[Federal Register Volume 81, Number 177 (Tuesday, September 13, 2016)]
[Proposed Rules]
[Pages 62980-63049]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-21583]



[[Page 62979]]

Vol. 81

Tuesday,

No. 177

September 13, 2016

Part II





 Department of Energy





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10 CFR Part 431





 Energy Conservation Program: Energy Conservation Standards for Walk-In 
Cooler and Freezer Refrigeration Systems; Proposed Rule

  Federal Register / Vol. 81 , No. 177 / Tuesday, September 13, 2016 / 
Proposed Rules  

[[Page 62980]]


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DEPARTMENT OF ENERGY

10 CFR Part 431

[Docket Number EERE-2015-BT-STD-0016]
RIN 1904-AD59


Energy Conservation Program: Energy Conservation Standards for 
Walk-In Cooler and Freezer Refrigeration Systems

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

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

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SUMMARY: The Energy Policy and Conservation Act of 1975 (``EPCA''), as 
amended, prescribes energy conservation standards for various consumer 
products and certain commercial and industrial equipment, including 
walk-in coolers and freezers. EPCA also requires the U.S. Department of 
Energy (``DOE'') to periodically determine whether more-stringent, 
amended standards would be technologically feasible and economically 
justified, and would save a significant amount of energy. DOE proposes 
prescribing energy conservation standards for certain categories of 
walk-in cooler and freezer refrigeration systems and plans to hold a 
public meeting to receive comment on these proposed standards along 
with their accompanying analyses.

DATES: 
    Meeting: DOE will hold a public meeting on September 29, 2016, from 
10 a.m. to 2 p.m., in Washington, DC. The meeting will also be 
broadcast as a webinar. See section VII, ``Public Participation,'' for 
webinar registration information, participant instructions, and 
information about the capabilities available to webinar participants.
    Comments: DOE will accept comments, data, and information regarding 
this notice of proposed rulemaking (``NOPR'') before and after the 
public meeting, but no later than November 14, 2016. See section VII, 
``Public Participation,'' for details.
    Comments regarding the likely competitive impact of the proposed 
standard should be sent to the Department of Justice contact listed in 
the ADDRESSES section before October 13, 2016.

ADDRESSES: The public meeting will be held at the U.S. Department of 
Energy, Forrestal Building, Room 1A-104, 1000 Independence Avenue SW., 
Washington, DC 20585.
    Instructions: Any comments submitted must identify the NOPR on 
Energy Conservation Standards for WICF refrigeration systems, and 
provide docket number EE-2015-BT-STD-0016 and/or regulatory information 
number (RIN) 1904-AD59. Comments may be submitted using any of the 
following methods:
    1. Federal eRulemaking Portal: www.regulations.gov. Follow the 
instructions for submitting comments.
    2. Email: [email protected]. Include the docket number 
and/or RIN in the subject line of the message. Submit electronic 
comments in WordPerfect, Microsoft Word, PDF, or ASCII file format, and 
avoid the use of special characters or any form of encryption.
    3. Postal Mail: Appliance and Equipment Standards Program, U.S. 
Department of Energy, Building Technologies Office, Mailstop EE-5B, 
1000 Independence Avenue SW., Washington, DC 20585-0121. If possible, 
please submit all items on a compact disc (CD), in which case it is not 
necessary to include printed copies.
    4. Hand Delivery/Courier: Appliance and Equipment Standards 
Program, U.S. Department of Energy, Building Technologies Office, 950 
L'Enfant Plaza SW., 6th Floor, Washington, DC 20024. Telephone: (202) 
586-6636. If possible, please submit all items on a CD, in which case 
it is not necessary to include printed copies.
    No telefacsimilies (faxes) will be accepted. For detailed 
instructions on submitting comments and additional information on the 
rulemaking process, see section VII of this document (``Public 
Participation'').
    Written comments regarding the burden-hour estimates or other 
aspects of the collection-of-information requirements contained in this 
proposed rule may be submitted to Office of Energy Efficiency and 
Renewable Energy through the methods listed above and by email to 
[email protected].
    EPCA requires the Attorney General to provide DOE a written 
determination of whether the proposed standard is likely to lessen 
competition. The U.S. Department of Justice Antitrust Division invites 
input from market participants and other interested persons with views 
on the likely competitive impact of the proposed standard. Interested 
persons may contact the Division at [email protected] before 
October 13, 2016. Please indicate in the ``Subject'' line of your email 
the title and Docket Number of this rulemaking notice.
    Docket: The docket, which includes Federal Register notices, public 
meeting attendee lists and transcripts, comments, and other supporting 
documents/materials, is available for review at www.regulations.gov. 
All documents in the docket are listed in the www.regulations.gov 
index. However, some documents listed in the index may not be publicly-
available, such as those containing information that is exempt from 
public disclosure.
    A link to the docket Web page can be found at: https://www1.eere.energy.gov/buildings/appliance_standards/standards.aspx?productid=56. This Web page contains a link to the 
docket for this proposed rule on the www.regulations.gov site. The 
www.regulations.gov Web page contains simple instructions on how to 
access all documents, including public comments, in the docket. See 
section VII, ``Public Participation,'' for further information on how 
to submit comments through www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Ashley Armstrong, 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) 586-6590. Email: [email protected].
    Michael Kido, U.S. Department of Energy, Office of the General 
Counsel, GC-33, 1000 Independence Avenue SW., Washington, DC 20585-
0121. Telephone: (202) 586-8145. Email: [email protected].
    For further information on how to submit a comment, review other 
public comments and the docket, or participate in the public meeting, 
contact the Appliance and Equipment Standards Program staff at (202) 
586-6636 or by email: [email protected].

SUPPLEMENTARY INFORMATION: 

Table of Contents

I. Synopsis of the Proposed Rule
    A. Benefits and Costs to Consumers
    B. Impact on Manufacturers
    C. National Benefits and Costs
    D. Conclusion
II. Introduction
    A. Authority
    B. Background
III. General Discussion
    A. Test Procedure
    B. Technological Feasibility
    1. General
    2. Maximum Technologically Feasible Levels
    C. Equipment Classes and Scope of Coverage
    D. Energy Savings

[[Page 62981]]

    1. Determination of Savings
    2. Significance of Savings
    E. 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 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
    F. Compliance Date of Standards
IV. Methodology and Discussion of Related Comments
    A. Market and Technology Assessment
    1. Scope of Coverage and Equipment Classes
    2. Technology Options
    B. Screening Analysis
    1. Technologies Having No Effect on Rated Energy Consumption
    2. Adaptive Defrost and On-Cycle Variable-Speed Evaporator Fans
    3. Screened-Out Technologies
    4. Remaining Technologies
    C. Engineering Analysis
    1. Refrigerants
    2. As-Tested Versus Field-Representative Performance Analysis
    3. Representative Equipment for Analysis
    4. Cost Assessment Methodology
    a. Teardown Analysis
    b. Cost Model
    c. Manufacturing Production Cost
    d. Manufacturing Markup
    e. Shipping Cost
    5. Component and System Efficiency Model
    a. Unit Coolers (Formerly Termed the Multiplex Condensing Class)
    b. Condensing Units/Dedicated Condensing Class
    c. Field-Representative Paired Dedicated Condensing Systems
    6. Baseline Specifications
    7. Design Options
    a. Higher Efficiency Compressors
    b. Improved Condenser Coil
    c. Improved Condenser and Evaporator Fan Blades
    d. Off-Cycle Evaporator Fan Control
    e. Floating Head Pressure
    8. Cost-Efficiency Curves
    9. Engineering Efficiency Levels
    D. Markups Analysis
    E. Energy Use Analysis
    1. Oversize Factors
    2. Net Capacity Adjustment Factors
    3. Temperature Adjustment Factors
    F. Life-Cycle Cost and Payback Period Analysis
    1. System Boundaries
    a. Field-Paired
    b. Condensing Unit-Only
    c. Unit Cooler Only
    d. System Boundary and Equipment Class Weights
    2. Equipment Cost
    3. Installation Cost
    4. Annual Energy Use
    5. Energy Prices and Energy Price Projections
    6. Maintenance and Repair Costs
    7. Equipment Lifetime
    8. Discount Rates
    9. Efficiency Distribution in the No-New-Standards Case
    10. Payback Period Analysis
    G. Shipments Analysis
    H. National Impact Analysis
    1. National Energy Savings
    2. Net Present Value Analysis
    I. Consumer Subgroup Analysis
    J. Manufacturer Impact Analysis
    1. Overview
    2. GRIM Analysis and Key Inputs
    a. Manufacturer Production Costs
    b. Shipment Scenarios
    c. Capital and Product Conversion Costs
    d. Manufacturer Markup Scenarios
    K. Emissions Analysis
    L. Monetizing Carbon Dioxide and Other Emissions Impacts
    1. Social Cost of Carbon
    a. Monetizing Carbon Dioxide Emissions
    b. Development of Social Cost of Carbon Values
    c. Current Approach and Key Assumptions
    2. Social Cost of Other Air Pollutants
    M. Utility Impact Analysis
    N. Employment Impact Analysis
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 Direct Employment
    c. Impacts on Manufacturing Capacity
    d. Impacts on Subgroups of Manufacturers
    e. Cumulative Regulatory Burden
    C. National Impact Analysis
    a. Significance of Energy Savings
    b. Net Present Value of Consumer Costs and Benefits
    c. Indirect Impacts on Employment
    1. Impact on Utility or Performance of Products
    2. Impact of Any Lessening of Competition
    3. Need of the Nation To Conserve Energy
    4. Other Factors
    5. Summary of National Economic Impacts
    D. Conclusion
    1. Benefits and Burdens of TSLs Considered for WICF 
Refrigeration System Standards
    2. Summary of Annualized Benefits and Costs of the Proposed 
Standards
VI. Procedural Issues and Regulatory Review
    A. Review Under Executive Orders 12866 and 13563
    B. Review Under the Regulatory Flexibility Act
    1. Why This Action Is Being Considered
    2. Objectives of, and Legal Basis for, the Proposed Rule
    3. Description and Estimated Number of Small Entities Regulated
    4. Description and Estimate of Compliance Requirements
    5. Duplication, Overlap, and Conflict With Other Rules and 
Regulations
    6. Significant Alternatives to the Rule
    C. Review Under the Paperwork Reduction Act
    D. Review Under the National Environmental Policy Act of 1969
    E. Review Under Executive Order 13132
    F. Review Under Executive Order 12988
    G. Review Under the Unfunded Mandates Reform Act of 1995
    H. Review Under the Treasury and General Government 
Appropriations Act, 1999
    I. Review Under Executive Order 12630
    J. Review Under the Treasury and General Government 
Appropriations Act, 2001
    K. Review Under Executive Order 13211
    L. Review Under the Information Quality Bulletin for Peer Review
VII. Public Participation
    A. Attendance at the Public Meeting
    B. Procedure for Submitting Prepared General Statements for 
Distribution
    C. Conduct of the Public Meeting
    D. Submission of Comments
    E. Issues on Which DOE Seeks Comment
VIII. Approval of the Office of the Secretary

I. Synopsis of the Proposed Rule

    Title III, Part C \1\ of the Energy Policy and Conservation Act of 
1975 (``EPCA'' or, in context, ``the Act''), Public Law 94-163 
(December 22, 1975), coupled with Section 441(a) Title IV of the 
National Energy Conservation Policy Act, Public Law 95-619 (November 9, 
1978) (collectively codified at 42 U.S.C. 6311-6317), established the 
Energy Conservation Program for Certain Industrial Equipment.\2\ The 
covered equipment includes certain walk-in cooler and freezer (``WICF'' 
or ``walk-in'') refrigeration systems, including low-temperature 
dedicated condensing systems and both medium- and low-temperature unit 
coolers,\3\ the subjects of this rulemaking.
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    \1\ For editorial reasons, upon codification in the U.S. Code, 
Part C was re-designated Part A-1.
    \2\ All references to EPCA in this document refer to the statute 
as amended through the Energy Efficiency Improvement Act of 2015, 
Public Law 114-11 (Apr. 30, 2015).
    \3\ In previous proceedings, most notably the June 2014 final 
rule, DOE used the terminology ``multiplex condensing'' (abbreviated 
``MC'') to refer to the class of equipment represented by a unit 
cooler, which for purposes of testing and certification is rated as 
though it would be connected to a multiplex condensing system. In a 
separate test procedure NOPR, DOE has proposed to change the 
terminology to better reflect the equipment itself, which consists 
of a unit cooler sold without a condensing unit, and which can 
ultimately be used in either a multiplex condensing or dedicated 
condensing application. Accordingly, in this document, DOE has 
changed the class name from ``multiplex condensing'' to ``unit 
cooler'' and the class abbreviation from ``MC'' to ``UC.''
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    Pursuant to EPCA, any new or amended energy conservation standard 
that DOE prescribes for WICF refrigeration systems must be designed to 
achieve the maximum improvement in energy efficiency that the Secretary 
of Energy determines is technologically feasible and economically 
justified. (42

[[Page 62982]]

U.S.C. 6313(f)(4)(A)) For purposes of this rulemaking, DOE also plans 
to adopt standards that are likely to result in a significant 
conservation of energy that satisfies both of the above requirements. 
See 42 U.S.C. 6295(o)(3)(B).
    In accordance with these and other statutory provisions discussed 
in this document, DOE proposes to establish performance-based energy 
conservation standards for the aforementioned classes of WICF 
refrigeration systems that will be in addition to those standards that 
DOE has already promulgated for dedicated condensing, medium 
temperature, indoor and outdoor refrigeration systems. See 10 CFR 
431.306(e) (as amended by 80 FR 69838 (November 12, 2015)). The 
proposed standards, which are expressed in terms of an annual walk-in 
energy factor (``AWEF'') for classes of walk-in refrigeration systems 
being considered in this rule, are shown in Table I-1. These proposed 
standards, if adopted, would apply to all applicable WICF refrigeration 
systems listed in Table I-1 and manufactured in, or imported into, the 
United States starting on the date three years after the publication of 
the final rule for this rulemaking. (For purposes of this analysis, 
that date is projected to fall on the day after December 31, 2019. This 
date is subject to change pending publication of the final rule in the 
Federal Register.)

  Table I-1--Proposed Energy Conservation Standards for the Considered Equipment Classes of WICF Refrigeration
                                                     Systems
----------------------------------------------------------------------------------------------------------------
           Equipment class               Capacity (qnet) (Btu/h)               Minimum AWEF (Btu/W-h)
----------------------------------------------------------------------------------------------------------------
Unit Cooler--Low-Temperature........  <15,500.....................  1.575 x 10-\5\ x qnet + 3.91
                                      >=15,500....................  4.15
Unit Cooler--Medium Temperature.....  All.........................  9.00
Dedicated Condensing System--Low-     <6,500......................  6.522 x 10-\5\ x qnet + 2.73
 Temperature, Outdoor.                >=6,500.....................  3.15
Dedicated Condensing System--Low-     <6,500......................  9.091 x 10-\5\ x qnet + 1.81
 Temperature, Indoor.                 >=6,500.....................  2.40
----------------------------------------------------------------------------------------------------------------
* Where qnet is net capacity as determined in accordance with 10 CFR 431.304 and certified in accordance with 10
  CFR part 429.

    In various places in this document, DOE will use the following 
acronyms to denote the seven equipment classes of walk-in refrigeration 
systems that are subject to this rulemaking:

--DC.L.I. (dedicated condensing, low-temperature, indoor unit)
--DC.L.O (dedicated condensing, low-temperature, outdoor unit)
--UC.L. (unit cooler, low-temperature)
--UC.M. (unit cooler, medium-temperature)

    For reference, DOE will use the following acronyms to denote the 
two equipment classes of walk-in refrigeration systems which are not 
subject to this rulemaking for which standards were established in the 
previous WICF rulemaking:

--DC.M.I (dedicated condensing, medium-temperature, indoor unit)
--DC.M.O (dedicated condensing, medium-temperature, outdoor unit)

A. Benefits and Costs to Consumers

    Table I-2 presents DOE's evaluation of the economic impacts of the 
proposed standards on consumers of the considered WICF refrigeration 
systems (i.e. medium- and low-temperature unit coolers and dedicated 
condensing low-temperature systems), as measured by the average life-
cycle cost (``LCC'') savings and the simple payback period 
(``PBP'').\4\ DOE's analysis demonstrates that the projected average 
LCC savings are positive for all considered equipment classes, and the 
projected PBP is less than the average lifetime of the considered WICF 
refrigeration systems, which is estimated to be 11 years (see section 
IV.F).
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    \4\ The average LCC savings are measured relative to the 
efficiency distribution in the no-new-standards case, which depicts 
the market in the compliance year in the absence of standards (see 
section IV.F.9). The simple PBP, which is designed to compare 
specific efficiency levels, is measured relative to baseline 
equipment (see section IV.C.1.a).

 Table I-2--Impacts of Proposed Energy Conservation Standards on Consumers of WICF Refrigeration Systems (TSL 3)
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                                                                                   Average life-
                                                                                    cycle cost    Simple payback
          Equipment class                Application            Design path           savings     period (years)
                                                                                      (2015$)
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DC.L.I............................  Dedicated, Indoor....  Condensing Unit Only           $1,717             1.3
                                                            *.
                                    Dedicated, Indoor....  Field Paired **......           1,820             1.5
                                    Dedicated, Indoor....  Unit Cooler Only                  156             4.6
                                                            [dagger].
DC.L.O............................  Dedicated, Outdoor...  Condensing Unit Only.           3,148             2.1
                                    Dedicated, Outdoor...  Field Paired.........           3,294             1.0
                                    Dedicated, Outdoor...  Unit Cooler Only.....             324             4.3
UC.L..............................  Multiplex............  Unit Cooler Only.....              97             7.3
UC.M..............................  Dedicated, Indoor....  Unit Cooler Only.....              99             1.3
UC.M..............................  Dedicated, Outdoor...  Unit Cooler Only.....              96             1.8
UC.M..............................  Multiplex............  Unit Cooler Only.....              84             2.9
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Note: DOE separately considers the impacts of unit cooler standards when the unit cooler is combined in an
  application with dedicated condensing equipment versus multiplex condensing equipment. Namely, DOE is
  examining the impacts of unit coolers that are combined with medium temperature dedicated condensing equipment
  (DC.M.I and DC.M.O). DOE is not considering establishing standards for the latter, as they are covered by the
  2014 final rule and were not vacated by the Fifth Circuit order.
* Condensing Unit Only (CU-Only): Condensing unit-only. This analysis evaluates standard levels applied to a
  condensing unit distributed in commerce without a designated companion unit cooler for a scenario in which a
  new condensing unit is installed to replace a failed condensing unit, but the existing unit cooler is not
  replaced. See section IV.F.1.b for more details.

[[Page 62983]]

 
** Field Paired (FP): Field-paired unit cooler and condensing unit. This analysis evaluates standard levels
  applied to a condensing unit distributed in commerce without a designated companion unit cooler for a scenario
  in which both a new condensing unit and a new unit cooler are installed. See section IV.F.1.a for more
  details.
[dagger] Unit Cooler Only (UC-Only): Unit cooler only. This analysis evaluates standard levels applied to a unit
  cooler distributed in commerce without a designated companion condensing unit, either dedicated or multiplex,
  for a scenario in which a new unit cooler is installed to replace a failed unit cooler, but the existing
  condensing unit is not replaced. See section IV.F.1.c for more details.

    DOE's analysis of the impacts of the proposed standards on 
consumers is described in section IV.F of this NOPR.

B. Impact on Manufacturers

    The industry net present value (``INPV'') is the sum of the 
discounted cash-flows to the industry from the base year through the 
end of the analysis period (2016 to 2049). Using a real discount rate 
of 10.2 percent, DOE estimates that the INPV from the seven WICF 
refrigeration system equipment classes being analyzed is $99.7 million 
in 2015$. Under the proposed standards, DOE expects INPV may change 
approximately -14.8 percent to -4.4 percent, which corresponds to 
approximately -14.8 million and -4.4 million in 2015$. To bring 
equipment into compliance with the proposed standard in this NOPR, DOE 
expects the industry to incur $16.2 million in total conversion costs.
    DOE's analysis of the impacts of the proposed standards on 
manufacturers is described in section IV.J of this document.

C. National Benefits and Costs \5\
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    \5\ All monetary values in this document are expressed in 2015 
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).
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    DOE's analyses indicate that the proposed energy conservation 
standards for the considered WICF refrigeration systems would save a 
significant amount of energy. Relative to the case without adopting the 
standards, the lifetime energy savings for the considered WICF 
refrigeration systems purchased in the 30-year period that begins in 
the anticipated year of compliance with the standards (2020-2049) 
amount to 0.90 quadrillion British thermal units (Btu), or quads.\6\ 
This represents a savings of 24 percent relative to the energy use of 
these products in the case without the proposed standards in place 
(referred to as the ``no-new-standards case'').
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    \6\ 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.
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    The cumulative net present value (``NPV'') of total consumer costs 
and savings of the proposed standards for the considered WICF 
refrigeration systems ranges from $1.8 billion (at a 7-percent discount 
rate) to $4.3 billion (at a 3-percent discount rate). This NPV 
expresses the estimated total value of future operating-cost savings 
minus the estimated increased equipment costs for the considered WICF 
refrigeration systems purchased in 2020-2049.
    In addition to these anticipated benefits, the proposed standards 
for the considered WICF refrigeration systems are projected to yield 
significant environmental benefits. DOE estimates that the proposed 
standards would result in cumulative emission reductions (over the same 
period as for energy savings) of 54.4 million metric tons (Mt) \7\ of 
carbon dioxide (CO2), 31.7 thousand tons of sulfur dioxide 
(SO2), 97.7 thousand tons of nitrogen oxides 
(NOX), 232.1 thousand tons of methane (CH4), 0.7 
thousand tons of nitrous oxide (N2O), and 0.1 tons of 
mercury (Hg).\8\ The cumulative reduction in CO2 emissions 
through 2030 amounts to 9.3 Mt, which is equivalent to the emissions 
resulting from the annual electricity use of 849 thousand homes.
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    \7\ A metric ton is equivalent to 1.1 short tons. Results for 
emissions other than CO2 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 (AEO 2015) Reference case. AEO 2015 generally 
represents current legislation and environmental regulations for 
which implementing regulations were available as of October 31, 
2014.
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    The value of the CO2 reductions is calculated using a 
range of values per metric ton of CO2 (otherwise known as 
the ``Social Cost of Carbon'', or SCC) developed by a Federal 
interagency Working Group.\9\ The derivation of the SCC values is 
discussed in section IV.L. Using discount rates appropriate for each 
set of SCC values (see Table I-3), DOE estimates the present monetary 
value of the CO2 emissions reduction (not including 
CO2 equivalent emissions of other gases with global warming 
potential) is between $0.4 billion and $5.4 billion, with a value of 
$1.8 billion using the central SCC case represented by $40.0/t in 2015. 
DOE also estimates the present monetary value of the NOX 
emissions reduction to be $0.08 billion at a 7-percent discount rate 
and $0.18 billion at a 3-percent discount rate.\10\ DOE is still 
investigating the most appropriate economic estimates to use in valuing 
the reduction in methane and other emissions, and therefore did not 
include any values for those emissions in this rulemaking.
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    \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: https://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 for the Clean Power Plan Final Rule, 
published in August 2015 by EPA's Office of Air Quality Planning and 
Standards. (Available at: http://www.epa.gov/cleanpowerplan/clean-power-plan-final-rule-regulatory-impact-analysis.) See section 
IV.L.2 for further discussion. The U.S. Supreme Court has stayed the 
rule implementing the Clean Power Plan until the current litigation 
against it concludes. Chamber of Commerce, et al. v. EPA, et al., 
Order in Pending Case, 136 S.Ct. 999, 577 U.S. ___(2016). However, 
the benefit-per-ton estimates established in the Regulatory Impact 
Analysis for the Clean Power Plan are based on scientific studies 
that remain valid irrespective of the legal status of the Clean 
Power Plan. DOE is primarily using a national benefit-per-ton 
estimate for NOX 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.
---------------------------------------------------------------------------

    DOE notes that the Secretary has determined that the proposed 
standards are technologically feasible and economically justified. This 
conclusion is further supported by, but does not depend on, the 
benefits expected to accrue as a result of the anticipated decreased 
production of CO2 emissions. As detailed in section V.D.1 of 
this document, the projected benefits from these proposed standards 
exceed the related costs, even ignoring the benefits from reduced 
CO2 emissions. Consideration of the benefits of reduced 
emissions further underscores the Secretary's conclusion.
    Table I-3 summarizes the economic benefits and costs expected to 
result from the proposed standards for the considered WICF 
refrigeration systems.

[[Page 62984]]



  Table I-3--Summary of Economic Benefits and Costs of Proposed Energy
     Conservation Standards for WICF Refrigeration Systems (TSL 3) *
------------------------------------------------------------------------
                                      Present value      Discount rate
             Category                 billion 2015$        (percent)
------------------------------------------------------------------------
                                Benefits
------------------------------------------------------------------------
Consumer Operating Cost Savings...                2.2                  7
                                                  5.1                  3
CO2 Reduction Value ($12.4/t case)                0.4                  5
 **...............................
CO2 Reduction Value ($40.6/t case)                1.8                  3
 **...............................
CO2 Reduction Value ($63.2/t case)                2.8                2.5
 **...............................
CO2 Reduction Value ($118/t case)                 5.4                  3
 **...............................
NOX Reduction Value [dagger]......                0.1                  7
                                                  0.2                  3
Total Benefits [Dagger]...........                4.0                  7
                                                  7.0                  3
------------------------------------------------------------------------
                                  Costs
------------------------------------------------------------------------
Consumer Incremental Installed                    0.4                  7
 Costs............................                0.8                  3
------------------------------------------------------------------------
                              Net Benefits
------------------------------------------------------------------------
Including CO2 and NOX Reduction                   3.6                  7
 Value [Dagger]...................                6.2                  3
------------------------------------------------------------------------
* This table presents the costs and benefits associated with WICF
  refrigeration systems shipped in 2020-2049. These results include
  benefits to consumers which accrue after 2049 from the equipment
  purchased in 2020-2049. The costs account for the incremental variable
  and fixed costs incurred by manufacturers due to the standard, some of
  which may be incurred in preparation for the rule.
** The CO2 values represent global monetized values of the SCC, in
  2015$, 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] DOE estimated the monetized value of NOX emissions reductions
  using benefit per ton estimates from the Regulatory Impact Analysis
  for the Clean Power Plan Final Rule, published in August 2015 by EPA's
  Office of Air Quality Planning and Standards. (Available at: http://www.epa.gov/cleanpowerplan/clean-power-plan-final-rule-regulatory-impact-analysis.) See section IV.L.2 for further discussion. DOE is
  primarily using a national benefit-per-ton estimate for NOX 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.
[Dagger] Total Benefits for both the 3% and 7% cases are derived using
  the series corresponding to average SCC with 3-percent discount rate
  ($40.6/t case).

    The benefits and costs of the proposed standards, for the 
considered WICF refrigeration systems sold in 2020-2049, can also be 
expressed in terms of annualized values. The monetary values for the 
total annualized net benefits are the sum of: (1) The national economic 
value of the benefits in reduced consumer operating costs, minus (2) 
the increase in equipment purchase prices and installation costs, plus 
(3) the value of the benefits of CO2 and NOX 
emission reductions, all annualized.\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 values of operating cost savings and CO2 
emission reductions are both important, two issues are relevant. The 
national operating cost savings are domestic U.S. consumer monetary 
savings that occur as a result of purchasing the covered equipment. The 
national operating cost savings is measured for the lifetime of WICF 
refrigeration systems shipped in 2020-2049. The CO2 
reduction is a benefit that accrues globally due to decreased domestic 
energy consumption that is expected to result from this rule.\12\ Like 
national operating cost savings, the amount of emissions reductions 
achieved as a result of the proposed standards is calculated based on 
the lifetime of WICF refrigeration systems shipped during that analysis 
period. Because CO2 emissions have a very long residence 
time in the atmosphere, however, the SCC values reflect CO2-
emissions impacts that continue beyond 2100 through 2300.
---------------------------------------------------------------------------

    \12\ DOE's analysis estimates both global and domestic benefits 
of CO2 emissions reductions. Following the recommendation 
of the interagency Working Group, DOE places more focus on a global 
measure of SCC. See section IV.L.1 for further discussion on why the 
global measure is appropriate.
---------------------------------------------------------------------------

    Estimates of annualized benefits and costs of the proposed 
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 $40.6/t in 
2015),\13\ the estimated cost of the standards proposed in this rule is 
$43.9 million per year in increased equipment costs, while the 
estimated annual benefits are $217.9 million in reduced equipment 
operating costs, $98.4 million in CO2 reductions, and $7.4 
million in reduced NOX emissions. In this case, the net 
benefit amounts to $280 million per year.
---------------------------------------------------------------------------

    \13\ DOE used a 3-percent discount rate because the SCC values 
for the series used in the calculation were derived using a 3-
percent discount rate (see section IV.L).
---------------------------------------------------------------------------

    Using a 3-percent discount rate for all benefits and costs and the 
average SCC series that has a value of $40.6/t in 2015, the estimated 
cost of the proposed standards is $45.9 million per year in increased 
equipment costs, while the estimated annual benefits are $283.3

[[Page 62985]]

million in reduced operating costs, $98.4 million in CO2 
reductions, and $10.3 million in reduced NOX emissions. In 
this case, the net benefit amounts to $346 million per year.

                          Table I-4--Annualized Benefits and Costs of Proposed Standards (TSL 3) for WICF Refrigeration Systems
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                      Million 2015$/year
                                                                     -----------------------------------------------------------------------------------
                                              Discount rate                                        Low net benefits estimate  High net benefits estimate
                                                                          Primary estimate *                   *                           *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings...  7%..............................  217.9.....................  200.4.....................  237.4.
                                    3%..............................  283.3.....................  257.9.....................  314.7.
CO2 Reduction Value ($12.4/t case)  5%..............................  29.2......................  27.8......................  30.7.
 **.
CO2 Reduction Value ($40.6/t case)  3%..............................  98.4......................  93.5......................  103.7.
 **.
CO2 Reduction Value ($63.2/t case)  2.5%............................  144.0.....................  136.8.....................  151.9.
 **.
CO2 Reduction Value ($118/t case)   3%..............................  299.9.....................  285.0.....................  316.3.
 **.
NOX Reduction Value...............  7%..............................  7.4.......................  7.1.......................  17.4.
                                    3%..............................  10.3......................  9.8.......................  24.6.
Total Benefits [dagger]...........  7% plus CO2 range...............  255 to 525................  235 to 493................  285 to 571.
                                    7%..............................  324.......................  301.......................  359.
                                    3% plus CO2 range...............  323 to 593................  295 to 553................  370 to 656.
                                    3%..............................  392.......................  361.......................  443.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                          Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Incremental Product Costs  7%..............................  43.9......................  43.4......................  44.4.
                                    3%..............................  45.9......................  45.3......................  46.5.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      Net Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total [dagger]....................  7% plus CO2 range...............  211 to 481................  192 to 449................  241 to 527.
                                    7%..............................  280.......................  258.......................  314.
                                    3% plus CO2 range...............  277 to 548................  250 to 507................  323 to 609.
                                    3%..............................  346.......................  316.......................  397.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* This table presents the annualized costs and benefits associated with the considered WICF refrigeration systems shipped in 2020-2049. These results
  include benefits to consumers which accrue after 2049 from the equipment purchased in 2020-2049. The results account for the incremental variable and
  fixed costs incurred by manufacturers due to the standard, some of which may be incurred in preparation for the rule. The Primary, Low Benefits, and
  High Benefits Estimates utilize projections of energy prices from the AEO 2015 Reference case, Low Economic Growth case, and High Economic Growth
  case, respectively. Note that the Benefits and Costs may not sum to the Net Benefits due to rounding.
** The CO2 values represent global monetized values of the SCC, in 2015$, 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] DOE estimated the monetized value of NOX emissions reductions using benefit per ton estimates from the Regulatory Impact Analysis for the Clean
  Power Plan Final Rule, published in August 2015 by EPA's Office of Air Quality Planning and Standards. (Available at: http://www.epa.gov/cleanpowerplan/clean-power-plan-final-rule-regulatory-impact-analysis.) See section IV.L.2 for further discussion. For the Primary Estimate and Low
  Net Benefits Estimate, DOE used a national benefit-per-ton estimate for NOX 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.
[Dagger] Total Benefits for both the 3% and 7% cases are derived using the series corresponding to the average SCC with a 3-percent discount rate ($40.6/
  t case). In the rows labeled ``7% plus CO2 range'' and ``3% plus CO2 range,'' the operating cost and NOX benefits are calculated using the labeled
  discount rate, and those values are added to the full range of CO2 values.

    DOE's analysis of the national impacts of the proposed standards is 
described in sections IV.F, IV.I and IV.J of this NOPR.

D. Conclusion

    DOE has tentatively concluded that the proposed standards represent 
the maximum improvement in energy efficiency that is technologically 
feasible and economically justified, and the proposed standards would 
result in the significant conservation of energy. DOE further notes 
that equipment achieving these standard levels is already commercially 
available for all equipment classes covered by this proposal. Based on 
the analyses described, DOE has tentatively concluded that the benefits 
of the proposed standards to the Nation (energy savings, positive NPV 
of consumer benefits, consumer LCC savings, and emission reductions) 
would outweigh the burdens (loss of INPV for manufacturers and LCC 
increases for some consumers).
    DOE also considered more-stringent energy efficiency levels for the 
considered WICF refrigeration systems, and is still considering them in 
this rulemaking. However, DOE has tentatively concluded that the 
potential burdens of the more-stringent energy efficiency levels would 
outweigh the projected benefits. Based on consideration of the public 
comments DOE receives in response to this NOPR and related information 
collected and analyzed during the course of this rulemaking effort, DOE 
may adopt energy efficiency levels presented in this NOPR that are 
either higher or lower than the proposed standards, or some combination 
of level(s) that incorporate the proposed standards in part.

II. Introduction

    The following section briefly discusses the statutory authority 
underlying this proposed rule, as well as some of the relevant 
historical background related to the establishment of standards for 
WICF refrigeration systems.

[[Page 62986]]

A. Authority

    Title III, Part B of the Energy Policy and Conservation Act of 1975 
(``EPCA'' or, in context, ``the Act''), Public Law 94-163 (codified as 
42 U.S.C. 6291-6309, as codified) established the Energy Conservation 
Program for Certain Industrial Equipment, a program covering certain 
industrial equipment, which includes the refrigeration systems used in 
walk-ins that are the subject of this rulemaking, which include low-
temperature dedicated condensing systems and low and medium temperature 
unit coolers. (42 U.S.C. 6311(1)(G)) EPCA, as amended, prescribed 
energy conservation standards for this equipment (42 U.S.C. 6313(f)). 
Under 42 U.S.C. 6295(m), which applies to walk-ins through 42 U.S.C. 
6316(a), the agency must periodically review its already established 
energy conservation standards for covered equipment. Under this 
requirement, the next review that DOE would need to conduct must occur 
no later than six years from the issuance of a final rule establishing 
or amending a standard for covered equipment.
    Pursuant to EPCA, DOE's energy conservation program for covered 
equipment consists essentially of four parts: (1) Testing; (2) 
labeling; (3) the establishment of Federal energy conservation 
standards; and (4) certification and enforcement procedures. 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 equipment. (42 U.S.C. 
6295(o)(3)(A), (r) and 6316(a)) Manufacturers of covered equipment must 
use the prescribed DOE test procedure as the basis for certifying to 
DOE that the covered equipment they manufacture complies with the 
applicable energy conservation standards adopted under EPCA and when 
making representations to the public regarding the energy use or 
efficiency of their covered equipment. (42 U.S.C. 6293(c) and 6295(s)) 
Similarly, DOE must use these test procedures to determine whether a 
manufacturer's covered equipment comply with standards adopted pursuant 
to EPCA. (42 U.S.C. 6295(s)) The DOE test procedures for WICF 
refrigeration systems appear at title 10 of the Code of Federal 
Regulations (``CFR'') Sec.  431.304.
    DOE has, however, published a NOPR proposing amendments to the test 
procedures applicable to the equipment classes addressed in this 
proposal, 81 FR 54926 (August 17, 2016). The standards considered and 
proposed in this rulemaking were evaluated using those separately 
proposed test procedures. While DOE typically finalizes its test 
procedures for a given regulated product or equipment prior to 
proposing new or amended energy conservation standards for that product 
or equipment, see 10 CFR part 430, subpart C, Appendix A, sec. 7(c) 
(``Procedures, Interpretations and Policies for Consideration of New or 
Revised Energy Conservation Standards for Consumer Products'' or 
``Process Rule''), DOE did not do so in this instance. As part of the 
negotiated rulemaking that led to the Term Sheet setting out the 
standards that DOE is proposing, Working Group members recommended 
(with ASRAC's approval) that DOE modify its test procedure for walk-in 
refrigeration systems. The test procedure changes at issue would 
simplify the current test procedure in a manner that is consistent with 
the approach agreed upon by the various parties who participated in the 
negotiated rulemaking. This circumstance leads DOE to tentatively 
conclude that providing a finalized test procedure that incorporates 
this limited change prior to the publication of this standards proposal 
is not necessary. Accordingly, in accordance with section 14 of the 
Process Rule, DOE tentatively concludes that deviation from the Process 
Rule is appropriate here. With respect to more substantive future 
changes that DOE may consider making to the test procedure consistent 
with the Term Sheet, DOE anticipates conducting a more complete review 
and analysis of that modified procedure in advance of any subsequent 
amendments to the WICF refrigeration system standards that DOE may 
consider later.
    DOE must follow specific statutory criteria for prescribing new or 
amended standards for covered equipment, including WICF refrigeration 
systems. Any new or amended standard for a type of covered equipment 
must be designed to achieve the maximum improvement in energy 
efficiency that the Secretary of Energy determines is technologically 
feasible and economically justified. (42 U.S.C. 6295(o)(2)(A)-(3)(B) 
and 6316(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) 
and 6316(a)) Moreover, DOE may not prescribe a standard: (1) For 
certain equipment, including WICF refrigeration systems, if no test 
procedure has been established for the equipment, or (2) if DOE 
determines by rule that the standard is not technologically feasible or 
economically justified. (42 U.S.C. 6295(o)(3)(A)-(B) and 6316(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) and 6316(a)) DOE must make this 
determination after receiving comments on the proposed standard, and by 
considering, to the greatest extent practicable, the following seven 
statutory factors:
    (1) The economic impact of the standard on manufacturers and 
consumers of the equipment subject to the standard;
    (2) The savings in operating costs throughout the estimated average 
life of the covered equipment in the type (or class) compared to any 
increase in the price, initial charges, or maintenance expenses for the 
covered equipment that are likely to result from the standard;
    (3) The total projected amount of energy (or as applicable, water) 
savings likely to result directly from the standard;
    (4) Any lessening of the utility or the performance of the covered 
products (or covered equipment) likely to result from the standard;
    (5) The impact of any lessening of competition, as determined in 
writing by the Attorney General, that is likely to result from the 
standard;
    (6) The need for national energy and water conservation; and
    (7) Other factors the Secretary of Energy (Secretary) considers 
relevant.
    (42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII) and 6316(a))
    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 equipment complying 
with an energy conservation standard level will be less than three 
times the value of the energy savings during the first year that the 
consumer will receive as a result of the standard, as calculated under 
the applicable test procedure. (42 U.S.C. 6295(o)(2)(B)(iii) and 
6316(a))
    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 type of 
covered equipment. (42 U.S.C. 6295(o)(1) and 6316(a)) 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

[[Page 62987]]

United States in any covered equipment type (or class) of performance 
characteristics (including reliability), features, sizes, capacities, 
and volumes that are substantially the same as those generally 
available in the United States. (42 U.S.C. 6295(o)(4) and 6316(a))
    Additionally, EPCA specifies requirements when promulgating an 
energy conservation standard for covered equipment divided into two or 
more subcategories. DOE must specify a different standard level for a 
type or class of equipment that has the same function or intended use, 
if DOE determines that equipment within such group: (A) Consume a 
different kind of energy from that consumed by other covered equipment 
within such type (or class); or (B) have a capacity or other 
performance-related feature which other equipment within such type (or 
class) do not have and such feature justifies a higher or lower 
standard. (42 U.S.C. 6295(q)(1) and 6316(a)) In determining whether a 
performance-related feature justifies a different standard for a group 
of equipment, DOE must consider such factors as the utility to the 
consumer of the 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) and 6316(a))
    Federal energy conservation requirements generally supersede State 
laws or regulations concerning energy conservation testing, labeling, 
and standards. (42 U.S.C. 6297(a) through (c) and 6316(a)) DOE may, 
however, grant waivers of Federal preemption for particular State laws 
or regulations, in accordance with the procedures and other provisions 
set forth under 42 U.S.C. 6297(d) and 6316(a)).
    Finally, pursuant to the amendments contained in the Energy 
Independence and Security Act of 2007 (``EISA 2007''), Public Law 110-
140, DOE is generally required to address standby mode and off mode 
energy use. Specifically, when DOE adopts a standard satisfying the 
criteria under 42 U.S.C. 6295(o), DOE must generally 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 equipment. In the case of WICFs, DOE is continuing to apply this 
approach to provide analytical consistency when evaluating potential 
energy conservation standards for this equipment. See generally, 42 
U.S.C. 6316(a).

B. Background

    A walk-in cooler and a walk-in freezer is an enclosed storage space 
refrigerated to temperatures above, and at or below, respectively, 
32[emsp14][deg]F that can be walked into and has a total chilled 
storage area of less than 3,000 square feet. (42 U.S.C 6311(20)) By 
definition, equipment designed and marketed exclusively for medical, 
scientific, or research purposes are excluded. See id. EPCA also 
provides prescriptive standards for walk-ins manufactured on or after 
January 1, 2009, which are described below.
    First, EPCA sets forth general prescriptive standards for walk-ins. 
Walk-ins must have automatic door closers that firmly close all walk-in 
doors that have been closed to within 1 inch of full closure, for all 
doors narrower than 3 feet 9 inches and shorter than 7 feet; walk-ins 
must also have strip doors, spring hinged doors, or other methods of 
minimizing infiltration when doors are open. Walk-ins must also contain 
wall, ceiling, and door insulation of at least R-25 for coolers and R-
32 for freezers, excluding glazed portions of doors and structural 
members, and floor insulation of at least R-28 for freezers. Walk-in 
evaporator fan motors of under 1 horsepower and less than 460 volts 
must be electronically commutated motors (brushless direct current 
motors) or three-phase motors, and walk-in condenser fan motors of 
under 1 horsepower must use permanent split capacitor motors, 
electronically commutated motors, or three-phase motors. Interior light 
sources must have an efficacy of 40 lumens per watt or more, including 
any ballast losses; less-efficacious lights may only be used in 
conjunction with a timer or device that turns off the lights within 15 
minutes of when the walk-in is unoccupied. See 42 U.S.C. 6313(f)(1).
    Second, EPCA sets forth requirements related to electronically 
commutated motors for use in walk-ins. See 42 U.S.C. 6313(f)(2)). 
Specifically, in those walk-ins that use an evaporator fan motor with a 
rating of under 1 horsepower (``hp'') and less than 460 volts, that 
motor must be either a three-phase motor or an electronically 
commutated motor unless DOE determined prior to January 1, 2009 that 
electronically commutated motors are available from only one 
manufacturer. (42 U.S.C. 6313(f)(2)(A)) Consistent with this 
requirement, DOE eventually determined that more than one manufacturer 
offered these motors for sale, which effectively made electronically 
commutated motors a required design standard for use with evaporative 
fan motors rated at under 1 hp and under 460 volts. DOE documented this 
determination in the rulemaking docket as docket ID EERE-2008-BT-STD-
0015-0072. This document can be found at https://www.regulations.gov/document?D=EERE-2008-BT-STD-0015-0072. Additionally, EISA authorized 
DOE to permit the use of other types of motors as evaporative fan 
motors--if DOE determines that, on average, those other motor types use 
no more energy in evaporative fan applications than electronically 
commutated motors. (42 U.S.C. 6313(f)(2)(B)) DOE is unaware of any 
other motors that would offer performance levels comparable to the 
electronically commutated motors required by Congress. Accordingly, all 
evaporator motors rated at under 1 horsepower and under 460 volts must 
be electronically commutated motors or three-phase motors.
    Third, EPCA requires that walk-in freezers with transparent reach-
in doors must have triple-pane glass with either heat-reflective 
treated glass or gas fill for doors and windows. Cooler doors must have 
either double-pane glass with treated glass and gas fill or triple-pane 
glass with treated glass or gas fill. (42 U.S.C. 6313(f)(3)(A)-(B)) For 
walk-ins with transparent reach-in doors, EISA also prescribed specific 
anti-sweat heater-related requirements: walk-ins without anti-sweat 
heater controls must have a heater power draw of no more than 7.1 or 
3.0 watts per square foot of door opening for freezers and coolers, 
respectively. Walk-ins with anti-sweat heater controls must either have 
a heater power draw of no more than 7.1 or 3.0 watts per square foot of 
door opening for freezers and coolers, respectively, or the anti-sweat 
heater controls must reduce the energy use of the heater in a quantity 
corresponding to the relative humidity of the air outside the door or 
to the condensation on the inner glass pane. See 42 U.S.C. 
6313(f)(3)(C)(D).
    EPCA also directed the Secretary to issue performance-based 
standards for walk-ins that would apply to equipment manufactured three 
(3) years after the final rule is published, or five (5) years if the 
Secretary determines by rule that a 3-year period is inadequate. (42 
U.S.C. 6313(f)(4)) In a final rule published on June 3, 2014 (2014 
Final Rule), DOE prescribed performance-based standards for walk-ins 
manufactured on or after June 5, 2017. 79 FR 32050. These standards 
applied to the main components of walk-in coolers and walk-in freezers 
(walk-ins): Refrigeration systems, panels, and doors. The standards 
were expressed in terms of AWEF for the walk-in refrigeration systems, 
R-value for walk-in panels, and maximum energy

[[Page 62988]]

consumption for walk-in doors. The standards are shown in Table I.1.

