new standards have been required 
during the prior 6 year period. (EPCA U.S.C. 6295(m)(4)(B)) As 
described earlier in this document, the current standard became 
effective January 1, 2006. Manufacturers will have 3 years to

[[Page 4765]]

comply with the amended standards after publication of this final rule. 
DOE believes that 3 years is sufficient time for manufacturers to 
transition products to the amended standard level. DOE also notes that 
the effective date of the amended standards in this final rule will be 
more than 6 years after the voluntary WaterSense specification date of 
September 19, 2013.
    The standard levels set in this final rule also alleviate the 
concern about product class switching that was raised by CA IOUs. CA 
IOUs suggested using one product class, because one of the benefits is 
that it would not result in product class switching. (CA IOUs, No. 34 
at p. 2) DOE does not expect product class switching to occur under the 
amended standards promulgated by this final rule, as the standard 
levels for product classes 1 and 2 do not move consumers from the 
current market minimums. A detailed description of DOE's method to 
model product class switching is contained in chapter 9 of the final 
rule TSD.
5. Manufacturing Cost Analysis
    DOE estimated the manufacturing costs using a reverse-engineering 
approach, which involves a bottom-up manufacturing cost assessment 
based on a detailed BOM derived from teardowns of the product being 
analyzed. The detailed BOM includes labor costs, depreciation costs, 
utilities, maintenance, tax, and insurance costs, in addition to the 
individual component costs. These manufacturing costs are developed to 
be an industry average and do not take into account how efficiently a 
particular manufacturing facility operates.
    To develop the relationship between cost and performance for 
commercial prerinse spray valves, DOE used a reverse-engineering 
analysis, or teardown analysis. DOE purchased off-the-shelf commercial 
prerinse spray valves available on the market and dismantled them 
component by component to determine what technologies and designs 
manufacturers use to decrease CPSV flow rate. DOE then used independent 
costing methods, along with component-supplier data, to estimate the 
costs of the components.
    DOE derived detailed manufacturing cost estimate data based on its 
reverse engineering analysis, which included the cost of the product 
components, labor, purchased parts and materials, and investment.
    A portion of DOE's test sample included four product series from 
four different manufacturers. Through testing, DOE found that the flow 
rates of the units varied within each series. However, based on the 
reverse-engineering analysis, the manufacturing costs for the units 
within each series were the same. Therefore, DOE concluded that there 
is no manufacturing cost difference for incremental efficiency 
improvements between models within the same series from the same 
manufacturer.
    DOE also tested and performed a teardown analysis on commercial 
prerinse spray valves from additional manufacturers. These commercial 
prerinse spray valves represented a range of market baseline to max-
tech units in each class. The testing and teardown results indicated 
that the manufacturing costs between different units from different 
manufacturers can vary based on the type of material, amount of 
material, and/or process used. However, DOE determined that these 
factors do not affect the efficiency of a commercial prerinse spray 
valve. Therefore, DOE did not include these cost differences in the 
engineering analysis. Chapter 5 of the final rule TSD provides further 
details on the teardown analysis, component costs, and costs that were 
developed as part of the cost-efficiency curves.

D. Markups Analysis

    The purpose of the markups analysis is to translate the MPC derived 
from the engineering analysis into the final consumer purchase price by 
applying the appropriate markups. The first step in this process is 
converting the MPC into the manufacturer selling price (MSP) by 
applying the manufacturer markup. The manufacturer markup accounts for 
cost of sales, general and administrative expenses, research and 
development costs, other corporate expenses, and profit. As described 
further in chapter 6 of the final rule TSD, the manufacturer markup of 
1.30 was calculated as the market share weighted average value for the 
industry. DOE developed this manufacturer markup by examining several 
major CPSV manufacturers' gross margin information from annual reports 
and Securities and Exchange Commission 10-K reports. Because the 10-K 
reports do not provide gross margin information at the subsidiary 
level, the estimated markups represent the average markups that the 
parent company applies over its entire range of product offerings, and 
does not necessarily represent the manufacturer markup of the 
subsidiary. Both the MPC and the MSP values are used in the MIA.
    Next, DOE uses manufacturer-to-consumer markups to convert the MSP 
into a consumer purchase price, which is then used in the LCC and PBP 
analysis, as well as the NIA. Consumer purchase prices are necessary 
for the baseline efficiency level and all other efficiency levels under 
consideration.
    DOE recognizes that the consumer purchase price depends on the 
distribution channel (i.e., how the product is distributed from the 
manufacturer to the consumer) the consumer uses to purchase the 
product. DOE identified the following distribution channels for 
commercial prerinse spray valves:

A. Manufacturer [rarr] Final Consumer (Direct Sales)
B. Manufacturer [rarr] Authorized Distributor [rarr] Final Consumer
C. Manufacturer [rarr] Retailer [rarr] Final Consumer
D. Manufacturer [rarr] Service Company [rarr] Final Consumer

    Baseline markups are multipliers that convert the MSP of products 
at the baseline efficiency level to consumer purchase price. 
Incremental markups are multipliers that convert the incremental 
increase in MSP for products at each higher efficiency level (compared 
to the MSP at the baseline efficiency level) to corresponding 
incremental increases in the consumer purchase price. Consistent with 
the CPSV NOPR, in the analysis in this final rule, DOE used only 
baseline markups to convert the MSP of products to the consumer 
purchase price. This is due to the fact that the engineering analysis 
indicated that there is no price increase with improvements in 
efficiency for commercial prerinse spray valves. Thus, incremental 
markups were not required. Chapter 6 of the final rule TSD provides 
further details on the distribution channels and calculated markups. No 
comments regarding the markups analysis or distribution chains were 
received from interested parties.

E. Energy and Water Use Analysis

    The purpose of the energy and water use analysis is to determine 
the annual energy and water consumption of commercial prerinse spray 
valves to assess the associated energy and water savings potential of 
different product efficiencies. The energy and water use analysis 
estimates the range of energy and water use of commercial prerinse 
spray valves in the field (i.e., as they are actually used by 
consumers). To this end, DOE performed an energy and water use analysis 
that calculated energy and water use of commercial prerinse spray 
valves for each product class and efficiency level identified in the 
engineering analysis. The energy and water use analysis provides the 
basis for other analyses DOE performed,

[[Page 4766]]

particularly assessments of the energy and water savings and the 
savings in consumer operating costs that could result from adoption of 
the amended standards.
    In the CPSV NOPR analysis, DOE calculated the energy and water use 
by determining the representative daily operating time of the product 
by major building types that contain commercial kitchens found in the 
Commercial Building Energy Consumption Survey (CBECS).\25\ The daily 
CPSV operating time was annualized based on operating schedules for 
each building type. Annual water use for each product class was 
determined by multiplying the annual operating time by the flow rate at 
an operating pressure of 60 psi, in accordance with the amended DOE 
test procedure, for each efficiency level.
---------------------------------------------------------------------------

    \25\ Survey data available at www.eia.gov/consumption/commercial/data/2003/index.cfm.
---------------------------------------------------------------------------

    Annual site energy use was calculated by multiplying the annual 
water use in gallons by the energy required to heat each gallon of 
water to an end-use temperature of 108 [deg]F.\26\ Cold water supply 
temperatures used in this calculation were derived for the nine U.S. 
census regions based on ambient air temperatures and the hot water 
supply temperature was assumed to be 140 [deg]F based on American 
Society of Heating, Refrigerating, and Air-Conditioning Engineers 
(ASHRAE) Standard 12-2000 regarding the appropriate hot water 
temperatures necessary to prevent legionellosis and other bacterial 
diseases.\27\ The proportion of buildings which used natural gas or 
electricity for water heating found in the CBECS database were 
multiplied by the energy consumption of each kind of water heater, 
taking into account the efficiency level of the product, to obtain the 
total energy consumption of each product class and efficiency level of 
commercial prerinse spray valves.
---------------------------------------------------------------------------

    \26\ End-use temperature was determined based on a review of 
several field studies. See chapter 7 of the CPSV NOPR TSD for a list 
of the field studies reviewed.
    \27\ ASHRAE Standard 12-2000: Minimizing the Risk of 
Legionellosis Associated with Building Water Systems, (February 
2000).
---------------------------------------------------------------------------

    In response to the CPSV NOPR, DOE received several comments related 
to the energy and water use analysis. Specifically, NRDC questioned how 
DOE derived the hot water ratio used in the energy and water use and 
why the hot water ratio was not consistent throughout the U.S. NRDC 
further inquired if the end use temperature of 108 [deg]F was 
consistent throughout the analysis. (NRDC, Public Meeting Transcript, 
No. 23 at pp. 61-63)
    The hot water ratio used in the CPSV NOPR and the final rule energy 
and water use analysis(see chapter 7 of the final rule TSD) calculates 
the proportion of hot water from the water heater that mixes with the 
incoming cold water from the local mains water at the commercial 
prerinse spray valve to deliver water at 108 [deg]F. The cold water is 
derived regionally for each census division and building type where 
commercial prerinse spray valves are installed. The hot water ratio is 
not consistent throughout the United States because the mains water 
temperature is not consistent throughout the United States. As noted 
previously, end use temperature was calculated using data from the 
average end use temperature from CPSV field studies.
    DOE also received comments in response to the CPSV NOPR related to 
the water pressure used in the energy and water use analysis. AWE 
commented that the representative range of water pressures in 
commercial kitchens should be determined in order to determine a 
reasonable range of both flow rate and spray force to be maintained by 
the valves. (AWE, No. 28 at p. 5) ASAP was concerned that not testing 
at different water pressures could affect the definition of the product 
classes, and make it difficult to ensure customer satisfaction. (ASAP, 
No. 23 at p. 27) AWE commented that spray force is largely dependent 
upon water pressure, and that the supplied water pressure can vary by 
at least 70 psi between different service areas. AWE stated that this 
can cause models to be classified differently in varying locales, and 
is not addressed in the proposal. (AWE, No. 28 at p. 3) AWE further 
stated that mandatory requirements demand a higher level of scrutiny, 
and recommended that DOE postpone the rulemaking until further research 
data is available on how water pressure affects performance in real 
life settings. (AWE, No. 28 at p. 5)
    DOE is not establishing spray force requirements in this final 
rule; instead, spray force is used only to define the boundaries 
between product classes. DOE understands that the measured flow rate of 
commercial prerinse spray valves will vary as a function of water 
pressure. In evaluating the representative water pressure used in the 
CPSV test procedure, DOE performed a sensitivity analysis to determine 
typical water pressure values and their impact on measured flow rate, 
titled ``Analysis of Water Pressure for Testing Commercial Prerinse 
Spray Valves Final Report.'' \28\ DOE concluded, as part of this 
analysis, that the representative water pressure for evaluating the 
energy and water use of commercial prerinse spray valves was 60 psi.
---------------------------------------------------------------------------

    \28\ The water pressure sensitivity analysis is available at 
regulations.gov under docket number EERE-2014-BT-TP-0055.
---------------------------------------------------------------------------

    Chapter 7 of the final rule TSD provides details and the results of 
DOE's energy use analysis for commercial prerinse spray valves.

F. Life-Cycle Cost and Payback Period Analysis

    DOE conducted the LCC and PBP analysis to evaluate the economic 
impacts on individual consumers of the amended energy conservation 
standards for commercial prerinse spray valves. The LCC is the total 
consumer expense over the life of the product, consisting of purchase 
and installation costs plus operating costs (expenses for energy and 
water use, maintenance, and repair). To compute the operating costs, 
DOE discounts future operating costs to the time of purchase and sums 
them over the lifetime of the product. The PBP is the estimated amount 
of time (in years) it takes consumers to recover the potential 
increased purchase cost (including installation) of more efficient 
products through lower operating costs. DOE calculates the PBP by 
dividing the change in purchase cost at higher efficiency levels by the 
change in annual operating cost for the first year the amended 
standards are in effect (2019).\29\
---------------------------------------------------------------------------

    \29\ As compliance with the amended standards will be required 
at the very end of 2018, DOE used 2019 as the first year in the 
analysis period.
---------------------------------------------------------------------------

    For any given efficiency level, DOE measures the change in LCC 
relative to an estimate of the no-new-standards case product efficiency 
distribution. The no-new-standards case estimate reflects the market in 
the absence of amended energy conservation standards, including the 
market for products that exceed the current energy conservation 
standard. In contrast, the PBP for a given efficiency level is measured 
relative to the baseline product.
    Inputs to the calculation of total installed cost include the cost 
of the product--which includes MSPs, distribution channel markups, and 
sales taxes--and installation costs. Inputs to the calculation of 
operating expenses include annual energy and water consumption, energy 
prices and price projections, combined water prices (which include 
water and wastewater prices) and price projections, repair and 
maintenance costs, product lifetimes, and discount rates. DOE created

[[Page 4767]]

distributions of values for product lifetime, discount rates, energy 
and combined water prices, and sales taxes, with probabilities attached 
to each value to account for their uncertainty and variability.
    The computer model DOE used to calculate the LCC and PBP, which 
incorporates Crystal Ball\TM\ (a commercially available software 
program), relies on a Monte Carlo simulation to incorporate uncertainty 
and variability into the analysis. The Monte Carlo simulations randomly 
sample input values from the probability distributions and CPSV user 
samples. The model calculated the LCC and PBP for products at each 
efficiency level for 10,000 CPSV users per simulation run.
    DOE calculated the LCC and PBP for all consumers as if each were to 
purchase a new commercial prerinse spray valve in 2019, the first year 
of the analysis period.
    Table IV.4 summarizes the approach and data DOE used to derive 
inputs to the LCC and PBP calculations. The subsections that follow 
provide further discussion. Details of the spreadsheet model, and of 
all the inputs to the LCC and PBP analyses, are contained in chapter 8 
and its appendices of the final rule TSD.

Table IV.4--Summary of Inputs and Methods for the LCC and PBP Analysis *
------------------------------------------------------------------------
                Inputs                           Source/method
------------------------------------------------------------------------
Product Cost.........................  Derived by multiplying MSPs by
                                        distribution channel markups and
                                        sales tax, as appropriate.
Installation Costs...................  Baseline installation cost
                                        determined with data from U.S.
                                        Department of Labor. Assumed no
                                        change with efficiency level.
Annual Energy and Water Use..........  Determined from the energy
                                        required to heat a gallon of
                                        water used at the prerinse spray
                                        valve multiplied by the average
                                        annual operating time and flow
                                        rate of each product class.
                                        Variability: By census region.
Energy, Water and Wastewater Prices..  Energy: Based on EIA's Form 826
                                        data for 2014. Variability: By
                                        State. Water: Based on 2012 AWWA
                                        Survey. Variability: By State.
Energy and Water Price Trends........  Energy: Forecasted using AEO2015
                                        price forecasts. Water:
                                        Forecasted using Bureau of Labor
                                        Statistics (BLS) historic water
                                        price index information.
Maintenance and Repair Costs.........  Assumed no change with efficiency
                                        level.
Product Lifetime.....................  DOE assumed an average lifetime
                                        of 5 years. Variability:
                                        Characterized using modified
                                        Weibull probability
                                        distributions.
Discount Rates.......................  Estimated using the average cost
                                        of capital to commercial
                                        prerinse spray valve consumers.
                                        Cost of capital was found using
                                        information from the Federal
                                        reserve and from Damodaran
                                        online data.
First Year of Analysis Period........  2019.
------------------------------------------------------------------------
* References for the data sources mentioned in this table are provided
  in the sections following the table or in chapter 8 of the final rule
  TSD.

1. Product Cost
    To calculate consumer product costs, DOE multiplied the MSPs 
developed from the engineering analysis by the distribution channel 
markups described in section IV.D (along with sales taxes). DOE used 
baseline markups, but did not apply incremental markups, because the 
engineering analysis indicated that there is no price increase with 
improvements in efficiency for commercial prerinse spray valves. 
Product costs are assumed to remain constant over the analysis period.
2. Installation Cost
    Installation cost includes labor, overhead, and any miscellaneous 
materials and parts needed to install the product. DOE used data from 
the U.S. Department of Labor to estimate the baseline installation cost 
for commercial prerinse spray valves.\30\ DOE found no evidence and 
received no comments in the NOPR stage of this rulemaking that indicate 
installation costs will be impacted with increased efficiency levels.
---------------------------------------------------------------------------

    \30\ U.S. Department of Labor--Wage and Hour Division. Minimum 
Wage. http://www.dol.gov/whd/minimumwage.htm. Washington, DC.
---------------------------------------------------------------------------

3. Annual Energy and Water Consumption
    Chapter 7 of the final rule TSD details DOE's analysis of CPSV 
annual energy and water use at various efficiency levels. For each 
sampled building type, DOE determined the energy and water consumption 
for a commercial prerinse spray valve at different efficiency levels 
using the approach described in section IV.E of this document.
4. Energy Prices
    DOE derived energy prices from the EIA regional average energy 
price data for the commercial sectors. DOE used projections of these 
energy prices for commercial consumers to estimate future energy prices 
in the LCC and PBP analysis. AEO2015 was used as the default source of 
projections for future energy prices.
    DOE developed estimates of commercial electricity and natural gas 
prices for each state and the District of Columbia (DC). DOE derived 
average regional energy prices from data that are published annually 
based on EIA Form 826.\31\ DOE then used AEO2015 price projections to 
estimate commercial electricity and natural gas prices in future years. 
AEO2015 price projections have an end year of 2040. To estimate price 
trends after 2040, DOE used the average annual rate of change in prices 
from 2030 to 2040. DOE assumed that 100 percent of installations were 
in commercial locations.
---------------------------------------------------------------------------

    \31\ U.S. Department of Energy--Energy Information 
Administration. Form EIA-826 Database Monthly Electric Utility Sales 
and Revenue Data (EIA-826 Sales and Revenue Spreadsheets). 2015. 
http://www.eia.gov/electricity/data/eia826/. Washington, DC.
---------------------------------------------------------------------------

5. Water and Wastewater Prices
    DOE obtained data on water and wastewater prices from the 2012 
American Water Works Association (AWWA) surveys for this document.\32\ 
For each state and the District of Columbia, DOE combined all 
individual utility observations within the state to develop one value 
for water and wastewater service. Because water and wastewater charges 
are frequently tied to the same metered commodity values, DOE combined 
the prices for water and wastewater into one total dollar per thousand 
gallons figure. This figure is

[[Page 4768]]

referred to as the combined water price. DOE used the consumer price 
index (CPI) data for water related consumption (1970-2013) in 
developing a real growth rate for combined water price forecasts.\33\
---------------------------------------------------------------------------

    \32\ American Water Works Association. AWWA 2012 Water and 
Wastewater Rate Survey. http://www.awwa.org/resources-tools/water-and-wastewater-utility-management/water-wastewater-rates.aspx.
    \33\ U.S. Department of Labor--Bureau of Labor Statistics, 1970-
2014 Tables 3A, 24. 2014. http://www.bls.gov/cpi/cpid1401.pdf.
---------------------------------------------------------------------------

    Chapter 8 of the final rule TSD provides more detail about DOE's 
approach to developing water and wastewater prices.
6. Maintenance and Repair Costs
    Repair costs are associated with repairing or replacing product 
components that have failed in the product; maintenance costs are 
associated with maintaining the operation of the product. Typically, 
small incremental increases in product efficiency produce no, or only 
minor, changes in repair and maintenance costs compared to baseline 
efficiency products.
    Throughout this rulemaking process, DOE has requested information 
as to whether maintenance and repair costs are a function of efficiency 
level and product class. DOE did not receive comments during the CPSV 
NOPR public meeting or comment period regarding these costs. Thus, 
consistent with the analysis conducted at the NOPR stage of this 
rulemaking, DOE assumed that consumers would replace the commercial 
prerinse spray valve upon failure rather than repairing the product. 
Additionally, DOE modeled no changes in maintenance or repair costs 
between different efficiency levels.
7. Product Lifetime
    Because product lifetime varies depending on utilization and other 
factors, DOE developed a distribution of product lifetimes. The use of 
a lifetime distribution helps account for the variability of product 
lifetimes.
    DOE considered--but did not implement--the use of factors such as 
usage, water temperature, and pressure as means of determining the 
distribution of lifetimes of commercial prerinse spray valves in the 
analysis for this document. DOE developed a Weibull distribution with 
an average lifetime of 5 years and a maximum lifetime of 10 years. In 
the CPSV NOPR analysis, DOE modified the Weibull distribution to 
reflect 10 percent of commercial prerinse spray valves failing within 
the first year after installation, and maintained that characteristic 
for the final rule analysis. See chapter 8 of the final rule TSD for 
further details on the method and sources DOE used to develop CPSV 
lifetimes.
8. Discount Rates
    In the calculation of LCC, DOE developed discount rates by 
estimating the average cost of capital to commercial prerinse spray 
valve consumers. DOE applies discount rates to commercial consumers to 
estimate the present value of future cash flows derived from a 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. See chapter 8 in the final rule TSD 
for further details on the development of consumer discount rates.
9. Efficiency Distribution in the No-New-Standards Case
    To accurately estimate the share of consumers that will be affected 
by the amended energy conservation standard at a particular efficiency 
level, DOE's LCC and PBP analysis considered the projected distribution 
of product efficiencies that consumers purchase under the no-new-
standards case. DOE refers to this distribution of product efficiencies 
as a no-new-standards case efficiency distribution.
    To estimate the no-new-standards case efficiency distribution of 
commercial prerinse spray valves in 2019 (the first year of the 
analysis period), DOE relied on data from the Food Service Technology 
Center and DOE's CCMS Database for commercial prerinse spray 
valves.\34\ Additionally, DOE conducted general internet searches and 
examined manufacturer literature to understand the characteristics of 
the spray valves currently offered on the market. DOE assumed that the 
no-new-standards case percentages in 2019 would stay the same through 
the analysis period. The no-new-standards case efficiency distribution 
is described in chapter 8 of the final rule TSD.
---------------------------------------------------------------------------

    \34\ The Food Service Technology Center test data for prerinse 
spray valves is available at www.fishnick.com/equipment/sprayvalves/
. The DOE compliance certification data for commercial prerinse 
spray valves is available at www.regulations.doe.gov/certification-data/.
---------------------------------------------------------------------------

    The estimated shares for the no-new-standards case efficiency 
distribution for commercial prerinse spray valves are shown in Table 
IV.5.