  Table II-1--Energy Conservation Standards for Walk-In Cooler and Walk-In Freezer Components Set Forth in 2014
                                                      Rule
----------------------------------------------------------------------------------------------------------------
            Class descriptor                           Class                           Standard level
----------------------------------------------------------------------------------------------------------------
                                                                                         Min. AWEF
Refrigeration Systems                                                                   (Btu/W-h) *
----------------------------------------------------------------------------------------------------------------
Dedicated Condensing, Medium              DC.M.I, <9,000                   5.61
 Temperature, Indoor System, <9,000 Btu/
 h Capacity.
Dedicated Condensing, Medium              DC.M.I, >=9,000                  5.61
 Temperature, Indoor System, >=9,000 Btu/
 h Capacity.
Dedicated Condensing, Medium              DC.M.O, <9,000                   7.60
 Temperature, Outdoor System, <9,000 Btu/
 h Capacity.
Dedicated Condensing, Medium              DC.M.O, >=9,000                  7.60
 Temperature, Outdoor System, >=9,000
 Btu/h Capacity.
Dedicated Condensing, Low-Temperature,    DC.L.I, <9,000                   5.93 x 10-\5\ x Q + 2.33
 Indoor System, <9,000 Btu/h Capacity.
Dedicated Condensing, Low-Temperature,    DC.L.I, >=9,000                  3.10
 Indoor System, >=9,000 Btu/h Capacity.
Dedicated Condensing, Low-Temperature,    DC.L.O, <9,000                   2.30 x 10-\5\ x Q + 2.73
 Outdoor System, <9,000 Btu/h Capacity.
Dedicated Condensing, Low-Temperature,    DC.L.O, >=9,000                  4.79
 Outdoor System, >=9,000 Btu/h Capacity.
Multiplex Condensing, Medium Temperature  MC.M                             10.89
 **.
Multiplex Condensing, Low-Temperature **  MC.L                             6.57
----------------------------------------------------------------------------------------------------------------
                                                                                        Min. R-value
Panels                                                                               (h-ft2-[deg]F/Btu)
----------------------------------------------------------------------------------------------------------------
Structural Panel, Medium Temperature....  SP.M                             25
Structural Panel, Low-Temperature.......  SP.L                             32
Floor Panel, Low-Temperature............  FP.L                             28
----------------------------------------------------------------------------------------------------------------
                                                                                        Max. energy
Non-Display Doors                                                                       consumption
                                                                                     (kWh/day) [dagger]
----------------------------------------------------------------------------------------------------------------
Passage Door, Medium Temperature........  PD.M                             0.05 x And + 1.7
Passage Door, Low-Temperature...........  PD.L                             0.14 x And + 4.8
Freight Door, Medium Temperature........  FD.M                             0.04 x And + 1.9
Freight Door, Low-Temperature...........  FD.L                             0.12 x And + 5.6
----------------------------------------------------------------------------------------------------------------
                                                                                        Max. energy
Display Doors                                                                           consumption
                                                                                 (kWh/day) [dagger][dagger]
----------------------------------------------------------------------------------------------------------------
Display Door, Medium Temperature........  DD.M                             0.04 x Add + 0.41
Display Door, Low-Temperature...........  DD.L                             0.15 x Add + 0.29
----------------------------------------------------------------------------------------------------------------
* These standards were expressed in terms of Q, which represents the system gross capacity as calculated in AHRI
  1250.
** DOE used this terminology to refer to these equipment classes in the June 2014 final rule. In this rule, DOE
  has changed ``multiplex condensing'' to ``unit cooler'' and the abbreviation ``MC'' to ``UC,'' consistent with
  the proposals of the separate test procedure rulemaking under consideration by DOE.
[dagger] And represents the surface area of the non-display door.
[dagger][dagger] Add represents the surface area of the display door.

    After publication of the 2014 Final Rule, the Air-Conditioning, 
Heating and Refrigeration Institute (``AHRI'') and Lennox 
International, Inc. (a manufacturer of WICF refrigeration systems) 
filed petitions for review of DOE's final rule and DOE's subsequent 
denial of a petition for reconsideration of the rule with the United 
States Court of Appeals for the Fifth Circuit. Lennox Int'l, Inc. v. 
Dep't of Energy, Case No. 14-60535 (5th Cir.). Other WICF refrigeration 
system manufacturers--Rheem Manufacturing Co., Heat Transfer Products 
Group (a subsidiary of Rheem Manufacturing Co.), and Hussmann Corp.--
along with the Air Conditioning Contractors of America (a trade 
association representing contractors who install WICF refrigeration 
systems) intervened on the petitioners' behalf. The Natural Resources 
Defense Council (``NRDC''), the American Council for an Energy-
Efficient Economy, and the Texas Ratepayers' Organization to Save 
Energy intervened on behalf of DOE. As a result of this litigation, a 
settlement agreement was reached to address, among other things, six of 
the refrigeration system standards--each of which is addressed in this 
document.\14\
---------------------------------------------------------------------------

    \14\ The ``six'' standards established in the 2014 final rule 
and vacated by the Fifth Circuit court order have become ``seven'' 
standards due to the split of one of the equipment classes based on 
capacity. Specifically, the ``multiplex condensing, low 
temperature'' class (see 79 FR 32050, 32124 (June 3, 2014)) has 
become two classes of ``unit cooler, low temperature,'' one with 
capacity (qnet) less than 15,500 Btu/h, and the other 
with capacity greater or equal to 15,500 Btu/h (see Table I-1).
---------------------------------------------------------------------------

    A controlling court order from the Fifth Circuit, which was issued 
on August 10, 2015, vacates those six standards. These vacated 
standards relate to (1) the two energy conservation standards 
applicable to multiplex condensing refrigeration systems (re-named as 
``unit coolers'' for purposes of this rule) operating at medium and low 
temperatures and (2) the four energy conservation standards applicable 
to dedicated condensing refrigeration systems operating at low 
temperatures. See 79 FR at 32124. The thirteen other standards 
established in the June 2014 final rule and shown in Table I-1 (that 
is, the four standards applicable to dedicated condensing refrigeration 
systems operating at medium temperatures; three standards applicable to 
panels; and six standards applicable

[[Page 62989]]

to doors) have not been vacated and remain subject to the June 5, 2017 
compliance date prescribed by the June 2014 final rule.\15\ To help 
clarify the applicability of these standards, DOE is also proposing to 
modify the organization of its regulations to specify the compliance 
date of these existing standards and the new standards in this 
proposal. To aid in readability, DOE is proposing to incorporate the 
new standards in this proposal with the refrigeration system standards 
that already exist into a single table that will be inserted into a new 
10 CFR 431.306(f).
---------------------------------------------------------------------------

    \15\ DOE has issued an enforcement policy with respect to 
dedicated condensing refrigeration systems operating at medium 
temperatures. See http://www.energy.gov/gc/downloads/walk-coolerwalk-freezer-refrigeration-systems-enforcement-policy.
---------------------------------------------------------------------------

    DOE subsequently established a Working Group to negotiate proposed 
energy conservation standards to replace the six vacated standards. 
Specifically, on August 5, 2015, DOE published a notice of intent to 
establish a walk-in coolers and freezers Working Group (``WICF Working 
Group''). 80 FR 46521. The Working Group was established under the 
Appliance Standards and Rulemaking Federal Advisory Committee 
(``ASRAC'') in accordance with the Federal Advisory Committee Act 
(``FACA'') and the Negotiated Rulemaking Act (``NRA''). (5 U.S.C. App. 
2; 5 U.S.C. 561-570, Public Law 104-320.) The purpose of the Working 
Group was to discuss and, if possible, reach consensus on proposed 
standard levels for the energy efficiency of the affected classes of 
WICF refrigeration systems. The Working Group was to consist of 
representatives of parties having a defined stake in the outcome of the 
proposed standards, and the group would consult as appropriate with a 
range of experts on technical issues.
    Ultimately, the Working Group consisted of 12 members and one DOE 
representative (see Table II-2). (See Appendix A, List of Members and 
Affiliates, Negotiated Rulemaking Working Group Ground Rules, Docket 
No. EERE-2015-BT-STD-0016, No. 0005 at p. 5.) The Working Group met in-
person during 13 days of meetings held August 27, September 11, 
September 30, October 1, October 15, October 16, November 3, November 
4, November 20, December 3, December 4, December 14, and December 15, 
2015.

Table II-2--ASRAC Walk-In Coolers and Freezers Working Group Members and
                              Affiliations
------------------------------------------------------------------------
           Member                  Affiliation          Abbreviation
------------------------------------------------------------------------
Ashley Armstrong............  U.S. Department of    DOE.
                               Energy.
Lane Burt...................  Natural Resources     NRDC.
                               Defense Council.
Mary Dane...................  Traulsen............  Traulsen.
Cyril Fowble................  Lennox                Lennox.
                               International, Inc.
                               (Heatcraft).
Sean Gouw...................  California Investor-  CA IOUs.
                               Owned Utilities.
Andrew Haala................  Hussmann Corp.......  Hussmann.
Armin Hauer.................  ebm-papst, Inc......  ebm-papst.
John Koon...................  Manitowoc Company...  Manitowoc.
Joanna Mauer................  Appliance Standards   ASAP.
                               Awareness Project.
Charlie McCrudden...........  Air Conditioning      ACCA.
                               Contractors of
                               America.
Louis Starr.................  Northwest Energy      NEEA.
                               Efficiency Alliance.
Michael Straub..............  Rheem Manufacturing   Rheem.
                               (Heat Transfer
                               Products Group).
Wayne Warner................  Emerson Climate       Emerson.
                               Technologies.
------------------------------------------------------------------------

    All of the meetings were open to the public and were also broadcast 
via webinar. Several people who were not members of the Working Group 
attended the meetings and were given the opportunity to comment on the 
proceedings. Non-Working Group meeting attendees are listed in Table 
II-3.

 Table II-3--Other ASRAC Walk-In Coolers and Freezers Meeting Attendees
                            and Affiliations
------------------------------------------------------------------------
          Attendee                 Affiliation          Abbreviation
------------------------------------------------------------------------
Akash Bhatia................  Tecumseh Products     Tecumseh.
                               Company.
Bryan Eisenhower............  VaCom Technologies..  VaCom.
Dean Groff..................  Danfoss.............  Danfoss.
Brian Lamberty..............  Unknown.............  Brian Lamberty.
Michael Layne...............  Turbo Air...........  Turbo Air.
Jon McHugh..................  McHugh Energy.......  McHugh Energy.
Yonghui (Frank) Xu..........  National Coil         National Coil.
                               Company.
Vince Zolli.................  Keeprite              Keeprite.
                               Refrigeration.
------------------------------------------------------------------------

    To facilitate the negotiations, DOE provided analytical support and 
supplied the group with a variety of analyses and presentations, all of 
which are available in the docket https://www.regulations.gov/docket?D=EERE-2015-BT-STD-0016). These analyses and presentations, 
developed with direct input from the Working Group members, include 
preliminary versions of many of the analyses discussed in this NOPR, 
including a market and technology assessment; screening analysis; 
engineering analysis; energy use analysis; markups analysis; life cycle 
cost and payback period analysis; shipments analysis; and national 
impact analysis.
    On December 15, 2015, the Working Group reached consensus on, among 
other things, a series of energy conservation standards to replace 
those that were vacated as a result of the litigation. The Working 
Group assembled its recommendations into a single term sheet (See 
Docket EERE-2015-BT-STD-0016, No. 0052) that was presented to, and 
approved by the ASRAC on December 18, 2015. DOE considered the approved 
term sheet,

[[Page 62990]]

along with other comments received during the negotiated rulemaking 
process, in developing energy conservation standards that this document 
proposes to adopt.

III. General Discussion

A. Test Procedure

    DOE's current energy conservation standards for WICF refrigeration 
systems are expressed in terms of AWEF (see 10 CFR 431.304(c)(10)). 
AWEF is an annualized refrigeration efficiency metric that expresses 
the ratio of the heat load that a system can reject (in British thermal 
units (``Btu'')) to the energy required to reject that load (in watt-
hours). The existing DOE test procedure for determining the AWEF of 
walk-in refrigeration systems is located at 10 CFR part 431, subpart R. 
The current DOE test procedure for walk-in refrigeration systems was 
originally established by an April 15, 2011 final rule, which 
incorporates by reference the Air-Conditioning, Heating, and 
Refrigeration Institute (``AHRI'') Standard 1250-2009, 2009 Standard 
for Performance Rating of Walk-In Coolers and Freezers. 73 FR 21580, 
21605-21612.
    On May 13, 2014, DOE updated its test procedures for WICFs in a 
final rule published in the Federal Register (May 2014 test procedure 
rule). 79 FR 27388. That rule allows WICF refrigeration system 
manufacturers to use an alternative efficiency determination method 
(``AEDM'') to rate and certify their basic models by using the 
projected energy efficiency level derived from these simulation models 
in lieu of testing. It also adopted testing methods to enable an OEM to 
readily test and rate its unit cooler or condensing unit individually 
rather than as part of matched pairs. Under this approach, a 
manufacturer who distributes a unit cooler as a separate component must 
rate that unit cooler as though it were to be connected to a multiplex 
system and must comply with any applicable standard DOE may establish 
for a unit cooler. Similarly, a manufacturer distributing a condensing 
unit as a separate component must use fixed values for the suction 
(inlet) conditions and certain nominal values for unit cooler fan and 
defrost energy, in lieu of actual unit cooler test data, when 
calculating AWEF. (10 CFR 431.304(c)(12)(ii)
    DOE notes that, although the final rule established the approach 
for rating individual components of dedicated condensing systems, it 
still allows matched-pair ratings of these systems. This approach is 
required for dedicated condensing systems with multiple capacity stages 
and/or variable-capacity, since the current test procedure of AHRI 
1250-2009 does not have a provision for testing individual condensing 
units with such features. An OEM would have to use matched-pair testing 
to rate multiple- or variable-capacity systems, but can choose matched-
pair or individual-component rating for single-capacity dedicated 
condensing systems.
    The May 2014 test procedure final rule also introduced several 
clarifications and additions to the AHRI test procedure for WICF 
refrigeration systems. These changes can be found in 10 CFR 431.304.
    The Working Group also recommended that DOE consider making certain 
amendments to the test procedure to support the refrigeration system 
standards being proposed in this NOPR to replace the six vacated 
standards. DOE is conducting a separate test procedure rulemaking to 
address these recommendations. All documents and information pertaining 
to the test procedure rulemaking can be found in docket [EERE-2016-BT-
TP-0030]. The standard levels discussed in this document were evaluated 
using the proposed test procedure.

B. Technological Feasibility

1. General
    As part of its energy conservation standards rulemakings, DOE 
generally conducts a screening analysis based on information gathered 
on all current technology options and prototype designs that could 
improve the efficiency of the equipment at issue. As the first step in 
such an analysis, DOE develops a list of technology options for 
consideration in consultation with manufacturers, design engineers, and 
other interested parties. DOE then determines which of those means for 
improving efficiency are technologically feasible. DOE considers 
technologies incorporated in commercially-available equipment or in 
working prototypes to be technologically feasible. 10 CFR part 430, 
subpart C, appendix A, section 4(a)(4)(i).
    After DOE has determined that particular technology options are 
technologically feasible, it further evaluates each technology option 
in light of the following additional screening criteria: (1) 
Practicability to manufacture, install, and service; (2) adverse 
impacts on equipment utility or availability; and (3) adverse impacts 
on health or safety. 10 CFR part 430, subpart C, appendix A, section 
4(a)(4)(ii) through (iv). Additionally, it is DOE policy not to include 
in its analysis any proprietary technology that is a unique pathway to 
achieving a certain efficiency level. Section IV.B of this NOPR 
discusses the results of the screening analysis for WICF refrigeration 
systems, particularly the designs 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 NOPR technical support document 
(``TSD'').
2. Maximum Technologically Feasible Levels
    When DOE proposes to adopt a standard for a type or class of 
covered equipment, it must determine the maximum improvement in energy 
efficiency or maximum reduction in energy use that is technologically 
feasible for such equipment. (42 U.S.C. 6295(p)(1) and 6316(a)) 
Accordingly, in the engineering analysis, DOE determined the maximum 
technologically feasible (``max-tech'') improvements in energy 
efficiency for WICF refrigeration systems, using the design parameters 
for the most efficient equipment available on the market or in working 
prototypes. The max-tech levels that DOE determined for this rulemaking 
are described in section IV.C.9 of this proposed rule and in chapter 5 
of the NOPR TSD.

C. Equipment Classes and Scope of Coverage

    When evaluating and establishing energy conservation standards, DOE 
often divides covered equipment into separate classes by the type of 
energy used, equipment capacity, or some other performance-related 
features that justify differing standards. In making a determination 
whether a performance-related feature justifies a different standard, 
DOE generally 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) and 6316(a))
    As previously noted in section II.B, a court order vacated the 
portions of the June 2014 final rule relating to multiplex condensing 
refrigeration systems (re-named unit coolers for purposes of this rule) 
operating at medium and low temperatures and dedicated condensing 
refrigeration systems operating at low temperatures. Therefore, this 
rulemaking focuses on standards related to these refrigeration system 
classes. More information relating to the scope of coverage is 
described in section IV.A.1 of this proposed rule.

[[Page 62991]]

D. Energy Savings

1. Determination of Savings
    For each trial standard level (``TSL''), DOE projected energy 
savings from application of the TSL to the considered WICF 
refrigeration systems purchased in the 30-year period that begins in 
the first full year of compliance with the proposed standards (2020-
2049).\16\ The savings are measured over the entire lifetime of the 
considered WICF refrigeration systems purchased in the above 30-year 
period. DOE quantified the energy savings attributable to each TSL as 
the difference in energy consumption between each standards case and 
the no-new-standards case. The no-new-standards case represents a 
projection of energy consumption that reflects how the market for the 
equipment at issue would likely evolve in the absence of energy 
conservation standards.
---------------------------------------------------------------------------

    \16\ Each TSL is comprised of specific efficiency levels for 
each equipment class. The TSLs considered for this NOPR are 
described in section V.A. DOE conducted a sensitivity analysis that 
considers impacts for equipment shipped in a 9-year period.
---------------------------------------------------------------------------

    DOE used its national impact analysis (``NIA'') spreadsheet model 
to estimate national energy savings (``NES'') from potential standards 
adopted for the considered WICF refrigeration systems at issue. The NIA 
spreadsheet model (described in section IV.H of this notice) calculates 
energy savings in terms of site energy, which is the energy directly 
consumed by equipment at the locations where they are used. Based on 
the site energy, DOE calculates NES in terms of primary energy savings 
at the site or at power plants, and also in terms of full-fuel-cycle 
(``FFC'') energy savings. The FFC metric includes the energy consumed 
in extracting, processing, and transporting primary fuels (i.e., coal, 
natural gas, petroleum fuels), and thus presents a more complete 
picture of the impacts of energy conservation standards.\17\ DOE's 
approach is based on the calculation of an FFC multiplier for each of 
the energy types used by the covered equipment addressed in this 
notice. For more information on FFC energy savings, see section IV.H.1 
of this proposed rule.
---------------------------------------------------------------------------

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

2. Significance of Savings
    To adopt any new or amended standards for a type of covered 
equipment, DOE must determine that such action would result in 
significant energy savings. (42 U.S.C. 6295(o)(3)(B) and 6316(a)) 
Although the term ``significant'' is not defined in the Act, the U.S. 
Court of Appeals for the District of Columbia Circuit, in Natural 
Resources Defense Council v. Herrington, 768 F.2d 1355, 1373 (D.C. Cir. 
1985), opined that Congress intended ``significant'' energy savings in 
the context of section 325 of EPCA (i.e. 42 U.S.C. 6295(o)(3)(B) and 
6316(a)) to be savings that are not ``genuinely trivial.'' The energy 
savings for all of the TSLs considered in this rulemaking, including 
the proposed standards (presented in section V.B.3), are nontrivial, 
and, therefore, DOE considers them ``significant'' within the meaning 
of section 325 of EPCA.

E. Economic Justification

1. Specific Criteria
    As noted above, EPCA provides seven factors to be evaluated in 
determining whether a potential energy conservation standard is 
economically justified. (42 U.S.C. 6295(o)(2)(B)(i)(I) through (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 a potential proposed 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) Industry 
net present value (i.e. 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 the LCC and PBP associated with new or amended standards. 
These measures are discussed further in the following section. For 
consumers in the aggregate, DOE also calculates the national net 
present value of the consumer costs and benefits expected to result 
from particular standards. DOE also evaluates the impacts of potential 
standards on identifiable subgroups of consumers that may be affected 
disproportionately by a standard.
b. Savings in Operating Costs Compared to Increase in Price (LCC and 
PBP)
    EPCA requires DOE to consider the savings in operating costs 
throughout the estimated average life of the covered equipment in the 
type (or class) compared to any increase in the price of, or in the 
initial charges for, or maintenance expenses of, the covered equipment 
that are likely to result from a standard. (42 U.S.C. 
6295(o)(2)(B)(i)(II) and 6316(a)) DOE conducts this comparison in its 
LCC and PBP analysis.
    The LCC is the sum of the purchase price of equipment (including 
its installation) and the operating expense (including energy, 
maintenance, and repair expenditures) discounted over the lifetime of 
the equipment. The LCC analysis requires a variety of inputs, such as 
equipment prices, equipment energy consumption, energy prices, 
maintenance and repair costs, equipment lifetime, and discount rates 
appropriate for consumers. To account for uncertainty and variability 
in specific inputs, such as equipment lifetime and discount rate, DOE 
uses a distribution of values, with probabilities attached to each 
value.
    The PBP is the estimated amount of time (in years) it takes 
consumers to recover the increased purchase cost (including 
installation) of a more-efficient equipment through lower operating 
costs. DOE calculates the PBP by dividing the change in purchase cost 
due to a more-stringent standard by the change in annual operating cost 
for the year that standards are assumed to take effect.
    For its LCC and PBP analysis, DOE assumes that consumers will 
purchase the covered equipment in the first full year of compliance 
with the proposed standards. The LCC savings for the considered 
efficiency levels are calculated relative to the case that reflects 
projected market trends in the absence of adopting the proposed 
standards. DOE's LCC and PBP analysis is discussed in further detail in 
section IV.F.
c. Energy Savings
    Although significant conservation of energy is a separate statutory

[[Page 62992]]

requirement for adopting an energy conservation standard, EPCA requires 
DOE, in determining the economic justification of a standard, to 
consider the total projected energy savings that are expected to result 
directly from the standard. (42 U.S.C. 6295(o)(2)(B)(i)(III) and 
6316(a)) As discussed in section III.D, DOE uses the NIA spreadsheet 
models to project national energy savings.
d. Lessening of Utility or Performance of Products
    In establishing equipment classes and in evaluating design options 
and the impact of potential standard levels, DOE evaluates potential 
standards that would not lessen the utility or performance of the 
considered equipment. (42 U.S.C. 6295(o)(2)(B)(i)(IV) and 6316(a)) 
Based on data available to DOE, the standards proposed in this proposed 
rule would not reduce the utility or performance of the equipment under 
consideration in this rulemaking.
e. Impact of Any Lessening of Competition
    EPCA directs DOE to consider the impact of any lessening of 
competition, as determined in writing by the Attorney General that is 
likely to result from a proposed standard. (42 U.S.C. 
6295(o)(2)(B)(i)(V) and 6316(a)) It also directs the Attorney General 
to determine the impact, if any, of any lessening of competition likely 
to result from a proposed standard and to transmit such determination 
to the Secretary 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) and 6316(a)) DOE will transmit a copy of this 
proposed rule to the Attorney General with a request that the 
Department of Justice (``DOJ'') provide its determination on this 
issue. DOE will publish and respond to the Attorney General's 
determination in the final rule. DOE invites comment from the public 
regarding the competitive impacts that are likely to result from this 
proposed rule. In addition, stakeholders may also provide comments 
separately to DOJ regarding these potential impacts. See the ADDRESSES 
section for information on how to send comments to DOJ.
f. Need for National Energy Conservation
    DOE also considers the need for national energy conservation in 
determining whether a new or amended standard is economically 
justified. (42 U.S.C. 6295(o)(2)(B)(i)(VI) and 6316(a)) The energy 
savings from the proposed 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 proposed standards also are 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 potential standards 
may affect these emissions, as discussed in section IV.K; the emissions 
impacts are reported in section IV.L of this proposed rule. DOE also 
estimates the economic value of emissions reductions resulting from the 
considered TSLs, as discussed in section IV.L.1.
g. Other Factors
    In determining whether an energy conservation standard is 
economically justified, to consider any other factors that the 
Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII) and 
6316(a)) To the extent interested parties submit any relevant 
information regarding economic justification that does not fit into the 
other categories described in this preamble, DOE could consider such 
information under ``other factors.''
2. Rebuttable Presumption
    As set forth in 42 U.S.C. 6295(o)(2)(B)(iii) (and as applied to 
WICFs through 42 U.S.C. 6316(a)), EPCA creates a rebuttable presumption 
that an energy conservation standard is economically justified if the 
additional cost to the consumer of equipment that meets the standard is 
less than three times the value of the first year's energy savings 
resulting from the standard, as calculated under the applicable DOE 
test procedure. DOE's LCC and PBP analyses generate values used to 
calculate the effects that proposed energy conservation standards would 
have on the payback period for consumers. These analyses include, but 
are not limited to, the 3-year payback period contemplated under the 
rebuttable-presumption test. In addition, DOE routinely conducts an 
economic analysis that considers the full range of impacts to 
consumers, manufacturers, the Nation, and the environment, as required 
under 42 U.S.C. 6295(o)(2)(B)(i), which applies to WICFs through 42 
U.S.C. 6316(a). The results of this analysis serve as the basis for 
DOE's evaluation of the economic justification for a potential standard 
level (thereby supporting or rebutting the results of any preliminary 
determination of economic justification). The rebuttable presumption 
payback calculation is discussed in section IV.F of this proposed rule.

F. Compliance Date of Standards

    Under EPCA, performance-based standards for WICFs, including the 
initial establishment of those standards, have a statutorily-prescribed 
lead time starting on the applicable final rule's publication date and 
ending three (3) years later. Starting on that latter date, WICF 
manufacturers must comply with the relevant energy conservation 
standards. See 42 U.S.C. 6313(f)(4)-(5). DOE may extend the lead time 
to as long as five (5) years if the Secretary determines, by rule, that 
the default 3-year period is inadequate. (See id.) At this time, DOE 
anticipates that publication of a final rule would occur in the second 
half of 2016, which would provide a compliance date that would fall in 
the second half of 2019 for any new standards that DOE would adopt as 
part of this rulemaking.

IV. Methodology and Discussion of Related Comments

    This section addresses the analyses DOE has performed for this 
rulemaking with regard to the considered WICF refrigeration systems. 
Separate subsections address each component of DOE's analyses.
    DOE used several analytical tools to estimate the impact of the 
standards proposed in this document. The first tool is a spreadsheet 
that calculates the LCC savings and PBP of potential amended or new 
energy conservation standards. The national impacts analysis uses a 
second spreadsheet set that provides shipments forecasts and calculates 
national energy savings and net present value of total consumer costs 
and savings expected to result from potential energy conservation 
standards. DOE uses the third spreadsheet tool, the Government 
Regulatory Impact Model (``GRIM''), to assess manufacturer impacts of 
potential standards. These three spreadsheet tools, which are mainstays 
in DOE's standards rulemaking proceedings and continue to be refined in 
response to public input, are available on the DOE Web site for this 
rulemaking: https://www1.eere.energy.gov/buildings/appliance_standards/standards.aspx?productid=56.
    DOE also developed a spreadsheet-based engineering model that 
calculates

[[Page 62993]]

performance of different WICF equipment designs and summarizes cost 
versus efficiency relationships for the classes covered in this 
rulemaking. DOE made this spreadsheet available on the rulemaking Web 
site. Additionally, DOE used output from the latest version of EIA's 
Annual Energy Outlook (``AEO''), a widely known energy forecast for the 
United States, for the emissions and utility impact analyses.

A. Market and Technology Assessment

    DOE develops information in the market and technology assessment 
that provides an overall picture of the market for the equipment 
concerned, including the purpose of the equipment, the industry 
structure, manufacturers, market characteristics, and technologies used 
in the equipment. This activity includes both quantitative and 
qualitative assessments, based primarily on publicly-available 
information. The subjects addressed in the market and technology 
assessment for this rulemaking include: (1) A determination of the 
scope of the rulemaking and equipment classes; (2) manufacturers and 
industry structure; (3) existing efficiency programs; (4) shipments 
information; (5) market and industry trends; and (6) technologies or 
design options that could improve the energy efficiency of the WICF 
refrigeration systems under consideration. The key findings of DOE's 
market assessment are summarized below. See chapter 3 of the NOPR TSD 
for further discussion of the market and technology assessment.
1. Scope of Coverage and Equipment Classes
    The NOPR of the separate WICF test procedure rulemaking noted 
earlier in section III.A addressed the coverage of process cooling 
walk-ins and their components under DOE's regulations and proposed a 
definition for process cooling to distinguish this equipment from other 
walk-ins. 81 FR at 54926 (August 17, 2016). As discussed in the test 
procedure NOPR, process cooling walk-ins would be considered to be 
walk-ins, making them subject to the prescriptive statutory 
requirements already established by Congress. See 42 U.S.C. 6313(f). In 
addition, their panels and doors would be subject to both the 
statutorily-prescribed standards for these components, and the 
standards established by the June 2014 final rule. See 42 U.S.C. 
6313(f) and 10 CFR 431.306. However, a process cooler may not need to 
satisfy the refrigeration system standards--including those being 
proposed today--depending on the circumstances.
    DOE proposed to define a process cooling refrigeration system as a 
refrigeration system that either (1) is distributed in commerce with an 
enclosure such that the refrigeration system capacity meets a certain 
minimum threshold, indicating that it is designed for refrigeration 
loads much greater than required simply to hold the temperature of the 
shipped enclosure at refrigerated temperature, or (2) is a unit cooler 
with a height dimension of at least 4.5 feet--a specification that its 
discharge air flow will impinge directly on stored products. 81 FR at 
54926 (Augsut 17, 2016). Because of the specific aspects of this 
definition, the exclusions to the refrigeration system standards would 
apply to (a) refrigeration systems sold as part of a complete package, 
including the insulated enclosure, and the refrigeration system for 
which the capacity per volume meets the proposed process cooling 
definition, (b) dedicated condensing systems sold as a matched pair in 
which the unit cooler meets the requirements of the proposed process 
cooling definition, and (c) unit coolers that meet the requirements of 
the proposed definition. As discussed in the test procedure document, 
the exclusion would not apply to condensing units distributed in 
commerce without unit coolers.
    DOE proposes to specify that the refrigeration system standards 
exclusions be added to the regulatory text at 10 CFR 431.306.
    As discussed in section II.B, this NOPR covers proposed energy 
conservation standards for walk-in refrigeration systems to replace the 
six standards vacated by the Fifth Circuit court order issued in August 
2015. These vacated standards relate to (1) the two energy conservation 
standards applicable to unit coolers operating at medium and low 
temperatures and (2) the four energy conservation standards applicable 
to dedicated condensing refrigeration systems operating at low 
temperatures. As noted earlier, the remaining standards for walk-ins 
promulgated by DOE remain in place.
    In the June 2014 final rule, DOE divided refrigeration systems into 
classes based on their treatment under the test procedure with respect 
to condensing unit configuration. 79 FR at 32069-32070. In the May 2014 
test procedure rule, DOE established a rating method for walk-in 
refrigeration system components distributed individually; that is, unit 
coolers sold by themselves are tested and rated with the multiplex 
condensing system test, while condensing units sold by themselves are 
tested and rated with the dedicated condensing system test. In other 
words, all unit coolers sold alone would belong to the (as termed at 
the time) multiplex condensing class, while all condensing units sold 
alone would belong to the dedicated condensing class. WICF 
refrigeration systems consisting of a unit cooler and condensing unit 
that are manufactured as a matched system and sold together by the 
manufacturer would also be rated with the dedicated condensing system 
test and belong to the dedicated condensing class.
    During the Working Group meetings, a caucus of manufacturers 
submitted shipment data showing that the vast majority (>90 percent) of 
their unit coolers and condensing units were sold as stand-alone 
equipment, rather than paired with the opposite component. (Docket No. 
EERE-2015-BT-STD-0016, No. 0029) The data suggested that manufacturers 
would certify the majority of the equipment they sell using the rating 
method specified for walk-in refrigeration components that are 
distributed individually; thus, DOE expects that the majority of 
systems being certified within the dedicated condensing class would 
consist of condensing units sold alone, while a much smaller number of 
systems certified within this class would have been tested as 
manufacturer-matched pairs under DOE's test procedure.
    All unit coolers sold alone would be treated for certification 
purposes as belonging to the unit cooler class, and likewise, as 
discussed in the previous paragraph, unit coolers sold alone must be 
tested and rated with the multiplex condensing system test. However, 
manufacturer data also showed that the majority of WICF unit coolers 
are ultimately installed in applications where they are paired with a 
dedicated condensing unit. See id. (noting in column ``K'' that 
approximately 82 percent of unit coolers are used in dedicated 
condensing applications, while approximately 12 percent are used in 
multiplex condensing applications. For this reason, DOE is proposing to 
re-name the ``multiplex condensing'' class as the ``unit cooler'' 
class, in acknowledgment of the fact that most unit coolers are not 
installed in multiplex condensing applications. For this rulemaking, 
DOE also conducted additional analysis to evaluate the energy use of 
unit coolers if they are installed in a dedicated condensing system 
application--i.e., an application for separately-sold unit coolers that 
is not covered in the test procedure or reflected in the equipment 
rating. This is discussed in sections IV.C.2 and IV.E.

[[Page 62994]]

    In the June 2014 final rule, DOE established a single AWEF standard 
for low-temperature multiplex condensing systems (unit coolers) 
regardless of capacity. This particular standard was one of those 
vacated through the controlling court order from the Fifth Circuit. 
Based on further comment and analysis conducted during the negotiated 
rulemaking to examine potential energy conservation standards for this 
class of equipment, DOE is proposing to consider different standard 
levels for different capacities of unit coolers, which would 
necessitate establishing separate classes for these systems based on 
capacity ranges. The updated analysis showed that the appropriate 
standard level for low-temperature unit coolers could vary with 
capacity. As a result, in DOE's view, applying different standard 
levels (in the form of different AWEF equations or values) based on 
capacity would provide a better-fitting approach than its previous one 
when setting the energy efficiency performance levels for walk-in 
refrigeration systems. In addition to being consistent with EPCA, which 
authorizes DOE to create capacity-based classes, see 42 U.S.C. 6295(q), 
this approach would provide a parallel structure to the one DOE had 
established in the June 2014 final rule for low-temperature dedicated 
systems. See 79 FR at 32124 (detailing different capacity-based classes 
for low-temperature dedicated condensing refrigeration systems). 
(Although the June 2014 standards for low-temperature dedicated systems 
were also vacated, analysis conducted during the negotiated rulemaking 
continued to affirm that it is reasonable to consider different 
capacity-based classes for low-temperature dedicated condensing 
refrigeration systems.) The Working Group discussed this issue and 
ultimately agreed to consider two classes for low-temperature unit 
coolers based on whether their net capacity is above or below 15,500 
Btu/h. See Term Sheet at EERE-2015-BT-STD-0016, No. 0056, 
recommendation #5. That agreement is reflected in this proposed rule, 
bringing the total number of standards proposed in this notice to 
seven. These seven standards would, if adopted, replace the six 
standards that were vacated.
2. Technology Options
    In the technology assessment for the June 2014 final rule, DOE 
identified 15 technology options to improve the efficiency of WICF 
refrigeration systems, as measured by the DOE test procedure:

 Energy storage systems
 Refrigeration system override
 Automatic evaporator fan shut-off
 Improved evaporator and condenser fan blades
 Improved evaporator and condenser coils
 Evaporator fan control
 Ambient sub-cooling
 Higher-efficiency fan motors
 Higher-efficiency compressors
 Liquid suction heat exchanger
 Defrost controls
 Hot gas defrost
 Floating head pressure
 Condenser fan control
 Economizer cooling

    DOE continued to consider these 15 options in formulating the WICF 
refrigeration system standards detailed in this proposal. Discussions 
during the Working Group negotiation meetings on September 11, 2015 and 
September 30, 2015 suggested that DOE should consider variable-speed 
evaporator fan control separately for periods when the compressor is 
off, and when the compressor is on. At various points in the meetings, 
Working Group members (Rheem, Hussmann, and Manitowoc) stated that 
while fan control in the off-cycle mode would be beneficial for both 
single-capacity and variable-capacity systems, fan control in the on-
cycle mode would be beneficial only for variable-capacity systems. 
(Docket No. EERE-2015-BT-STD-0016, Rheem and Hussmann, Public Meeting 
Transcript (September 11, 2015), No. 0061 at pp. 56-72 and Rheem, 
Hussmann, and Manitowoc, Public Meeting Transcript (September 30, 
2015), No. 0067 at pp. 112-117) This is because the unit cooler class 
is dominated by unit coolers that are also used in dedicated condensing 
installations, and these coolers--when equipped with evaporator fans 
that vary speed in the on-cycle mode--would need to be paired with 
either variable-speed or multiple-capacity compressors to produce an 
energy efficiency benefit from this feature. However, most dedicated 
condensing systems under consideration in this rule have single-speed/
single-capacity compressors. In the scenario where a unit cooler with 
on-cycle and off-cycle variable-speed capability is paired with a 
single-speed or single-capacity compressor, the on-cycle variable-speed 
feature would not deliver in-field savings while the off-cycle variable 
speed feature would be expected to deliver savings. DOE determined that 
delineating these two features into separate design options would more 
readily facilitate analysis of savings attributed to each feature. 
Furthermore, during the September 30, 2015 public meeting, Rheem 
pointed out that using a variable-speed evaporator fan control during 
the on-cycle mode requires additional features such as a controller 
that can account for temperature and/or pressure sensor inputs to allow 
an algorithm to modify fan speed so that delivered cooling matches 
refrigeration load. (Docket No. EERE-2015-BT-STD-0016, Rheem, Public 
Meeting Transcript (September 30, 2015), No. 0067 at pp. 119-123) These 
extra features would be expected to contribute to a cost difference 
between on-cycle and off-cycle variable-speed fan control, further 
suggesting that they should be considered as separate design options. 
Thus, as presented in the subsequent October 15, 2015 public meeting, 
DOE considered off-cycle and on-cycle fan controls to be different 
technology options for the purposes of this rulemaking analysis. (See 
October 15, 2015 Public Meeting Presentation, slide 42, available in 
Docket No. EERE-2015-BT-STD-0016, No. 0026, at p. 42)
    See chapter 3 of the TSD for further details on the technologies 
DOE considered.

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 equipment 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 equipment could not be achieved on the 
scale necessary to serve the relevant market at the time of the 
projected compliance date of the standard, then that technology will 
not be considered further.
    3. Impacts on equipment utility or equipment availability. If it is 
determined that a technology would have significant adverse impact on 
the utility of the equipment to significant subgroups of consumers or 
would result in the unavailability of any covered equipment type with 
performance characteristics (including reliability), features, sizes, 
capacities, and volumes that are substantially the same as equipment 
generally available in the United States at the time, it will not be 
considered further.
    4. Adverse impacts on health or safety. If it is determined that a 
technology would have significant

[[Page 62995]]

adverse impacts on health or safety, it will not be considered further.

10 CFR part 430, subpart C, appendix A, 4(a)(4) and 5(b).
    In sum, if DOE determines that a technology, or a combination of 
technologies, fails to meet one or more of the above four criteria, it 
will be excluded from further consideration in the engineering 
analysis. Furthermore, DOE also excludes from consideration in the 
engineering analysis any technology that does not affect rated energy 
consumption as it would not be considered beneficial in the context of 
this rulemaking. The reasons for excluding any technology are discussed 
below.
1. Technologies Having No Effect on Rated Energy Consumption
    In the June 2014 final rule, DOE determined that the following 
technologies do not affect rated energy consumption:

 Liquid suction heat exchanger
 Refrigeration system override
 Economizer cooling

    DOE has not received any further evidence that these technologies 
should be considered and has not included them in the analysis 
supporting the proposals of this document.
    As discussed in section III.A, DOE is proposing to remove the 
method for testing systems with hot gas defrost from the test procedure 
in a separate rulemaking. Thus, this option will not affect rated 
energy consumption and DOE is not considering it further.
2. Adaptive Defrost and On-Cycle Variable-Speed Evaporator Fans
    Consistent with the recommendations made during the Working Group 
negotiations, DOE's supporting analysis for this proposal does not 
further consider adaptive defrost and on-cycle variable-speed fans as 
options that manufacturers can use to improve the rated performance of 
their equipment. Adaptive defrost is covered by the DOE test procedure 
as a credit applied to any piece of equipment that has the feature--the 
test procedure does not include a test method for validating the 
performance of this feature. The Working Group was unable to develop a 
definition that adequately defined this feature in a way that all 
systems meeting the definition would receive performance improvements 
consistent with the test procedure credit. Hence, the Working Group 
recommended that certified ratings and standards should be based on 
equipment not having the feature, although the test procedure could 
still include it to allow manufacturers to make representations 
regarding improved performance for equipment having the feature. 
(Docket No. EERE-2015-BT-STD-0016, various parties, Public Meeting 
Transcript (December 3, 2015), No. 0057 at pp. 130-153) DOE has 
proposed this approach in the separate test procedure rulemaking it is 
conducting. Thus, the analysis does not consider adaptive defrost as a 
design option.
    Regarding on-cycle variable-speed evaporator fans, as mentioned in 
section IV.A.1, unit coolers sold individually are tested as though 
they are used in multiplex applications, but the majority are in fact 
installed in dedicated condensing applications. Furthermore, most 
dedicated condensing systems are single-capacity while the design 
option would only save energy when part of a variable-capacity system. 
(As a multiplex system is a variable-capacity system, the design option 
would save energy when the unit cooler is actually installed with a 
multiplex system.) Because of this discrepancy, most of the savings 
that would be predicted based on ratings would not be achieved in the 
field, and manufacturers in the Working Group objected to DOE 
considering design options for equipment features that would not be 
useful to most end-users. (Docket No. EERE-2015-BT-STD-0016, No. 0006 
at p. 1, item #5c and Docket No. EERE-2015-BT-STD-0016, various 
parties, Public Meeting Transcript (September 11, 2015), No. 0061 at 
pp. 56-72.) Despite the possibility of some field savings from this 
feature as mentioned in this preamble (that is, in scenarios where the 
unit cooler with the on-cycle variable speed feature is installed in a 
multiplex application or with a variable-speed or multi-capacity 
dedicated condenser), DOE is currently proposing not to consider this 
option in the analysis, which is consistent with a proposed 
modification to the test procedure that would preclude manufacturers 
from certifying compliance to DOE using ratings derived from testing of 
on-cycle variable-speed fans, as discussed in the following paragraph.
    The Working Group ultimately included in the term sheet a 
recommendation that would require manufacturers to make 
representations, including certifications of compliance to DOE, of the 
energy efficiency or energy consumption of WICF refrigeration systems 
without adaptive defrost or on-cycle variable-speed fans. See Term 
Sheet at EERE-2015-BT-STD-0016, No. 0056, recommendation #4. Likewise, 
they recommended that compliance with the applicable WICF refrigeration 
system standard should be assessed without using these technologies. As 
part of this approach, manufacturers would be permitted to make an 
additional representation of the energy efficiency or consumption for a 
basic model using either of these technologies as measured in 
accordance with the DOE test procedure, provided that the additional 
represented value has been certified to DOE per 10 CFR 429.12. Id. 
However, the benefit from using these technologies would not be 
factored in when determining compliance with the proposed standard. Id. 
The separate test procedure rulemaking currently underway is proposing 
to adopt these changes, and the NOPR for that rulemaking discusses the 
reasoning behind adopting these changes in more detail. Because these 
technologies would not have an effect on the rated efficiency of 
refrigeration systems for purposes of compliance under the proposed 
revisions to the test procedure, DOE did not consider these 
technologies in its analysis supporting the proposed standards.
3. Screened-Out Technologies
    In the June 2014 final rule, DOE screened out the following 
technologies from consideration:

 Energy storage systems (technological feasibility)
 High efficiency evaporator fan motors (technological 
feasibility)
 3-phase motors (impacts on equipment utility)
 Improved evaporator coils (impacts on equipment utility)

    DOE has not received any evidence beyond those technologies it has 
already considered that would weigh in favor of including these 
screened-out technologies and is continuing to exclude them for 
purposes of this proposal. Chapter 4 of the TSD contains further 
details on why DOE is screening out these technologies.
4. Remaining Technologies
    Through a review of each technology, DOE tentatively concludes that 
all of the other identified technologies listed in section IV.A.2 meet 
all four screening criteria and that their benefits can be measured 
using the DOE test procedure. In summary, DOE chose the following 
technology options to be examined further as design options in DOE's 
NOPR analysis:

 Higher efficiency compressors
 Improved condenser coil
 Higher efficiency condenser fan motors
 Improved condenser and evaporator fan blades
 Ambient sub-cooling

[[Page 62996]]

 Off-cycle evaporator fan control
 Variable speed condenser fan control
 Floating head pressure
    DOE determined that the benefits of these technology options can be 
measured using the DOE test procedure. Furthermore, the technology 
options are technologically feasible because they are being used or 
have previously been used in commercially-available equipment or 
working prototypes. DOE also finds that all of the remaining technology 
options meet the other screening criteria (i.e., practicable to 
manufacture, install, and service and do not result in adverse impacts 
on consumer utility, equipment availability, health, or safety).
    For additional details on DOE's screening analysis, see chapter 4 
of the NOPR TSD.

C. Engineering Analysis

    In the engineering analysis, DOE establishes the relationship 
between the manufacturer production cost (``MPC'') and improved WICF 
refrigeration system 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 
equipment to model different levels of efficiency. The efficiency-level 
approach uses estimates of costs and efficiencies of equipment 
available on the market at distinct efficiency levels to develop the 
cost-efficiency relationship. The reverse-engineering approach involves 
testing equipment for efficiency and determining cost from a detailed 
bill of materials (``BOM'') derived from reverse engineering 
representative equipment. The efficiency ranges from that of the 
typical WICF refrigeration system sold today (i.e., the baseline) to 
the maximum technologically feasible efficiency level. At each 
efficiency level examined, DOE determines the MPC; this relationship 
between increasing efficiency and increasing cost is referred to as a 
cost-efficiency curve. DOE conducted the engineering analysis for the 
June 2014 final rule using a design-option approach. 79 FR at 32072. 
DOE received no comments suggesting that it use of one of the 
alternative engineering analysis approaches. Consequently, DOE used a 
design-option approach in the analysis supporting this proposal.
    DOE did, however, make several changes to its engineering analysis 
based on discussions and information provided during the Working Group 
negotiation meetings. These changes are described in the following 
sections.
1. Refrigerants
    The analysis for the June 2014 final rule assumed that the 
refrigerant R-404A would be used in all new refrigeration equipment 
meeting the standard. 79 FR at 32074. On July 20, 2015, the U.S. 
Environmental Protection Agency (``EPA'') published a final rule under 
the Significant New Alternatives Policy (``SNAP'') prohibiting the use 
of R-404A in certain retail food refrigeration applications. See 80 FR 
42870 (``July 2015 EPA SNAP Rule''). Under the rule, R-404A can no 
longer be used in new supermarket refrigeration systems (starting on 
January 1, 2017), new remote condensing units (starting on January 1, 
2018), and certain stand-alone retail refrigeration units (starting on 
either January 1, 2019 or January 1, 2020 depending on the type of 
system). The last of these groups could include WICF refrigeration 
systems consisting of a unit cooler and condensing unit packaged 
together into a single piece of equipment. See 40 CFR part 82, appendix 
U to Subpart G (listing unacceptable refrigerant substitutes). EPA 
explained that most commercial walk-in coolers and freezers would fall 
within the end-use category of either supermarket systems or remote 
condensing units and would be subject to the rule. 80 FR at 42902.
    Given that manufacturers would not be allowed to use R-404A in WICF 
refrigeration systems when the proposed WICF standards would take 
effect, DOE conducted its analysis using an alternative refrigerant 
that can be readily used in most types of WICF refrigeration systems 
under the July 2015 EPA SNAP rule: R-407A. DOE made this selection 
after soliciting and obtaining input from the Working Group regarding 
which refrigerants would most likely be used to replace R-404A in WICF 
refrigeration systems and be most appropriate to use in its analysis to 
model WICF system performance. Lennox recommended the use of R-407A 
because it is currently a viable refrigerant for WICF refrigeration 
equipment and the manufacturer predicted that it would be the most 
common refrigerant in supermarket applications in the near future. 
(Docket No. EERE-2015-BT-STD-0016, Lennox, Public Meeting Transcript 
(September 11, 2015), No. 0061 at pp. 12-13) With respect to the issue 
of whether R-407A would be appropriate for all types of WICF 
refrigeration equipment, Rheem acknowledged that R-407A would not be 
allowed for packaged refrigeration equipment (where the condensing unit 
and unit cooler components are factory-assembled into a single piece of 
equipment) beginning January 1, 2020, but noted that this type of 
equipment comprises a very small segment of the WICF refrigeration 
market. It added that for this type of equipment, R-448A and R-449A 
would likely be the preferred alternatives and that they are similar to 
R-407A in terms of their refrigerant properties, making the choice of 
using R-407A for the analysis an appropriate one to simulate WICF 
refrigeration system performance with any of the likely replacement 
refrigerants. (Docket No. EERE-2015-BT-STD-0016, Rheem, Public Meeting 
Transcript (September 11, 2015), No. 0061 at pp. 14-15)
    In a subsequent meeting on September 30, 2015, the Working Group 
voted that DOE should use R-407A in its analysis going forward. The 
vote passed with 12 members voting ``yes'' and one member voting 
``no.'' The member who voted ``no'' (unidentified in the transcript) 
said that his constituency only uses R-448A. However, the CA IOUs 
observed that the performance of systems using R-448A is approximately 
equivalent to systems using R-407A. As a result of the Working Group's 
vote and discussion, DOE agreed to redo the analysis using R-407A going 
forward. (Docket No. EERE-2015-BT-STD-0016, various parties, Public 
Meeting Transcript (September 30, 2015), No. 0067 at pp. 34-39) For 
purposes of this proposal, DOE's analysis assumes the use of R-407A but 
a manufacturer would be permitted to use any acceptable refrigerant in 
its equipment to meet the proposed standard.
    Changing the refrigerant used in the assumptions, however, required 
some changes to DOE's analysis due to the properties of R-407A. Both R-
404A and R-407A are blends of refrigerants that have different boiling 
points. This means that unlike pure substances such as water, the 
temperature of the refrigerant changes as it boils or condenses, 
because one of the refrigerants in the blend, having a lower boiling 
point, boils off sooner than the other(s). This phenomenon is called 
``glide.'' The refrigerants that make up R-404A have nearly identical 
boiling points. For simplicity, the analysis assumed that R-404 remains 
at the same temperature as it undergoes a phase change (that is, it 
would not experience glide). In contrast, R-407A undergoes a much more 
significant temperature change when it boils--the temperature can rise 
as much as 8 degrees between

[[Page 62997]]

the saturated liquid condition (the temperature at which a liquid 
begins to boil, also called the ``bubble point'') and the saturated 
vapor condition (the temperature at which a vapor begins to condense, 
also called the ``dew point''). The average of these two temperatures, 
bubble point and dew point, is called the mid-point temperature. DOE 
revised its analysis to account for the glide of R-407A, as discussed 
in the following sections.
2. As-Tested Versus Field-Representative Performance Analysis
    DOE's engineering analysis is based on energy consumption 
characteristics as measured using the applicable DOE test procedure. 
The purpose is to replicate the manufacturer's rating so that the costs 
incurred for manufacturers to produce systems that meet the standard 
are accurately reflected. The engineering analysis outputs are 
generally also used as inputs to the downstream analyses such as the 
energy use, LCC, and NIA (which assess the economic benefits of energy 
savings of installed equipment), since energy use in the test is 
intended to reflect field energy use. However, for a number of reasons 
discussed during the negotiations, but primarily because of the switch 
in refrigerant from R-404A to R-407A described in the previous section, 
there are differences between as-tested performance and field 
performance (i.e. the performance that would be expected from a field-
installed system). The field-installed system performance could not be 
captured sufficiently in the energy use analysis, so DOE conducted an 
intermediate analysis to bridge the gap between the engineering 
analysis and the downstream analyses to predict aspects of field 
performance that would not be measured by the test procedure. DOE 
refers to this intermediate analysis as the ``field-representative 
analysis'' to distinguish it from the engineering and other analyses. 
Specific differences in how DOE modeled as-tested and in-field 
performance in the analysis are discussed as part of section IV.C.5 and 
further in chapter 5 of the TSD.
    Normally, when a test procedure becomes inadequate to capture 
representative equipment performance, DOE initiates a rulemaking to 
revise the test procedure. A revision of this magnitude fell outside 
the scope of the negotiated rulemaking. DOE has tentatively concluded 
that implementation of all the necessary test procedure changes is 
sufficiently complex that it would be prudent to work with the industry 
standard development groups that developed the original AHRI standard 
that DOE incorporated by reference into the WICF test procedure. The 
contemplation of such future changes does not implicate this standards 
rulemaking, however, because the standards set forth in this proposal 
are based on a limited group of refrigeration systems and rely on the 
modifications to the test procedure that DOE has already proposed to 
make. The fireld-representative analysis further ensures that the 
proposed test procedures adequately capture the impacts of the standard 
for the relevant equipment classes. Accordingly, the proposed standards 
would not have been affected by the incorporation of these additional 
test procedure changes. Furthermore, the contemplated future changes to 
the test procedure would affect the standards for medium temperature, 
dedicated condensing systems, which were not vacated by the litigation 
and are not at issue in this standards rulemaking. Therefore, DOE is 
not proposing to revise the test procedure within the context of this 
rulemaking (except as proposed in section III.A), but reserves the 
right to update the test procedure in a future rulemaking.
    Although DOE is allowing manufacturers to rate and certify unit 
coolers and condensing units separately, as described in section 
IV.A.1, and has structured its revised analysis based on this separate-
component rating approach, these components will ultimately be 
installed as part of complete refrigeration systems, and the field-
representative analysis reflects this fact. Some installations involve 
new systems consisting of two new components (a new condensing unit and 
a new unit cooler). The efficiency of these systems will reflect the 
design options included in both components. Other installations will 
involve replacing just the condensing unit or just the unit cooler. The 
efficiency of these systems will reflect the design options included in 
the new component only; DOE assumed for purposes of this analysis that 
the existing component would be at the baseline efficiency level.
    Ultimately, DOE provided outputs from the field-representative 
analysis outputs to the downstream analysis for four scenarios: (1) New 
unit cooler and new condensing unit that are installed together in the 
field; (2) new unit cooler that is installed with a multiplex system; 
(3) new unit cooler that is installed with an existing condensing unit 
in the field; and (4) new condensing unit that is installed with an 
existing unit cooler in the field. Scenarios 1 through 3 apply to the 
evaluation of unit cooler efficiency levels, while scenarios 1 and 4 
apply to evaluation of condensing unit efficiency levels. The scenarios 
analyzed in the downstream analysis are described in section IV.F. DOE 
evaluated equipment classes of tested unit coolers and condensing units 
in each of the relevant scenarios. (In the case of the medium 
temperature unit cooler class, DOE modeled the first scenario as a new 
unit cooler paired with a dedicated condensing unit meeting the 
standard for dedicated condensing, medium temperature systems 
established in the June 2014 final rule, which remains in effect.) 
During the November 20, 2015 public meeting, DOE presented a diagram 
mapping the tested classes to the field-representative scenarios. 
(Docket No. EERE-2015-BT-STD-0016, No. 0041 at p. 17) Details of these 
four scenarios are also provided in chapter 5 of the TSD.
3. Representative Equipment for Analysis
    In the analysis for the June 2014 final rule, DOE analyzed a range 
of representative WICF refrigeration systems within each equipment 
class. The representative systems covered different capacities, 
compressor types, and evaporator fin spacing. In all, DOE analyzed 47 
different representative refrigeration systems across all 10 equipment 
classes. See the June 2014 final rule TSD, chapter 5, pages 5-4 through 
5-6 (Docket No. EERE-2008-BT-STD-0015, No. 0031) and 79 FR 32050 at 
32073. DOE made several changes to the set of representative systems it 
analyzed for this proposal.
    First, as discussed in section IV.C.1, DOE conducted its analysis 
for this proposed rule based on the assumption that refrigerant R-407A 
would be used by walk-in refrigeration system manufacturers. In its 
prior analysis, not all of the compressor types analyzed in the June 
2014 final rule were designed to be compatible with this refrigerant. 
In the Working Group meeting held on September 11, 2015, National Coil 
Company, a meeting attendee, pointed out that low-temperature hermetic 
compressors are not likely to be developed for use with R-407A, and 
Lennox suggested analyzing scroll compressors for the low-capacity 
classes that could have used hermetic compressors using R-404A. 
Emerson, a Working Group member and major compressor manufacturer, 
agreed with the approach. (Docket No. EERE-2015-BT-STD-0016, National 
Coil Company, Lennox, and Emerson, Public Meeting Transcript (September 
11, 2015), No. 0061 at pp. 29-30) A caucus of

[[Page 62998]]

manufacturers later submitted a document to the docket recommending 
specific WICF equipment capacity ranges for different types of low-
temperature R-407A compressors that DOE should consider in its 
analysis: 5,000 to 60,000 Btu/h for scroll compressors and 15,000 to 
120,000 Btu/h for semi-hermetic compressors. (Docket No. EERE-2015-BT-
STD-0016, No. 0008 at p. 25)
    Second, the Working Group recognized that DOE's analysis would 
require additional capacity levels beyond those that had already been 
considered in the June 2014 final rule. As part of that rule's 
analysis, DOE analyzed low-temperature, dedicated condensing 
refrigeration systems with nominal capacities of 6,000, 9,000, 54,000, 
and 72,000 Btu/h. 79 FR at 32073. During the Working Group meetings, a 
caucus of manufacturers suggested that DOE consider analyzing low-
temperature dedicated condensing systems with nominal capacities of 
15,000 Btu/h and 25,000 Btu/h. (Docket No. EERE-2015-BT-STD-0016, No. 
0008 at p. 25; see also Docket No. EERE-2015-BT-STD-0016, Rheem, Public 
Meeting Transcript (September 30, 2015), No. 0067 at p.175) Following 
this recommendation, DOE analyzed low-temperature dedicated condensing 
systems at 25,000 Btu/h and considered adding a representative size of 
15,000 Btu/h if the initial results indicated that an additional 
capacity size was required to better model the performance of low-
temperature dedicated condensing systems. Ultimately, efficiency trends 
across capacities suggested that the 25,000 Btu/h point was adequate to 
represent the intermediate capacity range given the similarity to the 
AWEF range covered by the 9,000 Btu/h, 25,000 Btu/h, and 54,000 Btu/h. 
This trend is shown in a graph. See EERE-2015-BT-STD-0016-0051 
(presenting a spreadsheet containing a ``pivot awefs'' tab showing 
efficiency trends across capacities for dedicated condensing systems). 
Thus, because of the sufficiency of the 25,000 Btu/h at representing 
the intermediate capacity range for these systems, a full analysis of a 
15,000 Btu/h dedicated condensing system was unnecessary for the 
purposes of this proposal.
    Third, in the June 2014 final rule, DOE analyzed representative 
unit coolers at two different configurations of evaporator fin spacing, 
4 fins per inch and 6 fins per inch. (Unit cooler heat exchangers use a 
fin-tube design, meaning that refrigerant is circulated through copper 
tubes with aluminum strips, or ``fins'' attached to the tubes to 
facilitate heat transfer to the air passing through the heat 
exchanger.) See the June 2014 final rule TSD, chapter 5, pages 5-6 
(Docket No. EERE-2008-BT-STD-0015, No. 0131). In the September 11, 
2015, Working Group meeting, DOE sought feedback on the need to analyze 
both fin configurations for both medium- and low-temperature unit 
coolers. Rheem commented that an analysis based on configurations with 
4 fins per inch for low-temperature and 6 fins per inch for medium-
temperature applications would be appropriate. In their view, these fin 
configurations would adequately represent these systems. (Docket No. 
EERE-2015-BT-STD-0016, Rheem, Public Meeting Transcript (September 11, 
2015), No. 0061 at p. 109) On the basis of this input, DOE reiterated 
its plans to conduct the analysis using six fins per inch for medium 
temperature unit coolers and 4 fins per inch for low-temperature unit 
coolers. The Working Group raised no objections to this approach. 
(Docket No. EERE-2015-BT-STD-0016, DOE, Public Meeting Transcript 
(September 30, 2015), No. 0067 at pp. 183-184)
    Table IV-1 identifies, for each class of refrigeration system, the 
nominal capacities of the equipment DOE analyzed in the engineering 
analysis for this proposed rule. Chapter 5 of the TSD includes 
additional details on the representative equipment sizes and classes 
used in the analysis.

                            Table IV-1--Details of Representative Equipment Analyzed
----------------------------------------------------------------------------------------------------------------
                                                Sizes analyzed                                      Unit cooler
               Equipment class                 (nominal Btu/h)      Compressor types analyzed      fins per inch
----------------------------------------------------------------------------------------------------------------
DC.L.I, <6,500 Btu/h........................              6,000  Scroll.........................             N/A
DC.L.I, >=6,500 Btu/h.......................              9,000  Scroll.........................             N/A
                                                       * 25,000  Scroll, Semihermetic...........             N/A
                                                         54,000  Semihermetic...................             N/A
DC.L.O, <6,500 Btu/h........................              6,000  Scroll.........................             N/A
DC.L.O, >=6,500 Btu/h.......................              9,000  Scroll.........................             N/A
                                                       * 25,000  Scroll, Semihermetic...........             N/A
                                                         54,000  Semihermetic...................             N/A
                                                         72,000  Semihermetic...................             N/A
UC.M........................................              4,000  N/A............................               6
                                                          9,000  N/A............................               6
                                                         24,000  N/A............................               6
UC.L, <15,500 Btu/h.........................              4,000  N/A............................               4
                                                          9,000  N/A............................               4
UC.L, >= 15,500 Btu/h.......................             18,000  N/A............................               4
                                                         40,000  N/A............................               4
----------------------------------------------------------------------------------------------------------------
* Indicates a representative capacity that was not analyzed in the June 2014 final rule analysis. All other
  listed representative nominal capacities had also been analyzed in the June 2014 final rule.

4. Cost Assessment Methodology
a. Teardown Analysis
    In support of the June 2014 final rule, DOE conducted a teardown 
analysis to calculate manufacturing costs of WICF components. The 
teardown analysis consisted of disassembling WICF equipment; 
characterizing each subcomponent based on weight, dimensions, material, 
quantity, and manufacturing process; and compiling a bill of materials 
incorporating all materials, components, and fasteners to determine the 
overall manufacturing cost. DOE supplemented this process with 
``virtual teardowns,'' in which it used data from manufacturer catalogs 
to extrapolate cost assumptions to other equipment that DOE did not 
physically disassemble. 79 FR at 32077. For the analysis supporting 
this proposed rule, DOE conducted additional physical and virtual 
teardowns of WICF equipment to

[[Page 62999]]

ensure that its cost model was representative of the current market.
b. Cost Model
    The cost model is one of the analytical tools DOE used in 
constructing cost-efficiency curves. In developing this model, DOE 
derives cost model curves from the teardown BOMs and the raw material 
and purchased parts databases. Cost model results are based on material 
prices, conversion processes used by manufacturers, labor rates, and 
overhead factors such as depreciation and utilities. For purchased 
parts, the cost model considers the purchasing volumes and adjusts 
prices accordingly. The manufacturers of WICF components (i.e. OEMs), 
convert raw materials into parts for assembly, and also purchase parts 
that arrive as finished ``ready-to-assemble'' goods. DOE bases most raw 
material prices on past manufacturer quotes that have been adjusted to 
present day prices using Bureau of Labor Statistics (``BLS'') and 
American Metal Market (``AMM'') inflators. DOE inflates the costs of 
purchased parts similarly and also considers the purchasing volume--the 
higher the purchasing volume, the lower the price. Prices of all 
purchased parts and non-metal raw materials are based on the most 
current prices available, while raw metals are priced on the basis of a 
5-year average to smooth out volatility in raw material prices. In 
calculating the costs for this proposal, DOE updated its cost data to 
reflect the most recent 5-year price average.
    DOE uses the cost model to analyze the MPC impacts of certain 
design options that affect the size of equipment components and 
casings. For instance, a design option that increases the volume of a 
condenser coil will incur material costs for the increase in condenser 
coil materials, and will incur further material costs for the increase 
in unit case size and condenser fan size that are required to 
accommodate the larger coil. To calculate costs for this proposed rule, 
DOE revised its assumptions about how some design options would impact 
the growth of a unit's case and components. DOE updated the cost data 
to account for the cost impacts from changes to the unit components and 
casing for certain design options. Chapter 5 of the TSD describes DOE's 
cost model and definitions, assumptions, data sources, and estimates.
c. Manufacturing Production Cost
    Once it finalizes the cost estimates for all the components in each 
teardown unit, DOE totals the cost of the materials, labor, and direct 
overhead used to manufacture the unit to calculate the manufacturer 
production cost of such equipment. DOE then breaks the total cost of 
the equipment into two main costs: (1) The full manufacturer production 
cost, referred to as MPC; and (2) the non-production cost, which 
includes selling, general, and administration (``SG&A'') costs; the 
cost of research and development; and interest from borrowing for 
operations or capital expenditures. DOE estimated the MPC at each 
design level considered for each equipment class, from the baseline 
through max-tech. After incorporating all of the data into the cost 
model, DOE calculated the percentages attributable to each element of 
total production cost (i.e., materials, labor, depreciation, and 
overhead). These percentages were used to validate the data by 
comparing them to manufacturers' actual financial data published in 
annual reports, along with feedback obtained from manufacturers during 
interviews. DOE uses these production cost percentages in the MIA. See 
section IV.J.3.a for more details on the production costs.
d. Manufacturing Markup
    The manufacturer markup converts MPC to manufacturer selling price 
(``MSP''). DOE developed an average manufacturer markup by examining 
the annual Securities and Exchange Commission 10-K reports filed by 
publicly-traded manufacturers primarily engaged in commercial 
refrigeration manufacturing and whose combined equipment range includes 
WICF refrigeration systems. In the June 2014 final rule, DOE calculated 
an average markup of 35 percent for WICF refrigeration systems. 79 FR 
at 32079. In the absence of any adverse comments made during the 
Working Group meetings, DOE applied the same manufacturer markup in its 
supporting analysis for this proposal.
e. Shipping Cost
    For the June 2014 final rule, DOE developed estimates of shipping 
rates by conducting market research on shipping rates and by 
interviewing manufacturers of the covered equipment. DOE found that 
most manufacturers, when ordering component equipment for installation 
in their particular manufactured equipment, do not pay separately for 
shipping costs; rather, it is included in the selling price of the 
equipment. However, when manufacturers include the shipping costs in 
the equipment selling price, they typically do not mark up the shipping 
costs for profit, but instead include the full cost of shipping as part 
of the price quote. 79 FR at 32079. DOE did not significantly change 
its methodology for calculating shipping costs in this proposed rule. 
See chapter 5 of the TSD for more details on the shipping costs.
    DOE seeks comment regarding the method it used for estimating the 
manufacturing costs related to the equipment discussed in this 
proposal. This is identified as Issue 1 in section VII.E, ``Issues on 
Which DOE Seeks Comment.''
5. Component and System Efficiency Model
    At each representative capacity within each equipment class covered 
in this rulemaking (see section IV.C.3), DOE selected a particular 
model of unit cooler or condensing unit, as applicable, to represent 
the capacity. DOE then used a spreadsheet-based efficiency model to 
predict the efficiency of each representative unit as tested by the 
test procedure, similar to the method used in the June 2014 final rule. 
Generally, the efficiency is calculated as the annual box load--a 
function of the capacity of the unit--divided by the power consumed by 
the unit. The power consumption accounts for the power used by, as 
applicable, the compressor, condenser and evaporator fans, defrost, 
and/or other energy-using components. For dedicated systems with the 
condensing unit located outdoors, the box load is dependent on a 
distribution of outdoor ambient temperatures specified by the test 
procedure.
    In the June 2014 final rule, DOE analyzed two types of systems: 
Dedicated condensing systems consisting of a manufacturer-paired unit 
cooler and condensing unit; and systems consisting of a unit cooler 
paired with a multiplex condenser. However, the focus of the analysis 
for this proposed rule was on performance of either the condensing unit 
or unit cooler as tested, rather than a matched pair, since the revised 
engineering analysis is based on the rating of these components. As 
discussed in section IV.C.2, DOE also conducted a field representative 
analysis to evaluate the behavior of systems as installed to develop 
inputs to the downstream analyses. The following sections describe 
changes to DOE's analysis as compared with the June 2014 final rule 
analysis, describing changes associated both with the as-tested 
engineering analysis and the field-representative analysis. More 
information on the efficiency analysis can be found in chapter 5 of the 
TSD.

[[Page 63000]]

a. Unit Coolers (Formerly Termed the Multiplex Condensing Class)
    DOE continued to evaluate unit coolers in a manner similar to the 
June 2014 final rule analysis. That analysis, consistent with the DOE 
test procedure, examined the performance of unit coolers connected to a 
multiplex condensing system using AWEF--i.e. the ratio of the box load 
of the walk-in divided by the energy use attributed to the system. (Box 
load is a factor of the net capacity.) Also per the test procedure, the 
energy use is the sum of the energy consumed directly by the unit 
cooler, primarily by the fans (and defrost energy for low-temperature 
units), and the energy attributed to the multiplex condensing system 
(compressors, condensers, etc.), calculated by dividing the gross 
capacity of the unit cooler by an assumed multiplex system EER. 
However, DOE's updated analysis made changes to some aspects of the 
calculation.
    First, DOE recognizes that the as-tested performance of unit 
coolers may differ from field-representative performance, a difference 
due primarily (though not solely) to the change in refrigerant from R-
404A to R-407A. As discussed in section IV.C.1, R-407A experiences a 
significant change in temperature (``glide'') as it evaporates or 
condenses, while R-404 does not. In typical evaporators, R-407A 
experiences a glide of approximately 6 degrees from the evaporator 
entrance to the saturated vapor (dew point) condition. (Although the 
total glide of R-407A is approximately 8 degrees between bubble point 
and dew point, refrigerant entering the evaporator is already partially 
evaporated and is thus at a slightly higher temperature than the true 
bubble point). The test procedure specifies the evaporator dew point 
temperature that must be used during a test, and DOE continued to use 
this dew point temperature for unit coolers using R-407A in the as-
tested analysis. In the field-representative analysis, however, DOE 
shifted the dew point to maintain equivalence of heat transfer of R-
404A and R-407A: That is, the heat exchanger should operate with the 
same average refrigerant temperature in the two-phase region for both 
refrigerants. Because of the glide of R-407A, an average temperature 
consistent with R-404A would result in a dew point temperature that is 
3 degrees higher than the dew point of a unit cooler using R-404A--that 
is, half of the 6-degree glide. Likewise, DOE also reduced the 
superheat (i.e. the excess of temperature of a vapor above its dew 
point) in the field-representative case by 3 degrees so that the exit 
temperature of the refrigerant from the evaporator is consistent with 
the as-tested case, where the superheat is specified. (See October 15, 
2015 Public Meeting Presentation, Docket No. EERE-2015-BT-STD-0016, No. 
0026 at pp. 20-22.)
    Second, DOE adjusted its calculation to measure the net capacity 
for unit coolers. The June 2014 final rule analysis calculated the net 
capacity as the refrigerant mass flow multiplied by the rise in 
refrigerant enthalpy between the inlet and outlet of the unit cooler, 
minus the fan heat. DOE determined the mass flow rate by choosing for 
its analysis a compressor with a capacity close to that of the 
manufacturer-reported capacity of the unit cooler when measured at the 
test procedure's conditions. However, National Coil Company noted that 
once the inlet and outlet refrigerant conditions are defined, the 
compressor does not affect the capacity. It suggested that DOE avoid 
using a calculation methodology that relies on compressor 
characteristics. (Docket No. EERE-2015-BT-STD-0016, National Coil 
Company, Public Meeting Transcript (September 11, 2015), No. 0061 at p. 
115) DOE also conducted additional testing, which indicated that the 
unit coolers' measured capacities are lower than the nominal capacities 
reported in manufacturer literature. These results suggested that using 
a unit cooler's nominal capacity would overestimate both capacity and 
efficiency measured in the test. (September 11, 2015 Public Meeting 
Presentation, Docket No. EERE-2015-BT-STD-0016, No. 0003 at p. 40) 
Rheem suggested that this discrepancy may be due in part to the 
different test conditions used during testing versus those used when 
determining the nominal capacity of a unit cooler. (Docket No. EERE-
2015-BT-STD-0016, Rheem, Public Meeting Transcript (September 11, 
2015), No. 0061 at pp. 116-117) For the current analysis, DOE used 
performance modeling of WICF evaporator coils, calibrated based on 
testing data, to develop an equation relating manufacturer-reported 
nominal capacity to the net capacity that would be measured during unit 
cooler testing (as DOE is assuming all unit coolers will be rated using 
the multiplex system test as discussed in section IV.C.2). (September 
30, 2015 Public Meeting Presentation, Docket No. EERE-2015-BT-STD-0016, 
No. 0007 at pp. 55 and 57) The tests were conducted using R-404A, but 
DOE used the performance modeling to predict the capacity trend for 
unit coolers using R-407A refrigerant, since this was the refrigerant 
used in the engineering analysis, as discussed in section IV.C.1. (See 
the October 15, 2015 Public Meeting Presentation, Docket No. EERE-2015-
BT-STD-0016, No. 0026 at pp. 24, 26, and 28) DOE also developed 
different equations for the as-tested analysis and for the field-
representative results, where the field-representative calculations 
account for the 3-degree shift in dew point and reduction in superheat 
discussed in the previous paragraph. DOE used this approach for 
determining unit cooler measured capacity in the subsequent analysis, 
with agreement from Working Group members. (Docket No. EERE-2015-BT-
STD-0016, various parties, Public Meeting Transcript (October 15, 
2015), No. 0062 at pp. 205-209)
    Third, DOE revised the input assumption for refrigerant suction dew 
point temperature (i.e., dew point temperature of the refrigerant at 
the entrance to the condensing unit--which is typically lower than the 
refrigerant dew point at the unit cooler exit due to pressure drop in 
the refrigerant line connecting the unit cooler and condensing unit). 
The suction dew point temperature is used in the engineering analysis 
calculations to determine the appropriate multiplex system EER values 
as specified in the test procedure. In the June 2014 final rule 
analysis, DOE used EER values corresponding to a suction dew point 
temperature of 19[emsp14][deg]F for medium temperature systems and -
26[emsp14][deg]F for low-temperature systems. For the revised analysis, 
DOE used 23[emsp14][deg]F for medium-temperature systems and -
22[emsp14][deg]F for low-temperature systems, both of which have higher 
corresponding EER levels. DOE's initial use of the lower temperatures 
was based on a conservative interpretation of the open-ended nature of 
the AHRI 1250-2009 test procedure, which is incorporated by reference 
in DOE's test procedure. The suction dew point temperatures used in the 
current analysis are now two degrees lower than the evaporator exit dew 
point temperature used in the test. (See September 11, 2015 Public 
Meeting Presentation, Docket No. EERE-2015-BT-STD-0016, No. 0003 at p. 
39) The Working Group generally agreed with this approach and applying 
that 2-degree dew point reduction to account for pressure drop in the 
suction line. (Docket No. EERE-2015-BT-STD-0016, various parties, 
Public Meeting Transcript (September 11, 2015), No. 0061 at p. 113)
    Fourth, DOE used a different set of EER values in its field-
representative

[[Page 63001]]

analysis of unit coolers connected to multiplex condensing systems. The 
Working Group observed that the EER values used in the test procedure 
are likely based on R-404A, while, as discussed in this preamble, DOE's 
updated analysis to represent field performance was based on the use of 
R-407A. Members of the Working Group representing a caucus of 
manufacturers submitted EER values that they asserted would be more 
representative of a multiplex condensing system operating in the field, 
since the new values were based on the use of R-407A. (Docket No. EERE-
2015-BT-STD-0016, No. 0009) DOE observed that the Working Group-
recommended values were significantly lower than the test procedure 
values, which cannot be explained by the difference in refrigerants. 
The Working Group did not object to the use of the submitted EER 
values. Accordingly, DOE used these new EER values in the field-
representative analysis for unit coolers (while continuing to use EER 
values from the test procedure in the as-tested analysis). (Docket No. 
EERE-2015-BT-STD-0016, Public Meeting Transcript (October 15, 2015), 
No. 0062 at pp. 194-198; See also the October 15, 2015 Public Meeting 
Presentation, Docket No. EERE-2015-BT-STD-0016, No. 0026 at p. 19)
b. Condensing Units/Dedicated Condensing Class
    DOE made several changes to the way it analyzed dedicated 
condensing refrigeration systems. In the June 2014 final rule, DOE 
analyzed systems consisting of a paired unit cooler and condensing unit 
to represent the dedicated condensing class. In contrast, as described 
in sections III.A, IV.A.1, and IV.C.2, DOE based its analysis for this 
proposed rule on testing and rating condensing units as individual 
components rather than as part of matched-pair systems in order to 
evaluate efficiency levels for the dedicated condensing equipment 
classes. The as-tested analysis uses the nominal values for unit cooler 
fan and defrost energy use as prescribed in the DOE test procedure. (10 
CFR 431.304(c)(12))
    As in the June 2014 final rule analysis, DOE calculated compressor 
performance using the standard 10-coefficient compressor model 
described in section 6.4 of AHRI Standard 540-2004 (AHRI 540), 
``Performance Rating of Positive Displacement Refrigerant Compressors 
and Compressor Units.'' See the June 2014 final rule TSD, chapter 5, 
pp. 5-22 (Docket No. EERE-2008-BT-STD-0015, No. 0131) However, in the 
updated analysis, DOE used compressor coefficients for compressors 
operating with R-407A to be consistent with the approach discussed in 
section IV.C.1. (See the October 15, 2015 Public Meeting Presentation, 
Docket No. EERE-2015-BT-STD-0016, No. 0026 at p. 18.) Also, DOE used a 
return gas temperature of 5 degrees F in generating the coefficients 
using the software, suggested as the appropriate temperature for a low-
temperature system by a caucus of manufacturers. (Docket No. EERE-2015-
BT-STD-0016, No. 0008 at p. 26)
    The change to refrigerant R-407A also affected the condensing 
temperature in the analysis. As discussed in section IV.C.1, R-407A 
experiences approximately 8 degrees of glide, or temperature change, as 
it condenses. A caucus of manufacturers submitted information on R-407A 
glide and requested that DOE increase the assumed condenser dew-point 
temperatures by 4[emsp14][deg]F to maintain a midpoint temperature 
consistent with that of the analysis done with R-404A. (Docket No. 
EERE-2015-BT-STD-0016, No. 0008 at pp. 4-9) The midpoint temperature is 
representative of the average refrigerant temperature in the condenser 
heat exchanger. After considering the merits of the argument, DOE 
implemented this change in the analysis going forward. This change is 
similar to the shift in dew point on the evaporator side described in 
section IV.C.5.a, but is applied in the as-tested analysis as well as 
the field-representative analysis for condensing units. This is because 
the test procedure specifies the outdoor air temperature rather than 
the condensing temperature for tests of condensing units, unlike for 
unit coolers, for which the test procedure specifies the evaporating 
temperature. (Docket No. EERE-2015-BT-STD-0016, various parties, Public 
Meeting Transcript (September 30, 2015), No. 0067 at pp. 23-24 and 
Public Meeting Transcript (October 15, 2015), No. 0062 at pp. 184-187) 
(See also October 15, 2015 Public Meeting Presentation, Docket No. 
EERE-2015-BT-STD-0016, No. 0026 at pp. 19-20)
    In the June 2014 final rule, DOE used the saturated vapor 
temperature at the evaporator exit to derive the compressor power and 
mass flow from the 10-coefficient equation described in this preamble. 
For the analysis supporting this proposed rule, DOE instead used the 
suction dew point in the compressor coefficient equations. (See October 
15, 2015 Public Meeting Presentation, Docket No. EERE-2015-BT-STD-0016, 
No. 0026 at p. 29) As described in section IV.C.5.a, the suction dew 
point is 2 degrees lower than the dew point at the evaporator exit; 
this approach is consistent with DOE's selection of suction dew point 
for choosing the appropriate EER for multiplex systems.
    Also in the June 2014 final rule, DOE assumed that the refrigerant 
entering the unit cooler would be a subcooled liquid (that is, its 
temperature would be lower than the saturated liquid temperature in the 
condenser, primarily due to exposure of the refrigerant line to lower 
ambient temperatures). Rheem suggested that this would be inappropriate 
for a condenser-only test because there would be two phases of 
refrigerant in the receiver, and without a separate subcooler within 
the condensing unit, the refrigerant would not experience subcooling 
significantly greater than zero at the condenser exit. DOE assumed 
liquid line subcooling would occur after the condenser exit and thus 
would not be captured in the condenser-only test. (Docket No. EERE-
2015-BT-STD-0016, Rheem, Public Meeting Transcript (September 11, 
2015), No. 0061 at pp. 131-133) DOE revised its analysis to assume 0 
degrees of additional sub-cooling in the condensing unit for baseline 
systems. (See October 15, 2015 Public Meeting Presentation, Docket No. 
EERE-2015-BT-STD-0016, No. 0026 at p. 30)
    As described in section IV.C.3, one of the analyzed capacities of 
condensing unit--25,000 Btu/h nominal capacity--could be sold with two 
compressor types, scroll or semi-hermetic. The June 2014 final rule 
efficiency model also analyzed multiple compressor types at certain 
representative sizes. In that analysis, DOE developed a separate cost-
efficiency curve for each different compressor type. The life-cycle 
cost analysis then aggregated both curves into one set of efficiency 
levels, and selected points among the aggregated efficiency levels 
defining a new ``cost-effective'' curve where, when faced with a choice 
between two compressors, the manufacturer would choose the less 
expensive design among the options at the same efficiency level. DOE 
indicated in the Working Group meeting on September 30, 2015 that for 
the revised analysis, a single cost-efficiency curve would be developed 
for each representative condensing unit capacity, but that DOE was 
considering whether compressor type should be considered as a design 
option or whether DOE should aggregate the efficiency curves for the 
two compressors into a single curve. In the same meeting, ASAP 
suggested that it would be appropriate to consider higher-efficiency 
compressors as a design option, but Rheem raised concerns that this 
could restrict them to using only one

[[Page 63002]]

compressor or one compressor manufacturer's offering. (Docket No. EERE-
2015-BT-STD-0016, ASAP, Public Meeting Transcript (September 30, 2015), 
No. 0067 at p. 181-182; Docket No. EERE-2015-BT-STD-0016, Rheem, Public 
Meeting Transcript (September 30, 2015), No. 0067 at p. 182-183) As 
presented in the November 3, 2015 public meeting, DOE ultimately 
revised its approach to create a single aggregated cost-efficiency 
curve in the engineering analysis for the 25,000 Btu/h nominal 
capacity, thus aggregating results developed separately for the scroll 
and semi-hermetic compressors. Consequently, DOE did not consider 
compressor type as a design option. (Docket No. EERE-2015-BT-STD-0015, 
various parties, Public Meeting Transcript (November 3, 2015), No. 0064 
at pp. 75-80 and the November 3, 2015 Public Meeting Presentation, 
available in Docket No. EERE-2015-BT-STD-0016, No. 0033 at pp. 29-32) 
See chapter 5 of the TSD for more details of how DOE aggregated the 
cost-efficiency curves for the compressor types.
c. Field-Representative Paired Dedicated Condensing Systems
    DOE based its ``as-tested'' engineering analysis for dedicated 
condensing systems on an evaluation of condensing units tested 
individually. DOE recognizes that this approach is an approximation of 
actual in-field performance, in large part because each condensing unit 
will ultimately be paired with a given unit cooler in the field. 
Furthermore, certain conditions specified in the test procedure are 
contingent upon the use of a refrigerant that does not experience 
significant glide, and systems using R-407A, a refrigerant that does 
experience glide, would behave differently under such conditions than 
systems using a non-glide refrigerant. To account for the potential 
calculated differences between as-tested versus in-field performance, 
DOE conducted a separate field-representative analysis that accounts 
for actual system operation, which necessarily includes the performance 
of both the condensing unit and the unit cooler with which it is 
paired. This field-representative analysis includes a number of key 
elements.
    First, although refrigerant subcooling at the exit of a condensing 
unit tested alone would be zero degrees as discussed in section 
IV.C.5.b, during field operation of a system, subcooling between the 
condenser exit and unit cooler entrance may occur due to exposure of 
the refrigerant line to ambient air with a temperature lower than the 
refrigerant. DOE's June 2014 final rule analysis of paired systems 
assumed that subcooling at the unit cooler inlet would be 12 [deg]F, 
based on test data for paired systems--DOE presented these data during 
the negotiated rulemaking. (Docket No. EERE-2015-BT-STD-0016, Public 
Meeting Transcript (September 30, 2015), No. 0067 at pp. 133-135 and 
September 30, 2015 Public Meeting Presentation, Docket No. EERE-2015-
BT-STD-0016, No. 0007 at p. 23) However, the test data were based on 
systems using R-404A and DOE reasoned that the glide from R-407A could 
result in a lower refrigerant temperature at the condenser exit (4 
degrees) than for R-404A, assuming the same mid-point temperature is 
used. (See the discussion regarding glide and maintaining the same 
average refrigerant temperature for different refrigerants, described 
in the previous two sections, for further details.) Thus, DOE assumed a 
subcooling temperature of 8 degrees in the field-representative 
analysis--4 degrees lower than the 12 degrees attributed to operation 
with R-404A. In effect, the analysis assumes that the final liquid 
temperature would be the same for both refrigerants. DOE also checked 
to make sure that this final liquid refrigerant temperature was not 
lower than the ambient temperature. The Working Group did not object to 
this approach and DOE continued to use it in preparing this proposal. 
(Docket No. EERE-2015-BT-STD-0016, DOE, Public Meeting Transcript 
(October 15, 2015), No. 0062 at pp. 213-214; October 15, 2015 Public 
Meeting Presentation, Docket No. EERE-2015-BT-STD-0016, No. 0026 at p. 
30.
    Second, DOE assumed a unit cooler exit dew point for the field-
representative analysis that is 3 degrees higher than the exit dew 
point temperature specified in the test procedure. This is similar to 
the adjustment made for condensing units, described in the previous 
paragraphs. To account for the 6 degrees of glide within an evaporator 
using R-407A and maintain the same average refrigerant temperature as 
the equivalent R-404A analysis, the exit dew point must be 3 degrees 
higher that the prescribed test procedure temperature. DOE also 
adjusted the evaporator exit superheat to maintain a refrigerant 
temperature at the unit cooler exit that would be consistent with the 
equivalent R-404A analysis. In the as-tested analysis, the evaporator 
superheat was assumed to be 6[emsp14][deg]F for low temperature systems 
and 10[emsp14][deg]F in medium temperature systems; in the field 
representative analysis, DOE reduced both of these by 3 degrees to 
account for the 3-degree increase in evaporator dew point temperature. 
(October 15, 2015 Public Meeting Presentation, Docket No. EERE-2015-BT-
STD-0016, No. 0026 at p. 22) Similar to the as-tested analysis, DOE 
continued to use a 2-degree reduction in dew point temperature between 
the evaporator exit and condensing unit entrance to represent suction 
line pressure drop in the field-representative analysis. (October 15, 
2015 Public Meeting Presentation, Docket No. EERE-2015-BT-STD-0016, No. 
0026 at p. 29)
    Third, the as-tested analysis of a dedicated condensing system 
(i.e. a condensing unit tested alone) uses nominal values for the unit 
cooler fan and defrost power, as required by the test procedure. See 10 
CFR 431.304(c)(12)(ii). During the Working Group meetings, 
manufacturers provided data on representative unit cooler fan and 
defrost power. (Docket No. EERE-2015-BT-STD-0016, No. 0011). As 
presented in the October 15, 2015 public meeting, DOE used these data 
to estimate unit cooler fan and defrost power for a field-matched 
system since the manufacturer-supplied data would be, when compared to 
other available data, the most likely dataset to be reasonably 
representative of installed system performance. (Docket No. EERE-2015-
BT-STD-0016, No. 0026 at p. 40 and Docket No. EERE-2015-BT-STD-0016, 
various parties, Public Meeting Transcript (October 15, 2015), No. 0062 
at pp. 227-228) DOE did not receive any adverse comments and proceeded 
with this approach in the analysis for this proposed rule.
6. Baseline Specifications
    Because there have not been any previous performance-based 
standards for WICF refrigeration systems, there is no established 
baseline efficiency level for this equipment. DOE developed baseline 
specifications for the representative units in its analysis, described 
in section IV.C.3, by examining current manufacturer literature to 
determine which characteristics represented baseline equipment versus 
high-efficiency equipment. DOE conducted additional testing and 
teardowns to supplement the data used in the June 2014 final rule 
analysis and identify characteristics not listed in manufacturer 
literature. DOE assumed that all baseline refrigeration systems comply 
with the current prescriptive standards in EPCA--namely, (1) evaporator 
fan motors of under 1 horsepower and less than 460 volts are 
electronically commutated motors (brushless direct current motors)