  Table IV.5--Commercial Prerinse Spray Valve No-New-Standards Case Efficiency Distribution by Product Class in
                                                      2019
----------------------------------------------------------------------------------------------------------------
                                                          Product class 1    Product class 2    Product class 3
                    Efficiency level                     (% of  shipments)  (% of  shipments)  (% of  shipments)
----------------------------------------------------------------------------------------------------------------
0......................................................                  0                  0                 40
1......................................................                 10                 40                 35
2......................................................                  0                 50                 20
3......................................................                 80                  0                  5
4......................................................                 10                 10                N/A
----------------------------------------------------------------------------------------------------------------

10. Payback Period Analysis
    The payback period is the amount of time it takes the consumer to 
recover the additional installed cost of more-efficient products, 
compared to baseline products, through energy and water cost savings. 
Payback periods are expressed in years. Payback periods that exceed the 
life of the product mean that the increased total installed cost is not 
recovered in reduced operating expenses.
    The inputs to the PBP calculation for each efficiency level are the 
change in total installed cost of the product and the change in the 
first year annual operating expenditures relative to the baseline. The 
PBP calculation uses the same inputs as the LCC analysis, except that 
discount rates are not needed. As explained in the engineering analysis 
(section IV.C) there are no additional installed costs for more 
efficient commercial prerinse spray valves, making the PBPs in this 
analysis zero.
11. Rebuttable-Presumption Payback Period
    EPCA, as amended, establishes a rebuttable presumption that a 
standard

[[Page 4769]]

is economically justified if DOE finds that the additional cost to the 
consumer of purchasing a product complying with an energy conservation 
standard level will be less than three times the value of the first 
year's energy (and, as applicable, water) savings resulting from the 
standard, as calculated under the test procedure in place for that 
standard. (42 U.S.C. 6295(o)(2)(B)(iii)) For each considered efficiency 
level, DOE determined the value of the first year's energy and water 
savings by calculating the quantity of those savings in accordance with 
the applicable DOE test procedure, and multiplying that amount by the 
average energy and combined water price forecast for the year in which 
compliance with the amended standard will be required. The results are 
summarized in section V.B.1.c of this document.

G. Shipments Analysis

    DOE uses projections of product shipments to calculate the national 
impacts of amended energy conservation standards on energy and water 
use, NPV, and future manufacturer cash flows. DOE develops shipment 
projections based on historic economic figures and an analysis of key 
market drivers for commercial prerinse spray valves. In DOE's shipments 
model, CPSV shipments are driven by both new construction and stock 
replacements. The shipments model takes an accounting approach, 
tracking market shares of each product class and the vintage of units 
in the existing stock. Stock accounting uses product shipments as 
inputs to estimate the age distribution of in-service product stocks 
for all years. The age distribution of in-service products is a key 
input to calculations of the NES, national water savings, and NPV, 
because operating costs for any year depend on the age distribution of 
the stock.
    In the shipments analysis for this final rule, DOE gathered 
information pertaining to commercial prerinse spray valves for many 
building types besides restaurants from the Puget Sound Energy Program, 
EPA WaterSense Field Study, and other industry reports.35 36
---------------------------------------------------------------------------

    \35\ U.S. Environmental Protection Agency WaterSense. Pre-Rinse 
Spray Valve Field Study Report. March 2011. Washington DC. Available 
at: http://www.epa.gov/watersense/partners/prsv_background.html#study.
    \36\ SBW Consulting, Inc. and Koeller and Company. Pre-Rinse 
Spray Valve Programs: How Are They Really Doing? December 2005. 
Seattle, WA. Available at: http://www.allianceforwaterefficiency.org/Commercial_Food_Service_Introduction.aspx.
---------------------------------------------------------------------------

    In the CPSV NOPR analysis, DOE disaggregated total industry 
shipments into the three product classes. At the CPSV NOPR public 
meeting, T&S Brass commented that more shipments should be allocated to 
product class 3, which was the ``heavy duty'' product class in the CPSV 
NOPR. (T&S Brass, Public Meeting Transcript, No. 23 at p. 80) After 
considering the comment from T&S Brass, and with further study into the 
CPSV market, DOE updated the allocation of total shipments by product 
class for the final rule, as shown in Table IV.6.

                     Table IV.6--NOPR vs. Final Rule Shipments Allocations by Product Class
----------------------------------------------------------------------------------------------------------------
                                                          Product class 1    Product class 2    Product class 3
                                                                (%)                (%)                (%)
----------------------------------------------------------------------------------------------------------------
NOPR...................................................                 20                 50                 30
Final Rule.............................................                 10                 30                 60
----------------------------------------------------------------------------------------------------------------

    DOE based the retirement function (the time at which the product 
fails and is replaced) on the probability distribution for product 
lifetime that was developed in the LCC and PBP analysis. The shipments 
model assumes that no units are retired below a minimum product 
lifetime (one year of service) and that all units are retired before 
exceeding a maximum product lifetime (10 years of service).
    DOE determined that a roll-up scenario is most appropriate to 
establish the distribution of efficiencies in the first year of 
compliance with the amended standards. Under the ``roll-up'' scenario, 
DOE assumes: (1) Product efficiencies in the no-new-standards case that 
do not meet the standard level ``roll-up'' to meet the required 
standard levels for each standards case; and (2) product efficiencies 
above the standard level are not affected. The details of DOE's 
approach to forecast efficiency trends are described in chapter 8 of 
the final rule TSD.
    The nature of the market for commercial prerinse spray valves makes 
it possible that consumers may, under examined TSLs and product 
classes, opt to switch product classes to a commercial prerinse spray 
valve that consumes more water and energy than their current product. 
In particular, if current choices of product flow rate correspond to 
consumers' optimal choice under the current regulatory environment, it 
is probable that some consumers would switch from product class 1 to 
product class 2, and from product class 2 to product class 3, in 
response to amended standards, given the lack of restrictions on doing 
so. DOE implemented a mechanism in the shipments model to estimate such 
consumer choices. The economics resulting from product class switching 
may result in lower optimal efficiency levels and reduced estimates of 
water and energy savings, as compared to the case without class 
switching. A detailed description of DOE's method to model product 
class switching is contained in chapter 9 of the final rule TSD.
1. Sensitivity Cases
    In addition to a standard shipments scenario, DOE also developed 
two alternative shipments scenarios to help examine potential impacts 
in specific situations.
    The first alternative shipments scenario, introduced in the CPSV 
NODA, alters standards-case shipments for product class 3. 80 FR 72608. 
In this shipments scenario, some consumers exit the CPSV market rather 
than comply with amended standards. Since the utility of single-orifice 
CPSV models may not be equivalent in some applications that previously 
used shower-type CPSV models, this alternative shipments scenario 
enables analysis of the case where, rather than accepting the decreased 
usability of a compliant CPSV model, consumers of shower-type units 
instead exit the CPSV market and purchase faucets that have a maximum 
flow rate of 2.2 gpm under the current Federal standard. Thus, 
shipments of compliant CPSV models are much lower under this scenario. 
With this scenario, DOE is able to account for the energy and water use 
of CPSV models that remain within the scope of this rule and also for 
the change in energy and water use for consumers that chose to exit the 
CPSV

[[Page 4770]]

market, and instead purchase faucets, as a result of the standard.
    The second alternative shipments scenario modifies the no-new-
standards case for product classes 1 and 2. In the case of the first 
two product classes, EL 1 represents the market minimum level, while EL 
0 represents a baseline at the Federal standard level of 1.6 gpm, as 
described in section IV.C.3. Although DOE did not observe any models at 
the baseline, DOE recognizes that it is possible that some shipments 
could occur at this level. In order to better understand the 
implications of moving the standard from EL 0 to EL 1, for this 
sensitivity case, 1 percent of no-new-standards case shipments in each 
of the first two product classes are assumed to fall into EL 0. These 
shipments were originally located at EL 1 in the default shipments 
scenario. Although additional product-class switching would possibly 
occur as a result of standards impacting these consumers, somewhat 
reducing any incremental savings, it was not considered in this 
sensitivity case.
    Specific analyses undertaken with these alternative shipments 
scenarios are discussed in section V.A. Results of those analyses are 
provided in sections V.B.2 and V.B.3.

H. National Impact Analysis

    The NIA assesses the NES, national water savings, and NPV of total 
consumer costs and savings that are expected to result from amended 
standards at specific efficiency levels. DOE calculates the NES, 
national water savings, and NPV based on projections of annual CPSV 
shipments, along with the annual energy and water consumption and total 
installed cost data from the energy and water use analysis, as well as 
the LCC and PBP analysis. DOE forecasted the energy and water savings, 
operating cost savings, product costs, and NPV of consumer benefits 
over the lifetime of commercial prerinse spray valves sold from 2019 
through 2048.
    DOE evaluates the impacts of amended standards by comparing a no-
new-standards case with standards-case projections. The no-new-
standards case characterizes energy and water use and consumer costs 
for each product class in the absence of new or amended energy 
conservation standards. For this projection, DOE considers historical 
trends in efficiency and various forces that are likely to affect the 
mix of efficiencies over time. DOE compares the no-new-standards case 
with projections characterizing the market for each product class if 
DOE adopted new or amended standards at specific 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 products with efficiencies greater than the standard.
    DOE uses a spreadsheet model to calculate the energy and water 
savings, and the national consumer costs and savings for each TSL. 
Chapter 10 of the final rule TSD describes the models and how to use 
them; interested parties can review DOE's analyses by changing various 
input quantities within the spreadsheet. The NIA spreadsheet model uses 
typical or weighted-average mean values (as opposed to probability 
distributions) as inputs.
    DOE used projections of energy and combined water prices as 
described in section IV.F.4 and IV.F.5, as well as chapter 8 of the 
final rule TSD. As part of the NIA, DOE analyzed scenarios that used 
inputs from the AEO2015 Low Economic Growth and High Economic Growth 
cases. Those cases have higher and lower energy price trends compared 
to the reference case. NIA results based on these cases are available 
via the NIA analysis spreadsheet.
    Table IV.7 summarizes the inputs and methods DOE used for the NIA 
analysis for the final rule. Discussion of these inputs and methods 
follows the table. 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.
First Year of Analysis Period........  2019.
No-Standards Case Forecasted           Efficiency distributions are
 Efficiencies.                          forecasted based on historical
                                        efficiency data.
Standards Case Forecasted              Used a ``roll-up'' scenario.
 Efficiencies.
Annual Energy and Water Consumption    Annual weighted-average values
 per Unit.                              are a function of energy and
                                        water use at each TSL.
Total Installed Cost per Unit........  Annual weighted-average values
                                        are a function of cost at each
                                        TSL.
                                       Incorporates forecast of future
                                        product prices based on
                                        historical data.
Annual Energy and Combined Water Cost  Annual weighted-average values as
 per Unit.                              a function of the annual energy
                                        and water consumption per unit,
                                        and energy, and combined water
                                        treatment prices.
Energy Prices........................  AEO2015 forecasts (to 2040) and
                                        extrapolation through 2058.
Energy Site-to-Source Conversion       Varies yearly and is generated by
 Factors.                               NEMS-BT.
Discount Rate........................  3 and 7 percent real.
Present Year.........................  Future expenses discounted to
                                        2015, when the final rule will
                                        be published.
------------------------------------------------------------------------

1. National Energy and Water Savings
    The NES analysis involves a comparison of national energy and water 
consumption of the considered products in each TSL with consumption in 
the no-new-standards case with no amended energy and water conservation 
standards. DOE calculated the national energy and water consumption by 
multiplying the number of units (stock) of each product (by vintage or 
age) by the unit energy and water consumption (also by vintage). DOE 
calculated annual NES and national water savings based on the 
difference in national energy and water consumption for the no-new-
standards case and for each higher efficiency standard. DOE estimated 
energy consumption and savings based on site energy and converted the 
electricity consumption and savings to primary energy (i.e., the energy 
consumed by power plants to generate site electricity) using annual 
conversion factors derived from AEO2015. Cumulative energy and water 
savings are the sum of the NES and national water savings for each year 
over the timeframe of the analysis. DOE has historically presented NES 
in terms of primary energy savings. In the case of electricity use and 
savings, this quantity includes the energy consumed by power plants to 
generate delivered (site) electricity.
    In 2011, in response to the recommendations of a committee on 
``Point-of-Use and Full-Fuel-Cycle Measurement Approaches to Energy

[[Page 4771]]

Efficiency Standards'' appointed by the National Academy of Sciences, 
DOE announced its intention to use FFC measures of energy use and GHG 
and other emissions in the NIAs and emissions analyses included in 
future energy conservation standards rulemakings. 76 FR 51281 (August 
18, 2011). After evaluating the approaches discussed in the August 18, 
2011 document, DOE published a statement of amended policy in which DOE 
explained its determination that EIA's NEMS is the most appropriate 
tool for its FFC analysis and its intention to use NEMS for that 
purpose. 77 FR 49701 (August 17, 2012). NEMS is a public domain, multi-
sector, partial equilibrium model of the U.S. energy sector \37\ that 
EIA uses to prepare its Annual Energy Outlook. The approach used for 
deriving FFC measures of energy use and emissions is described in 
appendix 10B of the final rule TSD.
---------------------------------------------------------------------------

    \37\ For more information on NEMS, refer to the Energy 
Information Administration. The National Energy Modeling System: An 
Overview 2009. October 2009. DOE/EIA-0581. https://www.eia.gov/forecasts/aeo/nems/overview/pdf/0581(2009).pdf.
---------------------------------------------------------------------------

    In response to the CPSV NOPR, ASAP asked if DOE considered the 
energy required to treat and transport the water used by commercial 
prerinse spray valves in its energy analysis. (ASAP, Public Meeting 
Transcript, No. 23 at pp. 63-64)
    DOE recognizes the important relationship between water and energy 
use. In June 2014, a DOE working group published a report on this 
relationship, which acknowledged the need for a more interconnected 
approach to energy and water use analysis.\38\ The report also 
identified the need for data and an integrated water-energy analytical 
platform, which remains under development.
---------------------------------------------------------------------------

    \38\ U.S. Department of Energy, The Water-Energy Nexus: 
Challenges and Opportunities (June 2014) (Available 
at:www.energy.gov/sites/prod/files/2014/06/f16/Water%20Energy%20Nexus%20Report%20June%202014.pdf).
---------------------------------------------------------------------------

2. Net Present Value Analysis
    The inputs for determining the NPV of the total costs and benefits 
experienced by consumers are (1) total annual installed cost, (2) total 
annual savings in operating costs, and (3) a discount factor to 
calculate the present value of costs and savings. DOE calculates net 
savings each year as the difference between the no-new-standards case 
and each standards case in terms of total savings in operating costs 
versus total increases in installed costs. DOE calculates operating 
cost savings over the lifetime of each product shipped during the 
forecast period. The operating cost savings are energy and combined 
water cost savings.
    In calculating the NPV, DOE multiplies the net savings in future 
years by a discount factor to determine their present value. For this 
final rule, DOE estimated the NPV of consumer benefits using both a 3-
percent and a 7-percent real discount rate. DOE uses these discount 
rates in accordance with guidance provided by the Office of Management 
and Budget (OMB) to Federal agencies on the development of regulatory 
analysis.\39\ The discount rates for the determination of NPV are in 
contrast to the discount rates used in the LCC analysis, which are 
designed to reflect a consumer's perspective. 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 
``social rate of time preference,'' which is the rate at which society 
discounts future consumption flows to their present value.
---------------------------------------------------------------------------

    \39\ U.S. Office of Management and Budget. Circular A-4: 
Regulatory Analysis,'' (Sept. 17, 2003), section E (Available at: 
www.whitehouse.gov/omb/memoranda/m03-21.html).
---------------------------------------------------------------------------

I. Consumer Subgroup Analysis

    In analyzing the potential impact of new or amended standards on 
consumers, DOE evaluates the impact on identifiable subgroups of 
consumers that may be disproportionately affected by a new or amended 
national standard. DOE evaluated impacts on particular subgroups of 
consumers by analyzing the LCC impacts and PBP for those particular 
consumers from alternative standard levels. For this final rule, DOE 
analyzed the impacts of the considered standard levels on single 
entities and limited service establishment end users.
    In general, the higher the cost of capital and the lower the cost 
of energy and water, the more likely it is that an entity would be 
disproportionately affected by the requirement to purchase higher 
efficiency product. An example of a single entity would be a small, 
independent, or family-owned business that operates in a single 
location. Compared to large corporations and franchises, these single 
entities might be subjected to higher costs of capital.
    The other subgroup DOE analyzed in the subgroup analysis is a 
limited service establishment. These consumers likely have 
significantly lower operating times than the average consumer. Lower 
operating times typically lead to lower operating cost savings over the 
lifetime of the product, making this subgroup of consumers 
disproportionately affected by amended efficiency standards. Chapter 11 
of the final rule TSD describes the consumer subgroup analysis in 
greater detail.