[[Page 63003]]

or three-phase motors and (2) walk-in condenser fan motors of under 1 
horsepower are permanent split capacitor motors, electronically 
commutated motors, or three-phase motors. (See section II.B for further 
details on current WICF standards.)
    During the negotiations, Working Group members observed that DOE's 
baseline energy consumption values did not seem to account for some 
equipment features, such as controls, that may be included on the 
equipment and would use energy during a test. DOE's test procedure for 
WICFs incorporates by reference the industry standard AHRI 1250-2009 in 
its entirety, with certain exceptions as outlined in 10 CFR 431.304. 
(See 10 CFR 431.303, which incorporates this industry standard by 
reference.) One provision in section 5.1 of this industry standard 
requires that the power input measured during the test should include 
power used by accessories such as condenser fans, controls, and similar 
accessories. Members of the Working Group requested that DOE either 
revise its test procedure to introduce an exception to the industry 
standard modifying the provision so as not to measure these loads 
during a test, or to account for power used by these accessories in the 
analysis. (Docket No. EERE-2015-BT-STD-0016, various parties, Public 
Meeting Transcript (September 11, 2015), No. 0061 at pp. 51-56; See 
also Docket No. EERE-2015-BT-STD-0016, No. 0006 at p. 1, recommendation 
#4.) DOE requested, and Working Group members then provided, additional 
data regarding auxiliary power-using equipment features, fan and 
defrost power, and condenser coil sizing for baseline refrigeration 
systems. (Docket No. EERE-2015-BT-STD-0016, Nos. 0010, 0011, and 0030, 
respectively.) In lieu of introducing a modification to the test 
procedure, DOE considered this information in formulating baseline 
specifications in this NOPR analysis. See chapter 5 of the TSD for more 
detailed baseline specifications for the representative systems.
7. Design Options
    Section IV.B.4 lists technologies that passed the screening 
analysis and that DOE examined further as potential design options. DOE 
updated the analysis for several of these design options based on 
information received during the Working Group meetings. The following 
sections address design options for which DOE received new information 
or conducted additional analysis during the negotiation period. All 
design options are discussed in more detail in chapter 5 of the TSD.
a. Higher Efficiency Compressors
    In the analysis for the June 2014 final rule, DOE considered a 
design option for a high-efficiency compressor designed to run at 
multiple discrete capacities or variable capacity. During the Working 
Group meetings, members noted that a provision in section 7.8.1 of AHRI 
1250-2009, the industry test procedure incorporated by reference, 
specifies that the method for testing a condensing unit alone (i.e. not 
as part of a matched pair) applies only to single-capacity WICF 
refrigeration systems. (See 10 CFR 431.303, which incorporates this 
industry standard by reference; see also Docket No. EERE-2015-BT-STD-
0016, various parties, Public Meeting Transcript (September 11, 2015), 
No. 0061 at pp. 87-94 and Public Meeting Transcript (September 30, 
2015), No. 0067 at pp. 157-167).
    As discussed in section IV.C.2, most condensing units are sold 
separately by OEMs and would be rated separately, rather than rated 
with specified unit coolers as matched pair systems. DOE's analysis for 
dedicated condensing unit standards has been updated to reflect the 
concerns noted by the Working Group by being based on the testing and 
rating of condensing units alone rather than as part of matched pairs. 
While the analysis reflects this change, the current test procedure 
does not allow testing of variable-capacity systems using the 
condenser-alone rating method. Adopting standards that would require 
use of a variable-capacity compressor would force manufacturers to rate 
and sell units as matched pairs, a result that, in DOE's view, may 
create an excessive burden on manufacturers and the related 
distribution system, since it would restrict the option of selling 
individual components and because the numbers of possible matched pair 
systems would be much greater than the number of individual condensing 
units and unit coolers (for example, if a manufacturer sells 5 
condensing units and 5 unit coolers that could all be paired with each 
other, there are 25 possible matched-pair combinations as compared with 
10 individual units). Therefore, DOE did not analyze variable-capacity 
compressors. This approach does not preclude manufacturers from 
designing and selling systems with variable-capacity compressors but 
would require them to test and certify such systems as matched-pair 
systems--which would need to comply with the applicable energy 
conservation standards. DOE may consider this design option in a future 
rulemaking if the test procedure can be modified so that it properly 
addresses variable-capacity systems.
b. Improved Condenser Coil
    In its supporting analysis for the June 2014 final rule, DOE 
considered a design option for an improved condenser coil. The improved 
condenser coil would have more face area and heat transfer capacity 
than a baseline coil. DOE assumed that the coil would be sized to lower 
the condensing temperature by 10 degrees F, thus reducing the 
compressor power input, and increasing the compressor's cooling 
capacity. See the June 2014 final rule TSD, chapter 5, pages 5-44 and 
5-45 (Docket No. EERE-2008-BT-STD-0015, No. 0131).
    DOE's revised analysis still includes this design option, but with 
modified details. During Working Group meetings, manufacturers said 
that DOE had underestimated the cost increase for a condenser coil with 
a 10-degree lower condensing temperature. (Docket No. EERE-2015-BT-STD-
0016, various parties, Public Meeting Transcript (October 15, 2015), 
No. 0062 at pp. 56-60) DOE requested, and manufacturers then provided, 
data on specifications related to representative baseline and oversized 
coils. (Docket No. EERE-2015-BT-STD-0016, Lennox, No. 0030) DOE 
considered the data in updating the costs of this design option.
    In subsequent meetings, some meeting attendees--namely, McHugh 
Energy, ASAP, and NEEA--were concerned about the high cost of improving 
the coil, relative to the savings that would be achieved. They noted 
that a TD reduction of 10 degrees may be too costly to be a realistic 
option, and requested that DOE further optimize condensing unit 
improvements in terms of both coil face area and air side heat 
transfer. (Docket No. EERE-2015-BT-STD-0016, various parties, Public 
Meeting Transcript (November 3, 2015), No. 0064 at pp. 50-57 and Public 
Meeting Transcript (November 20, 2015), No. 0066 at pp 34-38; see also 
email correspondence at Docket No. EERE-2015-BT-STD-0016, No. 0040) 
Thus, DOE considered a new design approach that would result in a 5-
degree condensing temperature reduction. Based in part on the data 
submitted by manufacturers on condenser coil sizing, DOE estimated that 
following this approach would require a 33 percent increase in airflow 
and 50 percent increase in total heat transfer area over the baseline. 
DOE incorporated the revised cost and energy characteristics of this 
option into the analysis. (December 3, 2015 Public Meeting

[[Page 63004]]

Presentation, Docket No. EERE-2015-BT-STD-0016, No. 0049 at pp. 8-11)
c. Improved Condenser and Evaporator Fan Blades
    The supporting analysis for the June 2014 final rule considered 
design options for improved evaporator and condenser fan blades that 
could increase fan efficiency by five percent. See the June 2014 final 
rule TSD, chapter 5, pages 5-46 and 5-47 (Docket No. EERE-2008-BT-STD-
0015, No. 0131). During Working Group negotiation meetings, a caucus of 
manufacturers submitted a document asking DOE to provide additional 
data supporting the efficiency improvement estimate. (Docket No. EERE-
2015-BT-STD-0016, No. 0006 at p. 2, clarification question #2) A 
Working Group member representing a fan supplier (ebm-papst) responded 
that five percent was a reasonable estimate of fan efficiency 
improvement and that he had observed an example of a 12 percent 
efficiency improvement when replacing a stamped aluminum blade with an 
engineered plastic blade. (Docket No. EERE-2015-BT-STD-0016, ebm-papst, 
Public Meeting Transcript (September 30, 2015), No. 0067 at pp. 144-
147) McHugh Energy, another negotiation meeting attendee, referenced a 
report by the Florida Solar Energy Center showing that it was possible 
to achieve fan efficiency improvements between 17 and 25 percent. 
(Docket No. EERE-2015-BT-STD-0016, McHugh Energy, Public Meeting 
Transcript (September 30, 2015), No. 0067 at pp. 147-148) Both 
stakeholders also submitted supporting material to the rulemaking 
docket (Docket No. EERE-2015-BT-STD-0016, No. 0013 and Docket No. EERE-
2015-BT-STD-0016, No. 0014). Based on the updated information received, 
DOE's analysis continues to assume that an average five percent fan 
efficiency improvement can be achieved using higher-efficiency 
evaporator and condenser fan blades. In DOE's view, this level of 
improvement in fan efficiency is, based on available information 
reviewed as part of this rulemaking, achievable and reasonable. While 
it may be possible for higher efficiencies to be achieved, DOE is 
retaining a more conservative approach to ensure its projected 
efficiency improvements are realistically achievable within the lead-
time proposed for this rule.
d. Off-Cycle Evaporator Fan Control
    As with the June 2014 final rule, DOE continued to analyze two 
modes of off-cycle evaporator fan control: modulating fan control, 
which cycles the fans on and off with a 50 percent duty cycle when the 
compressor is off; and variable-speed fan control, which turns the fan 
speed down to 50 percent of full speed when the compressor is off. DOE 
did not receive any comments on its efficiency assumptions for 
modulating and variable-speed fans and DOE is not proposing to change 
its approach to calculating the efficiency of this option. DOE assumed 
that all evaporator fan motors are electronically commutated (``EC'') 
motors. See section II.B (discussing EPCA's requirements for EC or 
three-phase motors) and section IV.B (explaining DOE's reasoning for 
screening out three phase motors) for further background. DOE is aware 
that variable-speed EC motors typically cost more than single-speed EC 
motors. For purposes of this analysis, DOE assumed that the costs of 
constant-torque permanent-magnet motors are representative of single-
speed EC evaporator fan motors and the costs of constant-airflow 
permanent-magnet motors are representative of variable-speed EC 
evaporator fan motors. (DOE also implemented these assumptions in its 
analysis of variable-speed EC condenser fan motors.) DOE is aware that 
motor suppliers may sell different brands of motors with similar 
capabilities. See chapter 5 of the TSD for more details on motor costs.
e. Floating Head Pressure
    Floating head pressure is a type of WICF refrigeration control that 
allows the condensing pressure to decrease at low ambient temperatures, 
thus lowering the condensing temperature and improving compressor 
efficiency. Previously, in support of the June 2014 final rule, DOE 
analyzed two modes of operation for this option: floating head pressure 
with a standard thermostatic expansion valve (``TXV''), and floating 
head pressure with an electronic expansion valve (``EEV''). In testing 
conducted in support of this proposed rule, DOE found that systems with 
floating head pressure had a minimum head pressure of 180 psi at the 
lowest ambient rating temperature of 35[emsp14][deg]F when using a TXV. 
DOE predicted that systems equipped with an EEV could maintain an even 
lower pressure because an EEV would be able to control the refrigerant 
flow at even larger pressure differences between the lowest and highest 
ambient temperatures and avoid instability. However, at the time, DOE's 
understanding was that the minimum condensing pressure and temperature 
is also limited by the compressor operating envelope. DOE assumed that 
for hermetic and semi-hermetic compressors, the lowest condensing dew 
point temperature at which the compressor can operate is approximately 
75[emsp14][deg]F, corresponding to a pressure of approximately 175 psi 
(for the June 2014 final rule's analysis, DOE increased this to a 
minimum of 180 psi to be consistent with the test results). For scroll 
compressors, DOE assumed the minimum condensing temperature is 
approximately 50[emsp14][deg]F, corresponding to a pressure of 
approximately 120 psi (DOE increased this to a minimum of 125 psi for 
the final rule's analysis). DOE assumed this minimum pressure would 
apply at the lowest ambient rating condition--35[emsp14][deg]F. DOE 
made these compressor operating envelope assumptions based on 
manufacturer compressor literature that it gathered at the time. See 
the June 2014 final rule TSD, chapter 5, pages 5-52 and 5-53 (Docket 
No. EERE-2008-BT-STD-0015, No. 0131).
    In discussions with the Working Group, Emerson (a compressor 
manufacturer) suggested that semi-hermetic compressors that operate at 
lower pressures that are consistent with the floating head pressure 
with EEV option are currently available. (Docket No. EERE-2015-BT-STD-
0016, Emerson, Public Meeting Transcript (December 3, 2015), No. 0057 
at pp. 47-51) DOE conducted additional research and found technical 
literature from multiple compressor manufacturers showing semi-hermetic 
compressors using R-407A that could operate at condensing temperatures 
as low as 50[emsp14][deg]F, corresponding to a vapor pressure of about 
101 psi. (For R-404A, a condensing temperature of 50[emsp14][deg]F 
corresponds to a vapor pressure of about 118 psi). In light of this 
updated information, DOE included both semi-hermetic and scroll 
compressors when evaluating the design option to improve energy 
efficiency with lower floating head pressure using an EEV. (As 
discussed in section IV.C.1, DOE did not analyze systems with hermetic 
compressors.)
    DOE also more closely optimized the interaction among design 
options at the highest efficiency levels. Specifically, after DOE 
updated its design options and efficiency model, implementing the 
larger condenser coil caused AWEF to drop for large semi-hermetic units 
due to the interaction of floating head pressure, variable-speed 
condenser fans and the condenser coil option. This AWEF reduction was 
associated with operation of the condenser fans at excessive speed for 
the 35 [deg]F test condition. To compensate, DOE increased the minimum 
head pressure from 125 psi to 135 psi at the lowest ambient 
temperature. (December 14

[[Page 63005]]

Public Meeting Presentation, Docket No. EERE-2015-BT-STD-0016, No. 0050 
at pp. 4-6; see also Docket No. EERE-2015-BT-STD-0016, various parties, 
Public Meeting Transcript (December 14, 2015), No. 0059 at pp. 9-20).
8. Cost-Efficiency Curves
    After determining the cost and energy savings attributed to each 
design option, DOE then evaluates the design options in terms of their 
manufacturing cost-effectiveness: that is, the gain in as-tested AWEF 
that a manufacturer would obtain for implementing the design option on 
their equipment, versus the cost for using that option. The goal is to 
determine which designs a manufacturer is more or less likely to 
implement to meet a given standard level. For each representative unit 
listed in section IV.C.3, DOE calculates performance as measured using 
the test procedure efficiency metric, AWEF, and the manufacturing 
production cost (i.e. MPC). When using a design-option analysis, DOE 
calculates these values first for the baseline efficiency and then for 
more-efficient designs that add design options in order of the most to 
the least cost-effective. The outcome of this design option ordering is 
called a ``cost-efficiency curve'' consisting of a set of manufacturing 
costs and AWEFs for each consecutive design option added in order of 
most to least cost-effective. DOE conducted this analysis for the 
equipment classes evaluated in this proposal at the representative 
nominal capacities discussed in section IV.C.3.
    Table IV-2 and Table IV-3 show the AWEFs calculated in this manner. 
Additional detail is provided in appendix 5A of the NOPR TSD, including 
graphs of the cost-efficiency curves and correlation of the design 
option groups considered with their corresponding AWEF levels.

                                        Table IV-2--Engineering Analysis Output: Calculated AWEFs for DC Classes
--------------------------------------------------------------------------------------------------------------------------------------------------------
                    Representative unit                                          As-tested AWEF with each Design Option (DO) added *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                Nominal
       Equipment class           Btu/h     Compressor type             Base-line     DO 1       DO 2      DO 3      DO 4      DO 5      DO 6      DO 7
--------------------------------------------------------------------------------------------------------------------------------------------------------
DC.L.I, <6,500 Btu/h.........      6,000  Scroll..........  DO         .........  EC         CD2        CB2
                                                            AWEF       1.81       1.87       2.19       2.20
DC.L.I, >=6,500 Btu/h........      9,000  Scroll..........  DO         .........  EC         CD2        CB2
                                                            AWEF       1.98       2.04       2.37       2.38
                               ** 25,000  Scroll, Semi-     DO         .........  EC         CD2        CB2
                                           hermetic.        AWEF       1.92       1.96       2.30       2.30
                                  54,000  Semi-hermetic...  DO         .........  EC         CD2        CB2
                                                            AWEF       2.25       2.31       2.57       2.58
DC.L.O, <6,500 Btu/h.........      6,000  Scroll..........  DO         .........  FHP        EC         CB2       FHPEV     CD2       VSCF      ASC
                                                            AWEF       2.13       2.46       2.55       2.56      2.75      2.81      2.98      3.00
DC.L.O, >=6,500 Btu/h........      9,000  Scroll..........  DO         .........  FHP        EC         FHPEV     CB2       CD2       VSCF      ASC
                                                            AWEF       2.31       2.70       2.78       3.00      3.01      3.08      3.15      3.18
                                * 25,000  Scroll, Semi-     DO         .........  FHP        EC         FHPEV     CB2       VSCF      ASC       CD2
                                           hermetic.        AWEF       2.22       2.60       2.67       2.87      2.94      2.95      2.98      3.06
                                  54,000  Semi-hermetic...  DO         .........  FHP        FHPEV      EC        VSCF      ASC       CB2       CD2
                                                            AWEF       2.51       2.82       2.97       3.05      3.14      3.17      3.17      3.19
                                  72,000  Semi-hermetic...  DO         .........  FHP        FHPEV      EC        VSCF      ASC       CB2       CD2
                                                            AWEF       2.49       2.80       2.98       3.06      3.15      3.18      3.18      3.19
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Design option abbreviations are as follows: ASC = Ambient sub-cooling; CB2 = Improved condenser fan blades; CD2 = Improved condenser coil; EC =
  Electronically commutated condenser fan motors; FHP = Floating head pressure; FHPEV = Floating head pressure with electronic expansion valve; VSCF =
  Variable speed condenser fans.
** As discussed in section IV.C.5.b, DOE aggregated the separate results for scroll and semi-hermetic compressors and created a single aggregated cost-
  efficiency curve in the engineering analysis for the 25,000 Btu/h nominal capacity.


                    Table IV-3--Engineering Analysis Output: Calculated AWEFs for UC Classes
----------------------------------------------------------------------------------------------------------------
             Representative unit                      As-tested AWEF with each Design Option (DO) added *
----------------------------------------------------------------------------------------------------------------
       Equipment class          Nominal Btu/h                  Baseline         DO 1         DO 2        DO 3
----------------------------------------------------------------------------------------------------------------
UC.M.........................           4,000  DO           ..............  MEF          EB2          VEF
                                               AWEF                   6.45  7.75         7.91         9.02
                                        9,000  DO           ..............  MEF          EB2          VEF
                                               AWEF                   7.46  8.74         8.89         9.92
                                       24,000  DO           ..............  MEF          VEF          EB2
                                               AWEF                   8.57  9.74         10.64        10.75
UC.L, <15,500 Btu/h..........           4,000  DO           ..............  EB2          MEF          VEF
                                               AWEF                   3.43  3.47         3.58         3.66
                                        9,000  DO           ..............  MEF          EB2          VEF
                                               AWEF                   3.75  3.86         3.88         3.95
UC.L, >=15,500 Btu/h.........          18,000  DO           ..............  MEF          EB2          VEF
                                               AWEF                   3.94  4.05         4.08         4.15
                                       40,000  DO           ..............  MEF          EB2          VEF
                                               AWEF                   4.06  4.20         4.23         4.32
----------------------------------------------------------------------------------------------------------------

9. Engineering Efficiency Levels
    DOE selects efficiency levels for each equipment class. These 
levels form the basis of the potential standard levels that DOE 
considers in its analysis. As discussed in this preamble, DOE conducted 
a design-option-based engineering analysis for this rulemaking, in 
which AWEFs were calculated for specific designs incorporating groups 
of design options. However, these design-option-based AWEFs vary as a 
function of representative capacity due to multiple factors and are not 
generally suitable as

[[Page 63006]]

the basis for standard levels. Hence, DOE selected engineering 
efficiency levels (``ELs'') for each class that provide suitable 
candidate levels for consideration. The efficiency levels do not 
exactly match the calculated AWEFs at each representative capacity, but 
the candidate efficiency levels are meant to represent the range of 
efficiencies calculated for the individual representative capacities.
    The selected efficiency levels for the equipment classes analyzed 
for this document are shown in Table IV-4. DOE divided the dedicated 
condensing classes into the same two classes initially considered in 
the 2014 Final Rule, except that the current classes are split based on 
actual net capacity rather than the 9,000 Btu/h nominal capacity used 
previously. (This is based on a re-evaluation of the analysis in light 
of new data indicating that nominal capacity and net capacity may be 
very different for a given system.) For the medium-temperature and low-
temperature unit cooler classes, where the initial analysis had a 
single class covering the entire capacity range, for some of the 
efficiency levels for this NOPR, DOE considered a class split based on 
actual net capacity. DOE adopted this approach because the current 
analysis shows significant variation of efficiency at the lower 
capacity levels (the selected proposal has two classes for low-
temperature unit coolers and one for medium-temperature).
    The maximum technologically feasible level is represented by EL 3 
for all classes. DOE represented these efficiency levels by either a 
single AWEF or an equation for the AWEF as a function of the net 
capacity. The ELs for each class are formulated such that they divide 
the gap in efficiency between the baseline and the maximum 
technologically feasible efficiency level into approximately equal 
intervals. The baseline level is generally represented by the lowest 
AWEF achieved by any representative system in the class, while the 
maximum technologically feasible level is represented by the highest 
AWEF achieved by any representative system in the class, rounded down 
to the nearest 0.05 Btu/W-h to account for uncertainty in the analysis.

                                                               Table IV-4--Engineering Efficiency Levels for Each Equipment Class
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                 AWEF
          Equipment class           ------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                    Baseline                                  EL 1                                   EL 2                                   EL 3
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Dedicated Condensing System--Low,
 Indoor with a Net Capacity (q_net)
 of:
    <6,500 Btu/h...................  5.030 x 10-\5\ x q_net + 1.59           6.384 x 10-\5\ x q_net + 1.67          7.737 x 10-\5\ x q_net + 1.74          9.091 x 10-\5\ x q_net + 1.81
    >=6,500 Btu/h..................  1.92                                    2.08                                   2.24                                   2.40
Dedicated Condensing System--Low,
 Outdoor with a Net Capacity
 (q_net) of:
    <6,500 Btu/h...................  3.905 x 10-\5\ x q_net + 1.97           4.778 x 10-\5\ x q_net + 2.22          5.650 x 10-\5\ x q_net + 2.47          6.522 x 10-\5\ x q_net + 2.73
    >=6,500 Btu/h..................  2.22                                    2.53                                   2.84                                   3.15
Unit Cooler--Medium:
    <21,800 Btu/h..................  6.45                                    7.3                                    8.15                                   9
Unit Cooler--Low with a Net
 Capacity (q_net) of:
    <15,500 Btu/h..................  2.499 x 10-\5\ x q_net + 3.36           2.191 x 10-\5\ x q_net + 3.54          1.883 x 10-\5\ x q_net + 3.73          1.575 x 10-\5\ x q_net + 3.91
    >=15,500 Btu/h.................  3.75                                    3.88                                   4.02                                   4.15
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* Where q_net is net capacity as determined and certified pursuant to 10 CFR 431.304.

    In two cases, DOE selected maximum-technology ELs whose AWEFs 
exceed the maximum AWEFs as calculated in the design-option engineering 
analysis (see Table IV-2) for one or more representative capacities. 
First, for low temperature unit coolers, the smaller representative 
capacities had lower maximum achievable AWEFs than the AWEF values 
obtained with the maximum technology (EL3) equation for this class. DOE 
notes that there is some uncertainty regarding the actual obtainable 
AWEFs for lower-capacity models of this class. The analysis is based on 
a ratio between actual capacity and nominal capacity that DOE developed 
based on testing and modeling of unit coolers that collectively suggest 
an increasing trend in the actual/nominal capacity ratio as nominal 
capacity increases (this analysis is described in section IV.C.5.a). 
However, there is some uncertainty in this analysis because of the 
limited number of tests for which data were available to DOE. If DOE 
had used a data regression approach assuming that the actual/nominal 
capacity ratio did not depend on capacity, the analyses for the 4,000 
and 9,000 Btu/h nominal representative capacities would have shown that 
the selected maximum technology EL is achievable. Given the uncertainty 
in the analysis results and the fact that, during the December 15, 2015 
Working Group negotiation meeting, the industry negotiating parties 
explicitly agreed to a standard level for small-capacity UC.L systems 
essentially equal to the selected maximum-technology level (EL3) for 
this class (see Docket No. EERE-2015-BT-STD-0016, AHRI, Public Meeting 
Transcript (December 15, 2015), No. 0060 at pp. 229-230), DOE believes 
that the selected EL 3 is technologically feasible.
    Second, for dedicated refrigeration systems--low temperature, with 
a net capacity of >=6,500 Btu/h, for both indoor and outdoor systems, 
the analysis for a system with a representative nominal capacity of 
25,000 Btu/h indicates that the maximum achievable AWEFs are 2.30 for 
indoor systems and 3.06 for outdoor (see Table IV-2). These values are 
lower than the AWEF values obtained with the maximum technology (EL3) 
equation for this class. However, the AWEFs shown in Table IV-2 for 
25,000 Btu/h nominal capacity units represent an aggregation of results 
developed separately for systems using either scroll or semi-hermetic 
compressors, which means that the listed AWEFs can be achieved by a 
system using either compressor type. The DOE analysis at this nominal 
capacity, when disaggregated by compressor type, shows that the AWEF 
values for EL 3 levels can be met at the 25,000 Btu/h nominal 
representative capacity with systems using semi-hermetic compressors 
(though not with systems using scroll compressors). Hence, DOE 
concludes that EL 3 is technologically feasible for these classes.
    Although DOE observed a trend of AWEFs increasing with capacity 
across

[[Page 63007]]

the representative units for the medium temperature unit cooler class, 
DOE is maintaining a single AWEF level for all sizes within that class 
due to the outcome of a sensitivity analysis that investigated 
efficiency trends of high capacity unit coolers. That sensitivity 
analysis, contained in appendix 5B of the TSD, showed that large unit 
coolers--i.e., those with a capacity greater than approximately 60,000 
Btu/h--tend to have disproportionately higher fan power (as a factor of 
net capacity) than the largest representative unit coolers DOE analyzed 
in this rulemaking. Particularly, DOE found that large-capacity medium-
temperature unit coolers would most likely be unable to meet a higher 
standard (such as those exceeding EL 3) because their higher fan power 
per capacity would reduce their measured AWEF compared to the largest 
capacity unit analyzed (of 24,000 Btu/h nominal capacity). Larger unit 
coolers could be used with walk-in coolers of less than 3,000 square 
feet and thus are within the scope of this rulemaking. Consequently, 
based on the available information it reviewed and the corresponding 
analysis, DOE tentatively concludes that efficiency levels higher than 
EL 3 would not be technologically feasible for this class.

D. Markups Analysis

    The markups analysis develops appropriate markups in the equipment 
distribution chain and sales taxes to convert the MSP estimates derived 
in the engineering analysis to consumer prices, which are then used in 
the LCC and PBP analysis and in the manufacturer impact analysis. At 
each step in the distribution channel, companies mark up the price of 
the equipment to cover business costs and profit margin.
    For this NOPR, DOE retained the distribution channels that were 
used in the 2014 final rule--(1) direct to customer sales, through 
national accounts or contractors; (2) refrigeration wholesalers to 
consumers; and (3) OEMs to consumers. The OEM channel primarily 
represents manufacturers of WICF refrigeration systems who may also 
install and sell entire WICF refrigeration units.
    For each of the channels, DOE developed separate markups for 
baseline equipment (baseline markups) and the incremental cost of more-
efficient equipment (incremental markups). Incremental markups are 
coefficients that relate the change in the MSP of higher-efficiency 
models to the change in the retailer sales price. DOE relied on data 
from the U.S. Census Bureau, the Heating, Air-conditioning & 
Refrigeration Distributors International (``HARDI'') industry trade 
group, and RSMeans \18\ to estimate average baseline and incremental 
markups.
---------------------------------------------------------------------------

    \18\ R.S. Means Company, Inc. RSMeans Mechanical Cost Data. 33rd 
edition. 2015. Kingston, MA.
---------------------------------------------------------------------------

    Chapter 6 of the NOPR TSD provides details on DOE's development of 
markups for WICF refrigeration systems.
    Because the identified market channels are complex and their 
characterization required a number of assumptions, DOE seeks input on 
its analysis of market channels described in this preamble. This is 
identified as Issue 2 in section VII.E, ``Issues on Which DOE Seeks 
Comment.''

E. Energy Use Analysis

    The purpose of the energy use analysis is to determine the annual 
energy consumption of the considered WICF refrigeration systems at 
different efficiencies in representative U.S. installations, and to 
assess the energy savings potential of increased WICF refrigeration 
system efficiency. The energy use analysis estimates the range of 
energy use of the considered WICF refrigeration systems in the field 
(i.e., as they are actually used by consumers). The energy use analysis 
provides the basis for other analyses DOE performed, particularly 
assessments of the energy savings and the savings in consumer operating 
costs that could result from adoption of amended or new standards.
    The estimates for the annual energy consumption of each analyzed 
representative refrigeration system (see section IV.C.2) were derived 
assuming that (1) the refrigeration system is sized such that it 
follows a specific daily duty cycle for a given number of hours per day 
at full-rated capacity, and (2) the refrigeration system produces no 
additional refrigeration effect for the remaining period of the 24-hour 
cycle. These assumptions are consistent with the present industry 
practice for sizing refrigeration systems. This methodology assumes 
that the refrigeration system is correctly paired with an envelope that 
generates a load profile such that the rated hourly capacity of the 
paired refrigeration system, operated for the given number of run hours 
per day, produces sufficient refrigeration to meet the daily 
refrigeration load of the envelope with a safety margin to meet 
contingency situations. Thus, the annual energy consumption estimates 
for the refrigeration system depend on the methodology adopted for 
sizing, the implied assumptions and the extent of oversizing.
    The WICF equipment run-time hours that DOE used broadly follow the 
load profile assumptions of the industry test procedure for 
refrigeration systems--AHRI 1250-2009. As noted earlier, that protocol 
was incorporated into DOE's test procedure. 76 FR 33631 (June 9, 2011). 
For the NOPR analysis, DOE used a nominal run-time of 16 hours per day 
for coolers and 18 hours per day for freezers over a 24-hour period to 
calculate the capacity of a ``perfectly''-sized refrigeration system at 
specified reference ambient temperatures of 95[emsp14][deg]F and 
90[emsp14][deg]F for refrigeration systems with outdoor and indoor 
condensing units, respectively. (Docket No. EERE-2015-BT-STD-0016, 
various parties, Public Meeting Transcript (October 1, 2015), No. 0068 
at p. 9) Nominal run-time hours for coolers and freezers were adjusted 
to account for equipment over-sizing safety margin and capacity 
mismatch factors. They were further adjusted to account for the change 
in net capacity from increased efficiency projected to occur in the 
standards case, and, in the case of outdoor equipment, variations in 
ambient temperature. The WICF equipment run-time hours that DOE used 
broadly follow the load profile assumptions of the industry test 
procedure for refrigeration systems--AHRI 1250-2009. As noted earlier, 
that protocol was incorporated into DOE's test procedure. 76 FR 33631 
(June 9, 2011). For the NOPR analysis, DOE used a nominal run-time of 
16 hours per day for coolers and 18 hours per day for freezers over a 
24-hour period to calculate the capacity of a ``perfectly''-sized 
refrigeration system at specified reference ambient temperatures of 
95[emsp14][deg]F and 90[emsp14][deg]F for refrigeration systems with 
outdoor and indoor condensing units, respectively. (Public Meeting 
October 1, 2015, p. 9) Nominal run-time hours for coolers and freezers 
were adjusted to account for equipment over-sizing safety margin and 
capacity mismatch factors. They were further adjusted to account for 
the change in net capacity from increased efficiency projected to occur 
in the standards case, and, in the case of outdoor equipment, 
variations in ambient temperature.
1. Oversize Factors
    During the Working Group negotiations, Rheem indicated that the 
typical and widespread industry practice for sizing the refrigeration 
system is to calculate the daily heat load on the basis of a 24-hour 
cycle and divide by 16 hours of run-time for coolers and 18 hours of 
run-time for freezers. In the field, WICF refrigeration systems are 
sized to account for a ``worst case scenario'' need for

[[Page 63008]]

refrigeration to prevent food spoilage, and as such are oversized by a 
safety margin. (Docket No. EERE-2015-BT-STD-0016, Rheem, Public Meeting 
Transcript (October 1, 2015), No. 0068 at pp. 12, 14) Based on 
discussions with purchasers of WICF refrigeration systems, DOE found 
that it is customary in the industry to add a 10 percent safety margin 
to the aggregate 24-hour load, resulting in 10 percent oversizing of 
the refrigeration system. The use of this 10 percent oversizing of the 
refrigeration system was presented to the Working Group and accepted 
without objection and incorporated into the NOPR analysis. (Docket No. 
EERE-2015-BT-STD-0016, various parties, Public Meeting Transcript 
(October 1, 2015), No. 0068 at pp. 8-16)
    Further, DOE recognized that an exact match for the calculated 
refrigeration system capacity may not be available for the 
refrigeration systems available in the market because most 
refrigeration systems are produced in discrete capacities. To account 
for this situation, DOE used the same approach as in the 2014 final 
rule. Namely, DOE applied a capacity mismatch factor of 10 percent to 
capture the inability to perfectly match the calculated WICF capacity 
with the capacity available in the market. This approach was presented 
to the Working Group and accepted without objection and incorporated 
into the NOPR analysis. (Docket No. EERE-2015-BT-STD-0016, various 
parties, Public Meeting Transcript (October 1, 2015), No. 0068 at pp. 
8, 18)
    The combined safety margin factor and capacity mismatch factor 
result in a total oversizing factor of 1.2. With the oversize factor 
applied, the run-time of the refrigeration system is reduced to 13.3 
hours per day for coolers and 15 hours per day for freezers at full 
design point capacity.
2. Net Capacity Adjustment Factors
    As in the 2014 final rule, DOE assumed that the heat loads to which 
WICF refrigeration systems are connected remain constant in the no new 
standards and standards cases. To account for changes in the net 
capacity of more efficient designs in the standard cases, DOE adjusted 
the run-time hours.
3. Temperature Adjustment Factors
    As in the 2014 final rule, DOE assumed that indoor WICF 
refrigeration systems are operated at a steady-state ambient 
temperature of 90[emsp14][deg]F. For these equipment classes, the run-
time hours are only adjusted by the change in steady-state capacity as 
efficiency increases. (Docket No. EERE-2015-BT-STD-0016, various 
parties, Public Meeting Transcript (October 1, 2015), No. 0068 at p. 
23)
    As in the 2014 final rule, DOE assumed that outdoor WICF 
refrigeration system run-times to be a function of external ambient 
temperature. DOE adjusted the run-time hours for outdoor WICF 
refrigeration systems to account for the dependence of the steady-state 
capacity on external ambient temperature. External ambient temperatures 
were determined as regional histograms of annual weighted hourly 
temperatures. For these equipment, the run-time hours are adjusted by 
the fraction of heat load that would be removed at each temperature bin 
of the regional histogram. (Docket No. EERE-2015-BT-STD-0016, various 
parties, Public Meeting Transcript (October 1, 2015), No. 0068 at pp. 
33-35)
    These adjusted run-times were presented to the Working Group in 
detail for indoor and outdoor dedicated condensing equipment classes. 
(Docket No. EERE-2015-BT-STD-0016, various parties, Public Meeting 
Transcript (November 20, 2015), No. 0066 at pp. 111-119) After 
reviewing DOE's run-time estimates, the CA-IOUs, along with an 
individual participating in the Working Group meetings, confirmed the 
reasonableness of DOE's estimates. (Docket No. EERE-2015-BT-STD-0016, 
CA IOUs, Public Meeting Transcript (November 4, 2015), No. 0065 at p. 
190)
    Chapter 7 of the NOPR TSD provides details on DOE's energy use 
analysis for the considered WICF refrigeration systems covered by this 
analysis.

F. Life-Cycle Cost and Payback Period Analysis

    DOE conducted LCC and PBP analyses to evaluate the economic impacts 
on individual consumers of potential energy conservation standards for 
the considered WICF refrigeration systems. The effect of energy 
conservation standards on individual consumers usually involves a 
reduction in operating cost and an increase in purchase cost. DOE used 
the following two metrics to measure consumer impacts:
     The LCC (life-cycle cost) is the total consumer expense of 
an appliance or equipment over the life of that equipment, consisting 
of total installed cost (manufacturer selling price, distribution chain 
markups, sales tax, and installation costs) plus operating costs 
(expenses for energy 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 equipment.
     The payback period is the estimated amount of time (in 
years) it takes consumers to recover the increased purchase cost 
(including installation) of more-efficient equipment 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 year that amended or new standards are assumed 
to take effect.
    For any given efficiency level, DOE measures the change in LCC 
relative to the LCC in the no-new-standards case, which reflects the 
estimated efficiency distribution of the considered equipment in the 
absence of new or amended energy conservation standards. In contrast, 
the PBP for a given efficiency level is measured relative to the 
baseline equipment.
    For each considered efficiency level in each equipment class, DOE 
calculated the LCC and PBP for a nationally representative set of WICF 
refrigeration systems. DOE used shipments data submitted by 
stakeholders to develop its sample. (Docket No. EERE-2015-BT-STD-0016, 
various parties, Public Meeting Transcript (November 3, 2015), No. 0064 
at pp. 119-120) The sample weights how the various WICF refrigeration 
system types and capacities are distributed over different commercial 
sub-sectors, geographic regions, and configurations of how the 
equipment is sold (either as a separate unit cooler, a separate 
condensing unit, or as a combined unit cooler and condensing unit pair 
matched at the time of installation). For each of these WICF 
refrigeration systems, DOE determined the energy consumption and the 
appropriate electricity price, enabling DOE to capture variations in 
WICF refrigeration system energy consumption and energy pricing.
    Inputs to the calculation of total installed cost include the cost 
of the equipment--which includes MPCs, manufacturer markups, retailer 
and distributor markups, and sales taxes--and installation costs. 
Inputs to the calculation of operating expenses include annual energy 
consumption, energy prices and price projections, repair and 
maintenance costs, equipment lifetimes, and discount rates. DOE created 
distributions of values for equipment lifetime, discount rates, and 
sales taxes, with probabilities attached to each value, to account for 
their uncertainty and variability.
    The computer model DOE uses to calculate the LCC and PBP relies on 
a Monte Carlo simulation to incorporate uncertainty and variability 
into the analysis. The Monte Carlo simulations

[[Page 63009]]

randomly sample input values from the probability distributions and air 
compressor consumer sample. The model calculated the LCC and PBP for 
equipment at each efficiency level for 5,000 consumers per simulation 
run.
    DOE calculated the LCC and PBP for all consumers of the considered 
WICF refrigeration systems as if each consumer were to purchase new 
equipment in the expected first full year of required compliance with 
the proposed standards. As discussed in section III.F, DOE currently 
anticipates a compliance date in the second half of 2019. Therefore, 
for purposes of its analysis, DOE used 2020 as the first full year of 
compliance with the standards for the WICF refrigeration systems under 
consideration in this proposal.
    Table IV-5 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 
of the NOPR TSD and its appendices.

Table IV-5--Summary of Inputs and Methods for the LCC and PBP Analysis *
------------------------------------------------------------------------
                 Inputs                           Source/method
------------------------------------------------------------------------
Equipment Cost.........................  Derived by multiplying MPCs by
                                          manufacturer and retailer
                                          markups and sales tax, as
                                          appropriate. Used historical
                                          data to derive a price scaling
                                          index to forecast equipment
                                          costs.
Installation Costs.....................  Baseline installation cost
                                          determined with data from RS
                                          Means. Assumed no change with
                                          efficiency level.
Annual Energy Use......................  The total annual energy use
                                          multiplied by the hours per
                                          year. Average number of hours
                                          based on field data.
                                         Variability: Based on the
                                          stakeholder submitted data.
Energy Prices..........................  Electricity: Marginal prices
                                          derived from EIA and EEI data.
Energy Price Trends....................  Based on AEO 2015 price
                                          forecasts.
Repair and Maintenance Costs...........  Assumed no change with
                                          efficiency level.
Product Lifetime.......................  Assumed average lifetime of 12
                                          years.
Discount Rates.........................  Approach involves identifying
                                          all possible debt or asset
                                          classes that might be used to
                                          purchase air compressors.
                                          Primary data source was the
                                          Damodaran Online.
Compliance Date........................  Late 2019 (2020 for purposes of
                                          analysis).
------------------------------------------------------------------------
* References for the data sources mentioned in this table are provided
  in the sections following the table or in chapter 8 of the NOPR TSD.

1. System Boundaries
    As discussed in section IV.C.5, participants during the Working 
Group meetings stated that the vast majority of WICF refrigeration 
equipment are sold as stand-alone components and installed either as a 
complete system in the field (field-paired) or as replacement 
components--i.e., to replace either the unit cooler (UC-only) or 
condensing unit (CU-only). AHRI provided data to the Working Group 
indicating that over 90 percent of these WICF refrigeration equipment 
components are sold as stand-alone equipment with the remaining sold as 
manufacturer matched pairs (Docket No. EERE-2015-BT-STD-0016, AHRI, No. 
0029). These data stand in contrast to the 2014 Final Rule, where DOE 
assumed in its analysis that all equipment was sold as manufacturer-
matched pairs. Further, in section III.A DOE discusses its May 2014 
update of the test procedure specifying that in instances where a 
complete walk-in refrigeration system consists of a unit cooler and 
condensing unit that are both sourced from separate manufacturers, each 
manufacturer is responsible for ensuring the compliance of its 
respective units. 79 FR 27388 (May 13, 2014). Based on the current 
market situation, the LCC analysis separately estimates the costs and 
benefits for equipment under the following system configuration 
scenarios: Field-paired systems,\19\ condensing unit-only,\20\ and unit 
cooler only.\21\
---------------------------------------------------------------------------

    \19\ Paired dedicated systems are described in section IV.C.5.c.
    \20\ Condensing units are described in section IV.C.5.b.
    \21\ Unit coolers are described in section IV.C.5.a.
---------------------------------------------------------------------------

a. Field-Paired
    Under the field-paired system configuration, DOE assumes that the 
unit cooler and condensing unit are purchased as stand-alone pieces of 
equipment and paired together in the field. Field-paired results were 
estimated for dedicated condensing, low-temperature equipment classes 
only, which include dedicated condensing, low-temperature outdoor 
(DC.L.O) and dedicated condensing, low-temperature indoor (DC.L.I) 
equipment classes. Medium-temperature dedicated condensing equipment 
classes were not analyzed as field-paired equipment because the 
condensing units are covered equipment under the 2014 final rule and 
fall outside the scope of this analysis. Also, unit coolers used in 
multiplex condensing applications were not analyzed as field-paired 
equipment because the scope of these equipment classes only covers the 
unit cooler portion of the walk-in system.
b. Condensing Unit-Only
    Under the condensing unit-only system configuration, DOE assumes 
that the condensing unit is purchased as a stand-alone piece of 
equipment and installed with a pre-existing baseline unit cooler. 
Condensing unit-only results were estimated for low-temperature, 
dedicated condensing equipment classes only, which includes DC.L.O and 
DC.L.I equipment classes.
c. Unit Cooler Only
    Under the unit cooler-only system configuration, DOE assumes that 
the unit cooler is purchased as a stand-alone piece of equipment and 
installed with a pre-existing baseline condensing unit. Unit cooler-
only results were estimated for all low-temperature condensing 
equipment classes (DC.L.O, DC.L.I, and UC.L). For the medium 
temperature unit coolers belonging to the UC.M equipment class, DOE 
estimated the impact of unit cooler design options on multiplex 
applications (referred to as UC.M in the tables) and on applications 
where the unit cooler is installed with a pre-existing medium 
temperature dedicated condensing unit. For the medium temperature 
dedicated applications DOE assumed that the condensing unit meets the 
standards adopted in the 2014 Final Rule. In the tables, the 
installations with a pre-existing medium temperature

[[Page 63010]]

dedicated condensing unit are referred to as UC.M-DC.M.I application 
and UC.M-DC.M.O applications.
    As discussed in section III.A, DOE established a rating method for 
walk-in refrigeration system components distributed individually; that 
is, unit coolers sold by themselves are tested and rated with the 
multiplex condensing system test, while condensing units sold by 
themselves are tested and rated with the dedicated condensing system 
test. DOE reflected this approach by aggregating unit cooler-only 
results within the low- and medium-temperature multiplex equipment 
classes. The low-temperature multiplex equipment class (UC.L) is an 
aggregation of results of all unit coolers attached to DC.L.O, DC.L.I, 
and low temperature multiplex condensing systems. The medium-
temperature multiplex equipment class (UC.M) is an aggregation of 
results of all unit coolers in all application types.
d. System Boundary and Equipment Class Weights
    Within each equipment class, DOE examined several different nominal 
capacities (see section IV.A.1). The life-cycle costs and benefits for 
each of these capacities was weighted in the results for each equipment 
class shown in section V based on the respective market share of each 
equipment class and capacity in the customer sample mentioned in this 
preamble. The system boundaries and customer sample weights (based on 
share of total sales of the considered WICF refrigeration equipment) 
are shown in Table IV-6.