J. Manufacturer Impact Analysis

1. Overview
    DOE performed an MIA to estimate the financial impacts of amended 
energy conservation standards on manufacturers of commercial prerinse 
spray valves and to estimate the potential impacts of such standards on 
employment and manufacturing capacity. The MIA has both quantitative 
and qualitative aspects and includes analyses of forecasted industry 
cash flows, the INPV, investments in research and development (R&D) and 
manufacturing capital, and domestic manufacturing employment. 
Additionally, the MIA seeks to determine how amended energy 
conservation standards might affect manufacturing employment, capacity, 
and competition, as well as how standards contribute to overall 
regulatory burden. Finally, the MIA serves to identify any 
disproportionate impacts on manufacturer subgroups, including small 
business manufacturers.
    The quantitative elements of the MIA rely on the GRIM, an industry 
cash flow model with inputs specific to this rulemaking. The key GRIM 
inputs include data on the industry cost structure, unit production 
costs, product shipments, manufacturer markups, and investments in R&D 
and manufacturing capital required to produce compliant products. The 
key GRIM outputs are the INPV, which is the sum of industry annual cash 
flows over the analysis period, discounted using the industry-weighted 
average cost of capital, and the impact to domestic manufacturing 
employment. The model uses standard accounting principles to estimate 
the impacts of more-stringent energy conservation standards on a given 
industry by comparing changes in INPV and domestic manufacturing 
employment between a no-new-standards case and the various TSLs. To 
capture the uncertainty relating to manufacturer pricing strategy 
following amended standards, the GRIM estimates a range of possible 
impacts under different markup scenarios.
    The qualitative part of the MIA addresses manufacturer 
characteristics and market trends. Specifically, the MIA considers such 
factors as manufacturing capacity, competition within the industry, the 
cumulative impact of other DOE and non-DOE regulations, and impacts on 
manufacturer subgroups. The complete MIA is outlined in chapter 12 of 
the final rule TSD.

[[Page 4772]]

    DOE conducted the MIA for this rulemaking in three phases. In Phase 
1 of the MIA, DOE prepared a profile of the CPSV manufacturing industry 
based on the market and technology assessment, information on the 
present and past market structure and characteristics of the industry, 
product attributes, product shipments, manufacturer markups, and the 
cost structure for various manufacturers.
    The profile also included an analysis of manufacturers in the 
industry using Security and Exchange Commission 10-K filings, Standard 
& Poor's stock reports, and corporate annual reports released by 
publicly held companies.\40\ DOE used this and other publicly available 
information to derive preliminary financial inputs for the GRIM, 
including an industry discount rate, manufacturer markup, cost of goods 
sold and depreciation, selling, general, and administrative (SG&A) 
expenses, and R&D expenses.
---------------------------------------------------------------------------

    \40\ SEC Form 10-K filings are available at www.sec.gov/edgar.shtml. Stock reports are available at 
www.standardandpoors.com.
---------------------------------------------------------------------------

    In Phase 2 of the MIA, DOE prepared the GRIM, an industry cash flow 
analysis, to quantify the impacts of potential amended energy 
conservation standards on the industry as a whole. 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 changes in sales volumes. DOE used the GRIM to model these 
effects in a cash flow analysis of the CPSV manufacturing industry. In 
performing this analysis, DOE used the financial parameters developed 
in Phase 1, the cost-efficiency curves from the engineering analysis, 
and the shipment assumptions from the NIA.
    In Phase 3, DOE evaluated subgroups of manufacturers that may be 
disproportionately impacted by standards or that may not be accurately 
represented by the average cost assumptions used to develop the 
industry cash flow analysis. For example, small businesses, 
manufacturers of niche products, or companies exhibiting a cost 
structure that differs significantly from the industry average could be 
more negatively affected. While DOE did not identify any other subgroup 
of manufacturers of commercial prerinse spray valves that would warrant 
a separate analysis, DOE specifically investigated impacts on small 
business manufacturers. See sections V.B.2.d and VI.B of this document 
for more information.
    In Phase 3, the MIA also addresses the direct impact on employment 
tied to the manufacturing of commercial prerinse spray valves, as well 
as impacts on manufacturing capacity. Additionally, the MIA explores 
the cumulative regulatory burdens facing CPSV manufacturers. See 
section V.B.2.b of this document and chapter 12 of the final rule TSD 
for more information on the impacts of amended energy conservation 
standards for commercial prerinse spray valves on direct employment, 
manufacturing capacity, and cumulative regulatory burdens.
2. Government Regulatory Impact Model
    DOE uses the GRIM to quantify the changes in cash flow that result 
in a higher or lower industry value due to energy conservation 
standards. The GRIM is a standard, discounted cash-flow model that 
incorporates manufacturer costs, markups, shipments, and industry 
financial information as inputs, and models changes in manufacturing 
costs, shipments, investments, and margins that may result from amended 
energy conservation standards. The GRIM uses these inputs to arrive at 
a series of annual cash flows, beginning with the base year of the 
analysis, 2015, and continuing through 2048. DOE uses the industry-
average weighted average cost of capital (WACC) of 6.9 percent, as this 
represents the minimum rate of return necessary to cover the debt and 
equity obligations manufacturers use to finance operations.
    DOE used the GRIM to compare INPV in the no-new-standards case with 
INPV at each TSL (the standards case). The difference in INPV between 
the no-new-standards and standards cases represents the financial 
impact of the amended standard on manufacturers. Additional details 
about the GRIM can be found in chapter 12 of the final rule TSD.
a. GRIM Key Inputs
Manufacturer Production Costs
    Manufacturer production costs are the costs to the manufacturer to 
produce a commercial prerinse spray valve. These costs include 
materials, labor, overhead, and depreciation. Changes in the MPCs of 
commercial prerinse spray valves can affect revenues, gross margins, 
and cash flow of the industry, making product cost data key inputs for 
DOE's analysis. DOE estimated the MPCs for the three CPSV product 
classes at the baseline and higher efficiency levels, as described in 
section IV.C.5 of this document. The cost model also disaggregated the 
MPCs into the cost of materials, labor, overhead, and depreciation. DOE 
used the MPCs and cost breakdowns, as described in chapter 5 of the 
final rule TSD, for each efficiency level analyzed in the GRIM.
No-New-Standards Case Shipments Forecast
    The GRIM estimates manufacturer revenues in each year of the 
forecast based in part on total unit shipments and the distribution of 
these values by efficiency level and product class. Generally, changes 
in the efficiency mix and total shipments at each standard level affect 
manufacturer finances. The GRIM uses the NIA shipments forecasts from 
2015 through 2048, the end of the analysis period.
    To calculate shipments, DOE developed a shipments model for each 
product class based on an analysis of key market drivers for commercial 
prerinse spray valves. For greater detail on the shipments analysis, 
see section IV.G of this document and chapter 9 of the final rule TSD.
Product and Capital Conversion Costs
    Amended energy conservation standards may cause manufacturers to 
incur conversion costs to make necessary changes to their production 
facilities and bring product designs into compliance. For the MIA, DOE 
classified these costs into two major groups: (1) Product conversion 
costs and (2) capital conversion costs. Product conversion costs are 
investments in R&D, testing, marketing, and other non-capitalized costs 
focused on making product designs comply with the amended energy 
conservation standard. Capital conversion costs are investments in 
property, plant, and equipment to adapt or change existing production 
facilities so that new product designs can be fabricated and assembled.
    DOE contacted manufacturers of commercial prerinse spray valves for 
the purpose of conducting interviews. However, no manufacturer agreed 
to participate in an interview. In the absence of information from 
manufacturers, DOE created estimates of industry capital and product 
conversion costs using the engineering cost model and information 
gained during product teardowns. DOE requested comments on the 
estimates of industry capital and product conversion costs provided in 
the CPSV NOPR. Since, no interested parties provided comments, DOE used 
the same methodology to estimate industry product and capital 
conversion costs in this final rule. DOE's estimates of the product and 
capital conversion

[[Page 4773]]

costs for the CPSV manufacturing industry can be found in section 
V.B.2.a of this document and in chapter 12 of the final rule TSD.
b. GRIM Scenarios
Standards Case Shipments Forecasts
    The MIA results presented in section V.B.2 of this document use 
shipments from the NIA. For standards case shipments, DOE assumed that 
CPSV consumers would choose to buy the commercial prerinse spray valve 
that has the flow rate that is closest to the flow rate of the product 
they currently use and that complies with the new standard (and, 
accordingly, manufacturers would choose to produce products with the 
closest flow rate to those they currently produce). Due to the 
structure of the product classes and efficiency levels for this rule, 
in certain instances, product class switching is predicted to occur, 
wherein consumers choose to buy the product with the flow rate that is 
closest to their current product's flow rate even if it has a higher 
spray force (putting those products into a different product class). 
Where product class switching does not occur, no-new-standards case 
shipments of products that did not meet the new standard would roll up 
to meet the standard starting in the compliance year. See section 
IV.F.9 of this document for a description of the standards case 
efficiency distributions. See section IV.G of this document for further 
detail relating to the shipments analysis.
    The NIA also used historical data to derive a price scaling index 
to forecast product costs. The MPCs and MSPs in the GRIM use the 
default price forecast for all scenarios, which assumes constant 
pricing. See section IV.H of this document for a discussion of DOE's 
price forecasting methodology.
Markup Scenarios
    MSP is equal to MPC times a manufacturer markup. The MSP includes 
direct manufacturing production costs (i.e., labor, material, 
depreciation, and overhead estimated in DOE's MPCs) and all non-
production costs (i.e., SG&A, R&D, and interest), along with profit.
    DOE used the baseline manufacturer markup of 1.30, developed during 
Phase 1 and subsequently revised, for all products when modeling the 
no-new-standards case in the GRIM. For the standards case in the GRIM, 
DOE modeled the preservation of gross margin as a percentage of 
revenues markup scenario markup scenario. For this scenario, DOE placed 
no premium on higher efficiency products. This is based on the 
assumption that efficiency is not the primary factor influencing 
purchasing decisions for CPSV consumers.
    The preservation of gross margin as a percentage of revenues markup 
scenario assumes that the baseline markup of 1.30 is maintained for all 
products in the standards case. This scenario corresponds with the 
assumption that manufacturers are able to pass additional production 
costs due to amended standards through to their consumers.
Capital Conversion Cost Scenarios
    DOE developed two capital conversion costs scenarios to estimate an 
upper and lower bound of industry profitability as a result of amended 
energy conservation standards for commercial prerinse spray valves. The 
assumption underlying both scenarios is that capital conversion costs 
associated with increasing the efficiency of commercial prerinse spray 
valves are exclusively related to the fabrication of plastic nozzles, 
as manufacturers would have to redesign nozzle molds to produce a 
nozzle with fewer or smaller spray holes. DOE does not believe there 
will be capital conversion costs associated with the in-house 
fabrication of metal nozzles. A more detailed discussion of capital 
conversion cost assumptions is provided in chapter 12 of the final rule 
TSD.
    One capital conversion cost scenario, representing the upper bound 
of industry profitability, assumes that the majority of CPSV 
manufacturers source components (including the nozzle) from component 
suppliers and simply assemble the commercial prerinse spray valves 
(i.e., Sourced Components Scenario). The second scenario, representing 
the lower bound of industry profitability, assumes that all of the CPSV 
manufacturers currently selling products with plastic spray nozzles 
fabricate these nozzles in-house (i.e., Fabricated Components 
Scenario). More detail regarding these capital conversion cost 
scenarios is provided in chapter 12 of the final rule TSD.
3. Discussion of Comments
    During the CPSV NOPR public meeting and in public comments 
submitted in response to the CPSV NOPR, manufacturers, trade 
organizations, and advocacy groups provided several comments on the 
potential impact of amended energy conservation standards on 
manufacturers. These comments are outlined in the following text. DOE 
notes that these comments helped to update the analysis reflected in 
this final rule.
    In response to the CPSV NOPR, several stakeholders expressed 
concerns relating to the overlapping effects of the EPA's WaterSense 
program and the potential amended DOE energy conservation standards on 
CPSV manufacturers. AWE stated that any update to DOE test criteria 
will place an unreasonable burden on the manufacturers who participated 
in WaterSense. (AWE, No. 28 at p. 3) Any amendment to current DOE 
standards will require manufacturers to abandon current products and 
again invest the capital and time to meet criteria that is entirely 
different than the WaterSense criteria. (AWE, No. 28 at p. 7) 
Similarly, T&S Brass commented that cumulative regulatory burden is a 
key issue for manufacturers, and that compliance with EPA's WaterSense 
required a significant financial investment in product redesigns. Two 
manufacturers chose to invest in developing, certifying, and promoting 
high efficiency products through WaterSense last year, and are now 
faced with a more stringent regulatory requirement and the associated 
costs of development and certification. (T&S Brass, No. 33 at pp. 2-3)
    Fisher also stated that compliance with WaterSense standards 
required Fisher to devote substantial resources to product development, 
testing, certification, updating literature, packaging, catalogs, Web 
sites, labeling, markings, marketing, and consumer education. Fisher 
believes DOE's proposed standards will require duplicative efforts and 
expenses and will jeopardize the WaterSense program. (Fisher, No. 30 at 
p. 1)
    PMI and NAFEM echoed these concerns. PMI stated that the proposed 
standards puts a strain its members, T&S Brass and Fisher 
Manufacturing, who have recently invested capital in redesigning and 
reengineering their products to comply with the EPA WaterSense 
specification. (PMI, No. 27 at p. 1) Additionally, NAFEM believes that 
the collaborative process used to develop WaterSense would be wasted as 
a result of DOE's amended standards. (NAFEM, No. 31 at p. 1)
    DOE acknowledges the existence of the voluntary WaterSense program 
and that three manufacturers, T&S Brass, Fisher Manufacturing, and 
Chicago Faucets, are currently participating in the WaterSense program. 
At the time of the CPSV NOPR, DOE had proposed standard levels of 0.65 
gpm, 0.97 gpm, and 1.24 gpm for light-, standard-, and heavy-duty 
product classes, respectively (since the CPSV NOPR, DOE updated

[[Page 4774]]

the product class names from light-, standard-, and heavy-duty to 
product class 1, 2, and 3). DOE has updated its proposal for this final 
rule to standard levels of 1.00 gpm and 1.20 gpm for product class 1 
and product class 2, and at the WaterSense level (1.28 gpm) for product 
class 3. All products certified to WaterSense currently meet the 
standard levels described in this final rule. Therefore, DOE expects 
the cumulative regulatory burdens due to the amended energy 
conservation standards, relative to the WaterSense program, to be 
limited. DOE investigates cumulative regulatory burden impacts 
associated with this rulemaking in more detail in section V.B.2.e of 
this document, and in chapter 12 of the final rule TSD.
    Next, Chicago Faucets stated that current commercial prerinse spray 
valves are rated for 1.00 or 1.25 gpm, and that the new proposed levels 
(i.e., as proposed in the CPSV NOPR; 0.65 gpm, 0.97 gpm and 1.24 gpm 
for light-, standard-, and heavy-duty product classes, respectively) 
will require spray valves to be retested and recertified at great 
expense to manufacturers. (Chicago Faucets, No. 26 at p. 3)
    In the MIA, DOE classifies retesting and recertification costs as 
product conversion costs. For the CPSV NOPR, DOE used the engineering 
analysis as a basis for estimating total conversion costs that are 
expected to be incurred by the industry at each efficiency level. DOE 
requested comment and additional information relating to industry 
product and capital conversion cost estimates. DOE did not receive any 
comment and therefore continues to use the same methodology for 
estimating conversion costs in this final rule. More information on 
conversion costs can be found in section V.B.2 of this document and 
chapter 12 of the final rule TSD.
    Finally, relating to DOE's CPSV NOPR finding that the average small 
manufacturer would likely have to reinvest between 81 and 120 percent 
of operating profit per year over the conversion period to comply with 
proposed amended energy conservation standards, T&S Brass commented 
that since eight of 11 CPSV manufacturers are small businesses, and 
concentrated in commercial prerinse spray valves and related products, 
amended standards would be a major financial strain on the majority of 
the industry. (T&S Brass, No. 33 at p. 2)
    DOE acknowledges that small businesses manufacturers may be 
disproportionately impacted by energy conservation standards relative 
to larger, more diversified manufacturers. In this document, DOE 
provides an updated analysis of disproportionate impacts, based on the 
revised engineering analysis and standard levels. The impacts of 
amended energy conservation standards on small business manufacturers 
are detailed in section VI.B of this document and in chapter 12 of the 
final rule TSD.

K. Emissions Analysis

    The emissions analysis consists of two components. The first 
component estimates the effect of amended 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 amended standards on emissions of 
two additional GHGs, CH4 and N2O, as well as the 
reductions to emissions of all species due to ``upstream'' activities 
in the fuel production chain. These upstream activities comprise 
extraction, processing, and transporting fuels to the site of 
combustion. The associated emissions are referred to as upstream 
emissions.
    The analysis of power sector emissions uses marginal emissions 
factors calculated using a methodology based on results published for 
the AEO2015 reference case and a set of side cases that implement a 
variety of efficiency-related policies. The methodology is described in 
chapter 15 of the final rule TSD.
    Combustion emissions of CH4 and N2O are 
estimated using emissions intensity factors published by the EPA, GHG 
Emissions Factors Hub.\41\ 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.
---------------------------------------------------------------------------

    \41\ Available at: http://www.epa.gov/climateleadership/inventory/ghg-emissions.html.
---------------------------------------------------------------------------

    The emissions intensity factors are expressed in terms of physical 
units per MWh or MMBtu of site energy savings. Total emissions 
reductions are estimated using the energy savings calculated in the 
NIA.
    For CH4 and N2O, DOE calculated emissions 
reduction in tons and also in terms of units of carbon dioxide 
equivalent (CO2eq). Gases are converted to CO2eq 
by multiplying 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,\42\ DOE used 
GWP values of 28 for CH4 and 265 for N2O.
---------------------------------------------------------------------------

    \42\ 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 AEO2015 projections incorporate 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. (42 U.S.C. 7651 et seq.) SO2 emissions 
from 28 eastern States and the District of Columbia 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.\43\ 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,\44\ 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.\45\ On October 23, 2014, the D.C. 
Circuit lifted the stay of CSAPR.\46\ Pursuant to this

[[Page 4775]]

action, CSAPR went into effect (and CAIR ceased to be in effect) as of 
January 1, 2015.
---------------------------------------------------------------------------

    \43\ 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).
    \44\ 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).
    \45\ 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.
    \46\ 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 would 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 will be needed or used to permit 
offsetting increases in SO2 emissions by any regulated 
EGU.\47\ Therefore, DOE believes that energy conservation standards 
will generally reduce SO2 emissions in 2016 and beyond.
---------------------------------------------------------------------------

    \47\ DOE notes that the Supreme Court recently remanded EPA's 
2012 rule regarding national emission standards for hazardous air 
pollutants from certain electric utility steam generating units. See 
Michigan v. EPA (Case No. 14-46, 2015). DOE has tentatively 
determined that the remand of the MATS rule does not change the 
assumptions regarding the impact of energy efficiency standards on 
SO2 emissions. 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.\48\ 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 are expected to reduce NOX 
emissions in the States not affected by the caps, so DOE estimated 
NOX emissions reductions from the standards in this final 
rule for these States.
---------------------------------------------------------------------------

    \48\ 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, therefore, 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.

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 consumer benefit, DOE considered the 
reduced emissions expected to result over the lifetime of products 
shipped in the forecast period for each TSL. This section summarizes 
the basis for the monetary values used for each of these emissions and 
presents the values considered in this final rule.
    For this final rule, DOE relied on a set of values for the 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
    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) 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.
    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 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, the OMB announced a new opportunity for public 
comment on the TSD underlying the revised SCC estimates. See 78 FR 
70586 (Nov. 26, 2013). In July 2015, OMB published a detailed summary 
and formal response to the many comments that were

[[Page 4776]]

received.\49\ In the response, the interagency working group continued 
to recommend the use of the SCC estimates as they represent the best 
scientific information on the impacts of climate change in a form 
appropriate for incorporating the damages from incremental 
CO2 emissions changes into regulatory analyses.\50\ 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.
---------------------------------------------------------------------------

    \49\ Available at https://www.whitehouse.gov/blog/2015/07/02/estimating-benefits-carbon-dioxide-emissions-reductions.
    \50\ Interagency Working Group on Social Cost of Carbon, U.S. 
Government, Response to Comments: Social Cost of Carbon for 
Regulatory Impact Analysis Under Executive Order 12866, at 5 (July 
2015).
---------------------------------------------------------------------------

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 \51\ 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.
---------------------------------------------------------------------------

    \51\ National Research Council, Hidden Costs of Energy: Unpriced 
Consequences of Energy Production and Use, National Academies Press: 
Washington, DC (2009).
---------------------------------------------------------------------------

    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 will 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.
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. 
Specifically, the group considered public comments and further explored 
the technical literature in relevant fields. The interagency group 
relied on three integrated assessment models commonly used to estimate 
the SCC--the FUND, DICE, and PAGE models. These models are frequently 
cited in the peer-reviewed literature and were used in the last 
assessment of the Intergovernmental Panel on Climate Change (IPCC). 
Each model was given equal weight in the SCC values that were 
developed.
    Each model takes a slightly different approach in modeling 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,\52\ although preference is given to consideration of the 
global benefits of reducing CO2 emissions. Table IV.8 
presents the values in the 2010 interagency group report,\53\ which is 
reproduced in appendix 14A of the final rule TSD.
---------------------------------------------------------------------------

    \52\ 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.
    \53\ Social Cost of Carbon for Regulatory Impact Analysis Under 
Executive Order 12866. Interagency Working Group on Social Cost of 
Carbon, U.S. Government (February 2010) (Available at: 
www.whitehouse.gov/sites/default/files/omb/inforeg/for-agencies/Social-Cost-of-Carbon-for-RIA.pdf).

[[Page 4777]]



                      Table IV.8--Annual SCC Values From 2010 Interagency Report, 2010-2050
                                           [2007$ per metric ton CO2]
----------------------------------------------------------------------------------------------------------------
                                                                         Discount rate
                                             -------------------------------------------------------------------
                    Year                             5%               3%              2.5%              3%
                                             -------------------------------------------------------------------
                                                  Average          Average          Average      95th 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).\54\
---------------------------------------------------------------------------

    \54\ 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: http://www.whitehouse.gov/sites/default/files/omb/inforeg/scc-tsd-final-july-2015.pdf).
---------------------------------------------------------------------------

    Table IV.9 shows the updated sets of SCC estimates from the 2013 
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.

            Table IV.9--Annual SCC Values From 2013 Interagency Report (Revised July 2015), 2010-2050
                                           [2007$ per metric ton CO2]
----------------------------------------------------------------------------------------------------------------
                                                                         Discount rate
                                             -------------------------------------------------------------------
                    Year                             5%               3%              2.5%              3%
                                             -------------------------------------------------------------------
                                                  Average          Average          Average      95th percentile
----------------------------------------------------------------------------------------------------------------
2010........................................               10               31               50               86
2015........................................               11               36               56              105
2020........................................               12               42               62              123
2025........................................               14               46               68              138
2030........................................               16               50               73              152
2035........................................               18               55               78              168
2040........................................               21               60               84              183
2045........................................               23               64               89              197
2050........................................               26               69               95              212
----------------------------------------------------------------------------------------------------------------

    It is important to recognize that a number of key uncertainties 
remain, and that current SCC estimates should be treated as provisional 
and revisable because they will evolve with improved scientific and 
economic understanding. The interagency group also recognizes that the 
existing models are imperfect and incomplete. The 2009 National 
Research Council report 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.
    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.
2. Social Cost of Other Air Pollutants
    As noted previously, DOE has estimated how the considered energy

[[Page 4778]]

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 titled, ``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. The report includes high and low values for 
NOX (as PM2.5) for 2020, 2025, and 2030 
discounted at 3 percent and 7 percent,\55\ 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.
---------------------------------------------------------------------------

    \55\ For the monetized NOX benefits associated with 
PM2.5, the related benefits (derived from benefit-per-ton 
values) are 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 so using the higher value 
would also be 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 here.)
---------------------------------------------------------------------------

    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. DOE will continue for 
evaluate the monetization of avoided NOX emissions and will 
make any appropriate updates in energy conservation standards 
rulemakings.
    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.
3. Comments
    In response to the CPSV NOPR, DOE received two comments regarding 
the use of SCC. In a comment submitted by the U.S. Chamber of Commerce 
along with the American Chemistry Council, the American Coke and Coal 
Chemicals Institute, the American Forest & Paper Association, the 
American Fuel & Petrochemical Manufacturers, the American Petroleum 
Institute, the Brick Industry Association, the Council of Industrial 
Boiler Owners, the National Association of Manufacturers, the National 
Mining Association, the National Oilseed Processors Association, and 
the Portland Cement Association (collectively, ``the Associations''), 
the commenters objected to DOE's continued use of SCC in the cost-
benefit analysis and stated their belief that SCC should be withdrawn 
as a basis for the rule. The Associations further stated that the SCC 
calculation should not be used in any rulemaking or policymaking until 
it undergoes a more rigorous notice, review, and comment process. (The 
Associations, No. 29, at p. 4) DOE also received a comment from a group 
consisting of the Environmental Defense Fund, Institute for Policy 
Integrity at New York University School of Law, Natural Resources 
Defense Council, and Union of Concerned Scientists (collectively, 
``Joint Commenters'') that supported DOE's current use of the 
Interagency Working Group's SCC estimate. The Joint Commenters further 
indicated that DOE should also include a qualitative assessment of all 
significant climate effects that are not currently quantified in the 
monetized estimate. (Joint Commenters, No. 21, at p. 19)
    DOE appreciates the comments and acknowledges the many 
uncertainties involved with monetizing the social benefits of reducing 
CO2 emissions. However, DOE reiterates that the use of the 
SCC estimates, as recommended by the working group, represent the best 
scientific information on the impacts of climate change in a form 
appropriate for incorporating into regulatory analyses.

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 produced 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 that incorporate efficiency-related policies to 
estimate the marginal impacts of reduced energy demand on the utility 
sector. 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.
    Chapter 15 of the final rule TSD describes the utility impact 
analysis in further detail.

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 any changes in the number of employees of 
manufacturers of the products subject to standards, their suppliers, 
and related service firms. The MIA addresses the direct employment 
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 consumer spending on new products 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).\56\ 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.\57\ 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 consumer utility 
bills.

[[Page 4779]]

Because reduced consumer expenditures for energy likely lead to 
increased expenditures in other sectors of the economy, the general 
effect of efficiency standards is to shift economic activity from a 
less labor-intensive sector (i.e., the utility sector) to more labor-
intensive sectors (e.g., the retail and service sectors). Thus, based 
on the BLS data alone, DOE believes net national employment may 
increase due to shifts in economic activity resulting from amended 
standards for commercial prerinse spray valves.
---------------------------------------------------------------------------

    \56\ 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].
    \57\ 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 
levels considered in this final rule using an input/output model of the 
U.S. economy called Impact of Sector Energy Technologies version 4.0 
(ImSET).\58\ 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.
---------------------------------------------------------------------------

    \58\ Livingston OV, SR Bender, MJ Scott, and RW Schultz. 2015. 
ImSET 4.0: Impact of Sector Energy Technologies Model Description 
and User's Guide. PNNL-24563, Pacific Northwest National Laboratory, 
Richland, WA. (2015).
---------------------------------------------------------------------------

    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, where these uncertainties are 
reduced. For more details on the employment impact analysis, see 
chapter 16 of the final rule TSD.

V. Analytical Results and Conclusions

    The following section addresses the results from DOE's analyses 
with respect to the considered energy conservation standards for 
commercial prerinse spray valves. It addresses the TSLs examined by 
DOE, the projected impacts of each of these levels if adopted as energy 
conservation standards for commercial prerinse spray valves, 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 document.

A. Trial Standard Levels

    DOE analyzed the benefits and burdens of four TSLs for commercial 
prerinse spray valves. These TSLs were developed by combining specific 
efficiency levels for each of the product classes analyzed by DOE. DOE 
also analyzed two additional TSLs that utilized the alternative 
shipments scenarios discussed in section IV.G.1. DOE presents the 
results for each of the TSLs in this document, while the engineering 
analysis results for all efficiency levels that DOE analyzed are in the 
final rule TSD.
    Table V.1 presents the TSLs and the corresponding efficiency levels 
for commercial prerinse spray valves. These TSLs were chosen based on 
the following criteria:
     TSL 1 represents the first EL above the market minimum for 
each product class. That is, for product classes 1 and 2, TSL 1 
represents EL 2 which is a 15 percent increase in efficiency above the 
market minimum. For product class 3, TSL 1 represents EL 1 which is a 
10 percent increase in efficiency above the market minimum.
     TSL 2 represents the second EL above market minimum for 
each product class. That is, for product classes 1 and 2, TSL 2 
represents EL 3 which is a 25 percent increase in efficiency above the 
market minimum. For product class 3, TSL 3 represents the WaterSense 
level, or 20 percent increase in efficiency above the market minimum.
     TSL 3 represents the minimum flow rates for each product 
class that: (1) Would not induce consumers to switch product classes as 
a result of a standard at those flow rates (as discussed in the CPSV 
NOPR); and (2) retains shower-type designs.
     TSL 3a is a sensitivity-case variant of TSL 3, utilizing 
the second alternative shipments scenario described in section IV.G.1. 
This shipments scenario permits examination of the potential for 
additional savings if one percent of the shipments are assumed to fall 
into EL 0, rather than at EL 1, in the no-new-standards case for 
product classes 1 and 2. NIA results were generated for this case.
     TSL 4 represents max-tech for all product classes under 
the default shipments scenario, which assumes the total volume of 
shipments does not change as a function of the standard level selected. 
Consumers in product classes 1 and 2 would purchase a compliant CPSV 
model with flow rates most similar to the flow rate they would purchase 
in the absence of a standard. This TSL assumes that purchasers of 
shower-type commercial prerinse spray valves would transition to 
single-orifice CPSV models.
     TSL 4a represents a sensitivity-case max-tech for all 
product classes under an alternative shipments scenario, as described 
in section IV.G.1. Since the utility of single-orifice CPSV models may 
not be equivalent to shower-type CPSV models for some applications, 
this alternative shipments scenario assumes consumers of shower-type 
units exit the CPSV market and purchase faucets, which have a maximum 
flow rate of 2.2 gpm under the current Federal standard. Thus, 
shipments of compliant CPSV models are much lower under this TSL and 
water consumption is higher due to increased faucet shipments. Both MIA 
and NIA results were developed for this case.

                      Table V.1--Trial Standard Levels for Commercial Prerinse Spray Valves
----------------------------------------------------------------------------------------------------------------
                                        Product class   Product class   Product class
                                              1               2               3
                 TSL                  ------------------------------------------------     Shipments scenario
                                             EL              EL              EL
----------------------------------------------------------------------------------------------------------------
1....................................               2               2               1  Default.
2....................................               3               3               2  Default.
3....................................               1               1               2  Default.
3a...................................               1               1               2  Alternate.
4....................................               4               4               3  Default.
4a...................................               4               4               3  Alternate.
----------------------------------------------------------------------------------------------------------------


[[Page 4780]]

B. Economic Justification and Energy Savings

1. Economic Impacts on Individual Consumers
    DOE analyzed the economic impacts on commercial prerinse spray 
valve consumers by looking at the effects the amended standards at each 
TSL would have on the LCC and PBP analysis. DOE also examined the 
impacts of amended standards on consumer subgroups. These analyses are 
discussed in the following sections.
a. Life-Cycle Cost and Payback Period
    To evaluate the net economic impact of the amended energy 
conservation standards on consumers of commercial prerinse spray 
valves, DOE conducted an LCC and PBP analysis for each TSL. In general, 
higher-efficiency products affect consumers in two ways: (1) Purchase 
price increases; and (2) annual operating cost decreases. Because DOE 
did not find that the purchase price of commercial prerinse spray 
valves increased with increasing efficiency, the only effect of higher-
efficiency products to consumers is decreased operating costs. Inputs 
used for calculating the LCC and PBP include: (1) Total installed costs 
(i.e., product price plus installation costs); and (2) operating costs 
(i.e., annual energy use, energy prices, energy price trends, repair 
costs, and maintenance costs). The LCC calculation also uses product 
lifetime and a discount rate. Chapter 8 of the final rule TSD provides 
detailed information on the LCC and PBP analyses.
    Table V.2 through Table V.7 show the LCC and PBP results for the 
TSLs considered for each product class. In the first of each pair of 
tables, the simple PBP is measured relative to the baseline product. In 
the second of each pair of tables, the LCC savings are measured 
relative to the average LCC in the no-new-standards case in the 
compliance year (see section IV.F.10 of this document). No impacts 
occur when the no-new-standards case efficiency for a specific consumer 
equals or exceeds the efficiency at a given TSL. In this situation, a 
standard would have no effect because the product installed would be at 
or above that standard level without amended standards. For commercial 
prerinse spray valves, DOE determined that there was no increase in 
purchase price with increasing EL within each product class. Therefore, 
LCC and PBP results instead reflect differences in operating costs due 
to decreased energy and water use for each EL.

               Table V.2--Average LCC and PBP Results by Efficiency Level for Product Class 1 (<=5.0 ozf) Commercial Prerinse Spray Valves
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2014$)
                                                         ----------------------------------------------------------------     Simple          Average
                   TSL                          EL                         First year's      Lifetime                         payback        lifetime
                                                          Installed cost     operating       operating          LCC           (years)         (years)
                                                                               cost            cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
--......................................               0              76             780           3,556           3,643  ..............             4.9
3.......................................               1              76             487           2,229           2,305             0.0             4.9
1.......................................               2              76             414           1,895           1,971             0.0             4.9
2.......................................               3              76             366           1,672           1,748             0.0             4.9
4.......................................               4              76             302           1,382           1,458             0.0             4.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the
  baseline product.


Table V.3--Average LCC Savings Relative to the No-New-Standards Case Efficiency Distribution for Product Class 1
                                  (<=5.0 ozf) Commercial Prerinse Spray Valves
----------------------------------------------------------------------------------------------------------------
                                                                                      Life-cycle cost savings
                                                                                 -------------------------------
                                                                                    Percent of
                               TSL                                      EL        consumers that      Average
                                                                                     experience      savings *
                                                                                    (net cost)        (2014$)
----------------------------------------------------------------------------------------------------------------
--..............................................................               0  ..............  ..............
3...............................................................               1               0            ** 0
1...............................................................               2               0             334
2...............................................................               3               0             557
4...............................................................               4               0             352
----------------------------------------------------------------------------------------------------------------
* Note: The calculation includes consumers with zero LCC savings (no impact).
** At TSL 3, the average LCC impact is a savings of $0 for CPSV models in product classes 1 and 2 because the
  market minimums are the standard for those classes. Because no consumers in the no-new-standards case purchase
  products with a higher flow rate than the respective market minimums, no consumers are affected by a standard
  set at EL 1 (market minimum) in product classes 1 and 2.


[[Page 4781]]


        Table V.4--Average LCC and PBP Results by Efficiency Level for Product Class 2 (>5.0 ozf and <=8.0 ozf) Commercial Prerinse Spray Valves
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2014$)
                                                         ----------------------------------------------------------------     Simple          Average
                   TSL                          EL                         First year's      Lifetime                         payback        lifetime
                                                          Installed cost     operating       operating          LCC           (years)         (years)
                                                                               cost            cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
--......................................               0              76             780           3,556           3,643  ..............             4.9
3.......................................               1              76             585           2,675           2,751             0.0             4.9
1.......................................               2              76             497           2,274           2,350             0.0             4.9
2.......................................               3              76             439           2,006           2,082             0.0             4.9
4.......................................               4              76             356           1,627           1,704             0.0             4.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the
  baseline product.


Table V.5--Average LCC Savings Relative to the No-New-Standards Case Efficiency Distribution for Product Class 2
                            (>5.0 ozf and <=8.0 ozf) Commercial Prerinse Spray Valves
----------------------------------------------------------------------------------------------------------------
                                                                                      Life-cycle cost savings
                                                                                 -------------------------------
                                                                                    Percent of
                               TSL                                      EL        consumers that      Average
                                                                                     experience      savings *
                                                                                    (net cost)        (2014$)
----------------------------------------------------------------------------------------------------------------
--..............................................................               0  ..............  ..............
3...............................................................               1               0            ** 0
1...............................................................               2               0             401
2...............................................................               3               0             446
4...............................................................               4               0             825
----------------------------------------------------------------------------------------------------------------
* Note: The calculation includes consumers with zero LCC savings (no impact).
** At TSL 3, the average LCC impact is a savings of $0 for CPSV models in product classes 1 and 2 because the
  market minimums are the standard for those classes. Because no consumers in the no-new-standards case purchase
  products with a higher flow rate than the respective market minimums, no consumers are affected by a standard
  set at EL 1 (market minimum) in product classes 1 and 2.


               Table V.6--Average LCC and PBP Results by Efficiency Level for Product Class 3 (>8.0 ozf) Commercial Prerinse Spray Valves
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2014$)
                                                         ----------------------------------------------------------------     Simple          Average
                   TSL                          EL                         First year's      Lifetime                         payback        lifetime
                                                          Installed cost     operating       operating          LCC           (years)         (years)
                                                                               cost            cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
--......................................               0              76             780           3,566           3,643  ..............             4.9
1.......................................               1              76             702           3,210           3,286             0.0             4.9
2, 3....................................               2              76             624           2,853           2,929             0.0             4.9
4.......................................               3              76             551           2,519           2,595             0.0             4.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the
  baseline product.


Table V.7--Average LCC Savings Relative to the No-New-Standards Case Efficiency Distribution for Product Class 3
                                   (>8.0 ozf) Commercial Prerinse Spray Valves
----------------------------------------------------------------------------------------------------------------
                                                                                      Life-cycle cost savings
                                                                                 -------------------------------
                                                                                    Percent of
                               TSL                                      EL        consumers that      Average
                                                                                     experience      savings *
                                                                                    (net cost)        (2014$)
----------------------------------------------------------------------------------------------------------------
--..............................................................               0  ..............  ..............
1...............................................................               1               0             357
2, 3............................................................               2               0             547
4...............................................................               3               0             766
----------------------------------------------------------------------------------------------------------------
Note: The calculation includes consumers with zero LCC savings (no impact).


[[Page 4782]]

b. Consumer Subgroup Analysis
    In the consumer subgroup analysis, DOE estimated the impact of the 
considered TSLs on small businesses and limited service establishments. 
Table V.8 through Table V.10 compare the average LCC savings at each 
efficiency level for the two consumer subgroups, along with the average 
LCC savings for the entire sample for each product class for commercial 
prerinse spray valves. The average LCC savings for single entities and 
limited service establishments at the considered ELs are not 
substantially different from the average for all consumers. Chapter 11 
of the final rule TSD presents the complete LCC and PBP results for the 
subgroups.

   Table V.8--Product Class 1 (<=5.0 ozf) Commercial Prerinse Spray Valves: Comparison of Average LCC Savings for Consumer Subgroups and All Consumers
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                           Average life-cycle cost savings (2014$)                Simple payback period (years)
                                                     ---------------------------------------------------------------------------------------------------
                         TSL                              Single       Limited service                      Single       Limited service
                                                         entities      establishments    All consumers     entities      establishments    All consumers
--------------------------------------------------------------------------------------------------------------------------------------------------------
1...................................................             317               267             334             0.0               0.0             0.0
2...................................................             529               446             557             0.0               0.0             0.0
3...................................................             * 0               * 0             * 0             0.0               0.0             0.0
4...................................................             334               281             352             0.0               0.0             0.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
* At TSL 3, the average LCC impact is a savings of $0 for CPSV models in product classes 1 and 2 because the market minimums are the standard for those
  classes. Because no consumers in the no-new-standards case purchase products with a higher flow rate than the respective market minimums, no consumers
  are affected by a standard set at EL 1 (market minimum) in product classes 1 and 2.