                            Table IV-6--System Boundaries and Customer Sample Weights
----------------------------------------------------------------------------------------------------------------
                                    Reported as equipment  Capacity (kBtu/
    Equipment class application             class                h)           System boundary       Weight (%)
----------------------------------------------------------------------------------------------------------------
DC.L.I............................  DC.L.I...............               6  CU-Only..............             1.2
DC.L.I............................  DC.L.I...............               9  CU-Only..............             0.4
DC.L.I............................  DC.L.I...............              25  CU-Only..............             0.1
DC.L.I............................  DC.L.I...............              54  CU-Only..............             0.0
DC.L.O............................  DC.L.O...............               6  CU-Only..............             0.6
DC.L.O............................  DC.L.O...............               9  CU-Only..............             1.1
DC.L.O............................  DC.L.O...............              25  CU-Only..............             0.4
DC.L.O............................  DC.L.O...............              54  CU-Only..............             0.1
DC.L.O............................  DC.L.O...............              72  CU-Only..............             0.1
DC.L.I............................  DC.L.I...............               6  Field-Paired.........             5.4
DC.L.I............................  DC.L.I...............               9  Field-Paired.........             2.0
DC.L.I............................  DC.L.I...............              25  Field-Paired.........             0.6
DC.L.I............................  DC.L.I...............              54  Field-Paired.........             0.2
DC.L.O............................  DC.L.O...............               6  Field-Paired.........             2.9
DC.L.O............................  DC.L.O...............               9  Field-Paired.........             5.1
DC.L.O............................  DC.L.O...............              25  Field-Paired.........             1.7
DC.L.O............................  DC.L.O...............              54  Field-Paired.........             0.3
DC.L.O............................  DC.L.O...............              72  Field-Paired.........             0.4
DC.L.I............................  UC.L.................               6  UC-Only..............             1.2
DC.L.I............................  UC.L.................               9  UC-Only..............             0.4
DC.L.I............................  UC.L.................              25  UC-Only..............             0.1
DC.L.I............................  UC.L.................              54  UC-Only..............             0.0
DC.L.O............................  UC.L.................               6  UC-Only..............             0.6
DC.L.O............................  UC.L.................               9  UC-Only..............             1.1
DC.L.O............................  UC.L.................              25  UC-Only..............             0.4
DC.L.O............................  UC.L.................              54  UC-Only..............             0.1
DC.L.O............................  UC.L.................              72  UC-Only..............             0.1
UC.M--DC.M.I......................  UC.M.................               9  UC-Only..............            15.5
UC.M--DC.M.I......................  UC.M.................              24  UC-Only..............             4.6
UC.M--DC.M.O......................  UC.M.................               9  UC-Only..............            24.0
UC.M--DC.M.O......................  UC.M.................              24  UC-Only..............            11.7
UC.L..............................  UC.L.................               4  UC-Only..............             0.8
UC.L..............................  UC.L.................               9  UC-Only..............             3.0
UC.L..............................  UC.L.................              18  UC-Only..............             2.0
UC.L..............................  UC.L.................              40  UC-Only..............             0.7
UC.M..............................  UC.M.................               4  UC-Only..............             1.4
UC.M..............................  UC.M.................               9  UC-Only..............             7.9
UC.M..............................  UC.M.................              24  UC-Only..............             2.0
----------------------------------------------------------------------------------------------------------------

2. Equipment Cost
    To calculate consumer equipment costs, DOE multiplied the MPCs 
developed in the engineering analysis by the markups described earlier 
(along with sales taxes). DOE used different markups for baseline 
equipment and higher-efficiency equipment because DOE applies an 
incremental markup to the increase in MSP associated with higher-
efficiency equipment.
    To develop an equipment price trend for WICFs, DOE derived an 
inflation-adjusted index of the producer price index (``PPI'') for 
commercial refrigerators and related equipment from 1978 to 2014.\22\ 
These data, which represent the closest approximation to the 
refrigeration equipment at issue in this proposal, indicate no clear 
trend, showing increases and decreases over time. Because the observed 
data do not provide a firm basis for projecting future price trends for 
WICF refrigeration equipment, DOE used a constant price assumption as 
the default trend to project future WICF refrigeration system prices. 
Thus, prices projected for the LCC and PBP analysis are equal to the 
2015 values for each efficiency level in each equipment class.
---------------------------------------------------------------------------

    \22\ Bureau of Labor Statistics, Producer Price Index Industry 
Data, Series: PCU3334153334153.

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

[[Page 63011]]

    DOE requests comments on the most appropriate trend to use for real 
(inflation-adjusted) walk-in prices. This is identified as Issue 3 in 
section VII.E, ``Issues on Which DOE Seeks Comment.''
3. Installation Cost
    Installation cost includes labor, overhead, and any miscellaneous 
materials and parts needed to install the equipment. DOE used data from 
RS Means Mechanical Cost Data 2015 \23\ to estimate the baseline 
installation cost for WICF refrigeration systems. Installation costs 
associated with hot gas defrost design options for low-temperature 
dedicated condensing and multiplex condensing equipment were discussed 
at length during the Working Group meetings. (Docket No. EERE-2015-BT-
STD-0016, various parties, Public Meeting Transcript (October 1, 2015), 
No. 0068 at p. 54; Docket No. EERE-2015-BT-STD-0016, various parties, 
Public Meeting Transcript (October 15, 2015), No. 0062 at pp. 36-37, 
49-50, 187)
---------------------------------------------------------------------------

    \23\ Reed Construction Data, RSMeans Mechanical Cost Data 2015 
Book, 2015.
---------------------------------------------------------------------------

    However, the Working Group recommended that DOE remove the hot gas 
defrost from the test procedure (Docket No. EERE-2015-BT-STD-0016, Term 
Sheet: Recommendation #3 (December 15, 2015), No. 0056 at p. 2)
    Consequently, DOE also removed hot gas defrost as a design option, 
as discussed in section VI.B.1.
    DOE requests comment on whether any of the efficiency levels 
considered in this NOPR might lead to an increase in installation costs 
and, if so, data regarding the magnitude of the increased cost for each 
relevant efficiency level. This is identified as Issue 4 in section 
VII.E, ``Issues on Which DOE Seeks Comment.''
4. Annual Energy Use
    DOE typically considers the impact of a rebound effect in its 
energy use calculation. A rebound effect occurs when users operate 
higher efficiency equipment more frequently and/or for longer 
durations, thus offsetting estimated energy savings. DOE did not 
incorporate a rebound factor for WICF refrigeration equipment because 
it is operated 24 hours a day, and therefore there is limited potential 
for a rebound effect. Additionally, DOE requested comment from the 
Working Group if there was any evidence contradicting DOE's assumption 
to not incorporate a rebound factor, (Docket No. EERE-2015-BT-STD-0016, 
DOE, Public Meeting Transcript (November 20, 2015), No. 0066 at pp. 92) 
to which Hussmann responded that DOE's assumption was reasonable. 
(Docket No. EERE-2015-BT-STD-0016, Hussmann, Public Meeting Transcript 
(November 20, 2015), No. 0066 at pp. 92)
    DOE requests comment on its assumption to not consider the impact 
of a rebound effect for the WICF refrigeration system classes covered 
in this NOPR. Further, DOE requests any data or sources of literature 
regarding the magnitude of the rebound effect for the covered WICF 
refrigeration equipment. This is identified as Issue 5 in section 
VII.E, ``Issues on Which DOE Seeks Comment.''
    For each sampled WICF refrigeration system, DOE determined the 
energy consumption at different efficiency levels using the approach 
described in section IV.E.
5. Energy Prices and Energy Price Projections
    DOE derived regional marginal non-residential (i.e., commercial and 
industrial) electricity prices using data from EIA's Form EIA-861 
database (based on the agency's ``Annual Electric Power Industry 
Report''),\24\ EEI Typical Bills and Average Rates Reports,\25\ and 
information from utility tariffs for each of 9 geographic U.S. Census 
Divisions.\26\ Electricity tariffs for non-residential consumers 
generally incorporate demand charges. The presence of demand charges 
means that two consumers with the same monthly electricity consumption 
may have very different bills, depending on their peak demand. For the 
NOPR analysis DOE derived marginal electricity prices to estimate the 
impact of demand charges for consumers of WICF refrigeration systems. 
The methodology used to calculate the marginal electricity rates can be 
found in appendix 8A of the NOPR TSD.
---------------------------------------------------------------------------

    \24\ Available at: www.eia.doe.gov/cneaf/electricity/page/eia861.html.
    \25\ Edison Electric Institute. Typical Bills and Average Rates 
Report. Winter 2014 published April 2014, Summer 2014 published 
October 2014: Washington, DC (Last accessed June 2, 2015.) http://www.eei.org/resourcesandmedia/products/Pages/Products.aspx.
    \26\ U.S. Census Bureau, Census Divisions and Census Regions 
https://www.census.gov/geo/reference/gtc/gtc_census_divreg.html 
(Last accessed Febuary 2, 2016).
---------------------------------------------------------------------------

    To estimate energy prices in future years, DOE multiplied the 
average and marginal regional electricity prices by the forecast of 
annual change in national-average commercial electricity price in the 
Reference case from AEO 2015, which has an end year of 2040.\27\ To 
estimate price trends after 2040, DOE used the average annual rate of 
change in prices from 2020 to 2040.
---------------------------------------------------------------------------

    \27\ U.S. Department of Energy-Energy Information 
Administration, Annual Energy Outlook 2015 with Projections to 2040 
(Available at: http://www.eia.gov/forecasts/aeo/).
---------------------------------------------------------------------------

6. Maintenance and Repair Costs
    Repair costs are associated with repairing or replacing equipment 
components that have failed in an appliance. Industry participants from 
the Working Group indicated that maintenance and repair costs do not 
change with increased WICF refrigeration system efficiency. (Docket No. 
EERE-2015-BT-STD-0016, various parties, Public Meeting Transcript 
(October 15, 2015), No. 0062 at pp. 38, 53) Accordingly, DOE did not 
include these costs in its supporting analysis.
    DOE requests comment on whether any of the efficiency levels 
considered in this NOPR might lead to an increase in maintenance and 
repair costs and, if so, data regarding the magnitude of the increased 
cost for each relevant efficiency level. This is identified as Issue 6 
in section VII.E, ``Issues on Which DOE Seeks Comment.''
7. Equipment Lifetime
    For this analysis, DOE continued to use an estimated average 
lifetime of 10.5 years for the WICF refrigeration systems examined in 
this rulemaking, with a minimum and maximum of 2 and 25 years, 
respectively, that it used in the June, 2014 final rule (79 FR 32050). 
DOE reflects the uncertainty of equipment lifetimes in the LCC analysis 
for equipment components by using probability distributions. DOE 
presented this assumption to the Working Group during the October 15, 
2015 public meeting and invited comment. DOE received no comments on 
WICF refrigeration system lifetimes. (Docket No. EERE-2015-BT-STD-0016, 
DOE, Public Meeting Transcript (October 15, 2015), No. 0062 at p. 41)
    DOE seeks comment on these minimum, average, and maximum equipment 
lifetimes, and whether or not they are appropriate for all equipment 
classes and capacities. This is identified as Issue 7 in section VII.E, 
``Issues on Which DOE Seeks Comment.''
8. Discount Rates
    In calculating the LCC, DOE applies discount rates to estimate the 
present value of future operating costs to the consumers of WICF 
refrigeration systems. DOE derived the discount rates for the NOPR 
analysis by estimating the average cost of capital for a large number 
of companies similar to those that could purchase WICF refrigeration

[[Page 63012]]

systems. This approach resulted in a distribution of potential consumer 
discount rates from which DOE sampled in the LCC analysis. Most 
companies use both debt and equity capital to fund investments, so 
their cost of capital is the weighted average of the cost to the 
company of equity and debt financing.
    DOE estimated the cost of equity financing by using the Capital 
Asset Pricing Model (``CAPM'').\28\ The CAPM assumes that the cost of 
equity is proportional to the amount of systematic risk associated with 
a company. Data for deriving the cost of equity and debt financing 
primarily came from Damodaran Online, which is a widely used source of 
information about company debt and equity financing for most types of 
firms.\29\
---------------------------------------------------------------------------

    \28\ Harris, R.S. Applying the Capital Asset Pricing Model. UVA-
F-1456. Available at SSRN: http://ssrn.com/abstract=909893.
    \29\ Damodaran Online, The Data Page: Cost of Capital by 
Industry Sector, (2004-2013) (Available at: http://
pages.stern.nyu.edu/~adamodar/).
---------------------------------------------------------------------------

    More details regarding DOE's estimates of consumer discount rates 
are provided in chapter 8 of the NOPR TSD.
9. Efficiency Distribution in the No-New-Standards Case
    To accurately estimate the share of consumers that would be 
affected by a potential energy conservation standard at a particular 
efficiency level, DOE's LCC analysis considered the projected 
distribution (market shares) of equipment efficiencies under the no-
new-standards case (i.e., the case without amended or new energy 
conservation standards). In the case of WICF refrigeration systems, DOE 
was unable to find usable data on the distribution of efficiencies in 
the market, nor was information offered by participants during the 
Working Group meetings. For the NOPR analysis, the efficiency 
distribution in the no-new-standards case assumes that 100 percent of 
WICF refrigeration equipment is at the baseline efficiency level.
    DOE requests comment on its assumption that all WICF refrigeration 
systems covered by this rulemaking would be at the baseline efficiency 
level in the compliance year. This is identified as Issue 8 in section 
VII.E, ``Issues on Which DOE Seeks Comment.''
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 equipment, 
compared to baseline equipment, through energy cost savings. Payback 
periods are expressed in years. Payback periods that exceed the life of 
the equipment mean that the increased total installed cost is not 
recovered in reduced operating expenses.
    The inputs to the payback period (i.e. PBP) calculation for each 
efficiency level are the change in total installed cost of the 
equipment 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 in light of the shorter time-frame involved.
    As noted in this preamble, EPCA, as amended, establishes a 
rebuttable presumption that a standard is economically justified if the 
Secretary finds that the additional cost to the consumer of purchasing 
equipment complying with an energy conservation standard level will be 
less than three times the value of the first year's energy savings 
resulting from the standard, as calculated under the applicable test 
procedure. (42 U.S.C. 6295(o)(2)(B)(iii)) For each considered 
efficiency level, DOE determined the value of the first year's energy 
savings by calculating the energy savings in accordance with the 
applicable DOE test procedure, and multiplying those savings by the 
average energy price forecast for the year in which compliance with the 
proposed standards would be required.

G. Shipments Analysis

    DOE uses forecasts of annual equipment shipments to calculate the 
national impacts of the proposed energy conservation standards on 
energy use, NPV, and future manufacturer cash-flows.\30\ The shipments 
model takes an accounting approach, tracking the vintage of units in 
the stock and market shares of each equipment class. The model uses 
equipment shipments as inputs to estimate the age distribution of in-
service equipment stocks for all years. The age distribution of in-
service equipment stocks is a key input to calculations of both the NES 
and NPV, because operating costs for any year depend on the age 
distribution of the stock.
---------------------------------------------------------------------------

    \30\ DOE uses data on manufacturer shipments as a proxy for 
national sales, as aggregate data on sales are not readily available 
for DOE to examine. In general, one would expect a close 
correspondence between shipments and sales in light of their direct 
relationship with each other.
---------------------------------------------------------------------------

    In DOE's shipments model, shipments of the considered WICF 
refrigeration systems are driven by new purchases and stock 
replacements due to failures. Equipment failure rates are related to 
equipment lifetimes described in section IV.F.7. New equipment 
purchases are driven by growth in commercial floor space.
    DOE initialized its stock and shipments model based on shipments 
data provided by stakeholders during the Working Group meetings. These 
data showed that for low-temperature, dedicated condensing equipment 
classes, 5 percent of shipments are manufacturer-matched condensing 
units and unit coolers, and the remaining 95 percent is sold as 
individual condensing units or unit coolers which were then matched by 
the installer in the field. (Docket No. EERE-2015-BT-STD-0016, various 
parties, Public Meeting Transcript (November 3, 2015), No. 0064 at p. 
120; Docket No. EERE-2015-BT-STD-0016, various parties, Public Meeting 
Transcript (November 20, 2015), No. 0066 at pp. 83-84) For medium and 
low-temperature unit coolers, 82 percent are paired with dedicated 
condensing systems, and the remaining 18 percent are paired with 
multiplex systems; 70 percent of unit coolers are medium temperature, 
and 30 percent are low temperature. (Docket No. EERE-2015-BT-STD-0016, 
various parties, Public Meeting Transcript (November 4, 2015), No. 0065 
at p. 117)
    DOE assumed that shipments of new equipment would increase over 
time at the rate of growth of commercial floor space projected in AEO 
2015. Because data on historic trends in market shares of WICF 
equipment classes and capacities were lacking, DOE took a conservative 
approach and assumed that they would remain constant over time. ((See 
November 20, 2015 Public Meeting Presentation, slide 24, available in 
Docket No. EERE-2015-BT-STD-0016, No. 0042, at p. 24)
    DOE seeks comment on the share of equipment sold as individual 
components versus the share of equipment sold as manufacturer matched 
equipment. This is identified as Issue 9 in section VII.E, ``Issues on 
Which DOE Seeks Comment.''

H. National Impact Analysis

    The NIA assesses the national energy savings (i.e. NES) and the net 
present value (i.e. NPV) from a national perspective of total consumer 
costs and savings that would be expected to result from the proposed 
standards at specific efficiency levels.\31\ (``Consumer'' in this 
context refers to consumers of the equipment being regulated.) DOE 
calculates the NES and NPV for the potential standard levels considered 
based on projections of annual equipment shipments, along with the

[[Page 63013]]

annual energy consumption and total installed cost data from the energy 
use and LCC analyses.\32\ For the present analysis, DOE forecasted the 
energy savings, operating cost savings, equipment costs, and NPV of 
consumer benefits over the lifetime of WICF refrigeration systems sold 
from 2020 through 2049.\33\
---------------------------------------------------------------------------

    \31\ The NIA accounts for impacts in the 50 States and U.S. 
territories.
    \32\ For the NIA, DOE adjusts the installed cost data from the 
LCC analysis to exclude sales tax, which is a transfer.
    \33\ Because the anticipated compliance date is in late 2019, 
for analytical purposes DOE used 2020 as the first full year of 
compliance.
---------------------------------------------------------------------------

    DOE evaluates the impacts of the proposed standards by comparing a 
case without such standards with standards-case projections. The no-
new-standards case characterizes energy use and consumer costs for each 
equipment class in the absence of the proposed energy conservation 
standards. DOE compares the no-new-standards case with a 
characterization of the market for each equipment class if DOE adopts 
amended or new standards at specific energy efficiency levels (i.e., 
the TSLs or standards cases) for that class. For the standards cases, 
DOE considers how a given standard would likely affect the market 
shares of equipment with efficiencies greater than the standard.
    Table IV-7 summarizes the inputs and methods DOE used for the NIA 
analysis for the NOPR. Discussion of these inputs and methods follows 
the table. See chapter 10 of the NOPR TSD for further details.

    Table IV-7--Summary of Inputs and Methods for the National Impact
                                Analysis
------------------------------------------------------------------------
                 Inputs                               Method
------------------------------------------------------------------------
Shipments..............................  Annual shipments from shipments
                                          model.
Compliance Date of Standard............  Late 2019. First full year of
                                          analysis is 2020.
Efficiency Trends......................  No-new-standards case: None.
                                         Standards cases: None.
Annual Energy Consumption per Unit.....  Annual weighted-average values
                                          are a function of energy use
                                          at each TSL.
Total Installed Cost per Unit..........  Does not change with efficiency
                                          level.
                                         Incorporates projection of
                                          future equipment prices based
                                          on historical data.
Annual Energy Cost per Unit............  Annual weighted-average values
                                          as a function of the annual
                                          energy consumption per unit
                                          and energy prices.
Repair and Maintenance Cost per Unit...  Annual values do not change
                                          with efficiency level.
Energy Prices..........................  AEO 2015 forecasts (to 2040)
                                          and extrapolation thereafter.
Energy Site-to-Primary and FFC           Site-to-Primary: A time-series
 Conversion.                              conversion factor based on AEO
                                          2015.
                                         FFC: Utilizes data and
                                          projections published in AEO
                                          2015.
Discount Rate..........................  Three and seven percent.
Present Year...........................  2015.
------------------------------------------------------------------------

    Because data on trends in efficiency for the considered WICF 
refrigeration systems are lacking, DOE took a conservative approach and 
assumed that no change in efficiency would occur over the shipments 
projection period in the no-new-standards case. (Docket No. EERE-2015-
BT-STD-0016, various parties, Public Meeting Transcript (November 20, 
2015), No. 0066 at pp. 83-84)
    DOE requests comment on its assumption that the WICF refrigeration 
system efficiency of the classes covered in this proposal would remain 
unchanged over time in the absence of adopting the proposed standards. 
This is identified as Issue 10 in section VII.E, ``Issues on Which DOE 
Seeks Comment.''
1. National Energy Savings
    The NES analysis compares the projected national energy consumption 
of the considered equipment between each potential standards case (TSL) 
and the no-new-standards case. DOE calculated the annual national 
energy consumption by multiplying the number of units (stock) of each 
equipment (by vintage or age) by the unit energy consumption (also by 
vintage). 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 AEO 2015. 
Cumulative energy savings are the sum of the NES for each year in which 
equipment purchased in 2020-2049 continues to operate.
    In 2011, in response to the recommendations of a committee on 
``Point-of-Use and Full-Fuel-Cycle Measurement Approaches to Energy 
Efficiency Standards'' appointed by the National Academy of Sciences, 
DOE announced its intention to use FFC measures of energy use and 
greenhouse gas and other emissions in the national impact analyses 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 notice, DOE published a 
statement of amended policy in which DOE explained its determination 
that EIA's National Energy Modeling System (``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 \34\ 
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 10A of the NOPR TSD.
---------------------------------------------------------------------------

    \34\ For more information on NEMS, refer to The National Energy 
Modeling System: An Overview, DOE/EIA-0581 (98) (Feb.1998) 
(Available at: http://www.eia.gov/oiaf/aeo/overview/).
---------------------------------------------------------------------------

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 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 equipment shipped during the forecast 
period.
    As discussed in section IV.F.1 of this proposed rule, DOE used a 
constant price trend for WICF refrigeration systems. DOE applied the 
same trend to forecast prices for each equipment class at each 
considered efficiency level. DOE's projection of equipment prices is 
discussed in appendix 10B of the NOPR TSD.

[[Page 63014]]

    To evaluate the effect of uncertainty regarding the price trend 
estimates, DOE investigated the impact of different equipment price 
forecasts on the consumer NPV for the considered TSLs for the 
considered WICF refrigeration systems. In addition to the default price 
trend, DOE considered one equipment price sensitivity case in which 
prices increase and one in which prices decrease. The derivation of 
these price trends and the results of the sensitivity cases are 
described in appendix 10B of the NOPR TSD.
    The operating cost savings are energy cost savings, which are 
calculated using the estimated energy savings in each year and the 
projected price of the appropriate form of energy. To estimate energy 
prices in future years, DOE multiplied the regional energy prices by 
the forecast of annual national-average commercial electricity price 
changes in the Reference case from AEO 2015, which has an end year of 
2040. To estimate price trends after 2040, DOE used the average annual 
rate of change in prices from 2020 to 2040. As part of the NIA, DOE 
also analyzed scenarios that used inputs from the AEO 2015 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 presented in appendix 10B of the NOPR TSD.
    In calculating the NPV, DOE multiplies the net savings in future 
years by a discount factor to determine their present value. For this 
NOPR, 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.\35\ 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.
---------------------------------------------------------------------------

    \35\ United States 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 the proposed standards on 
commercial consumers, DOE evaluates the impact on identifiable groups 
(i.e., subgroups) of consumers that may be disproportionately affected. 
Small businesses typically face a higher cost of capital, which could 
make it more likely that they would be disadvantaged by a requirement 
to purchase higher efficiency equipment.
    DOE estimated the impacts on the small business customer subgroup 
using the LCC model. To account for a higher cost of capital, the 
discount rate was increased by applying a small firm premium to the 
cost of capital.\36\ In addition, electricity prices associated with 
different types of small businesses were used in the subgroup 
analysis.\37\ Apart from these changes, all other inputs for the 
subgroup analysis are the same as those in the LCC analysis. Details of 
the data used for the subgroup analysis and results are presented in 
chapter 11 of the NOPR TSD.
---------------------------------------------------------------------------

    \36\ See chapter 8 of the NOPR TSD for a more detailed 
discussion of discount rates.
    \37\ Small businesses tend to face higher electricity prices 
than the average WICF users.
---------------------------------------------------------------------------

J. Manufacturer Impact Analysis

1. Definition of Manufacturer
    A manufacturer of a walk-in cooler or walk-in freezer is any person 
who: (1) Manufactures a component of a walk-in cooler or walk-in 
freezer that affects energy consumption, including, but not limited to, 
refrigeration, doors, lights, windows, or walls; or (2) manufactures or 
assembles the complete walk-in cooler or walk-in freezer. 10 CFR 
431.302. DOE requires a manufacturer of a walk-in component to certify 
the compliance of the components it manufactures. This document 
proposes energy conservation standards for seven classes of 
refrigeration equipment which are components of complete walk-in 
coolers and walk-in freezers. DOE provides a qualitative and 
quantitative analysis on the potential impacts of the proposed rule on 
the affected WICF refrigeration manufacturers. The results are 
presented in sections V.B.2.a through V.B.2.e. This document does not 
set new or amended energy conservation standards in terms of the 
performance of the complete walk-in cooler or walk-in freezer and, in 
DOE's view, this proposal would not create any significant burdens on 
manufacturers who assemble the complete walk-in cooler or freezer. DOE 
provides a qualitative review of the potential impacts on those 
manufacturers that assemble complete walk-ins in section V.B.2.f.
2. Overview of WICF Refrigeration Manufacturer Analysis
    DOE performed an MIA to estimate the financial impacts of the 
proposed energy conservation standards on manufacturers of the seven 
WICF refrigeration system equipment classes being analyzed, and to 
estimate the potential impacts of such standards on cash-flow and 
industry valuation. The MIA also has qualitative aspects and seeks to 
determine how the proposed energy conservation standards might affect 
competition, production capacity, and overall cumulative regulatory 
burden for manufacturers. Finally, the MIA serves to identify any 
disproportionate impacts on manufacturer subgroups, including small 
business manufacturers.
    The quantitative part of the MIA primarily relies on the Government 
Regulatory Impact Model (i.e. 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, equipment 
shipments, manufacturer markups, and investments in R&D and 
manufacturing capital required to produce compliant equipment. 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 between a no-new-standards case 
and the various trial standards cases (TSLs). To capture the 
uncertainty relating to manufacturer pricing strategy following the 
adoption of the proposed standards, the GRIM estimates a range of 
possible impacts under two markup scenarios. DOE notes that the INPV 
estimated by the GRIM is reflective of industry value derived from the 
seven equipment classes being analyzed. The model does not capture the 
revenue from equipment falling outside the scope of this rulemaking.
    The qualitative part of the MIA addresses manufacturer 
characteristics and market trends. Specifically, the MIA considers such 
factors as a potential standard's impact on manufacturing capacity, 
competition within the industry, and the cumulative impact of other 
Federal regulations. The complete MIA is outlined in chapter 12 of the 
NOPR TSD.

[[Page 63015]]

    In Phase 2 of the MIA, DOE prepared an industry cash-flow analysis 
to quantify the impacts of an energy conservation standard on 
manufacturers of WICF refrigeration systems. In general, more-stringent 
energy conservation standards can affect manufacturer cash-flow in 
three distinct ways: (1) By creating a need for increased investment; 
(2) by raising production costs per unit; and (3) by altering revenue 
due to higher per-unit prices and possible changes in sales volumes.
    In Phase 3 of the MIA, DOE used information from the Working Group 
negotiations to update key inputs to GRIM to better reflect the 
industry. Updates include changes to the engineering inputs and 
shipments model.
    As part of Phase 3, DOE also evaluated subgroups of manufacturers 
that may be disproportionately impacted by the proposed standards or 
that may not be accurately represented by the average cost assumptions 
used to develop the industry cash-flow analysis. Such manufacturer 
subgroups may include small business manufacturers, low-volume 
manufacturers, niche players, and/or manufacturers exhibiting a cost 
structure that largely differs from the industry average. DOE 
identified one manufacturer subgroup for which average cost assumptions 
may not hold: small businesses.
    To identify small businesses for this analysis, DOE applied the 
size standards published by the Small Business Administration (``SBA'') 
to determine whether a company is considered a small business. (65 FR 
30840, 30848 (May 15, 2000), as amended at 65 FR 53533, 53544 
(September 5, 2000); and codified at 13 CFR part 121.) To be 
categorized as a small business manufacturer of WICF refrigeration 
systems under North American Industry Classification System (``NAICS'') 
codes 333415 (``Air-Conditioning and Warm Air Heating Equipment and 
Commercial and Industrial Refrigeration Equipment Manufacturing''), a 
WICF refrigeration systems manufacturer and its affiliates may employ a 
maximum of 1,250 employees. The 1,250-employee threshold includes all 
employees in a business' parent company and any other subsidiaries. 
Using this classification in conjunction with a search of industry 
databases and the SBA member directory, DOE identified two 
manufacturers of WICF refrigeration systems that qualify as small 
businesses.
    The WICF refrigeration systems manufacturer subgroup analysis for 
the seven analyzed equipment classes is discussed in greater detail in 
chapter 12 of the NOPR TSD and in section VI.A of this document.
3. GRIM Analysis and Key Inputs
    DOE uses the GRIM to quantify the changes in cash-flows over time 
due to new or amended energy conservation standards. These changes in 
cash-flows result in either a higher or lower INPV for the standards 
case compared to the no-new standards case. The GRIM analysis uses a 
standard annual cash-flow analysis that incorporates MPCs, manufacturer 
markups, shipments, and industry financial information as inputs. It 
then models changes in MPCs, investments, and manufacturer margins that 
may result from analyzed proposed energy conservation standards. The 
GRIM uses these inputs to calculate a series of annual cash-flows 
beginning with the base year of the analysis, 2016, and continuing to 
2049. DOE computes INPV by summing the stream of discounted annual 
cash-flows during the analysis period. The GRIM analysis for this 
proposal focuses on manufacturer impacts with respect to the seven 
covered refrigeration equipment classes. DOE used a real discount rate 
of 10.2 percent for WICF refrigeration manufacturers. The major GRIM 
inputs are described in detail in the following sections.
a. Manufacturer Production Costs
    Manufacturing a higher-efficiency equipment is typically more 
expensive than manufacturing a baseline equipment due to the use of 
more complex and expensive components. The increases in the MPCs of the 
analyzed equipment can affect the revenues, gross margins, and cash-
flow of the industry, making these equipment costs key inputs for the 
GRIM and the MIA.
    In the MIA, DOE used the MPCs calculated in the engineering 
analysis, as described in section IV.C and further detailed in chapter 
5 of this NOPR TSD. DOE used information from its teardown analysis, 
described in section IV.C.4 to disaggregate the MPCs into material, 
labor, and overhead costs. To calculate the MPCs for equipment above 
the baseline, DOE added incremental material, labor, overhead costs 
from the engineering cost-efficiency curves to the baseline MPCs. These 
cost breakdowns and equipment markups were validated with manufacturers 
during manufacturer interviews conducted for the June 2014 final rule 
and further revised based on feedback from the Working Group.
b. Shipment Scenarios
    The GRIM estimates manufacturer revenues based on total unit 
shipment forecasts and the distribution of shipments by equipment 
class. For the no-new standards case analysis, the GRIM uses the NIA 
shipment forecasts from 2016, the base year for the MIA analysis, to 
2049, the last year of the analysis period. For the standards case 
shipment forecast, the GRIM uses the NIA standards case shipment 
forecasts. The NIA assumes zero elasticity in demand as explained in 
section IV.G and in chapter 9 of the TSD.
    If demand elasticity were not zero, there would be a small drop in 
shipments due to some purchasers electing to repair rather than replace 
failing equipment. However, as this equipment is required for business 
operations, the total number of units in the stock must remain 
constant. The net effect of demand elasticity is therefore to delay the 
purchase of new equipment, which has a very limited impact on the 
national impacts estimates. With no elasticity, the total number of 
shipments per year in the standards case is equal to the total 
shipments per year in the no-new standards case. DOE assumed that 
equipment efficiencies in the no-new standards case that did not meet 
the standard under consideration would ``roll up'' to meet the new 
standard in the compliance year.
c. Capital and Product Conversion Costs
    New energy conservation standards will cause manufacturers to incur 
conversion costs to bring their production facilities and equipment 
designs into compliance. For the MIA, DOE classified these conversion 
costs into two major groups: (1) Product conversion costs and (2) 
capital conversion costs. Product conversion costs are investments in 
research, development, testing, marketing, and other non-capitalized 
costs necessary to make equipment designs comply with a new or amended 
energy conservation standard. Capital conversion costs are investments 
in property, plant, and equipment necessary to adapt or change existing 
production facilities such that new equipment designs can be fabricated 
and assembled.
    To evaluate the level of conversion costs the industry would likely 
incur to comply with energy conservation standards, DOE used the data 
gathered in support of the June 2014 final rule. (79 FR at 32091-32092) 
The supporting data relied on manufacturer comments and information 
derived from the equipment teardown analysis and

[[Page 63016]]

engineering model. DOE also incorporated feedback received during the 
ASRAC negotiations, which included updated conversion costs to better 
reflect changes in the test procedure, design options and design option 
ordering, the dollar year, and the competitive landscape for walk-in 
refrigeration systems.
    In general, the analysis assumes that all conversion-related 
investments occur between the year of publication of the final rule and 
the year by which manufacturers must comply with a new or amended 
standard. The investment figures used in the GRIM can be found in Table 
IV-8 of this document. For additional information on the estimated 
product conversion and capital conversion costs, see chapter 12 of the 
final rule TSD.

               Table IV-8--Industry Product and Capital Conversion Costs per Trial Standard Level
----------------------------------------------------------------------------------------------------------------
                                                                               Trial standard level
                                                                 -----------------------------------------------
                                                                         1               2               3
----------------------------------------------------------------------------------------------------------------
Product Conversion Costs (2015$ MM).............................             2.2             4.8            11.3
Capital Conversion Costs (2015$ MM).............................  ..............             2.3             4.9
----------------------------------------------------------------------------------------------------------------

    Capital conversion costs are driven by investments related to 
larger condenser coils. DOE estimated that four manufacturers, produce 
their own condenser coils, which requires an estimated total investment 
of $1.0 million per manufacturer. The remainder of the capital 
conversion costs is attributed to the ambient subcooling design option, 
which requires an estimated investment of $100,000 per manufacturer.
    DOE's engineering analysis suggests that many efficiency levels can 
be reached through the incorporation of more efficient components. Many 
of these changes are component swaps that do not require extensive R&D 
or redesign. DOE estimated product conversion costs of $20,000 per 
manufacturers for component swaps. For improved evaporator fan blades, 
additional R&D effort may be required to account for proper airflow 
within the cabinet and across the heat exchanger. DOE estimates product 
conversion costs to be $50,000 per manufacturer per equipment class. 
Chapter 12 of the NOPR TSD provides further details on the methodology 
that was used to estimate conversion costs.
    DOE seeks additional information on industry capital and product 
conversion costs of compliance associated with the new standards for 
WICF refrigeration systems proposed in this document. This is 
identified as Issue 11 in section VII.E, ``Issues on Which DOE Seeks 
Comment.''
d. Manufacturer Markup Scenarios
    As discussed in this preamble, MSPs include direct manufacturing 
production costs (i.e., labor, material, and overhead estimated in 
DOE's MPCs) and all non-production costs (i.e., SG&A, R&D, and 
interest), along with profit. To calculate the MSPs in the GRIM, DOE 
applied manufacturer markups to the MPCs estimated in the engineering 
analysis and then added the cost of shipping. Modifying these 
manufacturer markups in the standards case yields different sets of 
impacts on manufacturers. For the MIA, DOE modeled two standards-case 
manufacturer markup scenarios to represent the uncertainty regarding 
the potential impacts on prices and profitability for manufacturers 
following the implementation of new or amended energy conservation 
standards: (1) A preservation of gross margin percentage markup 
scenario and (2) a preservation of operating profit markup scenario. 
These scenarios lead to different manufacturer markup values that, when 
applied to the inputted MPCs, result in varying revenue and cash-flow 
impacts. These markup scenarios are consistent with the scenarios 
modeled in the 2014 final rule for walk-ins.
    Under the preservation of gross margin percentage scenario, DOE 
applied a single uniform ``gross margin percentage'' markup across all 
efficiency levels. As production costs increase with efficiency, this 
scenario implies that the absolute dollar markup will increase as well. 
Based on publicly-available financial information for walk-in 
manufacturers, submitted comments, and information obtained during 
manufacturer interviews from the June 2014 final rule, DOE assumed the 
non-production cost markup--which includes SG&A expenses, R&D expenses, 
interest, and profit--to be 1.35. This markup is consistent with the 
one DOE assumed in the engineering analysis (see section IV.C.4.d). 
Manufacturers have indicated that it would be optimistic for DOE to 
assume that, as manufacturer production costs increase in response to 
an energy conservation standard, manufacturers would be able to 
maintain the same gross margin percentage markup. Therefore, DOE 
assumes that this scenario represents a high bound to industry 
profitability under an energy conservation standard.
    The preservation of operating profit markup scenario assumes that 
manufacturers are able to maintain only the no-new standards case total 
operating profit in absolute dollars in the standards cases, despite 
higher equipment costs and investment. The no-new standards case total 
operating profit is derived from marking up the cost of goods sold for 
each equipment by the preservation of gross margin markup. In the 
standards cases for the preservation of operating profit markup 
scenario, DOE adjusted the WICF manufacturer markups in the GRIM at 
each TSL to yield approximately the same earnings before interest and 
taxes in the standards cases in the year after the compliance date of 
the proposed WICF refrigeration system standards as in the no-new 
standards case. Under this scenario, while manufacturers are not able 
to yield additional operating profit from higher production costs and 
the investments that are required to comply with the proposed WICF 
refrigeration system energy conservation standards, they are able to 
maintain the same operating profit in the standards case that was 
earned in the no-new standards case.
    DOE requests comment on the appropriateness of assuming a constant 
manufacturer markup of 1.35 across all equipment classes and efficiency 
levels. This is identified as Issue 12 in section VII.E, ``Issues on 
Which DOE Seeks Comment.''

K. Emissions Analysis

    The emissions analysis consists of two components. The first 
component estimates the effect of potential energy conservation 
standards on power sector and site (where applicable) combustion 
emissions of CO2, NOX, SO2, and Hg. 
The second component estimates the impacts of potential standards on 
emissions of two additional greenhouse gases, CH4 and 
N2O, as well as the reductions to emissions of all species

[[Page 63017]]

due to ``upstream'' activities in the fuel production chain. These 
upstream activities comprise extraction, processing, and transporting 
fuels to the site of combustion. For the considered WICF refrigeration 
systems in this NOPR, DOE does not expect emissions to increase from 
the manufacturing of new equipment. As discussed in section IV.G, the 
number of units that are manufactured and shipped is not expected to 
change. Further, neither the design process nor installation processes 
are expected to generate emissions. The associated emissions are 
referred to as upstream emissions.
    The analysis of power sector emissions uses marginal emissions 
factors that were derived from data in AEO 2015, as described in 
section IV.M. The methodology is described in chapter 13 and chapter 15 
of the NOPR TSD.
    Combustion emissions of CH4 and N2O are 
estimated using emissions intensity factors from the EPA's GHG 
Emissions Factors Hub.\38\ The FFC upstream emissions are estimated 
based on the methodology described in chapter 15 of the NOPR TSD. The 
upstream emissions include both emissions from fuel combustion during 
extraction, processing, and transportation of fuel, and ``fugitive'' 
emissions (direct leakage to the atmosphere) of CH4 and 
CO2.
---------------------------------------------------------------------------

    \38\ Available at: http://www2.epa.gov/climateleadership/center-corporate-climate-leadership-ghg-emission-factors-hub.
---------------------------------------------------------------------------

    The emissions intensity factors are expressed in terms of physical 
units per MWh or MMBtu of site energy savings. Total emissions 
reductions are estimated using the energy savings calculated in the 
national impact analysis.
    For CH4 and N2O, DOE calculated emissions 
reduction in tons and also in terms of units of carbon dioxide 
equivalent (CO2eq). Gases are converted to CO2eq 
by multiplying 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,\39\ DOE used 
GWP values of 28 for CH4 and 265 for N2O.
---------------------------------------------------------------------------

    \39\ IPCC, 2013: Climate Change 2013: The Physical Science 
Basis. Contribution of Working Group I to the Fifth Assessment 
Report of the Intergovernmental Panel on Climate Change [Stocker, 
T.F., D. Qin, G.-K. Plattner, M. Tignor, S.K. Allen, J. Boschung, A. 
Nauels, Y. Xia, V. Bex and P.M. Midgley (eds.)]. Cambridge 
University Press, Cambridge, United Kingdom and New York, NY, USA. 
Chapter 8.
---------------------------------------------------------------------------

    The AEO incorporates the projected impacts of existing air quality 
regulations on emissions. AEO 2015 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 (DC). (42 U.S.C. 7651 et seq.) SO2 
emissions from 28 eastern States and DC 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.\40\ 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,\41\ 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.\42\ On October 23, 2014, the D.C. Circuit lifted the 
stay of CSAPR.\43\ Pursuant to this action, CSAPR went into effect (and 
CAIR ceased to be in effect) as of January 1, 2015.
---------------------------------------------------------------------------

    \40\ 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).
    \41\ 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).
    \42\ 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.
    \43\ See Georgia v. EPA, Order (D.C. Cir. filed October 23, 
2014) (No. 11-1302).
---------------------------------------------------------------------------

    EIA was not able to incorporate CSAPR into AEO 2015, 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 significant for the purpose of 
DOE's analysis of emissions impacts from energy conservation standards 
and does not affect the outcome of the cost-benefit analysis.
    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. AEO 
2015 assumes that, in order to continue operating, coal plants must 
have either flue gas desulfurization or dry sorbent injection systems 
installed by 2016. Both technologies, which are used to reduce acid gas 
emissions, also reduce SO2 emissions. Under the MATS, 
emissions will be far below the cap established by CAIR, so it is 
unlikely that excess SO2 emissions allowances resulting from 
the lower electricity demand would be needed or used to permit 
offsetting increases in SO2 emissions by any regulated 
EGU.\44\ Therefore, DOE believes that energy conservation

[[Page 63018]]

standards will generally reduce SO2 emissions in 2016 and 
beyond.
---------------------------------------------------------------------------

    \44\ DOE notes that the Supreme Court recently determined that 
EPA erred by not considering costs in the finding that regulation of 
hazardous air pollutants from coal- and oil-fired electric utility 
steam generating units is appropriate. See Michigan v. EPA (Case No. 
14-46, 2015). The Supreme Court did not vacate the MATS rule, and 
DOE has tentatively determined that the Court's decision on the MATS 
rule does not change the assumptions regarding the impact of energy 
efficiency standards on SO2 emissions. Further, the 
Court's decision 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.\45\ Energy conservation standards 
are expected to have little effect on NOX emissions in those 
States covered by CAIR because excess NOX emissions 
allowances resulting from the lower electricity demand could be used to 
permit offsetting increases in NOX emissions from other 
facilities. However, standards would be expected to reduce 
NOX emissions in the States not affected by the caps, so DOE 
estimated NOX emissions reductions from the standards 
considered in this NOPR for these States.
---------------------------------------------------------------------------

    \45\ CSAPR also applies to NOX and it supersedes the 
regulation of NOX under CAIR. As stated previously, the 
current analysis assumes that CAIR, not CSAPR, is the regulation in 
force. The difference between CAIR and CSAPR with regard to DOE's 
analysis of NOX emissions is slight.
---------------------------------------------------------------------------

    The MATS limit mercury emissions from power plants, but they do not 
include emissions caps and, as such, DOE's energy conservation 
standards would likely reduce Hg emissions. DOE estimated mercury 
emissions reduction using emissions factors based on AEO 2015, which 
incorporates the MATS.

L. Monetizing Carbon Dioxide and Other Emissions Impacts

    As part of the development of this proposed rule, DOE considered 
the estimated monetary benefits from the reduced emissions of 
CO2 and NOX that are expected to result from each 
of the TSLs considered. In order to make this calculation analogous to 
the calculation of the NPV of consumer benefit, DOE considered the 
reduced emissions expected to result over the lifetime of equipment 
shipped in the forecast period for each TSL. This section summarizes 
the basis for the monetary values used for CO2 and 
NOX emissions and presents the values considered in this 
NOPR.
1. Social Cost of Carbon
    The SCC is an estimate of the monetized damages associated with an 
incremental increase in carbon emissions in a given year. It is 
intended to include (but is not limited to) climate-change-related 
changes in net agricultural productivity, human health, property 
damages from increased flood risk, and the value of ecosystem services. 
Estimates of the SCC are provided in dollars per metric ton of 
CO2. A domestic SCC value is meant to reflect the value of 
damages in the United States resulting from a unit change in 
CO2 emissions, while a global SCC value is meant to reflect 
the value of damages worldwide.
    Under section 1(b)(6) of Executive Order 12866, ``Regulatory 
Planning and Review,'' 58 FR 51735 (Oct. 4, 1993), agencies must, to 
the extent permitted by law, ``assess both the costs and the benefits 
of the intended regulation and, recognizing that some costs and 
benefits are difficult to quantify, propose or adopt a regulation only 
upon a reasoned determination that the benefits of the intended 
regulation justify its costs.'' The purpose of the SCC estimates 
presented here is to allow agencies to incorporate the monetized social 
benefits of reducing CO2 emissions into cost-benefit 
analyses of regulatory actions. The estimates are presented with an 
acknowledgement of the many uncertainties involved and with a clear 
understanding that they should be updated over time to reflect 
increasing knowledge of the science and economics of climate impacts.
    As part of the interagency process that developed these SCC 
estimates, technical experts from numerous agencies met on a regular 
basis to consider public comments, explore the technical literature in 
relevant fields, and discuss key model inputs and assumptions. The main 
objective of this process was to develop a range of SCC values using a 
defensible set of input assumptions grounded in the existing scientific 
and economic literatures. In this way, key uncertainties and model 
differences transparently and consistently inform the range of SCC 
estimates used in the rulemaking process.
a. Monetizing Carbon Dioxide Emissions
    When attempting to assess the incremental economic impacts of 
CO2 emissions, the analyst faces a number of challenges. A 
report from the National Research Council \46\ 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.
---------------------------------------------------------------------------

    \46\ National Research Council, Hidden Costs of Energy: Unpriced 
Consequences of Energy Production and Use, National Academies Press: 
Washington, DC (2009).
---------------------------------------------------------------------------

    Although any numerical estimate of the benefits of reducing carbon 
dioxide emissions is subject to some uncertainty, that does not relieve 
DOE of its obligation to attempt to quantify such benefits and consider 
them in its cost-benefit analysis. Moreover, the interagency group's 
SCC estimates are well supported by the existing scientific and 
economic literature. As a result, DOE has relied on the interagency 
group's SCC estimates in quantifying the social benefits of reducing 
CO2 emissions. Specifically, DOE estimated the benefits from 
reduced emissions in any future year by multiplying the change in 
emissions in that year by the SCC values appropriate for that year. The 
present value of the benefits are then 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 current SCC values reflect 
the interagency group's best assessment, based on current data, of the 
societal effect of CO2 emissions. The interagency group is 
committed to updating these estimates as the science and economic 
understanding of climate change and its impacts on society improves 
over time. In the meantime, the interagency group will continue to 
explore the issues raised by this analysis and consider public comments 
as part of the ongoing interagency process.
b. Development of Social Cost of Carbon Values
    In 2009, an interagency process was initiated to offer a 
preliminary assessment of how best to quantify the benefits from 
reducing carbon dioxide 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 harmonized SCC estimates for use in regulatory 
analysis. The results of this preliminary effort were used in the 
Regulatory Impact Analyses of several

[[Page 63019]]

proposed and final rules from EPA and DOE.
c. Current Approach and Key Assumptions
    After the release of the interim values, the interagency group 
reconvened on a regular basis to generate improved SCC estimates. 
Specially, the group considered public comments and further explored 
the technical literature in relevant fields. The interagency group 
relied on three integrated assessment models commonly used to estimate 
the SCC: The FUND, DICE, and PAGE models. These models are frequently 
cited in the peer-reviewed literature and were used in the last 
assessment of the Intergovernmental Panel on Climate Change (IPCC). 
Each model was given equal weight in the SCC values that were 
developed.
    Each model takes a slightly different approach to model how changes 
in emissions result in changes in economic damages. A key objective of 
the interagency process was to enable a consistent exploration of the 
three models, while respecting the different approaches to quantifying 
damages taken by the key modelers in the field. An extensive review of 
the literature was conducted to select three sets of input parameters 
for these models: Climate sensitivity, socio-economic and emissions 
trajectories, and discount rates. A probability distribution for 
climate sensitivity was specified as an input into all three models. In 
addition, the interagency group used a range of scenarios for the 
socio-economic parameters and a range of values for the discount rate. 
All other model features were left unchanged, relying on the model 
developers' best estimates and judgments.
    In 2010, the interagency group selected four sets of SCC values for 
use in regulatory analyses. Three sets of values are based on the 
average SCC from the three integrated assessment models, at discount 
rates of 2.5, 3, and 5 percent. The fourth set, which represents the 
95th percentile SCC estimate across all three models at a 3-percent 
discount rate, was included to represent higher-than-expected impacts 
from climate change further out in the tails of the SCC distribution. 
The values grow in real terms over time. Additionally, the interagency 
group determined that a range of values from 7 percent to 23 percent 
should be used to adjust the global SCC to calculate domestic 
effects,\47\ although preference is given to consideration of the 
global benefits of reducing CO2 emissions.\48\ Table IV-9 
presents the values in the 2010 interagency group report,\49\ which is 
reproduced in appendix 16A of the NOPR TSD.
---------------------------------------------------------------------------

    \47\ 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.
    \48\ As discussed in appendix 16A of the NOPR TSD, the climate 
change problem is highly unusual in at least two respects. First, it 
involves a global externality: Emissions of most greenhouse gases 
contribute to damages around the world even when they are emitted in 
the United States. Consequently, to address the global nature of the 
problem, the SCC must incorporate the full (global) damages caused 
by domestic GHG emissions. Second, climate change presents a problem 
that the United States alone cannot solve. Even if the United States 
were to reduce its greenhouse gas emissions to zero, that step would 
be far from enough to avoid substantial climate change. Other 
countries would also need to take action to reduce emissions if 
significant changes in the global climate are to be avoided. 
Emphasizing the need for a global solution to a global problem, the 
United States has been actively involved in seeking international 
agreements to reduce emissions and in encouraging other nations, 
including emerging major economies, to take significant steps to 
reduce emissions. When these considerations are taken as a whole, 
the interagency group concluded that a global measure of the 
benefits from reducing U.S. emissions is preferable.
    \49\ Social Cost of Carbon for Regulatory Impact Analysis Under 
Executive Order 12866. Interagency Working Group on Social Cost of 
Carbon, United States Government (February 2010) (Available at: 
www.whitehouse.gov/sites/default/files/omb/inforeg/for-agencies/Social-Cost-of-Carbon-for-RIA.pdf).

                      Table IV-9--Annual SCC Values From 2010 Interagency Report, 2010-2050
                                           [2007$ per metric ton CO2]
----------------------------------------------------------------------------------------------------------------
                                                                           Discount rate
                                                 ---------------------------------------------------------------
                                                        5%              3%             2.5%             3%
                      Year                       ---------------------------------------------------------------
                                                                                                       95th
                                                      Average         Average         Average       percentile
----------------------------------------------------------------------------------------------------------------
2010............................................             4.7            21.4            35.1            64.9
2015............................................             5.7            23.8            38.4            72.8
2020............................................             6.8            26.3            41.7            80.7
2025............................................             8.2            29.6            45.9            90.4
2030............................................             9.7            32.8            50.0           100.0
2035............................................            11.2            36.0            54.2           109.7
2040............................................            12.7            39.2            58.4           119.3
2045............................................            14.2            42.1            61.7           127.8
2050............................................            15.7            44.9            65.0           136.2
----------------------------------------------------------------------------------------------------------------

    The SCC values used for this document were generated using the most 
recent versions of the three integrated assessment models that have 
been published in the peer-reviewed literature, as described in the 
2013 update from the interagency Working Group (revised July 2015).\50\ 
Table IV-10 shows the updated sets of SCC estimates from the latest 
interagency update in 5-year increments from 2010 to 2050. The full set 
of annual SCC values between 2010 and 2050 is reported in appendix 16B 
of the NOPR TSD, which contains the July 2015 report. 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.
---------------------------------------------------------------------------

    \50\ 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).

[[Page 63020]]



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

    It is important to recognize that a number of key uncertainties 
remain, and that current SCC estimates should be treated as provisional 
and revisable because they will evolve with improved scientific and 
economic understanding. The interagency group also recognizes that the 
existing models are imperfect and incomplete. The National Research 
Council report mentioned previously points out that there is tension 
between the goal of producing quantified estimates of the economic 
damages from an incremental ton of carbon and the limits of existing 
efforts to model these effects. There are a number of analytical 
challenges that are being addressed by the research community, 
including research programs housed in many of the Federal agencies 
participating in the interagency process to estimate the SCC. The 
interagency group intends to periodically review and reconsider those 
estimates to reflect increasing knowledge of the science and economics 
of climate impacts, as well as improvements in modeling.\51\
---------------------------------------------------------------------------

    \51\ In November 2013, OMB announced a new opportunity for 
public comment on the interagency technical support document 
underlying the revised SCC estimates. 78 FR 70586. In July 2015 OMB 
published a detailed summary and formal response to the many 
comments that were received. https://www.whitehouse.gov/blog/2015/07/02/estimating-benefits-carbon-dioxide-emissions-reductions. It 
also stated its intention to seek independent expert advice on 
opportunities to improve the estimates, including many of the 
approaches suggested by commenters.
---------------------------------------------------------------------------

    In summary, in considering the potential global benefits resulting 
from reduced CO2 emissions, DOE used the values from the 
2013 interagency report (revised July 2015), adjusted to 2015$ 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 $12.4, $40.6, $63.2, 
and $118 per metric ton avoided (values expressed in 2015$). 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 
conservation standards would decrease power sector NOX 
emissions in those 22 States not affected by the CAIR.
    DOE estimated the monetized value of NOX emissions 
reductions using benefit per ton estimates from the Regulatory Impact 
Analysis for the Clean Power Plan Final Rule, published in August 2015 
by EPA's Office of Air Quality Planning and Standards.\52\ The report 
includes high and low values for NOX (as PM2.5) 
for 2020, 2025, and 2030 using discount rates of 3 percent and 7 
percent; these values are presented in appendix 16C of the NOPR TSD. 
DOE primarily relied on the low estimates to be conservative.\53\ 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. DOE developed values specific to the end-use category 
for WICFs using a method described in appendix 16C of the NOPR TSD.
---------------------------------------------------------------------------

    \52\ Available at: http://www.epa.gov/cleanpowerplan/clean-power-plan-final-rule-regulatory-impact-analysis. See Tables 4A-3, 
4A-4, and 4A-5 in the report. The U.S. Supreme Court has stayed the 
rule implementing the Clean Power Plan until the current litigation 
against it concludes. Chamber of Commerce, et al. v. EPA, et al., 
Order in Pending Case, 577 U.S. __ (2016). However, the benefit-per-
ton estimates established in the Regulatory Impact Analysis for the 
Clean Power Plan are based on scientific studies that remain valid 
irrespective of the legal status of the Clean Power Plan.
    \53\ For the monetized NOX benefits associated with 
PM2.5, the related benefits are primarily based on an 
estimate of premature mortality derived from the ACS study (Krewski 
et al. 2009), which is the lower of the two EPA central tendencies. 
Using the lower value is more conservative when making the policy 
decision concerning whether a particular standard level is 
economically justified. If the benefit-per-ton estimates were based 
on the Six Cities study (Lepuele et al. 2012), the values would be 
nearly two-and-a-half times larger. (See chapter 16 of the NOPR TSD 
for further description of the studies mentioned.)
---------------------------------------------------------------------------

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

M. Utility Impact Analysis

    The utility impact analysis estimates several effects on the 
electric power generation industry that would result from the adoption 
of the proposed 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 AEO 2015. NEMS produces 
the AEO Reference case, as well as a number of side cases that estimate 
the economy-wide impacts of changes to energy supply and demand. DOE 
uses published side cases to estimate the marginal impacts of reduced 
energy demand on the utility sector. These marginal factors are 
estimated based on the changes to electricity sector generation, 
installed

[[Page 63021]]

capacity, fuel consumption and emissions in the AEO Reference case and 
various side cases. Details of the methodology are provided in the 
appendices to chapters 13 and 15 of the NOPR TSD.
    The output of this analysis is a set of time-dependent coefficients 
that capture the change in electricity generation, primary fuel 
consumption, installed capacity and power sector emissions due to a 
unit reduction in demand for a given end use. These coefficients are 
multiplied by the stream of electricity savings calculated in the NIA 
to provide estimates of selected utility impacts of new or amended 
energy conservation standards.

N. Employment Impact Analysis

    DOE considers employment impacts in the domestic economy as one 
factor in selecting a proposed standard. Employment impacts from the 
proposed energy conservation standards include both direct and indirect 
impacts. Direct employment impacts are any changes in the number of 
employees of manufacturers of the equipment subject to standards, their 
suppliers, and related service firms. The MIA addresses those impacts. 
Indirect employment impacts are changes in national employment that 
occur from shifts 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 equipment to which the 
new standards apply; and (4) the effects of those three factors 
throughout the economy.
    One method for assessing the possible effects on the demand for 
labor of such shifts in economic activity is to compare sector 
employment statistics developed by the Labor Department's BLS,\54\ 
which 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.\55\ 
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. 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, the BLS 
data suggest that net national employment may increase due to shifts in 
economic activity resulting from energy conservation standards.
---------------------------------------------------------------------------

    \54\ 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].
    \55\ 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 NOPR using an input/output model of the U.S. 
economy called Impact of Sector Energy Technologies version 3.1.1 
(``ImSET'').\56\ 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.
---------------------------------------------------------------------------

    \56\ J.M. Roop, M.J. Scott, and R.W. Schultz, ImSET 3.1: Impact 
of Sector Energy Technologies, PNNL-18412, Pacific Northwest 
National Laboratory (2009) (Available at: www.pnl.gov/main/publications/external/technical_reports/PNNL-18412.pdf).
---------------------------------------------------------------------------

    DOE notes that ImSET is not a general equilibrium forecasting 
model, and understands the uncertainties involved in projecting 
employment impacts, especially changes in the later years of the 
analysis. Because ImSET does not incorporate price changes, the 
employment effects predicted by ImSET may over-estimate actual job 
impacts over the long run for this rule. Therefore, DOE generated 
results for near-term timeframes (2020), where these uncertainties are 
reduced. For more details on the employment impact analysis, see 
chapter 16 of the NOPR 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 the 
considered WICF refrigeration systems. It addresses the TSLs examined 
by DOE, the projected impacts of each of these levels if adopted as 
energy conservation standards for the considered WICF refrigeration 
systems, and the standards levels that DOE is proposing to adopt in 
this NOPR. Additional details regarding DOE's analyses are contained in 
the NOPR TSD supporting this document.

A. Trial Standard Levels

    DOE analyzed the benefits and burdens of three TSLs for the 
considered WICF refrigeration systems. These TSLs were developed by 
combining specific efficiency levels for each of the equipment classes 
analyzed by DOE. (Efficiency levels for each class are described in 
section IV.C.9.) DOE presents the results for the TSLs in this 
document, while the results for all efficiency levels that DOE analyzed 
are in the NOPR TSD.
    TSL 3 represents the maximum technologically feasible level and the 
proposed energy conservation standard that was negotiated by, and 
unanimously agreed on by the Working Group (Term Sheet at EERE-2015-BT-
STD-0016-0056, recommendation #5). TSLs 1 and 2 are direct 
representations of efficiency levels 1 and 2. Table IV-1 shows the 
mapping of minimum AWEF values for each equipment class and nominal 
capacity to each TSL.

[[Page 63022]]



                               Table V-1--Mapping of AWEF to Trial Standard Levels
----------------------------------------------------------------------------------------------------------------
                                                      Nominal                  Trial standard level
      Equipment component        Equipment class   capacity Btu/ -----------------------------------------------
                                                        hr               1               2               3
----------------------------------------------------------------------------------------------------------------
Condensing Unit................  DC.L.I                    6,000            1.94            2.10            2.24
                                                           9,000            2.05            2.24            2.40
                                                          25,000            2.08            2.24            2.40
                                                          54,000            2.08            2.24            2.40
                                 DC.L.O                    6,000            2.42            2.71            3.02
                                                           9,000            2.50            2.80            3.14
                                                          25,000            2.53            2.84            3.15
                                                          54,000            2.53            2.84            3.15
                                                          72,000            2.53            2.84            3.15
Unit Cooler....................  UC.M                      4,000            7.30            8.15            9.00
                                                           9,000            7.30            8.15            9.00
                                                          24,000            7.30            8.15            9.00
                                 UC.L                      4,000            3.61            3.78            3.95
                                                           9,000            3.69            3.85            4.01
                                                          18,000            3.88            4.01            4.15
                                                          40,000            3.88            4.02            4.15
----------------------------------------------------------------------------------------------------------------

B. Economic Justification and Energy Savings

1. Economic Impacts on Individual Consumers
    DOE analyzed the economic impacts on consumers of the considered 
WICF refrigeration systems by looking at what the effects of the 
proposed standards at each TSL would be on the LCC and PBP. DOE also 
examined the impacts of potential standards on consumer subgroups. 
These analyses are discussed below.
Life-Cycle Cost and Payback Period
    In general, higher-efficiency equipment affect consumers in two 
ways: (1) Purchase price increases, and (2) annual operating costs 
decrease. Inputs used for calculating the LCC and PBP include total 
installed costs (i.e., equipment price plus installation costs), and 
operating costs (i.e., annual energy use, energy prices, energy price 
trends, repair costs, and maintenance costs). The LCC calculation also 
uses equipment lifetime and a discount rate. Chapter 8 of the NOPR TSD 
provides detailed information on the LCC and PBP analyses.
    The LCC results are the shipment-weighted average of results for 
each equipment class over system capacity using the weights for each 
shown in Table IV-6. The results for each TSL were approximated by 
analyzing the equipment class and nominal capacity combinations with 
the closest AWEF rating shown in Table V-1 that was analyzed in the 
engineering analysis. See chapter 8 of the TSD for more detailed LCC 
results.
    Table V-2 through Table V-3 show the LCC and PBP results for the 
TSL efficiency levels considered for each equipment class under the 
different consumer installation scenarios discussed in section IV.F.1. 
In the first of each pair of tables, the simple payback is measured 
relative to the baseline equipment (EL 0). In the second table, impacts 
are measured relative to the efficiency distribution in the no-new-
standards case in the compliance year (see section IV.F.9 of this 
document). Consumers for whom the LCC increases at a given TSL are 
projected to experience a net cost.

                  Table V-2--Average LCC and PBP Results by Trial Standard Level for Indoor Dedicated Condensing Units, Low-Temperature
                                                             [DC.L.I, condensing unit only]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Average costs 2015$
                                                         ---------------------------------------------------------------- Simple payback      Average
                TSL                          EL                            First year's      Lifetime                         (years)        lifetime
                                                          Installed cost  operating cost  operating cost        LCC                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    0...................          $3,727          $2,227         $18,320         $22,047  ..............            10.6
1.................................  1...................           3,761           2,191          18,019          21,779             0.9            10.6
2.................................  2...................           4,004           2,005          16,484          20,488             1.2            10.6
3.................................  3...................           4,036           1,981          16,294          20,330             1.3            10.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use equipment at that efficiency level. The PBP is measured relative to the
  baseline (EL 0) equipment.


[[Page 63023]]


Table V-3--Average LCC Savings Relative to the No-New-Standards Case for Indoor Dedicated Condensing Units, Low-
                                                   Temperature
                                         [DC.L.I, condensing unit only]
----------------------------------------------------------------------------------------------------------------
                                                                                      Life-cycle cost savings
                                                                                 -------------------------------
                                                                                                    Percent of
                      TSL                                      EL                   Average LCC   consumers that
                                                                                     savings *    experience net
                                                                                       2015$           cost
----------------------------------------------------------------------------------------------------------------
1.............................................  1...............................            $268               0
2.............................................  2...............................           1,559               0
3.............................................  3...............................           1,717               0
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.


                 Table V-4--Average LCC and PBP Results by Trial Standard Level for Outdoor Dedicated Condensing Units, Low-Temperature
                                                             [DC.L.O, condensing unit only]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Average costs 2015$
                                                         ---------------------------------------------------------------- Simple payback      Average
                TSL                          EL                            First year's      Lifetime                         (years)        lifetime
                                                          Installed cost  operating cost  operating cost        LCC                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    0...................          $4,508          $2,712         $22,368         $26,877  ..............            10.5
1.................................  1...................           4,562           2,523          20,808          25,370             0.3            10.5
2.................................  2...................           4,670           2,379          19,617          24,286             0.6            10.5
3.................................  3...................           5,288           2,236          18,440          23,728             2.1            10.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use equipment at that efficiency level. The PBP is measured relative to the
  baseline (EL 0) equipment.


Table V-5--Average LCC Savings Relative to the No-New-Standards Case for Outdoor Dedicated Condensing Units, Low-
                                                   Temperature
                                         [DC.L.O, condensing unit only]
----------------------------------------------------------------------------------------------------------------
                                                                                      Life-cycle cost savings
                                                                                 -------------------------------
                                                                                                    Percent of
                      TSL                                      EL                   Average LCC   consumers that
                                                                                     savings *    experience net
                                                                                       2015$           cost
----------------------------------------------------------------------------------------------------------------
1.............................................  1...............................          $1,507               0
2.............................................  2...............................           2,590               0
3.............................................  3...............................           3,148               0
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.


             Table V-6--Average LCC and PBP Results by Trial Standard Level for Indoor Paired Dedicated Condensing Systems, Low-Temperature
                                                                 [DC.L.I, field-paired]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Average costs 2015$
                                                         ---------------------------------------------------------------- Simple payback      Average
                TSL                          EL                            First year's      Lifetime                         (years)        lifetime
                                                          Installed cost  operating cost  operating cost        LCC                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    0...................          $6,011          $2,226         $18,450         $24,461  ..............            10.6
1.................................  1...................           6,051           2,185          18,108          24,159             1.0            10.6
2.................................  2...................           6,310           1,992          16,504          22,814             1.3            10.6
3.................................  3...................           6,412           1,961          16,247          22,659             1.5            10.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use equipment at that efficiency level. The PBP is measured relative to the
  baseline (EL 0) equipment.


[[Page 63024]]


   Table V-7--Average LCC Savings Relative to the No-New-Standards Case for Indoor Paired Dedicated Condensing
                                        Systems, Indoor Condensing Units
                                             [DC.L.I, field-paired]
----------------------------------------------------------------------------------------------------------------
                                                                                      Life-cycle cost savings
                                                                                 -------------------------------
                                                                                                    Percent of
                      TSL                                      EL                   Average LCC   consumers that
                                                                                     savings *    experience net
                                                                                       2015$           cost
----------------------------------------------------------------------------------------------------------------
1.............................................  1...............................            $320               0
2.............................................  2...............................           1,665               0
3.............................................  3...............................           1,820               0
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.


             Table V-8--Average LCC and PBP Results by Trial Standard Level for Outdoor Paired Dedicated Condensing Systems, Low-Temperature
                                                                 [DC.L.O, field-paired]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Average costs 2015$
                                                         ---------------------------------------------------------------- Simple payback      Average
                TSL                          EL                            First year's      Lifetime                         (years)        lifetime
                                                          Installed cost  operating cost  operating cost        LCC                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    0...................          $7,304          $2,713         $22,428         $29,731  ..............            10.5
1.................................  1...................           7,366           2,518          20,814          28,180             0.3            10.5
2.................................  2...................           7,431           2,387          19,737          27,167             0.5            10.5
3.................................  3...................           7,627           2,275          18,810          26,438             1.0            10.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use equipment at that efficiency level. The PBP is measured relative to the
  baseline (EL 0) equipment.


  Table V-9--Average LCC Savings Relative to the No-New-Standards Case for Outdoor Paired Dedicated Condensing
                                        Systems, Outdoor Condensing Units
                                             [(DC.L.O, field-paired]
----------------------------------------------------------------------------------------------------------------
                                                                                      Life-cycle cost savings
                                                                                 -------------------------------
                                                                                                    Percent of
                      TSL                                      EL                   Average LCC   consumers that
                                                                                     savings *    experience net
                                                                                       2015$           cost
----------------------------------------------------------------------------------------------------------------
1.............................................  1...............................          $1,552               0
2.............................................  2...............................           2,564               0
3.............................................  3...............................           3,294               0
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.


  Table V-10--Average LCC and PBP Results by Trial Standard Level for Low-Temperature Unit Coolers, Attached to Dedicated Condensing Indoor Condensing
                                                                          Units
                                                               [DC.L.I, unit cooler only]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Average costs 2015$
                                                         ---------------------------------------------------------------- Simple payback      Average
                TSL                          EL                            First year's      Lifetime                         (years)        lifetime
                                                          Installed cost  operating cost  operating cost        LCC                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    0...................          $2,283          $2,227         $18,347         $20,629  ..............            10.5
1.................................  1...................           2,317           2,213          18,232          20,549             1.6            10.5
2.................................  2...................           2,378           2,201          18,128          20,507             3.5            10.5
3.................................  3...................           2,433           2,190          18,041          20,473             4.6            10.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use equipment at that efficiency level. The PBP is measured relative to the
  baseline (EL 0) equipment.


[[Page 63025]]


Table V-11--Average LCC Savings Relative to the No-New-Standards Case for Low-Temperature Unit Coolers, Attached
                                 to Dedicated Condensing Indoor Condensing Units
                                           [DC.L.I, unit cooler only]
----------------------------------------------------------------------------------------------------------------
                                                                                      Life-cycle cost savings
                                                                                 -------------------------------
                                                                                                    Percent of
                      TSL                                      EL                   Average LCC   consumers that
                                                                                     savings *    experience net
                                                                                       2015$           cost
----------------------------------------------------------------------------------------------------------------
1.............................................  1...............................             $81               0
2.............................................  2...............................             122               1
3.............................................  3...............................             156               2
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.


  Table V-12--Average LCC and PBP Results by Trial Standard Level for Low-Temperature Unit Coolers, Attached to Dedicated Condensing Outdoor Condensing
                                                                          Units
                                                               [DC.L.O, unit cooler only]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Average costs 2015$
                                                         ---------------------------------------------------------------- Simple payback      Average
                TSL                          EL                            First year's      Lifetime                         (years)        lifetime
                                                          Installed cost  operating cost  operating cost        LCC                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    0...................          $2,795          $2,712         $22,308         $25,103  ..............            10.4
1.................................  1...................           2,809           2,705          22,255          25,064             0.6            10.4
2.................................  2...................           2,856           2,685          22,087          24,943             2.3            10.4
3.................................  3...................           2,969           2,651          21,810          24,779             4.3            10.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use equipment at that efficiency level. The PBP is measured relative to the
  baseline (EL 0) equipment.


Table V-13--Average LCC Savings Relative to the No-New-Standards Case for Low-Temperature Unit Coolers, Attached
                                to Dedicated Condensing Outdoor Condensing Units
                                           [DC.L.O, unit cooler only]
----------------------------------------------------------------------------------------------------------------
                                                                                      Life-cycle cost savings
                                                                                 -------------------------------
                                                                                                    Percent of
                      TSL                                      EL                   Average LCC   consumers that
                                                                                     savings *    experience net
                                                                                       2015$           cost
----------------------------------------------------------------------------------------------------------------
1.............................................  1...............................             $39               0
2.............................................  2...............................             160               0
3.............................................  3...............................             324               2
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.


 Table V-14--Average LCC and PBP Results by Trial Standard Level for Medium-Temperature Unit Coolers, Attached to Dedicated Condensing Indoor Condensing
                                                                          Units
                                                               [DC.M.I, unit cooler only]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Average costs 2015$
                                                         ---------------------------------------------------------------- Simple payback      Average
                TSL                          EL                            First year's      Lifetime                         (years)        lifetime
                                                          Installed cost  operating cost  operating cost        LCC                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    0...................          $2,187          $1,226         $10,010         $12,198  ..............            10.5
1.................................  1...................           2,187           1,226          10,010          12,198             0.0            10.5
2.................................  2...................           2,218           1,212           9,901          12,119             1.8            10.5
3.................................  3...................           2,227           1,209           9,875          12,102             1.9            10.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use equipment at that efficiency level. The PBP is measured relative to the
  baseline (EL 0) equipment.
Note: DOE is examining the impacts of unit coolers (UC.M and UC.L) combined with medium temperature dedicated condensing equipment (DC.M.I and DC.M.O),
  but DOE is not considering establishing standards for the latter equipment, as they are covered by the 2014 final rule standards that were not vacated
  by the Fifth Circuit order.


[[Page 63026]]


   Table V-15--Average LCC Savings Relative to the No-New-Standards Case for Medium-Temperature Unit Coolers,
                            Attached to Dedicated Condensing Indoor Condensing Units
                                           [DC.M.I, unit cooler only]
----------------------------------------------------------------------------------------------------------------
                                                                                      Life-cycle cost savings
                                                                                 -------------------------------
                                                                                                    Percent of
                      TSL                                      EL                   Average LCC   consumers that
                                                                                     savings *    experience net
                                                                                       2015$           cost
----------------------------------------------------------------------------------------------------------------
1.............................................  1...............................              $0               0
2.............................................  2...............................              79               1
3.............................................  3...............................              96               1
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
Note: DOE is examining the impacts of unit coolers (UC.M and UC.L) combined with medium temperature dedicated
  condensing equipment (DC.M.I and DC.M.O), but DOE is not considering establishing standards for the latter
  equipment, as they are covered by the 2014 final rule standards that were not vacated by the Fifth Circuit
  order.


Table V-16--Average LCC and PBP Results by Trial Standard Level for Medium-Temperature Unit Coolers, Attached to Dedicated Condensing Outdoor Condensing
                                                                          Units
                                                               [DC.M.O, unit cooler only]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Average costs 2015$
                                                         ---------------------------------------------------------------- Simple payback      Average
                TSL                          EL                            First year's      Lifetime                         (years)        lifetime
                                                          Installed cost  operating cost  operating cost        LCC                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    0...................          $2,294            $984          $8,070         $10,364  ..............            10.6
1.................................  1...................           2,294             984           8,070          10,364             0.0            10.6
2.................................  2...................           2,320             970           7,956          10,277             1.3            10.6
3.................................  3...................           2,329             968           7,937          10,265             1.4            10.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use equipment at that efficiency level. The PBP is measured relative to the
  baseline (EL 0) equipment.
Note: DOE is examining the impacts of unit coolers (UC.M and UC.L) combined with medium temperature dedicated condensing equipment (DC.M.I and DC.M.O),
  but DOE is not considering establishing standards for the latter equipment, as they are covered by the 2014 final rule standards that were not vacated
  by the Fifth Circuit order.


   Table V-17--Average LCC Savings Relative to the No-New-Standards Case for Medium-Temperature Unit Coolers,
                            Attached to Dedicated Condensing Outdoor Condensing Units
                                           [DC.M.O, unit cooler only]
----------------------------------------------------------------------------------------------------------------
                                                                                      Life-cycle cost savings
                                                                                 -------------------------------
                                                                                                    Percent of
                      TSL                                      EL                   Average LCC   consumers that
                                                                                     savings *    experience net
                                                                                       2015$           cost
----------------------------------------------------------------------------------------------------------------
1.............................................  1...............................              $0               0
2.............................................  2...............................              87               0
3.............................................  3...............................              99               0
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
Note: DOE is examining the impacts of unit coolers (UC.M and UC.L) combined with medium temperature dedicated
  condensing equipment (DC.M.I and DC.M.O), but DOE is not considering establishing standards for the latter
  equipment, as they are covered by the 2014 final rule standards that were not vacated by the Fifth Circuit
  order.


                            Table V-18--Average LCC and PBP Results by Trial Standard Level for Unit Coolers, Low-Temperature
                                                                [UC.L, unit cooler only]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Average costs 2015$
                                                         ---------------------------------------------------------------- Simple payback      Average
                TSL                          EL                            First year's      Lifetime                         (years)        lifetime
                                                          Installed cost  operating cost  operating cost        LCC                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    0...................          $2,850          $2,209         $18,831         $21,681  ..............            10.6
1.................................  1...................           2,856           2,207          18,820          21,676             0.6            10.6
2.................................  2...................           2,898           2,190          18,670          21,569             2.7            10.6

[[Page 63027]]

 
3.................................  3...................           3,115           2,166          18,468          21,583             7.3            10.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use equipment at that efficiency level. The PBP is measured relative to the
  baseline (EL 0) equipment.


     Table V-19--Average LCC Savings Relative to the No-New-Standards Case for Unit Coolers, Low-Temperature
                                            [UC.L, unit cooler only]
----------------------------------------------------------------------------------------------------------------
                                                                                      Life-cycle cost savings
                                                                                 -------------------------------
                                                                                                    Percent of
                      TSL                                      EL                   Average LCC   consumers that
                                                                                     savings *    experience net
                                                                                       2015$           cost
----------------------------------------------------------------------------------------------------------------
1.............................................  1...............................              $4               1
2.............................................  2...............................             112               8
3.............................................  3...............................              97              42
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.


                          Table V-20--Average LCC and PBP Results by Trial Standard Level for Unit Coolers, Medium Temperature
                                                                [UC.M, unit cooler only]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Average costs 2015$
                                                         ---------------------------------------------------------------- Simple payback      Average
                TSL                          EL                            First year's      Lifetime                         (years)        lifetime
                                                          Installed cost  operating cost  operating cost        LCC                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    0...................          $2,020            $698          $5,928          $7,948  ..............            10.5
1.................................  1...................           2,026             697           5,918           7,944             0.6            10.5
2.................................  2...................           2,056             685           5,813           7,869             2.3            10.5
3.................................  3...................           2,076             682           5,789           7,864             2.9            10.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use equipment at that efficiency level. The PBP is measured relative to the
  baseline (EL 0) equipment.


   Table V-21--Average LCC Savings Relative to the No-New-Standards Case for Unit Coolers, Medium Temperature
                                            [UC.M, unit cooler only]
----------------------------------------------------------------------------------------------------------------
                                                                                      Life-cycle cost savings
                                                                                 -------------------------------
                                                                                                    Percent of
                      TSL                                      EL                   Average LCC   consumers that
                                                                                     savings *    experience net
                                                                                       2015$           cost
----------------------------------------------------------------------------------------------------------------
1.............................................  1...............................              $5               1
2.............................................  2...............................              79               2
3.............................................  3...............................              84               7
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.

Consumer Subgroup Analysis
    In the consumer subgroup analysis, DOE estimated the impact of the 
considered TSLs on small businesses. Table V-22 compares the average 
LCC savings and PBP at each efficiency level for the small business 
consumer subgroup, along with the average LCC savings for the entire 
sample. In most cases, the average LCC savings and PBP for the small 
business subgroup at the considered efficiency levels are not

[[Page 63028]]

substantially different from the average for all businesses. The small 
business subgroup is the subgroup of consumers most likely to be 
affected by this proposal. Small businesses are likely to experience 
higher electricity prices, and experience higher costs of capital than 
the average for all businesses. Chapter 11 of the NOPR TSD presents the 
complete LCC and PBP results for the small business subgroup.

     Table V-22--Comparison of LCC Savings and PBP for Small Businesses Consumer Subgroup and All Consumers
----------------------------------------------------------------------------------------------------------------
                                                                                LCC savings (2015$)
  Equipment class application--design       Consumer subgroup    -----------------------------------------------
                 path                                                  TSL 1           TSL 2           TSL 3
----------------------------------------------------------------------------------------------------------------
DC.L.I--CS Only.......................  National Average........            $268          $1,559          $1,717
                                        Small Businesses........             249           1,445           1,591
DC.L.O--CS Only.......................  National Average........           1,507           2,590           3,148
                                        Small Businesses........           1,401           2,408           2,890
DC.L.I--Field Paired..................  National Average........             320           1,665           1,820
                                        Small Businesses........             297           1,542           1,681
DC.L.O--Field Paired..................  National Average........           1,552           2,564           3,294
                                        Small Businesses........           1,455           2,402           3,068
DC.L.I--UC Only.......................  National Average........              81             122             156
                                        Small Businesses........              73             108             136
DC.L.O--UC Only.......................  National Average........              39             160             324
                                        Small Businesses........              35             146             293
UC.M--DC.M.I..........................  National Average........               0              79              96
                                        Small Businesses........               0              74              89
UC.M--DC.M.O..........................  National Average........               0              87              99
                                        Small Businesses........               0              80              91
UC.L..................................  National Average........               4             112              97
                                        Small Businesses........              NA              NA              NA
UC.M..................................  National Average........               5              79              84
                                        Small Businesses........              NA              NA              NA
----------------------------------------------------------------------------------------------------------------
                                           Consumer Simple PBP (years)
----------------------------------------------------------------------------------------------------------------
DC.L.I--CS Only.......................  National Average........             0.9             1.2             1.3
                                        Small Businesses........             0.9             1.2             1.3
DC.L.I--CS Only.......................  National Average........             0.3             0.6             2.1
                                        Small Businesses........             0.3             0.6             2.1
DC.L.O--CS Only.......................  National Average........             1.0             1.3             1.5
                                        Small Businesses........             1.0             1.3             1.5
DC.L.I--Field Paired..................  National Average........             0.3             0.5             1.0
                                        Small Businesses........             0.3             0.5             1.0
DC.L.O--Field Paired..................  National Average........             1.6             3.5             4.6
                                        Small Businesses........             1.6             3.5             4.6
DC.L.I--UC Only.......................  National Average........             0.6             2.3             4.3
                                        Small Businesses........             0.6             2.2             4.3
DC.L.O--UC Only.......................  National Average........             0.0             1.8             1.9
                                        Small Businesses........             0.0             1.8             1.8
UC.M--DC.M.I..........................  National Average........             0.0             1.3             1.4
                                        Small Businesses........             0.0             1.3             1.4
UC.M--DC.M.O..........................  National Average........             0.6             2.7             7.3
                                        Small Businesses........              NA              NA              NA
UC.L..................................  National Average........             0.6             2.3             2.9
                                        Small Businesses........              NA              NA              NA
----------------------------------------------------------------------------------------------------------------
``NA'' indicates that these equipment classes are not commonly purchased by small businesses.
Note: DOE is examining the impacts of unit coolers (UC.M and UC.L) combined with medium temperature dedicated
  condensing equipment (DC.M.I and DC.M.O), but DOE is not considering establishing standards for the latter
  equipment, as they are covered by the 2014 final rule standards that were not vacated by the Fifth Circuit
  order.
* CU-Only: Condensing unit-only. This analysis evaluates standard levels applied to a condensing unit
  distributed in commerce without a designated companion unit cooler for a scenario in which a new condensing
  unit is installed to replace a failed condensing unit, but the existing unit cooler is not replaced. See
  section IV.F.1.b for more details.
** FP: Field-paired unit cooler and condensing unit. This analysis evaluates standard levels applied to a
  condensing unit distributed in commerce without a designated companion unit cooler for a scenario in which
  both a new condensing unit and a new unit cooler are installed. See section IV.F.1.a for more details.
[dagger] UC-Only: Unit cooler only. This analysis evaluates standard levels applied to a unit cooler distributed
  in commerce without a designated companion condensing unit, either dedicated or multiplex, for a scenario in
  which a new unit cooler is installed to replace a failed unit cooler, but the existing condensing unit is not
  replaced. See section IV.F.1.c for more details.

Rebuttable Presumption Payback
    As discussed in section IV.F.10, EPCA establishes a rebuttable 
presumption that an energy conservation standard is economically 
justified if the increased purchase cost for equipment that meets the 
standard is less than three times the value of the first-year energy 
savings resulting from the standard. In calculating a rebuttable 
presumption payback period for each of the considered TSLs, DOE used 
discrete

[[Page 63029]]

values, and, as required by EPCA, based the energy use calculation on 
the DOE test procedure for the considered WICF refrigeration systems. 
In contrast, the PBPs presented in section V.B.1.a were calculated 
using distributions that reflect the range of energy use in the field.
    Table V-23 presents the rebuttable-presumption payback periods for 
the considered TSLs for the WICF equipment classes evaluated in this 
proposal. These results show that, in almost all cases, the projected 
payback period will be under three years for each of the different 
equipment classes with respect to each TSL examined. In those cases, 
the rebuttable presumption therefore applies. While DOE examined the 
rebuttable-presumption criterion, it also considered whether the 
standard levels considered for the NOPR are economically justified 
through a more detailed analysis of the economic impacts of those 
levels for each equipment class in this NOPR, pursuant to 42 U.S.C. 
6295(o)(2)(B)(i), that considers the full range of impacts to the 
consumer, manufacturer, Nation, and environment. 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.

                  Table V-23--Rebuttable Payback Period (Years) for WICF Refrigeration Systems
----------------------------------------------------------------------------------------------------------------
                                                                               Trial standard level
                         Equipment class                         -----------------------------------------------
                                                                         1               2               3
----------------------------------------------------------------------------------------------------------------
DC.L.I (CU-Only)................................................             0.7             1.4             1.2
DC.L.O (CU-Only)................................................             0.3             0.5             1.9
DC.L.I (Field Paired)...........................................             0.8             1.6             1.6
DC.L.O (Field Paired)...........................................             0.4             0.5             0.9
DC.L.I (UC Only)................................................             0.0             0.1             0.1
DC.L.O (UC Only)................................................             0.0             0.0             0.1
UC.M--DC.M.I....................................................             0.0             0.2             0.3
UC.M--DC.M.O....................................................             0.0             0.3             0.4
UC.L............................................................             0.3             1.3             3.4
UC.M............................................................             0.1             0.2             0.3
----------------------------------------------------------------------------------------------------------------
Note: DOE is examining the impacts of unit coolers (UC.M and UC.L) combined with medium temperature dedicated
  condensing equipment (DC.M.I and DC.M.O), but DOE is not considering establishing standards for the latter
  equipment, as they are covered by the 2014 final rule standards that were not vacated by the Fifth Circuit
  order.
* CU-Only: Condensing unit-only. This analysis evaluates standard levels applied to a condensing unit
  distributed in commerce without a designated companion unit cooler for a scenario in which a new condensing
  unit is installed to replace a failed condensing unit, but the existing unit cooler is not replaced. See
  section IV.F.1.b for more details.
** FP: Field-paired unit cooler and condensing unit. This analysis evaluates standard levels applied to a
  condensing unit distributed in commerce without a designated companion unit cooler for a scenario in which
  both a new condensing unit and a new unit cooler are installed. See section IV.F.1.a for more details.
[dagger] UC-Only: Unit cooler only. This analysis evaluates standard levels applied to a unit cooler distributed
  in commerce without a designated companion condensing unit, either dedicated or multiplex, for a scenario in
  which a new unit cooler is installed to replace a failed unit cooler, but the existing condensing unit is not
  replaced. See section IV.F.1.c for more details.

2. Economic Impacts on Manufacturers
    DOE performed an MIA to estimate the impact of the proposed energy 
conservation standards on manufacturers of the seven WICF refrigeration 
system equipment classes being analyzed. The section below describes 
the expected impacts on manufacturers at each considered TSL. Chapter 
12 of the NOPR TSD explains the analysis in further detail.
Industry Cash Flow Analysis Results
    Table V-24 and Table V-25 depict the financial impacts on 
manufacturers of the seven WICF refrigeration equipment classes being 
analyzed. The financial impacts on these manufacturers are represented 
by changes in INPV.
    The impact of energy efficiency standards were analyzed under two 
manufacturer markup scenarios: (1) The preservation of gross margin 
percentage and (2) the preservation of operating profit. As discussed 
in section IV.J.3.d, DOE considered the preservation of gross margin 
percentage scenario by applying a uniform ``gross margin percentage'' 
markup across all efficiency levels. As production cost increases with 
efficiency, this scenario implies that the absolute dollar markup will 
increase. DOE assumed a manufacturer markup of 1.35 for WICF 
refrigeration systems. This manufacturer markup is consistent with the 
one DOE assumed in the engineering analysis and the no-new-standards 
case of the GRIM. WICF refrigeration manufacturers indicated that it is 
optimistic to assume that as their production costs increase in 
response to an efficiency standard, they would be able to maintain the 
same gross margin percentage markup. Therefore, DOE assumes that this 
scenario represents a high bound to industry profitability under an 
energy-conservation standard. It also represents a lower bound to 
expected consumer payback periods and end-user life cycle cost savings 
calculated in the NIA, since an upper bound to industry profitability 
is also the scenario in which the highest possible costs are being 
passed on to the end user.
    The preservation of operating profit scenario reflects WICF 
refrigeration manufacturer concerns about their inability to maintain 
their margins as manufacturing production costs increase to reach more-
stringent efficiency levels. In this scenario, while WICF refrigeration 
manufacturers make the necessary investments required to convert their 
facilities to produce new standards-compliant equipment, operating 
profit does not change in absolute dollars and decreases as a 
percentage of revenue.
    Each of the modeled scenarios results in a unique set of cash-flows 
and corresponding industry values at each TSL. In the following 
discussion, the INPV results refer to the difference in industry value 
between the no-new-standards case and each standards case resulting 
from the sum of discounted cash-flows from 2016 (the base year) through 
2049 (the end of the analysis period). To provide perspective on the 
short-run cash-flow impact, DOE includes in the discussion of the 
results a comparison of free cash-flow between the no-new-standards 
case and the standards case at each TSL in the year before new 
standards take effect.