 Table V.9--Product Class 2 (>5.0 ozf and <=8.0 ozf) Commercial Prerinse Spray Valves: Comparison of Average LCC Savings for Consumer Subgroups and All
                                                                        Consumers
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                           Average life-cycle cost savings (2014$)                Simple payback period (years)
                                                     ---------------------------------------------------------------------------------------------------
                         TSL                              Single       Limited service                      Single       Limited service
                                                         entities      establishments    All consumers     entities      establishments    All consumers
--------------------------------------------------------------------------------------------------------------------------------------------------------
1...................................................             381               321             401             0.0               0.0             0.0
2...................................................             423               357             446             0.0               0.0             0.0
3...................................................             * 0               * 0             * 0             0.0               0.0             0.0
4...................................................             782               660             825             0.0               0.0             0.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
* At TSL 3, the average LCC impact is a savings of $0 for CPSV models in product classes 1 and 2 because the market minimums are the standard for those
  classes. Because no consumers in the no-new-standards case purchase products with a higher flow rate than the respective market minimums, no consumers
  are affected by a standard set at EL 1 (market minimum) in product classes 1 and 2.


   Table V.10--Product Class 3 (>8.0 ozf) Commercial Prerinse Spray Valves: Comparison of Average LCC Savings for Consumer Subgroups and All Consumers
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                           Average life-cycle cost savings (2014$)                Simple payback period (years)
                                                     ---------------------------------------------------------------------------------------------------
                         TSL                              Single       Limited service                      Single       Limited service
                                                         entities      establishments    All consumers     entities      establishments    All consumers
--------------------------------------------------------------------------------------------------------------------------------------------------------
1...................................................             338               285             357             0.0               0.0             0.0
2...................................................             519               437             547             0.0               0.0             0.0
3...................................................             519               437             547             0.0               0.0             0.0
4...................................................             727               613             766             0.0               0.0             0.0
--------------------------------------------------------------------------------------------------------------------------------------------------------

c. Rebuttable Presumption Payback
    As discussed in section IV.F.11, EPCA establishes a rebuttable 
presumption that an energy conservation standard is economically 
justified if the increased purchase cost for a product that meets the 
standard is less than three times the value of the first year energy 
and water savings resulting from the standard. In calculating a 
rebuttable presumption PBP for each of the considered TSLs, DOE used 
discrete values, and, as required by EPCA, based the energy and water 
use calculation on the DOE test procedure for commercial prerinse spray 
valves. Table V.11 presents the rebuttable-presumption PBPs for the 
considered TSLs. In addition to examining the rebuttable-presumption 
criterion, DOE also considered whether the standard levels are 
economically justified through a more detailed analysis of the economic 
impacts of those levels that considers the full range of impacts to the 
consumer, manufacturer, nation, and environment. (42 U.S.C. 
6295(o)(2)(B)(i) The results of that 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. As indicated in 
the engineering analysis, there is no increased purchase cost for 
products that meets the standard, so the rebuttable PBP for each 
considered TSL is zero.

[[Page 4783]]



                          Table V.11--Commercial Prerinse Spray Valves: Rebuttable PBPs
----------------------------------------------------------------------------------------------------------------
                                                    Rebuttable payback period for trial standard level (years)
                  Product class                  ---------------------------------------------------------------
                                                         1               2               3               4
----------------------------------------------------------------------------------------------------------------
Product Class 1 (<=5.0 ozf).....................             0.0             0.0             0.0             0.0
Product Class 2 (>5.0 ozf and <=8.0 ozf)........             0.0             0.0             0.0             0.0
Product Class 3 (>8.0 ozf)......................             0.0             0.0             0.0             0.0
----------------------------------------------------------------------------------------------------------------

2. Economic Impacts on Manufacturers
    DOE performed an MIA to estimate the impact of amended energy 
conservation standards on manufacturers of commercial prerinse spray 
valves. Section V.B.2.a 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
    DOE modeled two scenarios using different conversion cost 
assumptions to evaluate the range of cash flow impacts on the CPSV 
manufacturing industry from amended energy conservation standards. Each 
scenario results in a unique set of cash flows and corresponding 
industry value at each TSL. These assumptions correspond to the bounds 
of a range of capital conversion costs that DOE anticipates could occur 
in response to amended standards. The following tables illustrate the 
financial impacts (represented by changes in INPV) of amended energy 
conservation standards on manufacturers of commercial prerinse spray 
valves, as well as the conversion costs that DOE estimates 
manufacturers would incur for each product class at each TSL.
    DOE also conducted a sensitivity MIA (reflected in TSL 4a) based on 
an alternative shipments scenario described in section IV.G.1. DOE 
assumed that a percentage of consumers currently using product class 3 
commercial prerinse spray valves will switch to using faucets at higher 
flow rates. DOE did not include faucet shipments in its shipments 
analysis. Therefore, overall shipments decrease in the alternative 
shipments scenario. The alternative shipments scenario is described in 
more detail in section IV.G.1. The results for the sensitivity MIA are 
presented in Table V.12 and Table V.13 as well as in chapter 12 of the 
final rule TSD.
    The INPV results refer to the difference in industry value between 
the no-new-standards case and the standards case, which DOE calculated 
by summing the discounted industry cash flows from the base year (2015) 
through the end of the analysis period (2048). The discussion also 
notes the difference in cash flow between the no-new-standards case and 
the standards case in the year before the compliance date of amended 
energy conservation standards.

      Table V.12--Manufacturer Impact Analysis for Commercial Prerinse Spray Valves--With the Sourced Components Capital Conversion Costs Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                             No-new-                           Trial Standard Level
                                                       Units                standards   ----------------------------------------------------------------
                                                                              case            1            2            3            4            4a
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV.....................................  2014$ MM....................             8.6         7.7          7.5          8.0          7.1          5.5
Change in INPV ($).......................  2014$ MM....................  ..............        (0.8)        (1.1)        (0.6)        (1.5)        (3.1)
Change in INPV (%).......................  %...........................  ..............        (9.9)       (12.8)        (6.5)       (17.4)       (36.3)
Product Conversion Costs.................  2014$ MM....................  ..............         1.5          1.8          0.8          2.4          1.9
Capital Conversion Costs.................  2014$ MM....................  ..............         0.1          0.2          0.2          0.2          0.0
Total Investment Required................  2014$ MM....................  ..............         1.6          2.0          1.0          2.6          1.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.


     Table V.13--Manufacturer Impact Analysis for Commercial Prerinse Spray Valves--With the Fabricated Components Capital Conversion Costs Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                             No-new-                           Trial Standard Level
                                                       Units                standards   ----------------------------------------------------------------
                                                                              case            1            2            3            4            4a
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV.....................................  2014$ MM....................             8.6         7.1          6.7          7.4          6.2          4.8
Change in INPV ($).......................  2014$ MM....................  ..............        (1.5)        (1.8)        (1.1)        (2.4)        (3.8)
Change in INPV (%).......................  %...........................  ..............       (17.5)       (21.4)       (13.1)       (28.0)       (44.4)
Product Conversion Costs.................  2014$ MM....................  ..............         1.5          1.8          0.8          2.4          1.9
Capital Conversion Costs.................  2014$ MM....................  ..............         0.8          1.0          0.8          1.2          0.8
Total Investment Required................  2014$ MM....................  ..............         2.3          2.8          1.6          3.6          2.7
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.


[[Page 4784]]

    At TSL 1, DOE estimates impacts on INPV to range from -$1.5 million 
to -$0.8 million, or a change in INPV of -17.5 percent to -9.9 percent 
for the Fabricated Components and Sourced Components Capital Conversion 
Costs scenarios, respectively. At this level, industry free cash flow 
is estimated to decrease by as much as 165.6 percent to -$0.3 million, 
compared to the no-new-standards case value of $0.5 million in the year 
leading up to the amended energy conservation standards. As DOE 
forecasts that approximately 63 percent of commercial prerinse spray 
valves shipments in the no-new-standards case will meet TSL 1 in the 
first year that standards are in effect (2019), 37 percent of the 
market shipments are affected at this standard level. The impact on 
INPV at TSL 1 stems exclusively from the conversion costs associated 
with the conversion of baseline units to those meeting the standards 
set at TSL 1. Product and capital conversion costs are estimated to be 
approximately $1.2 million for the Sourced Components Capital 
Conversion Costs scenario and $2.0 million for the Fabricated 
Components Capital Conversion Costs scenario.
    At TSL 2, DOE estimates impacts on INPV to range from -$1.8 million 
to -$1.1 million, or a change in INPV of -21.4 percent to -12.8 percent 
for the Fabricated Components and Sourced Components Capital Conversion 
Costs scenarios, respectively. At this level, industry free cash flow 
is estimated to decrease by as much as 202.7 percent to -$0.5 million, 
compared to the no-new-standards case value of $0.5 million in the year 
leading up to the amended energy conservation standards. As it is 
estimated that only approximately 27 percent of commercial prerinse 
spray valves shipments will meet the efficiency levels specified at TSL 
2 in the first year that standards are in effect (2019), 73 percent of 
the market shipments are affected at this standard level. As with TSL 
1, the impact on INPV at TSL 2 stems exclusively from the conversion 
costs associated with the conversion of lower efficiency units to those 
meeting the standards set at TSL 2. Since the majority of commercial 
prerinse spray valves will have to be updated to reach the standard 
level, product and capital conversion costs are estimated to be 
approximately $2.0 million for the Sourced Components Capital 
Conversion Costs scenario and $2.8 million for the Fabricated 
Components Capital Conversion Costs scenario.
    At TSL 3, DOE estimates impacts on INPV to range from -$1.1 million 
to -$0.6 million, or a change in INPV of -13.1 percent to -6.5 percent 
for the Fabricated Components and Sourced Components Capital Conversion 
Cost scenarios, respectively. At this level, industry free cash flow is 
estimated to decrease by as much as 124.4 percent to -$0.1 million, 
compared to the no-new-standards case value of $0.5 million in the year 
leading up to the amended energy conservation standards. It is 
estimated that 55 percent of commercial prerinse spray valves shipments 
will meet the efficiency levels specified at TSL 3 in the first year 
that standards are in effect (2019); 45 percent of market shipments are 
affected at this standard level. Again, the impact on INPV at TSL 3 
stems exclusively from the conversion costs associated with the 
conversion of lower efficiency units to those meeting the standards set 
at TSL 3. Since the majority of commercial prerinse spray valves 
already meet the standard level, product and capital conversion costs 
are estimated to be approximately $1.0 million for the Sourced 
Components Capital Conversion Costs scenario and $1.6 million for the 
Fabricated Components Capital Conversion Costs model.
    At TSL 4, DOE estimates impacts on INPV to range from -$2.4 million 
to -$1.5 million, or a change in INPV of -28.0 percent to -17.4 percent 
for the Fabricated Components and Sourced Components Capital Conversion 
Cost scenarios, respectively. At this level, industry free cash flow is 
estimated to decrease by as much as 275.3 percent to -$0.8 million, 
compared to the no-new-standards case value of $0.5 million in the year 
leading up to the amended energy conservation standards. It is 
estimated that just 7 percent of commercial prerinse spray valves 
shipments will meet the efficiency levels specified at TSL 4 in the 
first year that standards are in effect (2019). Again, the impact on 
INPV at TSL 4 stems exclusively from the conversion costs associated 
with the conversion of lower efficiency units to those meeting the 
standards set at TSL 4. Since the majority of commercial prerinse spray 
valves will have to be updated to reach the standard level, product and 
capital conversion costs are estimated to be approximately $2.6 million 
for the Sourced Components Capital Conversion Costs scenario and $3.6 
million for the Fabricated Components Capital Conversion Costs 
scenario.
    Finally, at TSL 4a, DOE estimates impacts on INPV to range from -
$3.8 million to -$3.1 million, or a change in INPV of -44.4 percent to 
-36.3 percent for the Fabricated Components and Sourced Components 
Capital Conversion Cost scenarios, respectively. At this level, 
industry free cash flow is estimated to decrease by as much as 189.4 
percent to -$0.4 million, compared to the no-new-standards case value 
of $0.5 million in the year leading up to the amended energy 
conservation standards. It is estimated that just 7 percent of 
commercial prerinse spray valves will meet the efficiency levels 
specified at TSL 4a in the first year that standards are in effect 
(2019). The impact on INPV at TSL 4a stems from the conversion costs 
associated with the conversion of lower efficiency units to those 
meeting the standards set at TSL 4a, and from a reduction in shipments 
in product class 3 by 46 percent. Since the majority of commercial 
prerinse spray valves will have to be updated to reach the standard 
level, product and capital conversion costs are estimated to be 
approximately $1.9 million for the Sourced Components Capital 
Conversion Costs scenario and $2.7 million for the Fabricated 
Components Capital Conversion Costs scenario.
b. Impacts on Employment
    DOE used the GRIM to estimate the domestic labor expenditures and 
number of domestic production workers in the no-new-standards case and 
at each TSL from 2014 through 2048. DOE used the labor content of each 
product and the MPCs from the engineering analysis to estimate the 
total annual labor expenditures associated with commercial prerinse 
spray valves sold in the United States. Using statistical data from the 
U.S. Census Bureau's 2013 ``Annual Survey of Manufactures'' (2013 ASM) 
as well as market research, DOE estimates that 100 percent of 
commercial prerinse spray valves sold in the United States are 
assembled domestically, and hence that portion of total labor 
expenditures is attributable to domestic labor.\59\ Labor expenditures 
for the manufacturing of products are a function of the labor intensity 
of the product, the sales volume, and an assumption that wages in real 
terms remain constant.
---------------------------------------------------------------------------

    \59\ U.S. Census Bureau. U.S. Census Bureau Annual Survey of 
Manufacturers 2013. 2013. Available at http://www.census.gov/manufacturing/asm/historical_data/index.html.
---------------------------------------------------------------------------

    Using the GRIM, DOE forecasts the domestic labor expenditure for 
commercial prerinse spray valve production labor in 2019 will be 
approximately $1.9 million. Using the $20.51 hourly wage rate including 
fringe benefits and 2,019 production hours per year per employee found 
in the 2013 ASM, DOE estimates there will be approximately 46 domestic 
production workers involved in assembling and, to

[[Page 4785]]

a lesser extent, fabricating components for commercial prerinse spray 
valves in 2019, the year in which the amended standards go into effect. 
In addition, DOE estimates that 21 non-production employees in the 
United States will support commercial prerinse spray valve production. 
The employment spreadsheet of the commercial prerinse spray valve GRIM 
shows the annual domestic employment impacts in further detail.\60\
---------------------------------------------------------------------------

    \60\ The employment spreadsheet is available in the GRIM at 
www.regulations.gov under docket number EERE-2014-BT-STD-0027.
---------------------------------------------------------------------------

    The production worker estimates in this section cover workers only 
up to the line-supervisor level who are directly involved in 
fabricating and assembling commercial prerinse spray valves within an 
original equipment manufacturer (OEM) facility. Workers performing 
services that are closely associated with production operations, such 
as material handling with a forklift, are also included as production 
labor. Additionally, the employment impacts shown are independent of 
the employment impacts from the broader U.S. economy, which are 
documented in chapter 12 of the final rule TSD.
    Table V.14 depicts the potential levels of production employment 
that could result following amended energy conservation standards as 
calculated by the GRIM. The employment levels shown reflect the 
scenario in which manufacturers continue to produce the same scope of 
covered products in domestic facilities and domestic production is not 
shifted to lower-labor-cost countries. The following discussion 
includes a qualitative evaluation of the likelihood of negative 
domestic production employment impacts at the various TSLs.

                             Table V.14--Total Number of Domestic Commercial Prerinse Spray Valve Production Workers in 2019
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                     Trial standard level
                                                        No-new-     ------------------------------------------------------------------------------------
                                                    standards  case         1                2                3                4                4a
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Number of Domestic Production Workers in                  46               46               46               46               46               27
 2019 (without changes in production locations)...
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The design options specified for achieving greater efficiency 
levels (i.e., reducing the spray hole area, changing spray hole shape, 
or changing the nozzle geometry from a venturi meter to an orifice 
plate) do not increase the labor content (measured in dollars) of 
commercial prerinse spray valves at any EL, nor do they increase total 
MPC. Except for TSL 4a, the total industry shipments are forecasted to 
be constant across TSLs. Therefore, DOE predicts no change in domestic 
manufacturing employment levels, provided manufacturers do not relocate 
production facilities outside of the United States, at TSLs 1 to 4. At 
TSL 4a, the total number of production workers for commercial prerinse 
spray valves in the United States is expected to decrease to 27 due to 
a reduction in industry shipments.
c. Impacts on Manufacturing Capacity
    Approximately 55 percent of CPSV shipments already comply with the 
amended energy conservation standards adopted in this rulemaking. The 
majority of manufacturers already offer products that meet the amended 
energy conservation standards for commercial prerinse spray valves. 
Therefore, DOE does not foresee any impact on manufacturing capacity 
during the period leading up to the compliance date.
d. Impacts on Subgroups of Manufacturers
    Using average cost assumptions to develop an industry cash-flow 
estimate may not be adequate for assessing differential impacts among 
manufacturer subgroups. Small manufacturers, niche product 
manufacturers, and manufacturers exhibiting a cost structure 
substantially different from the industry average could be affected 
disproportionately. DOE examined the potential for disproportionate 
impacts on small business manufacturers in section VI.B of this 
document. DOE did not identify any other manufacturer subgroups for 
this rulemaking.
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. In addition 
to energy conservation standards, other regulations can significantly 
affect manufacturers' financial operations. Multiple regulations 
affecting the same manufacturer can strain profits and can lead 
companies to abandon product lines or markets with lower expected 
future returns than competing products. For these reasons, DOE conducts 
an analysis of cumulative regulatory burden as part of its energy 
conservation standards rulemakings.
    For the cumulative regulatory burden, DOE considers other DOE 
regulations that could affect commercial prerinse spray valve 
manufacturers that will take effect approximately 3 years before or 
after the compliance date for the amended energy conservation 
standards. The compliance years and expected industry conversion costs 
of energy conservation standards that may also impact commercial 
prerinse spray valve manufacturers are indicated in Table V.15.

Table V.15--Compliance Dates and Expected Conversion Expenses of Federal
 Energy Conservation Standards Affecting Commercial Prerinse Spray Valve
                              Manufacturers
------------------------------------------------------------------------
                                    Compliance     Estimated conversion
           Regulation                  date                costs
------------------------------------------------------------------------
Commercial Refrigerators,              3/27/2017  $43.1 million.
 Freezers and
 Refrigerator[dash]Freezers, 79
 FR 17725 (March 28, 2014).
------------------------------------------------------------------------


[[Page 4786]]

Industry and State-Level Standards
    In addition to DOE's energy conservation regulations for commercial 
prerinse spray valves and other products also sold by commercial 
prerinse spray valve manufacturers, several other existing and pending 
regulations apply to commercial prerinse spray valves, including third-
party and international industry standards and certification programs 
(e.g., ASME A112.18.1/CSA B125.1, ASTM Standard F2324) and state water 
efficiency regulations (e.g., California, Texas, and Massachusetts).
    Additionally, in response to the CPSV NOPR, DOE received several 
comments related to the substantial cumulative burden associated with 
compliance with the EPA WaterSense specification. DOE summarized these 
comments in section IV.J.3 of this document. See chapter 12 of the 
final rule TSD for the results of DOE's analysis of the cumulative 
regulatory burden.
3. National Impact Analysis
a. Significance of Energy Savings
    To estimate the energy and water savings attributable to amended 
standards for commercial prerinse spray valves, DOE compared the energy 
consumption of those products under the no-new-standards case to their 
anticipated energy consumption under each TSL. The savings are measured 
over the entire lifetime of products purchased in the 30-year period 
that begins in the first year of compliance with the amended standards 
(2019-2048). Table V.16 presents DOE's projections of the NES for each 
TSL considered for commercial prerinse spray valves. The savings were 
calculated using the approach described in section IV.H.1 of this 
document.