[[Page 63030]]

    Table V-24 and Table V-25 show the MIA results for each TSL using 
the markup scenarios described above for the seven WICF refrigeration 
system equipment classes being analyzed.

  Table V-24--Manufacturer Impact Analysis for WICF Refrigeration Manufacturers Under the Preservation of Gross
                                             Margin Markup Scenario
----------------------------------------------------------------------------------------------------------------
                                                                               Trial standard level
                                       Units          No-new-    -----------------------------------------------
                                                  standards case         1               2               3
----------------------------------------------------------------------------------------------------------------
INPV............................        2015$ MM            99.7            99.1            97.7            95.3
Change in INPV ($)..............        2015$ MM  ..............           (0.6)           (2.0)           (4.4)
Change in INPV (%)..............               %  ..............           (0.6)           (2.0)           (4.4)
Product Conversion Costs........        2015$ MM  ..............             2.2             4.8            11.3
Capital Conversion Costs........        2015$ MM  ..............  ..............             2.3             4.9
                                 -------------------------------------------------------------------------------
Total Investment Required.......        2015$ MM  ..............             2.2             7.1            16.2
----------------------------------------------------------------------------------------------------------------


     Table V-25--Manufacturer Impact Analysis for WICF Refrigeration Manufacturers Under the Preservation of
                                        Operating Profit Markup Scenario
----------------------------------------------------------------------------------------------------------------
                                                                               Trial standard level
                                       Units          No-new-    -----------------------------------------------
                                                  standards case         1               2               3
----------------------------------------------------------------------------------------------------------------
INPV............................        2015$ MM            99.7            98.3            93.4            84.9
Change in INPV ($)..............        2015$ MM  ..............           (1.5)           (6.3)          (14.8)
Change in INPV (%)..............               %  ..............           (1.5)           (6.3)          (14.8)
Product Conversion Costs........        2015$ MM  ..............             2.2             4.8            11.3
Capital Conversion Costs........        2015$ MM  ..............  ..............             2.3             4.9
                                 -------------------------------------------------------------------------------
Total Investment Required.......        2015$ MM  ..............             2.2             7.1            16.2
----------------------------------------------------------------------------------------------------------------

    At TSL 1, DOE estimates impacts on INPV range from -$1.5 million to 
-$0.6 million, or a change in INPV of -1.5 percent to -0.6 percent. At 
TSL 1, industry free cash-flow is expected to decrease by approximately 
8.1 percent to $7.7 million, compared to the no-new standards case 
value of $8.3 million in 2019, the year leading up to the proposed 
standards.
    DOE expects WICF refrigeration manufacturers to incur approximately 
$2.2 million in product conversion costs for redesign and testing. DOE 
estimates WICF refrigeration manufacturers will incur minimal capital 
conversion costs associated with TSL 1, because the most cost effective 
design options are generally use of more efficient purchased parts.
    At TSL 1, the shipment-weighted average MPC increases by 
approximately 1.0 percent across all WICF refrigeration systems 
relative to the no-new standards case MPC in 2020, the expected year of 
compliance. In the preservation of gross margin markup scenario, WICF 
refrigeration manufacturers are able to fully pass on this slight cost 
increase to consumers. The increase in MSP is outweighed the 
approximately $2.2 million in conversion costs that WICF refrigeration 
manufacturers would incur, which causes a negative change in INPV at 
TSL 1 under the preservation of gross margin markup scenario.
    Under the preservation of operating profit markup scenario, WICF 
refrigeration manufacturers earn the same operating profit as would be 
earned in the no-new standards case, but manufacturers do not earn 
additional profit from their investments. In this scenario, the 1.0 
percent shipment-weighted average MPC increase results in a reduction 
in manufacturer markup after the compliance year. This reduction in 
manufacturer markup and the $2.2 million in conversion costs incurred 
by WICF refrigeration manufacturers cause a negative change in INPV at 
TSL 1 under the preservation of operating profit markup scenario.
    At TSL 2, DOE estimates impacts on INPV range from -$6.3 million to 
-$2.0 million, or a change in INPV of -6.3 percent to -2.0 percent. At 
TSL 2, industry free cash-flow is expected to decrease by approximately 
30.2 percent to $5.8 million, compared to the no-new standards case 
value of $8.3 million in 2019, the year leading up to the proposed 
standards.
    DOE expects WICF refrigeration systems to incur approximately $4.8 
million in product conversion costs for redesign and testing. DOE 
estimates WICF refrigeration manufacturers will incur $2.3 million in 
capital conversion costs associated with TSL 2 to invest in tooling 
necessary to update condensing system production equipment for models 
that do not meet the required efficiency levels.
    At TSL 2, the shipment-weighted average MPC increases by 
approximately 5.4 percent for all WICF refrigeration systems relative 
to the no-new standards case MPC in 2020, the expected year of 
compliance. In the preservation of gross margin markup scenario, 
manufacturers are able to fully pass on this cost increase to 
consumers. The increase in MSP is outweighed by approximately $7.1 
million in conversion costs that WICF refrigeration manufacturers would 
incur, which causes a 2.0 percent drop in INPV at TSL 2.
    Under the preservation of operating profit markup scenario, WICF 
refrigeration earn the same per-unit operating profit as would be 
earned in the no-new standards case. This scenario results in a 
reduction in manufacturer markup after the compliance year. This 
reduction in manufacturer markup and the $7.1 million in conversion 
costs incurred by WICF refrigeration manufacturers cause a negative 
change in INPV at TSL 2 under the preservation of operating profit 
markup scenario.

[[Page 63031]]

    At the max-tech level (TSL 3), DOE estimates impacts on INPV range 
from -$14.8 million to -$4.4 million, or a change in INPV of -14.8 
percent to -4.4 percent. At TSL 3, industry free cash-flow is expected 
to decrease by approximately 68.1 percent to $2.7 million, compared to 
the no-new standards case value of $8.3 million in 2019, the year 
immediately prior to the proposed year of compliance for the new 
standards.
    DOE expects manufacturers of WICF refrigeration systems to incur 
approximately $11.3 million in product conversion costs for redesign 
and testing. DOE estimates manufacturers will incur $4.9 million in 
capital conversion costs associated with TSL 3 to invest in tooling and 
machinery necessary to update condensing system production equipment 
for models that do not meet the required efficiency levels.
    At TSL 3, the shipment-weighted average MPC increases by 
approximately 12.8 percent for all WICF refrigeration systems relative 
to the no-new standards case MPC in 2020, the expected year of 
compliance. In the preservation of gross margin markup scenario, 
manufacturers are able to fully pass on this cost increase to 
consumers. The increase in MSP is outweighed by approximately $16.2 
million in conversion costs that WICF refrigeration manufacturers would 
incur, which causes a negative change in INPV at TSL 3 under the 
preservation of gross margin markup scenario.
    Under the preservation of operating profit markup scenario, WICF 
refrigeration manufacturers earn the same operating profit as would be 
earned in the no-new standards case, but they do not earn additional 
profit from their investments. In this scenario, the 12.6 percent 
shipment-weighted average MPC increase results in a reduction in 
manufacturer markup after the compliance year. This reduction in 
manufacturer markup and the $16.2 million in conversion costs incurred 
cause a negative change in INPV at TSL 3 under the preservation of 
operating profit markup scenario.
Impacts on Direct Employment
    To quantitatively assess the impacts of energy conservation 
standards on WICF refrigeration manufacturer employment, DOE used the 
GRIM to estimate the domestic labor expenditures and number of 
employees in the no-new-standards case and at each TSL. DOE used 
statistical data from the U.S. Census Bureau's 2014 Annual Survey of 
Manufacturers (``ASM'') and the results of the engineering analysis to 
calculate industry-wide labor expenditures and domestic employment 
levels. Labor expenditures related to equipment manufacturing depend on 
the labor intensity of the equipment, the sales volume, and an 
assumption that wages remain fixed in real terms over time. The total 
labor expenditures in each year are calculated by multiplying the MPCs 
by the labor percentage of MPCs.
    The total labor expenditures in the GRIM were then converted to 
domestic production employment levels by dividing production labor 
expenditures by the annual payment per production worker (production 
worker hours multiplied by the labor rate found in the U.S. Census 
Bureau's 2014 ASM). The estimates of production workers in this section 
cover workers, including line supervisors, who are directly involved in 
fabricating and assembling equipment within the OEM facility. Workers 
performing services that are closely associated with production 
operations, such as materials handling tasks using forklifts, are also 
included as production labor. DOE's production worker estimates only 
account for workers who manufacture the seven equipment classes covered 
by this rulemaking. For example, a production line worker producing a 
dedicated condensing medium temperature WICF refrigeration unit would 
not be included in the estimate of the production workers since 
dedicated condensing medium temperature units are not covered in this 
proposal.
    DOE calculated the direct employment associated with the seven 
analyzed equipment classes by multiplying the number of production 
workers by the ratio of total employment to production workers reported 
in the 2014 ASM.
    Using the GRIM, DOE estimates in the absence of new energy 
conservation standards, there would be 191 employees associated with 
the seven analyzed walk-in refrigeration system equipment classes in 
2020. 139 of these are production workers and 52 are non-production 
workers. The employment impacts shown in Table V-26 represent the 
potential direct employment changes that could result following the 
compliance date for the seven WICF refrigeration equipment classes in 
this proposal. The upper end of the results in the table estimates the 
maximum increase in the number of direct employment after the 
implementation of new energy conservation standards and it assumes that 
WICF refrigeration manufacturers would continue to produce the same 
scope of covered equipment within the United States. The lower end of 
the range represents the maximum decrease in the total number of U.S. 
production workers if production moved to lower labor-cost countries. 
Additional detail on the analysis of direct employment can be found in 
chapter 12 of the TSD.

               Table V-26--Direct Employment for the Seven Refrigeration Equipment Classes in 2020
----------------------------------------------------------------------------------------------------------------
                                                                               Trial standard level
                                                   No-standards  -----------------------------------------------
                                                       case              1               2               3
----------------------------------------------------------------------------------------------------------------
Production Workers in 2020 (without changes in               139             140             146             155
 production locations)..........................
Direct Employment in 2020.......................             191             192             200             213
Potential Changes in Direct Employment in 2020..  ..............        (139)--1        (139)--9       (139)--22
----------------------------------------------------------------------------------------------------------------

    The employment impacts shown are independent of the employment 
impacts from the broader U.S. economy, which are documented in the 
Employment Impact Analysis found in chapter 13 of the TSD.
    DOE requests comment and data on the potential impacts to direct 
employment levels. This is identified as Issue 13 in section VII.E, 
``Issues on Which DOE Seeks Comment.''
Impacts on Manufacturing Capacity
    DOE did not identify any significant capacity constraints for the 
design options being evaluated for this rulemaking. For most WICF 
refrigeration manufacturers, the walk-in market makes up a relatively 
small percentage of their overall revenues. Additionally, most of the 
design options being evaluated are available as equipment options 
today. As a result, the industry should not experience capacity

[[Page 63032]]

constraints directly resulting from an energy conservation standard.
Impacts on Subgroups of Manufacturers
    As discussed in section IV.I, using average cost assumptions to 
develop an industry cash-flow estimate may not be adequate for 
assessing differential impacts among manufacturer sub-groups. Small 
manufacturers, niche equipment manufacturers, and manufacturers 
exhibiting a cost structure substantially different from the industry 
average could be affected disproportionately. DOE used the results of 
the industry characterization to group manufacturers exhibiting similar 
characteristics. Consequently, DOE analyzes small manufacturers as a 
sub-group.
    DOE evaluated the impact of new energy conservation standards on 
small manufacturers, particularly those defined as ``small businesses'' 
by the SBA. The SBA defines a ``small business'' as having 1,250 
employees or less for NAICS 333415, ``Air-Conditioning and Warm Air 
Heating Equipment and Commercial and Industrial Refrigeration Equipment 
Manufacturing.'' Using this definition, DOE identified two 
refrigeration system manufacturers. DOE describes the differential 
impacts on these small businesses in this document in section VI.B.
Cumulative Regulatory Burden
    One aspect of assessing manufacturer burden involves looking at the 
cumulative impact of multiple DOE standards and the regulatory actions 
of other Federal agencies and States that affect the manufacturers of a 
covered product. DOE believes that a standard level is not economically 
justified if it contributes to an unacceptable cumulative regulatory 
burden. While any one regulation may not impose a significant burden on 
manufacturers, the combined effects of several existing or impending 
regulations may have serious consequences for some manufacturers, 
groups of manufacturers, or an entire industry. Multiple regulations 
affecting the same manufacturer can strain profits and lead companies 
to abandon product lines or markets with lower expected future returns 
than competing products. For these reasons, DOE conducts an analysis of 
cumulative regulatory burden as part of its rulemakings pertaining to 
appliance efficiency.
    DOE identified one regulation, in addition to amended energy 
conservation standards for WICF refrigeration systems, that 
manufacturers will face for equipment they manufacture approximately 
three years before or after to the estimated compliance date of these 
proposed standards. DOE summarizes these regulations in Table V-27, and 
includes the full details of the cumulative regulatory burden, in 
chapter 12 of the final rule TSD.

                             Table V-27--Other DOE Regulations Potentially Affecting WICF Refrigeration System Manufacturers
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                      Number of
                                                                    Number of       manufacturers      Approximate        Industry      Conversion costs
                          Regulation                             manufacturers *    from today's     standards year   conversion costs  as a  percentage
                                                                                       rule **                         (2012$ million)   of revenue ***
--------------------------------------------------------------------------------------------------------------------------------------------------------
Commercial Refrigeration Equipment, 79 FR 17726 (March 28,                    54                 4              2017            $184.0                 2
 2014)........................................................
Non-vacated Walk-in Cooler and Walk-in Freezer Components, 79                 63                 9              2017              33.6                 3
 FR 32050 (June 3, 2014)......................................
--------------------------------------------------------------------------------------------------------------------------------------------------------
* This column presents the total number of manufacturers identified in the energy conservation standard rule contributing to cumulative regulatory
  burden.
** This column presents the number of manufacturers producing the covered walk-in refrigeration equipment that are also identified as manufacturers in
  the energy conservation standard contributing to cumulative regulatory burden.
*** This column presents conversion costs as a percentage of conversion period revenue for the industry. The conversion period is the timeframe over
  which manufacturers must make conversion costs investments and lasts from the announcement year of the final rule to the standards year of the final
  rule. This period typically ranges from 3 to 5 years, depending on the energy conservation standard.

    This NOPR proposes energy conservation standards for seven WICF 
refrigeration system equipment classes. The thirteen other standards 
established in the June 2014 final rule and shown in Table I-1 (that 
is, the four standards applicable to dedicated condensing refrigeration 
systems operating at medium temperatures; three standards applicable to 
panels; and six standards applicable to doors) have not been vacated 
and remain subject to the June 5, 2017 compliance date prescribed by 
the June 2014 final rule.\57\
---------------------------------------------------------------------------

    \57\ But see http://www.energy.gov/sites/prod/files/2016/02/f29/Enforcement%20Policy%20Statement%20-%20WICF%2002-01-16.pdf 
(outlining DOE's enforcement discretion policy to not seek civil 
penalties or injunctive relief regarding the WICF refrigeration 
systems at issue in this rulemaking proceeding).
---------------------------------------------------------------------------

    DOE anticipates that nine manufacturers who would be subject to 
this proposal would also be subject to certain of the non-vacated 
standards, namely the refrigeration system standards applicable to 
dedicated condensing refrigeration systems operating at medium 
temperatures. Three of these manufacturers also produce panels and non-
display doors, and would be subject to those non-vacated standards as 
well.
Impact on Manufacturers of Complete Walk-Ins
    A manufacturer of a complete walk-in is the entity that assembles 
the complete walk-in cooler or walk-in freezer. In some cases, this may 
be an ``installer.'' Walk-in manufacturers have been subject to 
regulation since 2009, when EPCA's statutorily-prescriptive standards 
for walk-in coolers and freezers went into effect. 42 U.S.C. 6313(f)(1) 
EPCA required that all completed walk-ins must: Have automatic door 
closers; have strip doors, spring hinged doors, or other method of 
minimizing infiltration when doors are open; and for all interior 
lights, use light sources with an efficacy of 40 lumens per watt or 
more. Furthermore, for walk-ins that use an evaporator fan motor with a 
rating of under 1 horsepower (``hp'') and less than 460 volts, that fan 
motor must be either a three-phase motor or an electronically 
commutated motor. Also, walk-in freezers with transparent reach-in 
doors must have triple-pane glass with either heat-reflective treated 
glass or gas fill for doors and windows. 42 U.S.C. 6313(f)(1).
    Due to existing regulations, manufacturers of complete walk-ins 
have a responsibility to use components that comply with the applicable 
standards and to ensure the final

[[Page 63033]]

product fulfills the prescriptive design requirements. To aid 
manufacturers of complete walk-ins in meeting these responsibilities, 
DOE has proposed labeling requirements as part of a separate NOPR 
addressing potential amendments to the test procedure for walk-in 
coolers and walk-in freezers. 81 FR 54926 (August 17, 2016). As part of 
that proposal, DOE is considering requiring the use of permanent 
nameplates on WICF components that include rating information and 
indications of suitability for WICF applications. In DOE's view, the 
inclusion of such a requirement would help reduce the burden on 
manufacturers of complete walk-ins, relative to the existing compliance 
regime, by allowing them to more easily identify and select compliant 
WICF components for assembly.
    DOE notes that this document does not propose to include energy 
conservation standards that are measured in terms of the performance of 
the complete walk-in and does not introduce new burdens on 
manufacturers of the complete walk-in, including installers (i.e., the 
parties that assemble the complete walk-in). As a practical matter, 
walk-in manufacturers already comply with the applicable panel and door 
requirements, which have been in effect since 2009. Additionally, 
installers, and all other manufacturers of complete walk-ins, have no 
paperwork or certification requirements as a result of this proposal 
when using certified walk-in components. DOE was unable to identify 
whether installer conversion costs would be likely to occur as a direct 
result of the proposed standards since conversion costs are borne by 
component manufacturers. It is possible installers would have stranded 
assets in the form of refrigeration component inventory that is not 
compliant with the proposed standard. However, the WICF market involves 
a high degree of customization--walk-ins can vary dramatically in size, 
shape, capacity, and end-user application. This suggests that 
installers do not generally carry significant refrigeration system 
inventory. Furthermore, installers will have a conversion period, 
between the publication date and the compliance date of the final rule, 
to wind-down component surpluses and these components may be used to 
repair existing units deployed in the field.
    Companies that are both manufacturers of walk-in components and 
manufacturers of complete walk-ins must comply with standards for WICF 
components established in the 2014 final rule for panels, doors, and 
medium-temperature dedicated condensing refrigeration systems.\58\ They 
would also have to comply with the standards proposed in this document 
for low-temperature dedicated condensing refrigeration systems and for 
unit coolers. Additionally, they have existing responsibility to comply 
with prescriptive design standards for the complete walk-ins.
---------------------------------------------------------------------------

    \58\ See also http://www.energy.gov/gc/downloads/walk-coolerwalk-freezer-refrigeration-systems-enforcement-policy 
(detailing aspects of DOE's enforcement policy as to walk-in 
refrigeration systems).
---------------------------------------------------------------------------

    DOE requests data on conversion costs (upfront investments 
necessary ahead of the standard taking effect) and stranded assets, if 
any, that manufacturers who assemble complete walk-ins (including those 
installed on-site) could incur as a result of the proposed standards. 
DOE also requests comment on any direct burdens on installers that 
would arise as a result of the proposed rule. This is identified as 
Issue 14 in section VII.E, ``Issues on Which DOE Seeks Comment.''
C. National Impact Analysis
a. Significance of Energy Savings
    To estimate the energy savings attributable to potential standards 
for the considered WICF refrigeration systems, DOE compared their 
energy consumption under the no-new-standards case to their anticipated 
energy consumption under each TSL. The savings are measured over the 
entire lifetime of equipment purchased in the 30-year period that 
begins in the first full year of anticipated compliance with the 
proposed standards (2020-2049). Table V-28 present DOE's projections of 
the national energy savings for each TSL considered for the considered 
WICF refrigeration systems. The savings were calculated using the 
approach described in section IV.H of this proposed rule.

       Table V-28--Cumulative National Energy Savings for WICF Refrigeration Systems Shipped in 2020-2049
----------------------------------------------------------------------------------------------------------------
                                                                                       Quads
                                                                 -----------------------------------------------
                                                                               Trial standard level
                                                                 -----------------------------------------------
                                                                         1               2               3
----------------------------------------------------------------------------------------------------------------
Primary energy..................................................            0.23            0.62            0.86
FFC energy......................................................            0.24            0.65            0.90
----------------------------------------------------------------------------------------------------------------

    OMB Circular A-4 \59\ 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 nine, rather than 30, years 
of equipment shipments. The choice of a nine-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.\60\ The review timeframe established in EPCA is generally 
not synchronized with the equipment lifetime, equipment manufacturing 
cycles, or other factors specific to WICF refrigeration systems. Thus, 
such results are presented for informational purposes only and are not 
indicative of any change in DOE's analytical methodology. The NES 
sensitivity

[[Page 63034]]

analysis results based on a nine-year analytical period are presented 
in Table V-29. The impacts are counted over the lifetime of the 
considered WICF refrigeration systems purchased in 2020-2028.
---------------------------------------------------------------------------

    \59\ 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/).
    \60\ Section 325(m) of EPCA requires DOE to review its standards 
at least once every 6 years, and requires, for certain equipment, 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 equipment, 
the compliance period is 5 years rather than 3 years.

     Table V-29--Cumulative National Energy Savings for WICF Refrigeration Systems; Nine Years of Shipments
                                                   [2020-2028]
----------------------------------------------------------------------------------------------------------------
                                                                                       Quads
                                                                 -----------------------------------------------
                                                                               Trial standard level
                                                                 -----------------------------------------------
                                                                         1               2               3
----------------------------------------------------------------------------------------------------------------
Primary energy..................................................            0.14            0.18            0.23
FFC energy......................................................            0.15            0.18            0.24
----------------------------------------------------------------------------------------------------------------

b. Net Present Value of Consumer Costs and Benefits
    DOE estimated the cumulative NPV of the total costs and savings for 
consumers that would result from the TSLs considered for the considered 
WICF refrigeration systems. In accordance with OMB's guidelines on 
regulatory analysis,\61\ DOE calculated NPV using both a 7-percent and 
a 3-percent real discount rate. Table V-30 shows the consumer NPV 
results with impacts counted over the lifetime of equipment purchased 
in 2020-2049.
---------------------------------------------------------------------------

    \61\ 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-30--Cumulative Net Present Value of Consumer Benefits for WICF Refrigeration Systems Shipped in 2020-
                                                      2049
----------------------------------------------------------------------------------------------------------------
                                                                                   Billion 2015$
                                                                 -----------------------------------------------
                          Discount rate                                        Trial standard level
                                                                 -----------------------------------------------
                                                                         1               2               3
----------------------------------------------------------------------------------------------------------------
3 percent.......................................................             1.3             3.3             4.3
7 percent.......................................................             0.5             1.4             1.8
----------------------------------------------------------------------------------------------------------------

    The NPV results based on the aforementioned 9-year analytical 
period are presented in Table V-31. The impacts are counted over the 
lifetime of equipment purchased in 2020-2028. As mentioned previously, 
such results are presented for informational purposes only and are not 
indicative of any change in DOE's analytical methodology or decision 
criteria.

   Table V-31--Cumulative Net Present Value of Consumer Benefits for WICF Refrigeration Systems; Nine Years of
                                                    Shipments
                                                   [2020-2028]
----------------------------------------------------------------------------------------------------------------
                                                                                   Billion 2015$
                                                                 -----------------------------------------------
                          Discount rate                                        Trial standard level
                                                                 -----------------------------------------------
                                                                         1               2               3
----------------------------------------------------------------------------------------------------------------
3 percent.......................................................             0.7             0.9             0.8
7 percent.......................................................             0.3             0.5             0.6
----------------------------------------------------------------------------------------------------------------

    The results reflect the use of a constant trend to estimate the 
change in price for the considered WICF refrigeration systems over the 
analysis period (see section IV.F). DOE also conducted a sensitivity 
analysis that considered one scenario with an increasing price trend 
and one scenario with a decreasing price trend. The results of these 
alternative cases are presented in appendix 10B of the NOPR TSD.
c. Indirect Impacts on Employment
    DOE expects energy conservation standards for WICF refrigeration 
systems to reduce energy bills for consumers of those equipment, 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. 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 proposed standards are likely to have 
a negligible impact on the net demand for labor in

[[Page 63035]]

the economy. The net change in jobs is so small that it would be 
imperceptible in national labor statistics and might be offset by 
other, unanticipated effects on employment. Chapter 16 of the NOPR TSD 
presents detailed results regarding anticipated indirect employment 
impacts.
1. Impact on Utility or Performance of Products
    Based on testing conducted in support of this proposed rule, 
discussed in section IV.C.1. of thisdocument, DOE has tentatively 
concluded that the proposed standards would not reduce the utility or 
performance of the WICF refrigeration systems under consideration in 
this rulemaking. Manufacturers of these equipment currently offer units 
with an efficiency level that that meets or exceeds the proposed 
standards.
    DOE seeks comment on whether there are features or attributes of 
the more energy-efficient WICF refrigeration systems that manufacturers 
would produce to meet the standards in this proposed rule that might 
affect how they would be used by consumers. DOE requests comment 
specifically on how any such effects should be weighed in the choice of 
standards for the final rule. This is identified as Issue 15 in section 
VII.E, ``Issues on Which DOE Seeks Comment.''
2. Impact of Any Lessening of Competition
    As discussed in section III.E.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, together with an analysis of the nature and extent of 
such impact. To assist the Attorney General in making this 
determination, DOE has provided DOJ with copies of this NOPR and the 
accompanying TSD for review. DOE will consider DOJ's comments on the 
proposed rule in determining whether to proceed to a final rule to 
adopt standards for the equipment at issue. DOE will publish and 
respond to DOJ's comments in that document. DOE invites comment from 
the public regarding the competitive impacts that are likely to result 
from this proposed rule. In addition, stakeholders may also provide 
comments separately to DOJ regarding these potential impacts. See the 
ADDRESSES section for information to send comments to DOJ.
3. 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 NOPR TSD presents the estimated reduction in 
generating capacity, relative to the no-new-standards case, for the 
TSLs that DOE considered in this rulemaking.
    Energy conservation resulting from the proposed standards for the 
considered WICF refrigeration systems is expected to yield 
environmental benefits in the form of reduced emissions of air 
pollutants and greenhouse gases. Table V-32 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 NOPR TSD.

         Table V-32--Cumulative Emissions Reduction for WICF Refrigeration Systems Shipped in 2020-2049
----------------------------------------------------------------------------------------------------------------
                                                                               Trial standard level
                                                                 -----------------------------------------------
                                                                         1               2               3
----------------------------------------------------------------------------------------------------------------
                                             Power Sector Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......................................            13.5            37.2            51.5
SO2 (thousand tons).............................................             8.1            22.5            31.2
NOX (thousand tons).............................................            14.8            40.9            56.5
Hg (tons).......................................................            0.03            0.08            0.12
CH4 (thousand tons).............................................             1.2             3.2             4.5
N2O (thousand tons).............................................             0.2             0.5             0.6
----------------------------------------------------------------------------------------------------------------
                                               Upstream Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......................................             0.8             2.1             2.9
SO2 (thousand tons).............................................             0.1             0.4             0.5
NOX (thousand tons).............................................            10.8            29.8            41.2
Hg (tons).......................................................          0.0003           0.001           0.001
CH4 (thousand tons).............................................            59.5           164.6           227.7
N2O (thousand tons).............................................            0.01            0.02            0.03
----------------------------------------------------------------------------------------------------------------
                                               Total FFC Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......................................            14.2            39.3            54.4
SO2 (thousand tons).............................................             8.3            22.9            31.7
NOX (thousand tons).............................................            25.6            70.7            97.7
Hg (tons).......................................................            0.03            0.08            0.12
CH4 (thousand tons).............................................            60.7           167.9           232.1
CH4 (thousand tons CO2eq) *.....................................         1,699.5         4,700.0         6,500.1
N2O (thousand tons).............................................             0.2             0.5             0.7
N2O (thousand tons CO2eq) *.....................................            45.6           126.2           174.5
----------------------------------------------------------------------------------------------------------------
* CO2eq is the quantity of CO2 that would have the same global warming potential (GWP).


[[Page 63036]]

    As part of the analysis for this proposed 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 the considered WICF refrigeration systems. 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 2015$) are 
represented by $12.4/metric ton (the average value from a distribution 
that uses a 5-percent discount rate), $40.6/metric ton (the average 
value from a distribution that uses a 3-percent discount rate), $63.2/
metric ton (the average value from a distribution that uses a 2.5-
percent discount rate), and $118/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-33 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 
16 of the NOPR TSD.

   Table V-33--Estimates of Global Present Value of CO2 Emissions Reduction for Products Shipped in 2020-2049
----------------------------------------------------------------------------------------------------------------
                                                                            SCC case *
                                                 ---------------------------------------------------------------
                                                                           Million 2015$
                       TSL                       ---------------------------------------------------------------
                                                                                                    3% discount
                                                    5% discount     3% discount    2.5% discount    rate, 95th
                                                   rate, average   rate, average   rate, average    percentile
----------------------------------------------------------------------------------------------------------------
                                             Power Sector Emissions
----------------------------------------------------------------------------------------------------------------
1...............................................            95.9           437.2           693.5         1,332.8
2...............................................           265.3         1,209.1         1,917.8         3,685.9
3...............................................           367.0         1,672.2         2,652.3         5,097.6
----------------------------------------------------------------------------------------------------------------
                                               Upstream Emissions
----------------------------------------------------------------------------------------------------------------
1...............................................             5.3            24.2            38.4            73.8
2...............................................            14.6            66.9           106.2           204.0
3...............................................            20.1            92.5           146.9           282.2
----------------------------------------------------------------------------------------------------------------
                                               Total FFC Emissions
----------------------------------------------------------------------------------------------------------------
1...............................................           101.2           461.4           731.9         1,406.6
2...............................................           279.9         1,276.0         2,024.0         3,889.9
3...............................................           387.1         1,764.7         2,799.2         5,379.8
----------------------------------------------------------------------------------------------------------------
* For each of the four cases, the corresponding SCC value for emissions in 2015 is $12.4, $40.6, $63.2, and $118
  per metric ton (2015$). 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. DOE is part of the 
Interagency Working Group (``IWG'') on the Social Cost of Carbon and as 
such, will work with other Federal agencies to continue to review its 
estimates for 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. It 
will also consider on-going input from the National Academies of 
Sciences, Engineering and Medicine, who recently provided interim 
recommendations to the IWG for enhancing its presentation of 
uncertainty regarding these estimates and who will be providing a more 
comprehensive report in early 2017. Consistent with DOE's legal 
obligations, and taking into account the uncertainty involved with this 
particular issue, DOE has included in this proposed rule the most 
recent values and analyses using the recommendations from the IWG.
    DOE also estimated the cumulative monetary value of the economic 
benefits associated with NOX emissions reductions 
anticipated to result from the considered TSLs for WICF refrigeration 
systems. The dollar-per-ton values that DOE used are discussed in 
section IV.L of this document. Table V-34 presents the cumulative 
present values for NOX emissions for each TSL calculated 
using 7-percent and 3-percent discount rates. This table presents 
values that use the low dollar-per-ton values, which reflect DOE's 
primary estimate. Results that reflect the range of NOX 
dollar-per-ton values are presented in Table V-36.
    While the SCC-related values (including social cost of N2O and 
methane) did not play a direct role in influencing the level of 
efficiency proposed in this document, DOE notes that environmental 
benefits that flow from these values are used to support DOE's 
decisions on efficiency. DOE also notes that their relationship to the 
projected energy savings that would accrue from the proposed standards 
is a positive one. In other words, as the level of efficiency--as 
determined under DOE's analysis independent of the separate examination 
of the SCC impacts--increases, so too does the level of potential 
benefits with respect to GHG emissions. Accordingly, the greenhouse gas 
related data project potential benefits that are separate but additive 
to those that were independently derived from DOE's examination of the 
consumer benefits of

[[Page 63037]]

the potential standard level considered in this document.

  Table V-34--Estimates of Present Value of NOX Emissions Reduction for
             WICF Refrigeration Systems Shipped in 2020-2049
------------------------------------------------------------------------
                                                Million 2015$
                TSL                -------------------------------------
                                     3% discount rate   7% discount rate
------------------------------------------------------------------------
                         Power Sector Emissions
------------------------------------------------------------------------
1.................................               27.9               11.5
2.................................               77.2               31.9
3.................................              106.7               44.1
------------------------------------------------------------------------
                           Upstream Emissions
------------------------------------------------------------------------
1.................................               20.2                8.1
2.................................               55.9               22.5
3.................................               77.3               31.1
------------------------------------------------------------------------
                           Total FFC Emissions
------------------------------------------------------------------------
1.................................               48.1               19.7
2.................................              133.1               54.4
3.................................              184.0               75.2
------------------------------------------------------------------------

4. 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.
5. 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 for each TSL considered in this rulemaking. Table V-
35 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 2015 values in the four sets of SCC values discussed.

        Table V-35--Net Present Value of Consumer Savings Combined With Present Value of Monetized Benefits From CO2 and NOX Emissions Reductions
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                 Billion 2015$
                                                     ---------------------------------------------------------------------------------------------------
                                                                                 Consumer NPV at 3% discount rate added with:
                         TSL                         ---------------------------------------------------------------------------------------------------
                                                       SCC Case $12.4/ metric   SCC Case $40.6/ metric   SCC Case $63.2/ metric   SCC Case $118/ metric
                                                         ton and 3% low NOX       ton and 3% low NOX       ton and 3% low NOX       ton and 3% low NOX
                                                               values                   values                   values                   values
--------------------------------------------------------------------------------------------------------------------------------------------------------
1...................................................                      1.4                      1.8                      2.0                      2.7
2...................................................                      3.7                      4.7                      5.5                      7.4
3...................................................                      4.8                      6.2                      7.2                      9.8
--------------------------------------------------------------------------------------------------------------------------------------------------------


 
                                                                                                 Billion 2015$
                                                     ---------------------------------------------------------------------------------------------------
                                                                                 Consumer NPV at 7% discount rate added with:
                         TSL                         ---------------------------------------------------------------------------------------------------
                                                       SCC Case $12.4/ metric   SCC Case $40.6/ metric   SCC Case $63.2/ metric   SCC Case $118/ metric
                                                         ton and 7% low NOX       ton and 7% low NOX       ton and 7% low NOX       ton and 7% low NOX
                                                               values                   values                   values                   values
--------------------------------------------------------------------------------------------------------------------------------------------------------
1...................................................                      0.7                      1.0                      1.3                      2.0
2...................................................                      1.7                      2.7                      3.5                      5.4
3...................................................                      2.2                      3.6                      4.6                      7.2
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The SCC case values represent the global SCC in 2015, in 2015$, for each case.

    In considering the results, two issues are relevant. First, the 
national operating cost savings are domestic U.S. monetary savings that 
occur as a result of market transactions, while the value of 
CO2 reductions is based on a global value. Second, the 
assessments of operating cost savings and the SCC are performed with 
different methods that use different time frames for analysis. The 
national operating cost savings is measured for the lifetime of 
equipment shipped in 2020 to 2049. Because CO2 emissions 
have a very long residence

[[Page 63038]]

time in the atmosphere,\62\ the SCC values in future years reflect 
future CO2-emissions impacts that continue beyond 2100.
---------------------------------------------------------------------------

    \62\ 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,' '' 110 J. 
Geophys. Res. D14105 (2005).
---------------------------------------------------------------------------

D. Conclusion

    When considering new or amended energy conservation standards, the 
standards that DOE adopts for any type (or class) of covered equipment 
must be designed to achieve the maximum improvement in energy 
efficiency that the Secretary determines is technologically feasible 
and economically justified. See 42 U.S.C. 6295(o)(2)(A) and 6316(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) and 6316(a)) 
The new or amended standard must also result in significant 
conservation of energy. (42 U.S.C. 6295(o)(3)(B) and 6316(a))
    For this NOPR, DOE considered the impacts of adopting the proposed 
standards for the specified WICF refrigeration systems at each TSL, 
beginning with the maximum technologically feasible level, to determine 
whether that level was economically justified. Where the max-tech level 
was not justified, DOE then considered the next most efficient level 
and undertook the same evaluation until it reached the highest 
efficiency level that is both technologically feasible and economically 
justified and saves a significant amount of energy.
    To aid the reader as DOE discusses the benefits and/or burdens of 
each TSL, the tables in this 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.
1. Benefits and Burdens of TSLs Considered for WICF Refrigeration 
System Standards
    Table V-36 and Table V-37 summarize the quantitative impacts 
estimated for each TSL for the considered WICF refrigeration systems. 
The national impacts are measured over the lifetime of these WICF 
refrigeration systems purchased in the 30-year period that begins in 
the anticipated year of compliance with the proposed standards (2020-
2049). 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 proposed 
rule.

         Table V-36--Summary of Analytical Results for WICF Refrigeration Systems TSLs: National Impacts
----------------------------------------------------------------------------------------------------------------
          Category                       TSL 1                       TSL 2                       TSL 3
----------------------------------------------------------------------------------------------------------------
                                 Cumulative FFC National Energy Savings (quads)
----------------------------------------------------------------------------------------------------------------
                              0.24......................  0.65......................  0.90.
----------------------------------------------------------------------------------------------------------------
                               NPV of Consumer Costs and Benefits (2015$ billion)
----------------------------------------------------------------------------------------------------------------
3% discount rate............  1.3.......................  3.3.......................  4.3.
7% discount rate............  0.5.......................  1.4.......................  1.8.
----------------------------------------------------------------------------------------------------------------
                            Cumulative FFC Emissions Reduction (Total FFC Emissions)
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)...  14.2......................  39.3......................  54.4.
SO2 (thousand tons).........  8.3.......................  22.9......................  31.7.
NOX (thousand tons).........  25.6......................  70.7......................  97.7.
Hg (tons)...................  0.03......................  0.08......................  0.12.
CH4 (thousand tons).........  60.7......................  167.9.....................  232.1.
CH4 (thousand tons CO2eq) *.  1699.5....................  4700.0....................  6500.1.
N2O (thousand tons).........  0.17......................  0.48......................  0.66.
N2O (thousand tons CO2eq) *.  45.6......................  126.2.....................  174.5.
----------------------------------------------------------------------------------------------------------------
                               Value of Emissions Reduction (Total FFC Emissions)
----------------------------------------------------------------------------------------------------------------
CO2 (2015$ billion) **......  0.10 to 1.41..............  0.28 to 3.89..............  0.39 to 5.38.
NOX--3% discount rate (2015$  48.1 to 109.7.............  133.1 to 303.4............  184.0 to 419.6.
 million).
NOX--7% discount rate (2015$  19.7 to 44.3..............  54.4 to 122.6.............  75.2 to 169.6.
 million).
----------------------------------------------------------------------------------------------------------------
Note: Parentheses indicate negative (-) values.
* CO2eq is the quantity of CO2 that would have the same global warming potential (GWP).
** Range of the economic value of CO2 reductions is based on estimates of the global benefit of reduced CO2
  emissions.


Table V-37--Summary of Analytical Results for WICF Refrigeration Systems TSLs: Manufacturer and Consumer Impacts
----------------------------------------------------------------------------------------------------------------
          Category                      TSL 1 *                     TSL 2 *                     TSL 3 *
----------------------------------------------------------------------------------------------------------------
                                              Manufacturer Impacts
----------------------------------------------------------------------------------------------------------------
Industry NPV (2015$ million)  98.3 to 99.1..............  93.4 to 97.7..............  84.9 to 95.3.
 (No-new-standards case INPV
 = 99.7).
Industry NPV (% change).....  (1.5) to (0.6)............  (6.3) to (2.0)............  (14.8) to (4.4).
----------------------------------------------------------------------------------------------------------------

[[Page 63039]]

 
                                      Consumer Average LCC Savings (2015$)
----------------------------------------------------------------------------------------------------------------
DC.L.I (CU-Only) *..........  268.......................  1,559.....................  1,717.
DC.L.O (CU-Only)............  1,507.....................  2,590.....................  3,148.
DC.L.I (Field Paired) **....  320.......................  1,665.....................  1,820.
DC.L.O (Field Paired).......  1,552.....................  2,564.....................  3,294.
DC.L.I (UC-Only) [dagger]...  81........................  122.......................  156.
DC.L.O (UC-Only)............  39........................  160.......................  324.
UC.M--DC.M.I................  0.........................  79........................  96.
UC.M--DC.M.O................  0.........................  87........................  99.
UC.L........................  4.........................  112.......................  97.
UC.M........................  5.........................  79........................  84.
----------------------------------------------------------------------------------------------------------------
                                           Consumer Simple PBP (years)
----------------------------------------------------------------------------------------------------------------
DC.L.I (CU-Only) *..........  0.9.......................  1.2.......................  1.3.
DC.L.O (CU-Only)............  0.3.......................  0.6.......................  2.1.
DC.L.I (Field Paired) **....  1.0.......................  1.3.......................  1.5.
DC.L.O (Field Paired).......  0.3.......................  0.5.......................  1.0.
DC.L.I (UC-Only) [dagger]...  1.6.......................  3.5.......................  4.6.
DC.L.O (UC-Only)............  0.6.......................  2.3.......................  4.3.
UC.M--DC.M.I................  0.0.......................  1.8.......................  1.9.
UC.M--DC.M.O................  0.0.......................  1.3.......................  1.4.
UC.L........................  0.6.......................  2.7.......................  7.3.
UC.M........................  0.6.......................  2.3.......................  2.9.
----------------------------------------------------------------------------------------------------------------
                                     % of Consumers that Experience Net Cost
----------------------------------------------------------------------------------------------------------------
DC.L.I (CU-Only) *..........  0.........................  0.........................  0.
DC.L.O (CU-Only)............  0.........................  0.........................  0.
DC.L.I (Field Paired) **....  0.........................  0.........................  0.
DC.L.O (Field Paired).......  0.........................  0.........................  0.
DC.L.I (UC-Only) [dagger]...  0.........................  1.........................  2.
DC.L.O (UC-Only)............  0.........................  0.........................  2.
UC.M--DC.M.I................  0.........................  1.........................  1.
UC.M--DC.M.O................  0.........................  0.........................  0.
UC.L........................  1.........................  8.........................  42.
UC.M........................  1.........................  2.........................  7.
----------------------------------------------------------------------------------------------------------------
Note: Parentheses indicate negative (-) values. The entry ``n.a.'' means not applicable because there is no
  change in the standard at certain TSLs.
* CU-Only: Condensing unit-only. This analysis evaluates standard levels applied to a condensing unit
  distributed in commerce without a designated companion unit cooler for a scenario in which a new condensing
  unit is installed to replace a failed condensing unit, but the existing unit cooler is not replaced. See
  section IV.F.1.b for more details.
** FP: Field-paired unit cooler and condensing unit. This analysis evaluates standard levels applied to a
  condensing unit distributed in commerce without a designated companion unit cooler for a scenario in which
  both a new condensing unit and a new unit cooler are installed. See section IV.F.1.a for more details.
[dagger] UC-Only: Unit cooler only. This analysis evaluates standard levels applied to a unit cooler distributed
  in commerce without a designated companion condensing unit, either dedicated or multiplex, for a scenario in
  which a new unit cooler is installed to replace a failed unit cooler, but the existing condensing unit is not
  replaced. See section IV.F.1.c for more details.
[Dagger] For this NOPR, DOE is examining the impacts of unit coolers (UC.M and UC.L) combined with medium
  temperature dedicated condensing equipment (DC.M.I and DC.M.O), but DOE is not considering establishing
  standards for the latter equipment, as they are covered by the 2014 final rule standards that were not vacated
  by the Fifth Circuit order.