 Table V.16--Commercial Prerinse Spray Valves: Cumulative National Energy and Water Savings for Products Shipped
                                                  in 2019-2048
----------------------------------------------------------------------------------------------------------------
                                                                      National energy savings
                                                                              (quads)             National water
                  TSL                         Product class      --------------------------------     savings
                                                                      Primary           FFC        (billion gal)
----------------------------------------------------------------------------------------------------------------
1.....................................  1 (<=5.0 ozf)...........           0.008           0.009          10.831
                                        2 (>5.0 ozf and <=8.0              0.113           0.123         144.916
                                         ozf).
                                        3 (>8.0 ozf)............         (0.082)         (0.089)       (105.275)
                                                                 =================
    Total TSL 1.......................  ........................           0.039           0.043          50.471
                                                                 =================
2.....................................  1 (<=5.0 ozf)...........           0.008           0.009          10.831
                                        2 (>5.0 ozf and <=8.0              0.244           0.264         311.926
                                         ozf).
                                        3 (>8.0 ozf)............         (0.165)         (0.179)       (210.875)
                                                                 -----------------
    Total TSL 2.......................  ........................           0.087           0.095         111.882
                                                                 =================
3.....................................  1 (<=5.0 ozf)...........           0.000           0.000           0.000
                                        2 (>5.0 ozf and <=8.0              0.000           0.000           0.000
                                         ozf).
                                        3 (>8.0 ozf)............           0.093           0.101         119.572
                                                                 =================
                                                                 =================
3a....................................  1 (<=5.0 ozf)...........           0.001           0.001           0.650
                                        2 (>5.0 ozf and <=8.0              0.001           0.001           1.300
                                         ozf).
                                        3 (>8.0 ozf)............           0.093           0.101         119.572
                                                                 -----------------------------------------------
    Total TSL 3a......................  ........................           0.095           0.103         121.521
                                                                 =================
4.....................................  1 (<=5.0 ozf)...........           0.059           0.064          75.815
                                        2 (>5.0 ozf and <=8.0              0.196           0.212         250.516
                                         ozf).
                                        3 (>8.0 ozf)............         (0.092)         (0.100)       (118.272)
                                                                 -----------------------------------------------
    Total TSL 4.......................  ........................           0.163           0.176         208.059
                                                                 =================
4a....................................  1 (<=5.0 ozf)...........           0.059           0.064          75.815
                                        2 (>5.0 ozf and <=8.0              0.196           0.212         250.516
                                         ozf).
                                        3 (>8.0 ozf)............         (0.463)         (0.503)       (593.418)
                                                                 -----------------------------------------------
    Total TSL 4a......................  ........................         (0.209)         (0.226)       (267.087)
----------------------------------------------------------------------------------------------------------------

    OMB Circular A-4 \61\ requires agencies to present analytical 
results, including separate schedules of the monetized benefits and 
costs that show the type and timing of benefits and costs. Circular A-4 
also directs agencies to consider the variability of key elements 
underlying the estimates of benefits and costs. For this rulemaking, 
DOE undertook a sensitivity analysis using 9, rather than 30, years of 
product shipments. The choice of a 9-year period is a proxy for the 
timeline in EPCA for the review of certain energy conservation 
standards and potential revision of and compliance with such revised 
standards.\62\ The review timeframe established in EPCA is generally 
not synchronized with the product lifetime, product manufacturing 
cycles, or other factors specific to CPSV equipment. Thus, such results 
are presented for informational purposes only and are not indicative of 
any

[[Page 4787]]

change in DOE's analytical methodology. Table V.17 reports cumulative 
national energy and water savings associated with this shorter analysis 
period of 2019-2027. The impacts are counted over the lifetime of 
products purchased during this period.
---------------------------------------------------------------------------

    \61\ U.S. Office of Management and Budget, ``Circular A-4: 
Regulatory Analysis'' (Sept. 17, 2003) (Available at: http://www.whitehouse.gov/omb/circulars_a004_a-4/).
    \62\ Section 325(m) of 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. 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.17--Commercial Prerinse Spray Valves: Cumulative National Energy and Water Savings for Products Shipped
                                                  in 2019-2027
----------------------------------------------------------------------------------------------------------------
                                                                      National energy savings
                                                                              (quads)             National water
                  TSL                         Product class      --------------------------------     savings
                                                                      Primary           FFC        (billion gal)
----------------------------------------------------------------------------------------------------------------
1.....................................  1 (<=5.0 ozf)...........           0.002           0.003           2.917
                                        2 (>5.0 ozf and <=8.0              0.031           0.034          39.030
                                         ozf).
                                        3 (>8.0 ozf)............         (0.023)         (0.025)        (28.353)
                                                                 -----------------------------------------------
    Total TSL 1.......................  ........................           0.011           0.012          13.593
                                                                 -----------------------------------------------
2.....................................  1 (<=5.0 ozf)...........           0.002           0.003           2.917
                                        2 (>5.0 ozf and <=8.0              0.068           0.073          84.010
                                         ozf).
                                        3 (>8.0 ozf)............         (0.046)         (0.050)        (56.794)
                                                                 -----------------------------------------------
    Total TSL 2.......................  ........................           0.024           0.026          30.133
                                                                 -----------------------------------------------
3.....................................  1 (<=5.0 ozf)...........           0.000           0.000           0.000
                                        2 (>5.0 ozf and <=8.0              0.000           0.000           0.000
                                         ozf).
                                        3 (>8.0 ozf)............           0.026           0.028          32.204
                                                                 -----------------------------------------------
    Total TSL 3.......................  ........................           0.026           0.028          32.204
                                                                 -----------------------------------------------
3a....................................  1 (<=5.0 ozf)...........           0.000           0.000           0.175
                                        2 (>5.0 ozf and <=8.0              0.000           0.000           0.350
                                         ozf).
                                        3 (>8.0 ozf)............           0.026           0.028          32.204
                                                                 -----------------------------------------------
    Total TSL 3a......................  ........................           0.026           0.029          32.729
                                                                 -----------------------------------------------
4.....................................  1 (<=5.0 ozf)...........           0.016           0.018          20.419
                                        2 (>5.0 ozf and <=8.0              0.054           0.059          67.471
                                         ozf).
                                        3 (>8.0 ozf)............         (0.026)         (0.028)        (31.854)
                                                                 -----------------------------------------------
    Total TSL 4.......................  ........................           0.045           0.049          56.036
                                                                 -----------------------------------------------
4a....................................  1 (<=5.0 ozf)...........           0.016           0.018          20.419
                                        2 (>5.0 ozf and <=8.0              0.054           0.059          67.471
                                         ozf).
                                        3 (>8.0 ozf)............         (0.129)         (0.140)       (159.824)
                                                                 -----------------------------------------------
    Total TSL 4a......................  ........................         (0.058)         (0.063)        (71.934)
----------------------------------------------------------------------------------------------------------------

b. Net Present Value of Consumer Costs and Benefits
    DOE estimated the cumulative NPV to the nation of the total costs 
and savings for consumers that would result from particular standard 
levels for commercial prerinse spray valves. In accordance with OMB's 
guidelines on regulatory analysis,\63\ DOE calculated NPV using both a 
7-percent and a 3-percent real discount rate.
---------------------------------------------------------------------------

    \63\ U.S. Office of Management and Budget, ``Circular A-4: 
Regulatory Analysis, section E,'' (Sept. 17, 2003) (Available at: 
http://www.whitehouse.gov/omb/circulars_a004_a-4/).
---------------------------------------------------------------------------

    Table V.18 shows the consumer NPV results for each TSL DOE 
considered for commercial prerinse spray valves. The impacts are 
counted over the lifetime of products purchased in 2019-2048.

   Table V.18--Commercial Prerinse Spray Valves: Cumulative Net Present Value of Consumer Benefits for Product
                                              Shipped in 2019-2048
----------------------------------------------------------------------------------------------------------------
                                                                                    Net present value  (billion
                                                                                              $2014)
                      TSL                                 Product class          -------------------------------
                                                                                     7-Percent       3-Percent
                                                                                   discount rate   discount rate
----------------------------------------------------------------------------------------------------------------
1.............................................  1 (<=5.0 ozf)...................           0.067           0.137
                                                2 (>5.0 ozf and <=8.0 ozf)......           0.892           1.828
                                                3 (>8.0 ozf)....................         (0.656)         (1.342)
                                                                                 -------------------------------
    Total TSL 1...............................  ................................           0.303           0.623
                                                                                 -------------------------------
2.............................................  1 (<=5.0 ozf)...................           0.067           0.137
                                                2 (>5.0 ozf and <=8.0 ozf)......           1.924           3.943
                                                3 (>8.0 ozf)....................         (1.319)         (2.699)
                                                                                 -------------------------------
    Total TSL 2...............................  ................................           0.672           1.381
                                                                                 -------------------------------

[[Page 4788]]

 
3.............................................  1 (<=5.0 ozf)...................           0.000           0.000
                                                2 (>5.0 ozf and <=8.0 ozf)......           0.000           0.000
                                                3 (>8.0 ozf)....................           0.718           1.476
                                                                                 -------------------------------
    Total TSL 3...............................  ................................           0.718           1.476
                                                                                 -------------------------------
3a............................................  1 (<=5.0 ozf)...................           0.004           0.008
                                                2 (>5.0 ozf and <=8.0 ozf)......           0.008           0.016
                                                3 (>8.0 ozf)....................           0.718           1.476
                                                                                 -------------------------------
    Total TSL 3a..............................  ................................           0.730           1.500
                                                                                 -------------------------------
4.............................................  1 (<=5.0 ozf)...................           0.473           0.968
                                                2 (>5.0 ozf and <=8.0 ozf)......           1.539           3.156
                                                3 (>8.0 ozf)....................         (0.763)         (1.557)
                                                                                 -------------------------------
    Total TSL 4...............................  ................................           1.249           2.568
                                                                                 -------------------------------
4a *..........................................  1 (<=5.0 ozf)...................           0.473           0.968
                                                2 (>5.0 ozf and <=8.0 ozf)......           1.539           3.156
                                                3 (>8.0 ozf)....................         (3.616)         (7.421)
                                                                                 -------------------------------
    Total TSL 4a..............................  ................................         (1.603)         (3.296)
----------------------------------------------------------------------------------------------------------------
* In TSL 4a, DOE assumed that the installed costs for faucets and commercial prerinse spray valves are equal.

    DOE also determined financial impacts for a sensitivity case 
utilizing a 9-year analysis period. Table V.19 reports NPV results 
associated with this shorter analysis period. The impacts are counted 
over the lifetime of products purchased in 2019-2027. This information 
is presented for informational purposes only, and is not indicative of 
any change in DOE's analytical methodology or decision criteria.

  Table V.19--Commercial Prerinse Spray Valves: Cumulative Net Present Value of Customer Benefits for Equipment
                                              Shipped in 2019-2027
----------------------------------------------------------------------------------------------------------------
                                                                                    Net present value (billion
                                                                                              $2014)
                      TSL                                 Product class          -------------------------------
                                                                                  7[dash]Percent  3[dash]Percent
                                                                                   discount rate   discount rate
----------------------------------------------------------------------------------------------------------------
1.............................................  1 (<=5.0 ozf)...................           0.030           0.044
                                                2 (>5.0 ozf and <=8.0 ozf)......           0.397           0.580
                                                3 (>8.0 ozf)....................         (0.293)         (0.427)
                                                                                 -------------------------------
    Total TSL 1...............................  ................................           0.135           0.197
                                                                                 -------------------------------
2.............................................  1 (<=5.0 ozf)...................           0.030           0.044
                                                2 (>5.0 ozf and <=8.0 ozf)......           0.858           1.252
                                                3 (>8.0 ozf)....................         (0.589)         (0.859)
                                                                                 -------------------------------
    Total TSL 2...............................  ................................           0.299           0.437
                                                                                 -------------------------------
3.............................................  1 (<=5.0 ozf)...................           0.000           0.000
                                                2 (>5.0 ozf and <=8.0 ozf)......           0.000           0.000
                                                3 (>8.0 ozf)....................           0.319           0.467
                                                                                 -------------------------------
    Total TSL 3...............................  ................................           0.319           0.467
                                                                                 -------------------------------
3a............................................  1 (<=5.0 ozf)...................           0.002           0.003
                                                2 (>5.0 ozf and <=8.0 ozf)......           0.003           0.005
                                                3 (>8.0 ozf)....................           0.319           0.467
                                                                                 -------------------------------
    Total TSL 3a..............................  ................................           0.324           0.474
                                                                                 -------------------------------
4.............................................  1 (<=5.0 ozf)...................           0.211           0.308
                                                2 (>5.0 ozf and <=8.0 ozf)......           0.686           1.002
                                                3 (>8.0 ozf)....................         (0.342)         (0.497)
                                                                                 -------------------------------
    Total TSL 4...............................  ................................           0.555           0.812
                                                                                 -------------------------------
4a *..........................................  1 (<=5.0 ozf)...................           0.211           0.308
                                                2 (>5.0 ozf and <=8.0 ozf)......           0.686           1.002

[[Page 4789]]

 
                                                3 (>8.0 ozf)....................         (1.610)         (2.352)
                                                                                 -------------------------------
    Total TSL 4a..............................  ................................          (.713)         (1.043)
----------------------------------------------------------------------------------------------------------------
*In TSL 4a, DOE assumed that the installed costs for faucets and commercial prerinse spray valves are equal.

c. Indirect Impacts on Employment
    DOE expects amended energy conservation standards for commercial 
prerinse spray valves to reduce energy bills for consumers of those 
products, with the resulting net savings being redirected to other 
forms of economic activity. These expected 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 
expenditures (the income effect). As described in section IV.N of this 
document, 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. 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 
timeframes (2020-2025), where these uncertainties are reduced.
    The results suggest that the amended standards are likely to have a 
negligible impact on the net demand for labor in the economy. All TSLs 
increase net demand for labor by fewer than 500 jobs. The net change in 
jobs is so small that it would be imperceptible in national labor 
statistics, and it might be offset by other, unanticipated effects on 
employment. Chapter 16 of the final rule TSD presents detailed results 
regarding indirect employment impacts. As shown in Table V.20, DOE 
estimates that net indirect employment impacts from a CPSV amended 
standard are small relative to the national economy.


         Table V.20--Net Short-Term Change in Employment (Jobs)
------------------------------------------------------------------------
          Trial Standard Level                 2020            2025
------------------------------------------------------------------------
1.......................................              36             103
2.......................................              80             229
3.......................................              86             244
4.......................................             149             425
------------------------------------------------------------------------

4. Impact on Utility or Performance of Products
    Based on testing conducted in support of this rulemaking, discussed 
in section IV.C.4.b of this document, DOE has concluded that the 
amended standards in this final rule would not reduce the utility or 
performance of the commercial prerinse spray valves under consideration 
in this rulemaking. Manufacturers of these products currently offer 
units that meet or exceed the amended standards.
5. Impact of Any Lessening of Competition
    As discussed in section III.F.1.e, the Attorney General determines 
the impact, if any, of any lessening of competition likely to result 
from a proposed standard and transmits such determination in writing to 
the Secretary within 60 days of the publication of a proposed rule, 
along with an analysis of the nature and extent of the impact. To 
assist the Attorney General in making such determination, DOE provided 
the DOJ with copies of the CPSV NOPR and TSD for review. In its 
assessment letter responding to DOE, DOJ concluded that the amended 
energy conservation standards for commercial prerinse spray valves are 
unlikely to have a significant adverse impact on competition. DOE is 
publishing the Attorney General's assessment at the end of this 
document.
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 from amended standards for commercial prerinse 
spray valves is expected to yield environmental benefits in the form of 
reduced emissions of air pollutants and GHGs. Table V.21 provides DOE's 
estimate of cumulative emissions reductions expected to result from the 
TSLs considered in this rulemaking. The table includes both power 
sector emissions and upstream emissions. The emissions were calculated 
using the multipliers discussed in section IV.K. DOE reports annual 
emissions reductions for each TSL in chapter 13 of the final rule TSD.

[[Page 4790]]



 Table V.21--Cumulative Emissions Reduction Estimated for Commercial Prerinse Spray Valves Trial Standard Levels
                                        for Products Shipped in 2019-2048
----------------------------------------------------------------------------------------------------------------
                                                                                TSL
                                                 ---------------------------------------------------------------
                                                         1               2               3               4
----------------------------------------------------------------------------------------------------------------
                                         Power Sector and Site Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......................            2.26            5.00            5.35            9.31
NOX (thousand tons).............................            2.82            6.24            6.67           11.61
Hg (tons).......................................            0.00            0.01            0.01            0.01
N2O (thousand tons).............................            0.02            0.04            0.04            0.07
CH4 (thousand tons).............................            0.13            0.28            0.30            0.52
SO2 (thousand tons).............................            0.74            1.64            1.75            3.05
----------------------------------------------------------------------------------------------------------------
                                               Upstream Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......................            0.22            0.48            0.52            0.90
NOX (thousand tons).............................            3.39            7.51            8.03           13.97
Hg (tons).......................................            0.00            0.00            0.00            0.00
N2O (thousand tons).............................            0.00            0.00            0.00            0.00
CH4 (thousand tons).............................           19.87           44.04           47.07           81.90
SO2 (thousand tons).............................            0.01            0.03            0.03            0.05
----------------------------------------------------------------------------------------------------------------
                                                 Total Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......................            2.48            5.49            5.87           10.21
NOX (thousand tons).............................            6.20           13.75           14.70           25.57
Hg (tons).......................................            0.00            0.01            0.01            0.01
N2O (thousand tons).............................            0.02            0.04            0.04            0.07
N2O (thousand tons CO2eq).......................            4.75           10.53           11.25           19.57
CH4 (thousand tons).............................           19.99           44.32           47.37           82.42
CH4 (thousand tons CO2eq) *.....................          559.83        1,241.00        1,326.29        2,307.80
SO2 (thousand tons).............................            0.75            1.67            1.79            3.11
----------------------------------------------------------------------------------------------------------------
* CO2eq is the quantity of CO2 that would have the same GWP.


    As part of the analysis for this rule, DOE estimated monetary 
benefits likely to result from the reduced emissions of CO2 
and NOX that DOE estimated for each of the considered TSLs 
for commercial prerinse spray valves. As discussed in section IV.L of 
this document, for CO2, DOE used the most recent values for 
the SCC developed by an interagency process. The four sets of SCC 
values for CO2 emissions reductions in 2015 resulting from 
that process (expressed in 2014$) are represented by $12.2/metric ton 
(the average value from a distribution that uses a 5-percent discount 
rate), $40.0/metric ton (the average value from a distribution that 
uses a 3-percent discount rate), $62.3/metric ton (the average value 
from a distribution that uses a 2.5-percent discount rate), and $117/
metric ton (the 95th-percentile value from a distribution that uses a 
3-percent discount rate). The values for later years are higher due to 
increasing damages (public health, economic, and environmental) as the 
projected magnitude of climate change increases.
    Table V.22 presents the global value of CO2 emissions 
reductions at each TSL. For each of the four cases, DOE calculated a 
present value of the stream of annual values using the same discount 
rate as was used in the studies upon which the dollar-per-ton values 
are based. DOE calculated domestic values as a range from 7 percent to 
23 percent of the global values; these results are presented in chapter 
14 of the final rule TSD.

  Table V.22--Estimates of Global Present Value of CO2 Emissions Reduction for Commercial Prerinse Spray Valves
                                            TSLs Shipped in 2019-2048
----------------------------------------------------------------------------------------------------------------
                                                                    SCC case * (million 2014$)
                                                 ---------------------------------------------------------------
                       TSL                          5% discount     3% discount    2.5% discount    3% discount
                                                   rate, average   rate, average   rate, average    rate, 95th
                                                         *               *               *         percentile *
----------------------------------------------------------------------------------------------------------------
                                            Primary Energy Emissions
----------------------------------------------------------------------------------------------------------------
1...............................................              17              75             119             229
2...............................................              38             167             263             507
3...............................................              40             178             281             541
4...............................................              70             310             489             942
----------------------------------------------------------------------------------------------------------------
                                               Upstream Emissions
----------------------------------------------------------------------------------------------------------------
1...............................................               2               7              11              22
2...............................................               4              16              25              49

[[Page 4791]]

 
3...............................................               4              17              27              52
4...............................................               7              30              47              91
----------------------------------------------------------------------------------------------------------------
                                                 Total Emissions
----------------------------------------------------------------------------------------------------------------
1...............................................              19              82             130             251
2...............................................              41             183             288             555
3...............................................              44             195             308             594
4...............................................              77             340             536           1,033
----------------------------------------------------------------------------------------------------------------
* For each of the four cases, the corresponding SCC value for emissions in 2015 is $12.2, $40.0, $62.3, and $117
  per metric ton (2014$). The values are for CO2 only (i.e., not CO2eq of other greenhouse gases).

    DOE is well aware that scientific and economic knowledge about the 
contribution of CO2 and other GHG emissions to changes in 
the future global climate and the potential resulting damages to the 
world economy continues to evolve rapidly. Thus, any value placed on 
reduced CO2 emissions in this rulemaking is subject to 
change. DOE, together with other Federal agencies, will continue to 
review various methodologies for estimating the monetary value of 
reductions in CO2 and other GHG emissions. This ongoing 
review will consider the comments on this subject that are part of the 
public record for this and other rulemakings, as well as other 
methodological assumptions and issues. However, consistent with DOE's 
legal obligations, and taking into account the uncertainty involved 
with this particular issue, DOE has included in this final rule the 
most recent values and analyses resulting from the interagency review 
process.
    DOE also estimated the cumulative monetary value of the economic 
benefits associated with NOX emissions reductions 
anticipated to result from the considered TSLs for commercial prerinse 
spray valves. The dollar-per-ton value that DOE used is discussed in 
section IV.L of this document. Table V.23 presents the cumulative 
present values for NOX emissions for each TSL calculated 
using 7-percent and 3-percent discount rates.

 Table V.23--Estimates of Present Value of NOX Emissions Reduction Under
         Commercial Prerinse Spray Valves Trial Standard Levels
------------------------------------------------------------------------
                                                   Million 2014$
                                         -------------------------------
                   TSL                      3% discount     7% discount
                                               rate            rate
------------------------------------------------------------------------
                         Power Sector Emissions
------------------------------------------------------------------------
1.......................................              10               5
2.......................................              22              10
3.......................................              24              11
4.......................................              42              19
------------------------------------------------------------------------
                           Upstream Emissions
------------------------------------------------------------------------
1.......................................              12               5
2.......................................              27              12
3.......................................              29              13
4.......................................              50              22
------------------------------------------------------------------------
                             Total Emissions
------------------------------------------------------------------------
1.......................................              22              10
2.......................................              49              22
3.......................................              52              24
4.......................................              91              42
------------------------------------------------------------------------

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 consumer 
savings calculated

[[Page 4792]]

for each TSL considered in this rulemaking. Table V.24 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 consumer 
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 in section V.B.6.

Table V.24--Net Present Value of Consumer Savings Combined With Present Value of Monetized Benefits From CO2 and
                                            NOX Emissions Reductions
----------------------------------------------------------------------------------------------------------------
                                                                           Billion 2014$
                                                 ---------------------------------------------------------------
                                                   SCC Value of    SCC Value of    SCC Value of    SCC Value of
                       TSL                         $12.2/metric    $40.0/metric    $62.3/metric     $117/metric
                                                   ton CO2* and    ton CO2* and    ton CO2* and    ton CO2* and
                                                   Medium Value    Medium Value    Medium Value    Medium Value
                                                     for NOX**       for NOX**       for NOX**       for NOX**
----------------------------------------------------------------------------------------------------------------
                                  Consumer NPV at 3% Discount Rate added with:
----------------------------------------------------------------------------------------------------------------
1...............................................           0.664           0.728           0.775           0.896
2...............................................           1.471           1.613           1.718           1.985
3...............................................           1.572           1.724           1.836           2.122
4...............................................           2.736           2.999           3.195           3.692
----------------------------------------------------------------------------------------------------------------
                                  Consumer NPV at 7% Discount Rate added with:
----------------------------------------------------------------------------------------------------------------
1...............................................           0.332           0.396           0.443           0.564
2...............................................           0.735           0.877           0.982           1.249
3...............................................           0.786           0.937           1.050           1.335
4...............................................           1.367           1.630           1.826           2.323
----------------------------------------------------------------------------------------------------------------
* For each of the four cases, the corresponding SCC value for emissions in 2015 is $12.2, $40.0, $62.3, and $117
  per metric ton (2014$).
** The medium value for NOX is $2,723 per short ton (2014$)

    In considering the results discussed previously, 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 products shipped in 2019 through 2048. Because 
CO2 emissions have a very long residence time in the 
atmosphere,\64\ the SCC values in future years reflect future climate-
related impacts that continue beyond 2100.
---------------------------------------------------------------------------

    \64\ 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

    Any new or amended energy conservation standards that DOE adopts 
for any type (or class) of covered product must be designed to achieve 
the maximum improvement in energy efficiency that the Secretary 
determines is technologically feasible and economically justified. (42 
U.S.C. 6295(o)(2)(A)) In determining whether a 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))
    For this final rule, DOE considered the impacts of amended 
standards for commercial prerinse spray valves at each TSL, beginning 
with the max-tech 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.
    Tables in the following section present a summary of the results of 
DOE's quantitative analysis for each TSL. 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 consumers who may be 
disproportionately affected by a national standard and impacts on 
employment.
    DOE also notes that the economics literature provides a wide-
ranging discussion of how consumers trade off upfront costs and energy 
savings in the absence of government intervention. Much of this 
literature attempts to explain why consumers appear to undervalue 
energy efficiency improvements. There is evidence that consumers 
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; (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 (for example, between 
renters and owners, or builders and purchasers). Having less than 
perfect foresight and a high degree of uncertainty about the future, 
consumers may trade off these types of investments at a higher than 
expected rate between current consumption and uncertain future energy 
cost savings.
    In DOE's current regulatory analysis, potential changes in the 
benefits and costs of a regulation due to changes in consumer purchase 
decisions are included in two ways. First, if consumers forego the 
purchase of a product in the standards case, this decreases sales for 
product manufacturers, and the impact on manufacturers attributed to 
lost revenue is included in the MIA. Second, DOE

[[Page 4793]]

accounts for energy savings attributable only to products actually used 
by consumers in the standards case; if a regulatory option decreases 
the number of products purchased by consumers, this decreases the 
potential energy savings from an energy conservation standard. DOE 
provides estimates of shipments and changes in the volume of product 
purchases in chapter 9 of the final rule TSD. However, DOE's current 
analysis does not explicitly control for heterogeneity in consumer 
preferences, preferences across subcategories of products or specific 
features, or consumer price sensitivity variation according to 
household income.\65\
---------------------------------------------------------------------------

    \65\ P.C. Reiss and M.W. White, Household Electricity Demand, 
Revisited, Review of Economic Studies 72, 853-883 (2005).
---------------------------------------------------------------------------

    While DOE is not prepared at present to provide a fuller 
quantifiable framework for estimating the benefits and costs of changes 
in consumer purchase decisions due to an energy conservation standard, 
DOE is committed to developing a framework that can support empirical 
quantitative tools for improved assessment of the consumer welfare 
impacts of appliance standards. DOE has posted a paper that discusses 
the issue of consumer welfare impacts of appliance energy conservation 
standards, and potential enhancements to the methodology by which these 
impacts are defined and estimated in the regulatory process.\66\
---------------------------------------------------------------------------

    \66\ Alan Sanstad, Notes on the Economics of Household Energy 
Consumption and Technology Choice. Lawrence Berkeley National 
Laboratory (2010) (Available online at: https://www1.eere.energy.gov/buildings/appliance_standards/pdfs/consumer_ee_theory.pdf).
---------------------------------------------------------------------------

1. Benefits and Burdens of TSLs Considered for Commercial Prerinse 
Spray Valve Standards
    Table V.25 and Table V.26 summarize the quantitative impacts 
estimated for each TSL for commercial prerinse spray valves. The 
national impacts are measured over the lifetime of commercial prerinse 
spray valves purchased in the 30-year period that begins in the first 
year of compliance with amended standards (2019-2048). The energy 
savings, emissions reductions, and value of emissions reductions refer 
to full-fuel-cycle results. The efficiency levels contained in each TSL 
are described in section V.A of this document. Note that the tables in 
this section report the results only for the standard TSLs that utilize 
the default shipments scenario. Results for the two sensitivity-case 
TSLs are reported in sections V.B.2 and V.B.3.

                  Table V.25--Summary of Analytical Results for Commercial Prerinse Spray Valve Trial Standard Levels: National Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
              Category                           TSL 1                        TSL 2                        TSL 3                        TSL 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          Cumulative FFC Energy Savings (quads)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                     0.04........................  0.10.......................  0.10.......................  0.18.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                         Cumulative Water Savings (billion gal)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                     50.47.......................  111.88.....................  119.57.....................  208.06.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                        NPV of Consumer Benefits (2014$ billion)
--------------------------------------------------------------------------------------------------------------------------------------------------------
3% discount rate...................  0.62........................  1.38.......................  1.48.......................  2.57.
7% discount rate...................  0.30........................  0.67.......................  0.72.......................  1.25.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                           Cumulative FFC Emissions Reduction
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 million metric tons............  2.48........................  5.49.......................  5.87.......................  10.21.
NOX thousand tons..................  6.20........................  13.75......................  14.70......................  25.57.
Hg tons............................  0.00........................  0.01.......................  0.01.......................  0.01.
N2O thousand tons..................  0.02........................  0.04.......................  0.04.......................  0.07.
N2O thousand tons CO2eq*...........  4.75........................  10.53......................  11.25......................  19.57.
CH4 thousand tons..................  19.99.......................  44.32......................  47.37......................  82.42.
CH4 thousand tons CO2eq*...........  559.83......................  1,241.00...................  1,326.29...................  2,307.80.
SO2 thousand tons..................  0.75........................  1.67.......................  1.79.......................  3.11.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Value of Emissions Reduction
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 2014$ million **...............  19 to 251...................  41 to 555..................  44 to 594..................  77 to 1033.
NOX--3% discount rate 2014$ million  22 to 50....................  49 to 110..................  52 to 117..................  91 to 204.
NOX--7% discount rate 2014$ million  10 to 22....................  22 to 50...................  24 to 53...................  42 to 92.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* CO2eq is the quantity of CO2 that would have the same GWP.
** Range of the economic value of CO2 reductions is based on estimates of the global benefit of reduced CO2 emissions.


         Table V.26--Summary of Analytical Results for Commercial Prerinse Spray Valve Trial Standard Levels: Manufacturer and Consumer Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
              Category                          TSL 1 *                      TSL 2 *                      TSL 3 *                      TSL 4 *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  Manufacturer Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
Industry NPV Relative to a No-New-   7.1-7.7.....................  6.7-7.5....................  7.4-8.0....................  6.2-7.1.
 Standards Case Value of 8.6 (2014$
 million, 6.9% discount rate).
Industry NPV (% change)............  (17.5)-(9.9)................  (21.4)-(12.8)..............  (13.1)-(6.5)...............  (28.0)-(17.4).
--------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 4794]]

 
                                                                Direct Employment Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
Potential Increase in Domestic       0...........................  0..........................  0..........................  0.
 Production Workers in 2019.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          Consumer Average LCC Savings (2014$)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Product Class 1 (<=5.0 ozf)........  334.........................  557........................  N/A........................  352.
Product Class 2 (>5.0 and <=8.0      401.........................  446........................  N/A........................  825.
 ozf).
Product Class 3 (>8.0 ozf).........  357.........................  547........................  547........................  766.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Consumer Simple PBP (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Product Class 1 (<=5.0 ozf)........  0.0.........................  0.0........................  0.0........................  0.0.
Product Class 2 (>5.0 and <=8.0      0.0.........................  0.0........................  0.0........................  0.0.
 ozf).
Product Class 3 (>8.0 ozf).........  0.0.........................  0.0........................  0.0........................  0.0.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                   Distribution of Consumer LCC Impacts--Net Cost (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Product Class 1 (<=5.0 ozf)........  0...........................  0..........................  0..........................  0.
Product Class 2 (>5.0 and <=8.0      0...........................  0..........................  0..........................  0.
 ozf).
Product Class 3 (>8.0 ozf).........  0...........................  0..........................  0..........................  0.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative (-) values. The entry ``N/A'' means not applicable because there is no change in the standard at certain TSLs.

    DOE first considered TSL 4, which represents the max-tech 
efficiency levels. TSL 4 would save 0.18 quads of energy and 208.06 
billion gallons of water. Under TSL 4, the NPV of consumer benefit 
would be $1.25 billion using a discount rate of 7 percent, and $2.57 
billion using a discount rate of 3 percent.
    The cumulative emissions reductions at TSL 4 are 10.21 Mt of 
CO2, 25.57 thousand tons of NOX, 3.11 thousand 
tons of SO2, 0.01 tons of Hg, 0.07 thousand tons of 
N2O, and 82.42 thousand tons of CH4. The 
estimated monetary value of the CO2 emissions reductions at 
TSL 4 ranges from $77 million to $1,033 million.
    At TSL 4, the average LCC impact is a savings of $357 for CPSV 
models in product class 1, $825 for CPSV models in product class 2, and 
$766 for CPSV models in product class 3. The simple PBP is 0.0 years 
for all CPSV models because there are no incremental equipment costs 
for more efficient products. The fraction of consumers experiencing an 
LCC net cost is 0 percent for all CPSV models.
    At TSL 4, the projected change in INPV ranges from a decrease of 
$2.4 million to a decrease of $1.5 million. If the lower bound of the 
range of impacts is reached, TSL 4 could result in a net loss of up to 
28.0 percent in INPV for manufacturers.
    Although TSL 4 for commercial prerinse spray valves provides 
positive LCC savings and a positive total NPV of consumer benefits, the 
estimated industry losses are large. Moreover, the studied sensitivity 
case of TSL 4a indicated that the outcomes of setting a standard at TSL 
4 could be far less favorable, including sufficient loss of utility to 
drive consumers from the CPSV market to another product.
    TSL 4a would increase energy use by 0.23 quads of energy, and 
increase water use by 267.08 billion gallons of water. Under TSL 4a, 
the NPV of consumer benefit would be -$1.60 billion using a discount 
rate of 7 percent, and -$3.30 billion using a discount rate of 3 
percent.
    At TSL 4a, the projected change in INPV ranges from a decrease of 
$3.8 million to a decrease of $3.1 million. If the lower bound of the 
range of impacts is reached, TSL 4 could result in a net loss of up to 
44.4 percent in INPV for manufacturers.
    Therefore, the Secretary concludes that at TSL 4 the benefits of 
energy savings, positive NPV of consumer benefits, emission reductions, 
and the estimated monetary value of the emissions reductions would be 
outweighed by the reduction in manufacturer industry value. 
Consequently, the Secretary has concluded that TSL 4 is not 
economically justified.
    DOE then considered TSL 3, which saves an estimated total of 0.10 
quads of energy and 119.57 billion gallons of water. TSL 3 has an 
estimated NPV of consumer benefit of $0.72 billion using a 7-percent 
discount rate, and $1.48 billion using a 3-percent discount rate.
    TSL 3 represents the minimum flow rate for each product class that 
would not induce consumers to switch product classes as a result of a 
standard at those flow rates, and retains shower-type designs. 
Therefore, unlike TSL 4, TSL 3 maintains consumer utility and the 
availability of all types of products currently in the marketplace.
    The cumulative emissions reductions at TSL 3 are 5.87 Mt of 
CO2, 14.70 thousand tons of NOX, 1.79 thousand 
tons of SO2, 0.01 tons of Hg, and 47.37 thousand tons of 
CH4. The estimated monetary value of the CO2 
emissions reductions at TSL 3 ranges from $44 million to $594 million.
    At TSL 3, the average LCC impact is a savings of $0 for CPSV models 
in product classes 1 and 2 because the market minimums are the standard 
for those classes. Because no consumers in the no-new-standards case 
purchase products with a higher flow rate than the respective market 
minimums, no consumers are affected by a standard set at EL 1 (market 
minimum) in product classes 1 and 2. Consumers of CPSV models in 
product class 3 save an average of $547 over a product's lifetime. The 
simple payback period is 0.0 years for all CPSV models. The fraction of 
consumers experiencing an LCC net cost is 0 percent for all CPSV 
models.
    At TSL 3, the projected change in INPV ranges from a decrease of 
$1.1 million to a decrease of $0.6 million. If the lower bound of the 
range of impacts is reached, TSL 3 could result in a net loss of up to 
13.1 percent in INPV for manufacturers. Moreover, the studied 
sensitivity case of TSL 3a indicated that

[[Page 4795]]

the outcomes of setting a standard at TSL 3 could provide an 
opportunity for incremental savings for product classes 1 and 2, if 
some products exist at the current minimum standard level. These 
additional savings enable TSL 3a to save an estimated total of 0.10 
quads of energy and 121.52 billion gallons of water. TSL 3a has an 
estimated NPV of consumer benefit of $0.73 billion using a 7-percent 
discount rate, and $1.50 billion using a 3-percent discount rate.
    DOE concludes that at TSL 3 for commercial prerinse spray valves, 
the benefits of energy savings, water savings, positive NPV of consumer 
benefits, emission reductions, and the estimated monetary value of the 
CO2 emissions reductions would outweigh the negative impacts 
on manufacturers, including the conversion costs that could result in a 
reduction in INPV for manufacturers.
    After considering the analysis and the benefits and burdens of TSL 
3, DOE concludes that this TSL will offer the maximum improvement in 
efficiency that is technologically feasible and economically justified, 
and will result in the significant conservation of energy and water. 
Therefore, DOE adopts TSL 3 for commercial prerinse spray valves. The 
amended energy conservation standards for commercial prerinse spray 
valves, which are described in terms of flow rate, are shown in Table 
V.27.

    Table V.27--Amended Energy Conservation Standards for Commercial
                          Prerinse Spray Valves
------------------------------------------------------------------------
                                                             Flow rate
                      Product class                            (gpm)
------------------------------------------------------------------------
Product Class1 (<=5.0 ozf)..............................            1.00
Product Class2 (>5.0 ozf and <=8.0 ozf).................            1.20
Product Class 3 (>8.0 ozf)..............................            1.28
------------------------------------------------------------------------

2. Summary of Annualized Benefits and Costs of the Amended Standards
    The benefits and costs of the amended 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 products that meet the amended 
standards (consisting primarily of operating cost savings from using 
less energy and water, minus increases in product purchase costs) and 
(2) the annualized monetary value of the benefits of CO2 and 
NOX emission reductions.\67\
---------------------------------------------------------------------------

    \67\ To convert the time-series of costs and benefits into 
annualized values, DOE calculated a present value in 2014, 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.28 shows the annualized values for commercial prerinse 
spray valves under TSL 3, expressed in 2014$. 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), there are 
no increased product costs associated with the standards described in 
this rule, while the benefits are $69.90 million per year in reduced 
product operating costs, $10.94 million per year in CO2 
reductions, and $1.00 million per year in reduced NOX 
emissions. In this case, the net benefit amounts to $81.85 million per 
year.
    Using a 3-percent discount rate for all benefits and costs as well 
as the average SCC series that has a value of $40.0 per metric ton in 
2015, there are no increased product costs associated with the 
standards described in this rule, while the benefits are $81.32 million 
per year in reduced operating costs, $10.94 million in CO2 
reductions, and $1.11 million in reduced NOX emissions. In 
this case, the net benefit amounts to $93.37 million per year.

Table V.28--Annualized Benefits and Costs of Amended Standards (TSL 3) for Commercial Prerinse Spray Valves Sold
                                                  in 2019-2048
----------------------------------------------------------------------------------------------------------------
                                                                          Million 2014$/year
                                                     -----------------------------------------------------------
                                     Discount rate                         Low net benefits    High net benefits
                                                      Primary estimate *      estimate *          estimate *
----------------------------------------------------------------------------------------------------------------
                                                    Benefits
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings.  7%................  71................  66................  74.
                                  3%................  82................  76................  86.
CO2 Reduction at $12.0/t **.....  5%................  3.................  3.................  3.
CO2 Reduction at $40.5/t **.....  3%................  11................  11................  11.
CO2 Reduction at $62.4/t **.....  2.5%..............  16................  16................  16.
CO2 Reduction at $119/t **......  3%................  33................  33................  33.
NOX Reduction Monetized Value     7%................  2.................  2.................  5.
 [dagger].
                                  3%................  3.................  3.................  7.
                                 -------------------------------------------------------------------------------
Total Benefits [dagger][dagger].  7% plus CO2 range.  77 to 106.........  71 to 101.........  82 to 112.
                                  7%................  84................  79................  90.
                                  3% plus CO2 range.  89 to 118.........  82 to 112.........  96 to 126.
                                  3%................  96................  89................  104.
----------------------------------------------------------------------------------------------------------------
                                                      Costs
----------------------------------------------------------------------------------------------------------------
Manufacturer Conversion Costs     7%................  0.08 to 0.13......  0.08 to 0.13......  0.08 to 0.13.
 [dagger][dagger][dagger].
                                  3%................  0.05 to 0.08......  0.05 to 0.08......  0.05 to 0.08.
----------------------------------------------------------------------------------------------------------------
                                               Total Net Benefits
----------------------------------------------------------------------------------------------------------------
Total [dagger][dagger][dagger]..  7% plus CO2 range.  77 to 106.........  71 to 101.........  82 to 112.
                                  7%................  84................  79................  90.
                                  3% plus CO2 range.  89 to 118.........  82 to 112.........  96 to 126.

[[Page 4796]]

 
                                  3%................  96................  89................  104.
----------------------------------------------------------------------------------------------------------------
* This table presents the annualized costs and benefits associated with commercial prerinse spray valves shipped
  in 2019-2048. These results include benefits to consumers which accrue after 2048 from the products purchased
  in 2019-2048. The results account for the incremental variable and fixed costs incurred by manufacturers due
  to the amended 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
  estimate, and high estimate, respectively.
** 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.
[dagger] The $/ton values used for NOX are described in section IV.L. 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][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.
[dagger][dagger][dagger] The lower value of the range represents costs associated with the Sourced Components
  conversion cost scenario. The upper value represents costs for the Fabricated Components scenario.
[dagger][dagger][dagger][dagger] Total benefits for both the 3 percent and 7 percent cases are derived using the
  series corresponding to the average SCC with 3 percent discount rate. In the rows labeled ``7% plus CO[ihel2]
  range'' and ``3% plus CO[ihel2] range,'' the operating cost and NOX benefits are calculated using the labeled
  discount rate, and those values are added to the full range of CO[ihel2] values. Manufacturer Conversion Costs
  are not included in the net benefits calculations.

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 amended standards for commercial prerinse spray 
valves are intended to address are as follows:
    (1) Insufficient information and the high costs of gathering and 
analyzing relevant information leads some consumers to miss 
opportunities to make cost-effective investments in energy efficiency.
    (2) In some cases the benefits of more efficient products are not 
realized due to misaligned incentives between purchasers and users. An 
example of such a case is when the product 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 commercial prerinse spray valves that are not captured by 
the users of such products. 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 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. Accordingly, DOE is not submitting this 
final rule for review by OIRA.
    In addition, the Administrator of OIRA has determined that this 
regulatory action is not an ``economically'' significant regulatory 
action under section (3)(f)(1) of Executive Order 12866. Accordingly, 
pursuant to section 6(a)(3)(C) of the Order, DOE has provided to OIRA 
an assessment, including the underlying analysis, of benefits and costs 
anticipated from the regulatory action, together with, to the extent 
feasible, a quantification of those costs; and an assessment, including 
the underlying analysis, of costs and benefits of potentially effective 
and reasonably feasible alternatives to the planned regulation, and an 
explanation why the planned regulatory action is preferable to the 
identified potential alternatives. These assessments can be found in 
the technical support document for this rulemaking. DOE has also 
reviewed this regulation pursuant to Executive Order 13563, issued on 
January 18, 2011. 76 FR 3281 (Jan. 21, 2011). Executive Order 13563 is 
supplemental to and explicitly reaffirms the principles, structures, 
and definitions governing regulatory review established in Executive 
Order 12866. To the extent permitted by law, agencies are required by 
Executive Order 13563 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

[[Page 4797]]

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 an final regulatory flexibility analysis (FRFA) for any 
rule that by law must be proposed for public comment, unless the agency 
certifies that the rule, if promulgated, will not have a significant 
economic impact on a substantial number of small entities. As required 
by Executive Order 13272, ``Proper Consideration of Small Entities in 
Agency Rulemaking,'' 67 FR 53461 (August 16, 2002), DOE published 
procedures and policies on February 19, 2003, to ensure that the 
potential impacts of its rules on small entities are properly 
considered during the rulemaking process. 68 FR 7990. DOE has made its 
procedures and policies available on the Office of the General 
Counsel's Web site (http://energy.gov/gc/office-general-counsel). DOE 
has prepared the following FRFA for the products that are the subject 
of this rulemaking.
    For manufacturers of commercial prerinse spray valves, the Small 
Business Administration (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 http://www.sba.gov/sites/default/files/files/Size_Standards_Table.pdf. Manufacturing of 
commercial prerinse spray valves is classified under NAICS 332919, 
``Other Metal Valve and Pipe Fitting Manufacturing.'' The SBA sets a 
threshold of 500 employees or less for an entity to be considered as a 
small business for this category.
1. Statement of the Need for, and Objectives of, the Rule
    A statement of the need for, and objectives of, the rule is stated 
elsewhere in the preamble and not repeated here.
2. Statement of the Significant Issues Raised by Public Comments
    DOE received no comments specifically on the initial regulatory 
flexibility analysis prepared for this rulemaking. Comments on the 
economic impacts of the rule are discussed elsewhere in the preamble 
and did not necessitate changes to the analysis required by the 
Regulatory Flexibility Act.
3. Response to Comments Submitted by the Small Business Administration
    The Small Business Administration did not file any comments on the 
proposed rule.
4. Description on Estimated Number of Small Entities Regulated
    To estimate the number of small businesses that could be impacted 
by the amended energy conservation standards, DOE conducted a market 
survey using public information to identify potential small 
manufacturers. DOE reviewed the DOE's CCMS database, EPA's WaterSense 
program database, individual company Web sites, and various marketing 
research tools (e.g., Hoover's reports) to create a list of companies 
that import, assemble, or otherwise manufacture commercial prerinse 
spray valves covered by this rulemaking. DOE screened out companies 
that do not offer products covered by this rulemaking, do not meet the 
definition of a ``small business,'' or are foreign-owned and operated.
    DOE identified 13 commercial spray valve manufacturers selling 
commercial prerinse spray valves in the United States, 9 of which are 
small businesses.
5. Description and Estimate of Compliance Requirements
    The nine small domestic commercial prerinse spray valve 
manufacturers account for approximately 83 percent of commercial spray 
valve basic models currently on the market. The remaining 17 percent of 
commercial spray valve spray basic models currently on the market are 
offered by four large manufacturers.
    Using basic model counts, DOE estimated the distribution of 
industry conversion costs between small manufacturers and large 
manufacturers. Using its count of manufacturers, DOE calculated capital 
conversion costs (under both capital conversion costs scenarios, Table 
VI.1) and product conversion costs (Table VI.2) for an average small 
manufacturer versus an average large manufacturer. To provide context, 
DOE presents the conversion costs relative to annual revenue and annual 
operating profit under the standard level for the two capital 
conversion cost scenarios considered in the MIA, as shown in Table VI.3 
and Table VI.4. 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. Due to 
the lack of direct market share data for individual manufacturers, DOE 
used basic model counts as a percent of total basic models currently 
available on the market as a proxy for market share.

           Table VI.1--Comparison of Typical Small and Large Manufacturer's Capital Conversion Costs *
----------------------------------------------------------------------------------------------------------------
                                                    Sourced components capital     Fabricated components capital
                                                     conversion costs scenario       conversion costs scenario
                                                 ---------------------------------------------------------------
                                                      Capital         Capital         Capital         Capital
                                                    conversion      conversion      conversion      conversion
              Trial standard level                   costs for       costs for       costs for       costs for
                                                   typical small   typical large   typical small   typical large
                                                   manufacturer    manufacturer    manufacturer    manufacturer
                                                 ---------------------------------------------------------------
                                                  2014$ millions  2014$ millions  2014$ millions  2014$ millions
----------------------------------------------------------------------------------------------------------------
TSL 1...........................................            0.05            0.02            0.07            0.03
TSL 2...........................................            0.06            0.03            0.09            0.03
TSL 3...........................................            0.03            0.02            0.05            0.02

[[Page 4798]]

 
TSL 4...........................................            0.08            0.03            0.12            0.04
TSL 4a..........................................            0.06            0.02            0.09            0.03
----------------------------------------------------------------------------------------------------------------
* Capital conversion costs are the capital investments made during the 3-year period between the publication of
  the final rule and the first year of compliance with the amended standard.


Table VI.2--Comparison of Typical Small and Large Manufacturer's Product
                           Conversion Costs *
------------------------------------------------------------------------
                                              Product         Product
                                            conversion      conversion
                                             costs for       costs for
          Trial standard level             typical small   typical large
                                           manufacturer    manufacturer
                                              (2014$          (2014$
                                             millions)       millions)
------------------------------------------------------------------------
TSL 1...................................            0.14            0.07
TSL 2...................................            0.17            0.08
TSL 3...................................            0.07            0.05
TSL 4...................................            0.22            0.10
TSL 4a..................................            0.18            0.07
------------------------------------------------------------------------
* 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 first year of compliance with the amended
  standard.


  Table VI.3--Comparison of Conversion Costs for an Average Small and an Average Large Manufacturer at TSL 3--
                              Sourced Components Capital Conversion Costs Scenario
----------------------------------------------------------------------------------------------------------------
                                                                                                    Conversion
                                                      Capital         Product       Conversion        costs/
                                                    conversion      conversion        costs/        conversion
                                                   cost  (2014$    cost  (2014$     conversion        period
                                                     millions)       millions)        period         operating
                                                                                   revenue*  (%)   profit *  (%)
----------------------------------------------------------------------------------------------------------------
Small Manufacturer..............................            0.03            0.07               4              39
Large Manufacturer..............................            0.02            0.05               5              47
----------------------------------------------------------------------------------------------------------------
* The conversion period, the time between the final rule publication year and the first year of compliance for
  this rulemaking, is 3 years.


  Table VI.4--Comparison of Conversion Costs for an Average Small and an Average Large Manufacturer at TSL 3--
                             Fabricated Components Capital Conversion Costs Scenario
----------------------------------------------------------------------------------------------------------------
                                                                                                    Conversion
                                                      Capital         Product       Conversion        costs/
                                                    conversion      conversion        costs/        conversion
                                                   cost  (2014$    cost  (2014$     conversion        period
                                                     millions)       millions)    period revenue     operating
                                                                                      *  (%)       profit *  (%)
----------------------------------------------------------------------------------------------------------------
Small Manufacturer..............................            0.05            0.07               7              70
Large Manufacturer..............................            0.02            0.05               6              58
----------------------------------------------------------------------------------------------------------------
* The conversion period, the time between the final rule publication year and the first year of compliance for
  this rulemaking, is 3 years.

    At the established standard level, depending on the capital 
conversion cost scenario, DOE estimates total conversion costs for an 
average small manufacturer to range from $30,000 to $50,000 for the 
Sourced Components Capital Conversion Costs scenario and the Fabricated 
Components Capital Conversion Costs scenario, respectively. This 
suggests that an average small manufacturer would need to reinvest 
roughly 39 percent to 70 percent of its operating profit per year over 
the conversion period to comply with standards. Depending on the 
capital conversion cost scenario, the total conversion costs for an 
average large manufacturer range from $16,000 to $19,000 for the 
Sourced Components Capital Conversion Costs scenario and the Fabricated 
Components Capital Conversion Costs scenario, respectively. This 
suggests that an average large manufacturer would need to reinvest

[[Page 4799]]

roughly 47 percent to 58 percent of its commercial prerinse spray 
valve-related operating profit per year over the 3-year conversion 
period.
6. Description of Steps To Minimize Impacts to Small Businesses
    The discussion in the previous section analyzes impacts on small 
businesses that would result from DOE's final rule, represented by TSL 
3. In reviewing alternatives to the final rule, DOE examined energy 
conservation standards set at both higher and lower efficiency levels.
    With respect to TSL 4, DOE estimated that while there would be 
significant consumer benefits from the projected energy savings of 0.18 
quads of energy and 208.06 billion gallons of water (ranging from $1.25 
billion using a 7-percent discount rate to $2.57 billion using a 3-
percent discount rate), along with emissions reductions and positive 
LCC savings, the standards could result in an INPV reduction of $2.4 
million to $1.5 million. DOE determined that this INPV reduction would 
outweigh the potential benefits. (See also the description of DOE's 
sensitivity case of TSL4a in section V.C.)
    With respect to TSL 1 and TSL 2, EPCA requires DOE to establish 
standards at the level that would achieve the maximum improvement in 
energy efficiency that is technologically feasible and economically 
justified. Based on its analysis, DOE concluded that TSL 3 achieves the 
maximum improvement in energy efficiency that is technologically 
feasible and economically justified. Therefore, DOE did not establish 
standards at the levels considered at TSL 1 and TSL 2 because DOE 
determined that higher levels were technologically feasible and 
economically justified. DOE's analysis also shows that TSL 1 and TSL 2 
would not reduce the impacts on small business manufacturers because 
there are more products that require redesign at TSL 1 and TSL 2 than 
at TSL 3. Therefore, TSL 3 results in lower impacts on small businesses 
than TSL 1 and TSL 2.
    In summary, DOE concluded that establishing standards at TSL 3 
balances the benefits of the energy savings and the NPV benefits to 
consumers at TSL 3 with the potential burdens placed on manufacturers, 
including small business manufacturers. Accordingly, DOE is declining 
to adopt 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.
    Additional compliance flexibilities may be available through other 
means. For example, individual manufacturers may petition for a waiver 
of the applicable test procedure. 10 CFR 431.401. Further, 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, inequity, or unfair distribution of burdens'' that may be 
imposed on that manufacturer as a result of such rule. Manufacturers 
should refer to 10 CFR part 430, subpart E, and part 1003 for 
additional details.

C. Review Under the Paperwork Reduction Act

    Manufacturers of commercial prerinse spray valves must certify to 
DOE that their products comply with any applicable energy conservation 
standards. In certifying compliance, manufacturers must test their 
products according to the DOE test procedures for commercial prerinse 
spray valves, 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 commercial prerinse spray valves. 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 rule fits within the category of actions 
included in Categorical Exclusion (CX) B5.1 and otherwise meets the 
requirements for application of a CX. See 10 CFR part 1021, appendix B, 
B5.1(b); Sec.  1021.410(b) and appendix B, B(1)-(5). The 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://cxnepa.energy.gov/.

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 
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 products that are 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

[[Page 4800]]

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). 
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 (Pub. L. 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 small governments. On March 18, 1997, 
DOE published a statement of policy on its process for 
intergovernmental consultation under UMRA. 62 FR 12820. DOE's policy 
statement is also available at http://energy.gov/sites/prod/files/gcprod/documents/umra_97.pdf.
    DOE has concluded that this final rule will not require 
expenditures of $100 million or more in any one year in the private 
sector.
    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 final rule 
TSD chapter 17, the ``Regulatory Impact Analysis,'' 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(o) 
and (dd), this final rule would establish amended energy conservation 
standards for commercial prerinse spray valves 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 chapter 17 of the final rule TSD, ``Regulatory Impact 
Analysis.''

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 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 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 
amended energy conservation standards for commercial prerinse spray 
valves, 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

[[Page 4801]]

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: 
www1.eere.energy.gov/buildings/appliance_standards/peer_review.html.

M. 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 not 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

    Administrative practice and procedure, Confidential business 
information, Energy conservation, Household appliances, Reporting and 
recordkeeping requirements.

10 CFR Part 431

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

    Issued in Washington, DC, on December 29, 2015.
David J. Friedman,
Principal Deputy Assistant Secretary, Energy Efficiency and Renewable 
Energy.

    For the reasons stated in the preamble, DOE amends parts 429 and 
431 of chapter II of title 10, 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 429.51(b) is revised to read as follows:


Sec.  429.51  Commercial pre-rinse spray valves.

* * * * *
    (b) Certification reports. (1) The requirements of Sec.  429.12 are 
applicable to commercial prerinse spray valves; and
    (2) Pursuant to Sec.  429.12(b)(13), a certification report must 
include the following public product-specific information: The flow 
rate, in gallons per minute (gpm), rounded to the nearest 0.01 gpm, and 
the corresponding spray force, in ounce-force (ozf), rounded to the 
nearest 0.1 ozf.

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

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

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


0
4. Section 431.266 is revised to read as follows:


Sec.  431.266  Energy conservation standards and their effective dates.

    (a) Commercial prerinse spray valves manufactured on or after 
January 1, 2006 and before January 28, 2019, shall have a flow rate of 
not more than 1.6 gallons per minute. For the purposes of this 
standard, a commercial prerinse spray valve is a handheld device 
designed and marketed for use with commercial dishwashing and ware 
washing equipment that sprays water on dishes, flatware, and other food 
service items for the purpose of removing food residue before cleaning 
the items.
    (b) Commercial prerinse spray valves manufactured on or after 
January 28, 2019 shall have a flow rate that does not exceed the 
following:

------------------------------------------------------------------------
                                                             Flow rate
    Product class  (spray force in  ounce-force, ozf)      (gallons per
                                                           minute, gpm)
------------------------------------------------------------------------
Product Class 1 (<=5.0 ozf).............................            1.00
Product Class 2 (>5.0 ozf and <=8.0 ozf)................            1.20
Product Class 3 (>8.0 ozf)..............................            1.28
------------------------------------------------------------------------

    (1) For the purposes of this standard, the definition of commercial 
prerinse spray valve in Sec.  431.262 applies.
    (2) [Reserved]


    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
RFK Main Justice Building
950 Pennsylvania Ave. NW
Washington, DC 20530-0001
(202) 514-2401/(202) 616-2645 (Fax)

September 4, 2015

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

Re: Energy Conservation Standards for Commercial Prerinse Spray 
Valves Doc. No. EERE-2014-BT-STD-0027

Dear Deputy General Counsel Harkavy:

    I am responding to your July 9, 2015, letter seeking the views 
of the Attorney General about the potential impact on competition of 
proposed energy standards for commercial prerinse spray valves.
    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 required the Attorney General to make a 
determination of the impact of any lessening of competition that is 
likely to result from the imposition of proposed energy conservation 
standards. The Attorney General's responsibility for responding to 
requests from other departments about the effect of a program on 
competition has been delegated to the Assistant Attorney General for 
the Antitrust Division in 28 CFR 0.40(g).
    In conducting our analysis, the Antitrust Division examines 
whether a proposed standard may lessen competition, for example, by 
substantially limiting consumer

[[Page 4802]]

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 FR 39,486-39,539, July 9, 2015) and the 
related Technical Support Documents. We have also listened to, and 
reviewed materials from, the public meeting held on July 28, 2015. 
Further, we have talked to various industry representatives to 
determine their position regarding the proposed standards potential 
effect on competition. Based on this review, our conclusion is that 
the proposed energy conservation standards for commercial prerinse 
spray valves are unlikely to have a significant adverse impact on 
competition.

Sincerely,

William J. Baer

[FR Doc. 2016-00068 Filed 1-26-16; 8:45 am]
 BILLING CODE 6450-01-P