    In analyzing the different standards, DOE first considered TSL 3, 
which represents the max-tech efficiency levels. TSL 3 would save an 
estimated 0.86 quads of energy, an amount DOE considers significant. 
Under TSL 3, the NPV of consumer benefit would be $1.8 billion using a 
discount rate of 7 percent, and $4.3 billion using a discount rate of 3 
percent.
    The cumulative emissions reductions at TSL 3 are 54.4 Mt of 
CO2, 31.7 thousand tons of SO2, 97.7 thousand 
tons of NOX, 0.012 tons of Hg, 232.1 thousand tons of 
CH4, and 0.7 thousand tons of N2O. The estimated 
monetary value of the CO2 emissions reduction at TSL 3 
ranges from $0.39 billion to $5.38 billion.
    At TSL 3, the average LCC impact for low-temperature dedicated 
condensing units is a savings of $1,171 for DC.L.I, $3,148 for DC.L.O 
for the condensing unit-only; $1,820 for DC.L.I, $3,294 for DC.L.O for 
field-paired equipment. The average LCC impact for low-temperature unit 
coolers (UC.L) is a savings of $156 and $324 when connected to indoor 
and outdoor low-temperature dedicated condensing units, respectively, 
and $97 when connected to low-temperature multiplex condensing 
equipment. The average LCC impact for medium-temperature unit coolers 
(UC.M) is a savings of $96 and $99 when connected to indoor and outdoor 
medium-temperature dedicated condensing units, respectively, and $84 
when connected to medium-temperature multiplex condensing equipment. 
The simple payback period impact for low-temperature dedicated 
condensing units is 1.2 years for DC.L.I and, 2.1 years for DC.L.O for 
the condensing unit-only; 1.5 years for DC.L.I and, 1.0 years for

[[Page 63040]]

DC.L.O for field-paired equipment. The simple payback period for low-
temperature unit coolers (UC.L) is 4.6 years and 4.3 years when 
connected to indoor and outdoor low-temperature dedicated condensing 
units, respectively, and 7.3 years when connected to low-temperature 
multiplex condensing equipment. The simple payback period for medium-
temperature unit coolers (UC.M) is 1.8 years and 1.3 years when 
connected to indoor and outdoor medium-temperature dedicated condensing 
units, respectively, and 2.9 years when connected to medium-temperature 
multiplex condensing equipment. The fraction of consumers experiencing 
a net LCC cost is zero percent for low-temperature dedicated condensing 
units DC.L.I and DC.L.O for the condensing unit-only; and zero percent 
for DC.L.I and DC.L.O for field-paired equipment. The fraction of 
consumers experiencing a net LCC cost for low-temperature unit coolers 
(UC.L) is 2 percent when connected to indoor and outdoor low-
temperature dedicated condensing units, respectively, and 42 percent 
when connected to low-temperature multiplex condensing equipment. The 
fraction of consumers experiencing a net LCC cost for medium-
temperature unit coolers (UC.M) is 1 percent and zero percent when 
connected to indoor and outdoor medium-temperature dedicated condensing 
units, respectively, and 7 percent when connected to medium-temperature 
multiplex condensing equipment.
    At TSL 3, the projected change in INPV ranges from -$14.8 million 
to -$4.4 million, which corresponds to a change of -14.8 percent and -
4.4 percent, respectively. DOE estimates that compliance with TSL 3 
will require a total industry investment of $16.2 million.
    In addition, the proposed TSL 3 standards are consistent with the 
unanimous recommendations submitted by the Working Group and approved 
by the ASRAC. (See: Term Sheet at EERE-2015-BT-STD-0016-0056, 
recommendation #5) DOE has encouraged the negotiation of proposed 
standard levels, in accordance with the FACA and the NRA, as a means 
for interested parties, representing diverse points of view, to analyze 
and recommend energy conservation standards to DOE. Such negotiations 
may often expedite the rulemaking process. In addition, standard levels 
recommended through a negotiation may increase the likelihood for 
regulatory compliance, while decreasing the risk of litigation.
    After considering the analysis and weighing the benefits and 
burdens, the Secretary has tentatively concluded that at TSL 3 for the 
considered WICF refrigeration systems, the benefits of energy savings, 
positive NPV of consumer benefits, emission reductions, the estimated 
monetary value of the emissions reductions, and positive average LCC 
savings would outweigh the negative impacts on some consumers and on 
manufacturers. Accordingly, the Secretary has tentatively concluded 
that TSL 3 would offer the maximum improvement in efficiency that is 
technologically feasible and economically justified, and would result 
in the significant conservation of energy. DOE's conclusion is further 
supported by, but does not depend on, the benefits from the reduction 
of greenhouse gases projected to occur with this level.
    Therefore, based on the considerations, DOE proposes to adopt the 
energy conservation standards for WICF refrigeration systems at TSL 3. 
The proposed energy conservation standards for the considered WICF 
refrigeration systems, which are expressed as AWEF, are shown in Table 
V-38.

                Table V-38--Proposed Energy Conservation Standards for WICF Refrigeration Systems
----------------------------------------------------------------------------------------------------------------
                                         Capacity (Cnet)* (Btu/h)
            Equipment class                                                    Minimum AWEF (Btu/W-h)
----------------------------------------------------------------------------------------------------------------
Unit Coolers--Low-Temperature.........  <15,500..................  1.575 * 10-\5\ * qnet + 3.91
                                        >=15,500.................  4.15
Unit Coolers--Medium Temperature......  All......................  9.00
Dedicated Condensing System--Low-       <6,500...................  6.522 * 10-\5\ * qnet + 2.73
 Temperature, Outdoor.                  >=6,500..................  3.15
Dedicated Condensing System--Low-       <6,500...................  9.091 * 10-\5\ * qnet + 1.81
 Temperature, Indoor.                   >=6,500..................  2.40
----------------------------------------------------------------------------------------------------------------
* Where qnet is net capacity as determined and certified pursuant 10 CFR 431.304.

2. Summary of Annualized Benefits and Costs of the Proposed Standards
    The benefits and costs of the proposed 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 
2015$) of the benefits from operating equipment that meet the proposed 
standards (consisting primarily of operating cost savings from using 
less energy, minus increases in equipment purchase costs, and (2) the 
annualized monetary value of the benefits of CO2 and 
NOX emission reductions.\63\
---------------------------------------------------------------------------

    \63\ To convert the time-series of costs and benefits into 
annualized values, DOE calculated a present value in 2015, the year 
used for discounting the NPV of total consumer costs and savings. 
For the benefits, DOE calculated a present value associated with 
each year's shipments in the year in which the shipments occur 
(2020, 2030, etc.), and then discounted the present value from each 
year to 2015. The calculation uses discount rates of 3 and 7 percent 
for all costs and benefits except for the value of CO2 
reductions, for which DOE used case-specific discount rates. Using 
the present value, DOE then calculated the fixed annual payment over 
a 30-year period, starting in the compliance year that yields the 
same present value.
---------------------------------------------------------------------------

    Table V-39 shows the annualized values for the considered WICF 
refrigeration systems under TSL 3, expressed in 2015$. The results 
under the primary estimate are as follows.
    Using a 7-percent discount rate for benefits and costs other than 
CO2 reduction (for which DOE used a 3-percent discount rate 
along with the average SCC series that has a value of $40.6/t in 
2015),\64\ the estimated cost of the standards proposed in this rule is 
$43.9 million per year in increased equipment costs, while the 
estimated annual benefits are $217.9 million in reduced equipment 
operating costs, $98.4 million in CO2 reductions, and

[[Page 63041]]

$7.4 million in reduced NOX emissions. In this case, the net 
benefit amounts to $280 million per year.
---------------------------------------------------------------------------

    \64\ DOE used a 3-percent discount rate because the SCC values 
for the series used in the calculation were derived using a 3-
percent discount rate (see section IV.L).
---------------------------------------------------------------------------

    Using a 3-percent discount rate for all benefits and costs and the 
average SCC series that has a value of $40.6/t in 2015, the estimated 
cost of the proposed standards is $45.9 million per year in increased 
equipment costs, while the estimated annual benefits are $283.3 million 
in reduced operating costs, $98.4 million in CO2 reductions, 
and $10.3 million in reduced NOX emissions. In this case, 
the net benefit amounts to $346 million per year.

                         Table V-39--Annualized Benefits and Costs of Proposed Standards (TSL 3) for WICF Refrigeration Systems
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                      Million 2015$/year
                                                                     -----------------------------------------------------------------------------------
                                              Discount rate                                       Low net benefits  estimate       High net benefits
                                                                          Primary estimate *                   *                      estimate *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings...  7%..............................  217.9.....................  200.4.....................  237.4.
                                    3%..............................  283.3.....................  257.9.....................  314.7.
CO2 Reduction Value ($12.4/t case)  5%..............................  29.2......................  27.8......................  30.7.
 **.
CO2 Reduction Value ($40.6/t case)  3%..............................  98.4......................  93.5......................  103.7.
 **.
CO2 Reduction Value ($63.2/t case)  2.5%............................  144.0.....................  136.8.....................  151.9.
 **.
CO2 Reduction Value ($118/t case)   3%..............................  299.9.....................  285.0.....................  316.3.
 **.
NOX Reduction Value...............  7%..............................  7.4.......................  7.1.......................  17.4.
                                    3%..............................  10.3......................  9.8.......................  24.6.
Total Benefits [dagger]...........  7% plus CO2 range...............  255 to 525................  235 to 493................  285 to 571.
                                    7%..............................  324.......................  301.......................  359.
                                    3% plus CO2 range...............  323 to 593................  295 to 553................  370 to 656.
                                    3%..............................  392.......................  361.......................  443.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                          Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Incremental Product Costs  7%..............................  43.9......................  43.4......................  44.4.
                                    3%..............................  45.9......................  45.3......................  46.5.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      Net Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
        Total [dagger]............  7% plus CO2 range...............  211 to 481................  192 to 449................  241 to 527.
                                    7%..............................  280.......................  258.......................  314.
                                    3% plus CO2 range...............  277 to 548................  250 to 507................  323 to 609.
                                    3%..............................  346.......................  316.......................  397.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* This table presents the annualized costs and benefits associated with WICF refrigeration systems shipped in 2020-2049. These results include benefits
  to consumers which accrue after 2049 from the equipment purchased in 2020-2049. The results account for the incremental variable and fixed costs
  incurred by manufacturers due to the standard, some of which may be incurred in preparation for the rule. The Primary, Low Benefits, and High Benefits
  Estimates utilize projections of energy prices from the AEO 2015 Reference case, Low Economic Growth case, and High Economic Growth case,
  respectively.
** The CO2 values represent global monetized values of the SCC, in 2015$, 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] DOE estimated the monetized value of NOX emissions reductions using benefit per ton estimates from the Regulatory Impact Analysis for the Clean
  Power Plan Final Rule, published in August 2015 by EPA's Office of Air Quality Planning and Standards. (Available at: http://www.epa.gov/cleanpowerplan/clean-power-plan-final-rule-regulatory-impact-analysis.) See section IV.L.2 for further discussion. For the Primary Estimate and Low
  Net Benefits Estimate, DOE used a national benefit-per-ton estimate for NOX 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.
[dagger][dagger] Total Benefits for both the 3% and 7% cases are derived using the series corresponding to the average SCC with a 3-percent discount
  rate ($40.6/t case). In the rows labeled ``7% plus CO2 range'' and ``3% plus CO2 range,'' the operating cost and NOX benefits are calculated using the
  labeled discount rate, and those values are added to the full range of CO2 values.

VI. Procedural Issues and Regulatory Review

A. Review Under Executive Orders 12866 and 13563

    Section 1(b)(1) of Executive Order 12866, ``Regulatory Planning and 
Review,'' 58 FR 51735 (Oct. 4, 1993), requires each agency to identify 
the problem that it intends to address, including, where applicable, 
the failures of private markets or public institutions that warrant new 
agency action, as well as to assess the significance of that problem. 
The problems that the proposed standards set forth in this NOPR 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 equipment are not 
realized due to misaligned incentives between purchasers and users. An 
example of such a case is when the equipment purchase decision is made 
by a building contractor or building owner who does not pay the energy 
costs.
    (3) There are external benefits resulting from improved energy 
efficiency of appliances and equipment that are not captured by the 
users of such equipment. These benefits include externalities related 
to public health, environmental protection, and national energy 
security that are not reflected in energy prices, such as reduced 
emissions of air pollutants and greenhouse gases that impact human 
health and global warming. DOE

[[Page 63042]]

attempts to quantify 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 the proposed regulatory 
action is a significant regulatory action under section (3)(f) of 
Executive Order 12866. Accordingly, pursuant to section 6(a)(3)(B) of 
the Order, DOE has provided to OIRA: (i) The text of the draft 
regulatory action, together with a reasonably detailed description of 
the need for the regulatory action and an explanation of how the 
regulatory action will meet that need; and (ii) An assessment of the 
potential costs and benefits of the regulatory action, including an 
explanation of the manner in which the regulatory action is consistent 
with a statutory mandate. DOE has included these documents in the 
rulemaking record.
    In addition, the Administrator of OIRA has determined that the 
proposed regulatory action is 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 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 NOPR is 
consistent with these principles, including the requirement that, to 
the extent permitted by law, benefits justify costs and that net 
benefits are maximized.

B. Review Under the Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires 
preparation of an initial regulatory flexibility analysis (``IRFA'') 
for any rule that by law must be proposed for public comment, unless 
the agency certifies that the rule, if promulgated, will not have a 
significant economic impact on a substantial number of small entities. 
As required by Executive Order 13272, ``Proper Consideration of Small 
Entities in Agency Rulemaking,'' 67 FR 53461 (August 16, 2002), DOE 
published procedures and policies on February 19, 2003, to ensure that 
the potential impacts of its rules on small entities are properly 
considered during the rulemaking process. 68 FR 7990. DOE has made its 
procedures and policies available on the Office of the General 
Counsel's Web site (http://energy.gov/gc/office-general-counsel).
    A manufacturer of a walk-in cooler or walk-in freezer is any person 
who: (1) Manufactures a component of a walk-in cooler or walk-in 
freezer that affects energy consumption, including, but not limited to, 
refrigeration systems, doors, lights, windows, or walls; or (2) 
manufactures or assembles the complete walk-in cooler or walk-in 
freezer. 10 CFR 431.302. DOE considers manufacturers of refrigeration 
system components (referred to as WICF refrigeration manufacturers) and 
assemblers of the complete walk-in (or installers) separately for this 
Regulatory Flexibility Review.
    This document proposes to set energy conservation standards for 
seven equipment classes of WICF refrigeration systems. Manufacturers of 
WICF refrigeration system components are responsible for ensuring the 
compliance of the components to the proposed standard. WICF 
refrigeration manufacturers are required to certify to DOE the 
compliance of the components they manufacture or import. DOE used the 
SBA's small business size standards to determine whether any small WICF 
refrigeration manufacturers would be subject to the requirements of the 
rule. See 13 CFR part 121. WICF refrigeration manufacturing is 
classified under NAICS 333415, ``Air-Conditioning and Warm Air Heating 
Equipment and Commercial and Industrial Refrigeration Equipment 
Manufacturing.'' The SBA sets a threshold of 1,250 employees or less 
for an entity to be considered as a small business for this category.
    This document does not propose new or amended energy conservation 
standards that are measured in terms of the performance of the complete 
walk-in cooler or freezer. Manufacturers of complete walk-ins (which 
may be on-site installers) assemble certified components that have been 
previously tested and rated, such as panels, doors, and refrigeration 
systems, to complete the walk-in on-site. However, they are not 
required to certify compliance of their installations to DOE for energy 
conservation standards. Installers of complete walk-ins are categorized 
under NAICS 238220, which covers ``Commercial Refrigeration System 
Installation.'' SBA has set a revenue threshold of $15 million or less 
for an entity to be considered small for this category. However, given 
the lack of publicly available revenue information for walk-in 
assemblers and installers, DOE chose to use a threshold of 1,250 
employees or less to be small in order to be consistent with the 
threshold for WICF component manufacturers.
    Based on these thresholds, DOE present the following IRFA analysis:
1. Why This Action Is Being Considered
    Title III, Part B of the Energy Policy and Conservation Act of 1975 
(``EPCA'' or, in context, ``the Act''), Public Law 94-163 (codified as 
42 U.S.C. 6291-6309, as codified) established the Energy Conservation 
Program for Certain Industrial Equipment, a program covering certain 
industrial equipment, which includes the refrigeration systems

[[Page 63043]]

used in walk-ins that are the subject of this rulemaking--low-
temperature dedicated condensing systems and low and medium temperature 
unit coolers. (42 U.S.C. 6311(1)(G)) EPCA, as amended, prescribed 
energy conservation standards for these equipment (42 U.S.C. 6313(f)). 
In addition, EPCA required DOE to establish performance-based standards 
for walk-in coolers and freezers that achieve the maximum improvement 
in energy that the Secretary finds is technologically feasible and 
economically justified. 42 U.S.C. 6313(f)(4)
2. Objectives of, and Legal Basis for, the Proposed Rule
    As noted elsewhere in this document, DOE published a final rule 
prescribing performance-based energy conservation standards for walk-
ins manufactured on or after June 5, 2017. 79 FR 32050 (June 3, 2014). 
Those standards applied to the main components of a walk-in: 
Refrigeration systems, panels, and doors. Also as discussed earlier in 
this document, a legal challenge was filed to that rule, which resulted 
in a settlement agreement and court order in which the Fifth Circuit 
Court of Appeals vacated six refrigeration system standards established 
in that rule--(1) the two energy conservation standards applicable to 
multiplex condensing refrigeration systems (re-named unit coolers for 
purposes of this rule) operating at medium and low temperatures; and 
(2) the four energy conservation standards applicable to dedicated 
condensing refrigeration systems operating at low temperatures. This 
proposal, which was the result of a months-long negotiated rulemaking 
arising from the settlement agreement, is consistent with the Term 
Sheet developed as part of that negotiated rulemaking and would, if 
finalized, adopt the agreed-upon standards contained in that Term Sheet 
for the six classes of refrigeration systems. The proposal also 
examines the potential impacts on walk-in installers.
3. Description and Estimated Number of Small Entities Regulated
    During its market survey, DOE used available public information to 
identify small WICF refrigeration component manufacturers. DOE's 
research involved industry trade association membership directories 
(including those maintained by AHRI \65\ and NAFEM),\66\ public 
databases (e.g. the SBA Database),\67\ individual company Web sites, 
market research tools (e.g., Dunn and Bradstreet reports \68\ and 
Hoovers reports) \69\ to create a list of companies that manufacture or 
sell equipment covered by this rulemaking. DOE also asked stakeholders 
and industry representatives if they were aware of any other small WICF 
refrigeration component manufacturers during manufacturer interviews 
conducted for the June 2014 final rule and at DOE public meetings. DOE 
reviewed publicly-available data and contacted companies on its list, 
as necessary, to determine whether they met the SBA's definition of a 
small business manufacturer of WICF refrigeration systems. DOE screened 
out companies that do not offer equipment covered by this rulemaking, 
do not meet the definition of a ``small business,'' or are foreign-
owned.
---------------------------------------------------------------------------

    \65\ See www.ahridirectory.org/ahriDirectory/pages/home.aspx.
    \66\ See http://www.nafem.org/find-members/MemberDirectory.aspx.
    \67\ See http://dsbs.sba.gov/dsbs/search/dsp_dsbs.cfm.
    \68\ See www.dnb.com/.
    \69\ See www.hoovers.com/.
---------------------------------------------------------------------------

    DOE identified nine WICF refrigeration manufacturers that produce 
equipment for one or more of the equipment classes analyzed in this 
proposal. All nine refigeration manufacturers are domestic companies. 
Two of the nine WICF refrigeration manufacturers are small businesses 
based on the 1,250 person threshold for NAICS 333415.
    DOE was unable to identify any company that operated exclusively as 
a manufacturer of complete walk-ins. All businesses that were 
manufacturers of complete walk-ins offered their services as part of a 
broader range of products and service capabilities. All small business 
manufacturers of complete walk-ins that DOE identified were on-site 
installers that also offered HVAC installation or commercial 
refrigeration equipment installation services. DOE relied on U.S. 
Census data for NAICS code 238300. The NAICS code aggregates 
information for ``plumbing, heating, and air-conditioning 
contractors,'' which includes ``refrigeration contractors.''
    According to the 2012 U.S. Census ``Industry Snapshot'' for NAICS 
code 238220, there are approximately 87,000 plumbing, heating, and air-
conditioning contractor establishments in the United States.\70\ Based 
on detailed breakdowns provided in the 2007 U.S. Census, DOE was able 
to disaggregate the 87,000 business by contractor type.\71\ 35% of the 
establishments were exclusively plumbing, sprinkler installation, or 
steam and piping fitting contractors and were unlikely to provide walk-
in installation services. Of these remaining 65% of establishments, DOE 
estimated that 3,400 to 14,100 provide offer walk-in installation 
services.\72\
---------------------------------------------------------------------------

    \70\ U.S. Census Bureau. Industry Snapshot 
thedataweb.rm.census.gov/TheDataWeb_HotReport2/econsnapshot/2012/snapshot.hrml?NAICS=238220. (Last accessed July 2016)
    \71\ U.S. Census Bureau. Industyr Statistics Portal http://www.census.gov/econ/isp/sampler.php?naicscode=238220&naicslevel=6# 
(Last accessed August 2016).
    \72\ In the August 2016 test procedure NOPR for walk-in coolers 
and walk-in freezers, DOE estimated a different number of walk-in 
contractors. (81 FR 54926) For this Notice, DOE's used more detailed 
information from the 2007 U.S. Census to improve the estimated 
number of walk-in contractors. As a result, the range of potential 
walk-in contractors estimated in this Notice is lower than the range 
published in the test procedure NOPR.
---------------------------------------------------------------------------

    U.S. Census data from 2012 show that less than 1% of plumbing, 
heating, and air-conditioning contracting companies have more than 500 
or more employees. While the U.S. Census data show that average revenue 
per establishment is approximately $1.7 million, the data provide no 
indication of what the revenue distribution or the median revenue in 
the industry might be. Assuming that the plumbing, heating, and air-
conditioning employment data are representative of those found with 
walk-in installer employment numbers, the vast majority of installers 
are small businesses based on a 1,250-person threshold.
4. Description and Estimate of Compliance Requirements
    DOE identified two small WICF refrigeration businesses that 
manufacture refrigeration components used in walk-in applications. One 
small business focuses on large warehouse refrigeration systems, which 
are outside the scope of this rulemaking. However, this company offers 
small capacity units that can be sold to the walk-in market as well. 
The other small business specializes in building evaporators and unit 
coolers for a range of refrigeration applications, including the walk-
in market. Further, based on manufacturer interviews conducted for the 
June 2014 final rule, DOE determined that the WICF refrigeration system 
revenue for this company is small compared to the total revenue.
    Conversion costs are the primary driver of negative impacts on WICF 
refrigeration manufacturers. While there will be record keeping 
expenses associated with certification and compliance requirements, DOE 
expects the cost to be small relative to the investments necessary to 
determine which equipment are compliant, to

[[Page 63044]]

redesign non-compliant equipment, to purchase and install new 
manufacturing line equipment, and to update marketing materials. These 
conversion costs are described in section IV.J.C of this document.
    Since no market share information for small WICF refrigeration 
manufacturers is publicly-available, DOE relied on company revenue data 
for the small and large businesses as proxies for market share. For 
companies that are diversified conglomerates, DOE used revenue figures 
from the corporate business unit that produced walk-in refrigeration 
systems.

        Table VI-1--Average Small WICF Refrigeration Manufacturer's Capital and Product Conversion Costs
----------------------------------------------------------------------------------------------------------------
                                                                Small manufacturer
                                 -------------------------------------------------------------------------------
      Trial standard level                                                                  Conversion costs/
                                   Capital conversion costs   Product conversion costs      conversion period
                                       (2015$ millions)           (2015$ millions)            revenue * (%)
----------------------------------------------------------------------------------------------------------------
TSL1............................  0.00.....................  0.05.....................  0.02
TSL2............................  0.05.....................  0.11.....................  0.07
TSL3............................  0.10.....................  0.29.....................  0.18
----------------------------------------------------------------------------------------------------------------
* Conversion costs are the total investments made over the 3-year compliance period, between the publication of
  the final rule and the first year of compliance with the proposed standard.

    At the proposed standard level, DOE estimates total conversion 
costs for an average small WICF refrigeration manufacturer to be $0.39 
million per year over the three-year conversion period. Using revenue 
figures from Hoovers.com, DOE estimates that conversion costs are less 
than one percent of total small business revenue over the three-year 
conversion period.
    DOE estimates that there are approximately 10,000 to 30,000 walk-in 
installers, and 99% of them are small businesses. Installers of 
complete walk-ins have been subject to regulation since 2009, when 
EPCA's prescriptive standards for walk-in coolers and freezers went 
into effect. EPCA required that all completed walk-ins must: Have 
automatic door closers; have strip doors, spring hinged doors, or other 
method of minimizing infiltration when doors are open; for all interior 
lights, use light sources with an efficacy of 40 lumens per watt or 
more; contain wall, ceiling, and door insulation of at least R-25 for 
coolers and R-32 for freezers; contain floor insulation of at least R-
28 for freezers; use doors that have certain features; and use certain 
types of motors in components of the refrigeration system.
    This proposal does not propose to add energy conservation standards 
that would measure the performance of the complete walk-in and does not 
introduce new responsibilities on installers. Manufacturers who 
strictly assemble or install complete walk-ins do not certify 
compliance to DOE. DOE was unable to identify installer conversion 
costs that would be likely to occur as a direct result of the proposed 
standards since these costs are borne by component manufacturers. It is 
possible installers would have stranded assets in the form of 
refrigeration components inventory that is not compliant with the 
proposed standards. However, the WICF market involves a high degree of 
customization--walk-ins can vary dramatically in size, shape, capacity, 
and end-user application. This suggests that installers do not 
generally carry significant refrigeration system inventory. 
Furthermore, installers will have a conversion period, between the 
publication date and the compliance date of the final rule, to wind-
down component surpluses and these components may be used to repair 
existing units deployed in the field.
    DOE requests comment on the number of small WICF refrigeration 
manufacturers in the industry, data on the market share of those 
manufacturers, and the conversion costs those manufacturers are likely 
to incur. Additionally, DOE requests comment on the conversion costs 
and stranded assets, if any, that installers of walk-ins may incur. 
This is identified as Issue 16 in section VII.E, ``Issues on Which DOE 
Seeks Comment.''
5. Duplication, Overlap, and Conflict With Other Rules and Regulations
    DOE found no duplication, overlap, or conflict with other rules and 
regulations for the rule being proposed here.
6. Significant Alternatives to the Rule
    The discussion in the previous section analyzes impacts on small 
businesses that would result from DOE's proposed rule, represented by 
TSL 3. In reviewing alternatives to the proposed rule, DOE examined 
energy conservation standards set at lower efficiency levels (there are 
no levels higher than TSL 3). For all considered efficiency levels, 
there would be no new responsibilities on assemblers and installers. 
While TSL 1 and TSL 2 would reduce the impacts on small business WICF 
refrigeration manufacturers, it would come at the expense of a 
reduction in energy savings and NPV benefits to consumers. TSL 1 
achieves 73 percent lower energy savings and 71 percent less NPV 
benefits to consumers compared to the energy savings and NPV benefits 
at TSL 3. TSL 2 achieves 28 percent lower energy savings and 24 percent 
less NPV benefits to consumers compared to the energy savings and NPV 
benefits at TSL 3.
    Setting the standards for the refrigeration systems discussed in 
this document at the TSL 3 level balances the benefits of the energy 
savings at TSL 3 with the potential burdens placed on WICF 
refrigeration manufacturers, including small business manufacturers. 
Accordingly, because of these results, DOE is not proposing to adopt 
one of the other TSLs or policy alternatives examined as part of DOE's 
overall analysis. See discussion in section V (discussing the analyzed 
TSLs) and chapter 17 of the NOPR TSD (examining policy alternatives to 
setting standards).
    Additional compliance flexibilities may be available through other 
means. For example, 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.

[[Page 63045]]

C. Review Under the Paperwork Reduction Act

    Manufacturers of WICF refrigeration systems must certify to DOE 
that their equipment comply with any applicable energy conservation 
standards. In certifying compliance, manufacturers will be required to 
test their equipment according to the DOE test procedures for WICF 
refrigeration systems, 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 WICF refrigeration systems. See 
generally 10 CFR part 429, subpart B. 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 proposed rule fits within the 
category of actions included in Categorical Exclusion (``CX'') B5.1 and 
otherwise meets the requirements for application of a CX. See 10 CFR 
part 1021, App. B, B5.1(b); 1021.410(b) and App. B, B(1)-(5). The 
proposed 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 
proposed rule. DOE's CX determination for this proposed rule is 
available at http://energy.gov/nepa/categorical-exclusion-cx-determinations-cx/.

E. Review Under Executive Order 13132

    Executive Order 13132, ``Federalism,'' 64 FR 43255 (August 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 
proposed rule and has tentatively determined that it would not have a 
substantial direct effect on the States, on the relationship between 
the national government and the States, or on the distribution of power 
and responsibilities among the various levels of government. EPCA 
governs and prescribes Federal preemption of State regulations as to 
energy conservation for the equipment that are the subject of this 
proposed rule. States can petition DOE for exemption from such 
preemption to the extent, and based on criteria, set forth in EPCA. (42 
U.S.C. 6297) Therefore, no further action is required by Executive 
Order 13132.

F. Review Under Executive Order 12988

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

G. Review Under the Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (``UMRA'') 
requires each Federal agency to assess the effects of Federal 
regulatory actions on State, local, and Tribal governments and the 
private sector. Public Law 104-4, sec. 201 (codified at 2 U.S.C. 1531). 
For a proposed regulatory action likely to result in a rule that may 
cause the expenditure by State, local, and Tribal governments, in the 
aggregate, or by the private sector of $100 million or more in any one 
year (adjusted annually for inflation), section 202 of UMRA requires a 
Federal agency to publish a written statement that estimates the 
resulting costs, benefits, and other effects on the national economy. 
(2 U.S.C. 1532(a), (b)) The UMRA also requires a Federal agency to 
develop an effective process to permit timely input by elected officers 
of State, local, and Tribal governments on a proposed ``significant 
intergovernmental mandate,'' and requires an agency plan for giving 
notice and opportunity for timely input to potentially affected small 
governments before establishing any requirements that might 
significantly or uniquely affect them. On March 18, 1997, DOE published 
a statement of policy on its process for intergovernmental consultation 
under UMRA. 62 FR 12820. DOE's policy statement is also available at 
http://energy.gov/sites/prod/files/gcprod/documents/umra_97.pdf.
    Although this proposed rule does not contain a Federal 
intergovernmental mandate, it may require expenditures of $100 million 
or more in any one year by the private sector. Such expenditures may 
include: (1) Investment in research and development and in capital 
expenditures by WICF manufacturers in the years between the final rule 
and the compliance date for the new standards

[[Page 63046]]

and (2) incremental additional expenditures by consumers to purchase 
higher-efficiency WICF, starting at the compliance date for the 
applicable standard.
    Section 202 of UMRA authorizes a Federal agency to respond to the 
content requirements of UMRA in any other statement or analysis that 
accompanies the proposed rule. (2 U.S.C. 1532(c)) The content 
requirements of section 202(b) of UMRA relevant to a private sector 
mandate substantially overlap the economic analysis requirements that 
apply under section 325(o) of EPCA and Executive Order 12866. The 
SUPPLEMENTARY INFORMATION section of this NOPR and the TSD for this 
proposed rule respond to those requirements.
    Under section 205 of UMRA, the Department is obligated to identify 
and consider a reasonable number of regulatory alternatives before 
promulgating a rule for which a written statement under section 202 is 
required. (2 U.S.C. 1535(a)) DOE is required to select from those 
alternatives the most cost-effective and least burdensome alternative 
that achieves the objectives of the proposed rule unless DOE publishes 
an explanation for doing otherwise, or the selection of such an 
alternative is inconsistent with law. As required by 42 U.S.C. 6295(d), 
(f), and (o), 6313(e), and 6316(a), this proposed rule would establish 
energy conservation standards for the considered WICF equipment classes 
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 TSD for this 
proposed rule.

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

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

I. Review Under Executive Order 12630

    Pursuant to Executive Order 12630, ``Governmental Actions and 
Interference with Constitutionally Protected Property Rights,'' 53 FR 
8859 (March 18, 1988), DOE has determined that this proposed rule would 
not result in any takings that might require compensation under the 
Fifth Amendment to the U.S. Constitution.

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

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

K. Review Under Executive Order 13211

    Executive Order 13211, ``Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use,'' 66 FR 28355 
(May 22, 2001), requires Federal agencies to prepare and submit to OIRA 
at OMB, a Statement of Energy Effects for any proposed significant 
energy action. A ``significant energy action'' is defined as any action 
by an agency that promulgates or is expected to lead to promulgation of 
a final rule, and that: (1) Is a significant regulatory action under 
Executive Order 12866, or any successor order; and (2) is likely to 
have a significant adverse effect on the supply, distribution, or use 
of energy, or (3) is designated by the Administrator of OIRA as a 
significant energy action. For any proposed significant energy action, 
the agency must give a detailed statement of any adverse effects on 
energy supply, distribution, or use should the proposal be implemented, 
and of reasonable alternatives to the action and their expected 
benefits on energy supply, distribution, and use.
    DOE has tentatively concluded that this regulatory action, which 
proposes energy conservation standards for the considered walk-in 
refrigeration systems, is not a significant energy action because the 
proposed standards are not likely to have a significant adverse effect 
on the supply, distribution, or use of energy, nor has it been 
designated as such by the Administrator at OIRA. Accordingly, DOE has 
not prepared a Statement of Energy Effects on this proposed rule.

L. Review Under the Information Quality Bulletin for Peer Review

    On December 16, 2004, OMB, in consultation with the Office of 
Science and Technology Policy, issued its Final Information Quality 
Bulletin for Peer Review (the Bulletin). 70 FR 2664 (Jan. 14, 2005). 
The Bulletin establishes that certain scientific information shall be 
peer reviewed by qualified specialists before it is disseminated by the 
Federal Government, including influential scientific information 
related to agency regulatory actions. The purpose of the bulletin is to 
enhance the quality and credibility of the Government's scientific 
information. Under the Bulletin, the energy conservation standards 
rulemaking analyses are ``influential scientific information,'' which 
the Bulletin defines as ``scientific information the agency reasonably 
can determine will have, or does have, a clear and substantial impact 
on important public policies or private sector decisions.'' Id. at FR 
2667.
    In response to OMB's Bulletin, DOE conducted formal in-progress 
peer reviews of the energy conservation standards development process 
and analyses and has prepared a Peer Review Report pertaining to the 
energy conservation standards rulemaking analyses. Generation of this 
report involved a rigorous, formal, and documented evaluation using 
objective criteria and qualified and independent reviewers to make a 
judgment as to the technical/scientific/business merit, the actual or 
anticipated results, and the productivity and management effectiveness 
of programs and/or projects. The ``Energy Conservation Standards 
Rulemaking Peer Review Report'' dated February 2007 has been 
disseminated and is available at the following Web site: http://energy.gov/eere/buildings/downloads/energy-conservation-standards-rulemaking-peer-review-report-0.

VII. Public Participation

A. Attendance at the Public Meeting

    The time, date, and location of the public meeting are listed in 
the DATES and ADDRESSES sections at the beginning of this document. If 
you plan to attend the public meeting, please notify the Appliance and 
Equipment Standards Program Staff at (202) 586-6636 or 
[email protected].
    Please note that foreign nationals visiting DOE Headquarters are 
subject to advance security screening procedures which require advance 
notice prior to attendance at the public meeting. If a foreign national 
wishes to participate in

[[Page 63047]]

the public meeting, please inform DOE of this fact as soon as possible 
by contacting Ms. Regina Washington at (202) 586-1214 or by email 
([email protected]) so that the necessary procedures can be 
completed.
    DOE requires visitors to have laptops and other devices, such as 
tablets, checked upon entry into the Forrestal Building. Any person 
wishing to bring these devices into the building will be required to 
obtain a property pass. Visitors should avoid bringing these devices, 
or allow an extra 45 minutes to check in. Please report to the 
visitor's desk to have devices checked before proceeding through 
security.
    Due to the REAL ID Act implemented by the Department of Homeland 
Security (DHS), there have been recent changes regarding identification 
(ID) requirements for individuals wishing to enter Federal buildings 
from specific States and U.S. territories. As a result, driver's 
licenses from several States or territory will not be accepted for 
building entry, and instead, one of the alternate forms of ID listed 
below will be required. DHS has determined that regular driver's 
licenses (and ID cards) from the following jurisdictions are not 
acceptable for entry into DOE facilities: Alaska, American Samoa, 
Arizona, Louisiana, Maine, Massachusetts, Minnesota, New York, 
Oklahoma, and Washington. Acceptable alternate forms of Photo-ID 
include: U.S. Passport or Passport Card; an Enhanced Driver's License 
or Enhanced ID-Card issued by the States of Minnesota, New York, or 
Washington (Enhanced licenses issued by these States are clearly marked 
Enhanced or Enhanced Driver's License); a military ID or other Federal 
government-issued Photo-ID card.
    In addition, you can attend the public meeting via webinar. Webinar 
registration information, participant instructions, and information 
about the capabilities available to webinar participants will be 
published on DOE's Web site at: https://www1.eere.energy.gov/buildings/appliance_standards/standards.aspx?productid=56. Participants are 
responsible for ensuring their systems are compatible with the webinar 
software.

B. Procedure for Submitting Prepared General Statements for 
Distribution

    Any person who has plans to present a prepared general statement 
may request that copies of his or her statement be made available at 
the public meeting. Such persons may submit requests, along with an 
advance electronic copy of their statement in PDF (preferred), 
Microsoft Word or Excel, WordPerfect, or text (ASCII) file format, to 
the appropriate address shown in the ADDRESSES section at the beginning 
of this document. The request and advance copy of statements must be 
received at least one week before the public meeting and may be 
emailed, hand-delivered, or sent by mail. DOE prefers to receive 
requests and advance copies via email. Please include a telephone 
number to enable DOE staff to make follow-up contact, if needed.

C. Conduct of the Public Meeting

    DOE will designate a DOE official to preside at the public meeting 
and may also use a professional facilitator to aid discussion. The 
meeting will not be a judicial or evidentiary-type public hearing, but 
DOE will conduct it in accordance with section 336 of EPCA. (42 U.S.C. 
6306) A court reporter will be present to record the proceedings and 
prepare a transcript. DOE reserves the right to schedule the order of 
presentations and to establish the procedures governing the conduct of 
the public meeting. There shall not be discussion of proprietary 
information, costs or prices, market share, or other commercial matters 
regulated by U.S. anti-trust laws. After the public meeting, interested 
parties may submit further comments on the proceedings, as well as on 
any aspect of the rulemaking, until the end of the comment period.
    The public meeting will be conducted in an informal, conference 
style. DOE will present summaries of comments received before the 
public meeting, allow time for prepared general statements by 
participants, and encourage all interested parties to share their views 
on issues affecting this rulemaking. Each participant will be allowed 
to make a general statement (within time limits determined by DOE), 
before the discussion of specific topics. DOE will allow, as time 
permits, other participants to comment briefly on any general 
statements.
    At the end of all prepared statements on a topic, DOE will permit 
participants to clarify their statements briefly and comment on 
statements made by others. Participants should be prepared to answer 
questions by DOE and by other participants concerning these issues. DOE 
representatives may also ask questions of participants concerning other 
matters relevant to this rulemaking. The official conducting the public 
meeting will accept additional comments or questions from those 
attending, as time permits. The presiding official will announce any 
further procedural rules or modification of the procedures that may be 
needed for the proper conduct of the public meeting.
    A transcript of the public meeting will be included in the docket, 
which can be viewed as described in the Docket section at the beginning 
of this notice and will be accessible on the DOE Web site. In addition, 
any person may buy a copy of the transcript from the transcribing 
reporter.

D. Submission of Comments

    DOE will accept comments, data, and information regarding this 
proposed rule before or after the public meeting, but no later than the 
date provided in the DATES section at the beginning of this proposed 
rule. Interested parties may submit comments, data, and other 
information using any of the methods described in the ADDRESSES section 
at the beginning of this document.
    Submitting comments via www.regulations.gov. The 
www.regulations.gov Web page will require you to provide your name and 
contact information. Your contact information will be viewable to DOE 
Building Technologies staff only. Your contact information will not be 
publicly viewable except for your first and last names, organization 
name (if any), and submitter representative name (if any). If your 
comment is not processed properly because of technical difficulties, 
DOE will use this information to contact you. If DOE cannot read your 
comment due to technical difficulties and cannot contact you for 
clarification, DOE may not be able to consider your comment.
    However, your contact information will be publicly viewable if you 
include it in the comment itself or in any documents attached to your 
comment. Any information that you do not want to be publicly viewable 
should not be included in your comment, nor in any document attached to 
your comment. Otherwise, persons viewing comments will see only first 
and last names, organization names, correspondence containing comments, 
and any documents submitted with the comments.
    Do not submit to www.regulations.gov information for which 
disclosure is restricted by statute, such as trade secrets and 
commercial or financial information (hereinafter referred to as 
Confidential Business Information (CBI)). Comments submitted through 
www.regulations.gov cannot be claimed as CBI. Comments received through 
the Web site will waive any CBI claims for the information submitted. 
For information on submitting CBI, see the Confidential Business 
Information section below.

[[Page 63048]]

    DOE processes submissions made through www.regulations.gov before 
posting. Normally, comments will be posted within a few days of being 
submitted. However, if large volumes of comments are being processed 
simultaneously, your comment may not be viewable for up to several 
weeks. Please keep the comment tracking number that www.regulations.gov 
provides after you have successfully uploaded your comment.
    Submitting comments via email, hand delivery/courier, or mail. 
Comments and documents submitted via email, hand delivery/courier, or 
mail also will be posted to www.regulations.gov. If you do not want 
your personal contact information to be publicly viewable, do not 
include it in your comment or any accompanying documents. Instead, 
provide your contact information in a cover letter. Include your first 
and last names, email address, telephone number, and optional mailing 
address. The cover letter will not be publicly viewable as long as it 
does not include any comments.
    Include contact information each time you submit comments, data, 
documents, and other information to DOE. If you submit via mail or hand 
delivery/courier, please provide all items on a CD, if feasible, in 
which case it is not necessary to submit printed copies. No 
telefacsimiles (faxes) will be accepted.
    Comments, data, and other information submitted to DOE 
electronically should be provided in PDF (preferred), Microsoft Word or 
Excel, WordPerfect, or text (ASCII) file format. Provide documents that 
are not secured, that are written in English, and that are free of any 
defects or viruses. Documents should not contain special characters or 
any form of encryption and, if possible, they should carry the 
electronic signature of the author.
    Campaign form letters. Please submit campaign form letters by the 
originating organization in batches of between 50 to 500 form letters 
per PDF or as one form letter with a list of supporters' names compiled 
into one or more PDFs. This reduces comment processing and posting 
time.
    Confidential Business Information. Pursuant to 10 CFR 1004.11, any 
person submitting information that he or she believes to be 
confidential and exempt by law from public disclosure should submit via 
email, postal mail, or hand delivery/courier two well-marked copies: 
One copy of the document marked ``confidential'' including all the 
information believed to be confidential, and one copy of the document 
marked ``non-confidential'' with the information believed to be 
confidential deleted. Submit these documents via email or on a CD, if 
feasible. DOE will make its own determination about the confidential 
status of the information and treat it according to its determination.
    Factors of interest to DOE when evaluating requests to treat 
submitted information as confidential include: (1) A description of the 
items; (2) whether and why such items are customarily treated as 
confidential within the industry; (3) whether the information is 
generally known by or available from other sources; (4) whether the 
information has previously been made available to others without 
obligation concerning its confidentiality; (5) an explanation of the 
competitive injury to the submitting person that would result from 
public disclosure; (6) when such information might lose its 
confidential character due to the passage of time; and (7) why 
disclosure of the information would be contrary to the public interest.
    It is DOE's policy that all comments may be included in the public 
docket, without change and as received, including any personal 
information provided in the comments (except information deemed to be 
exempt from public disclosure).

E. Issues on Which DOE Seeks Comment

    Although DOE welcomes comments on any aspect of this proposal, DOE 
is particularly interested in receiving comments and views of 
interested parties concerning the following issues:
    1. DOE seeks comment regarding the method it used for estimating 
the manufacturing costs related to the equipment discussed in this 
proposal. See section IV.C.4 for details.
    2. DOE seeks input on its analysis of distribution channels in the 
WICF market. See section IV.D for details.
    3. DOE requests comments on the most appropriate trend to use for 
real (inflation-adjusted) walk-in prices. See section IV.F.2 for 
details.
    4. DOE requests comment on whether any of the efficiency levels 
considered in this NOPR might lead to an increase in installation costs 
and, if so, data regarding the magnitude of the increased cost for each 
relevant efficiency level. See section IV.F.3 for details.
    5. DOE requests comment on its assumption to not consider the 
impact of a rebound effect for the WICF refrigeration system classes 
covered in this NOPR. Further, DOE requests any data or sources of 
literature regarding the magnitude of the rebound effect for the 
covered WICF refrigeration equipment. See section IV.F.4 for details.
    6. DOE requests comment on whether any of the efficiency levels 
considered in this NOPR might lead to an increase in maintenance and 
repair costs and, if so, data regarding the magnitude of the increased 
cost for each relevant efficiency level. See section IV.F.6 for 
details.
    7. DOE seeks comment on the minimum, average, and maximum equipment 
lifetimes it assumed for the covered classes of WICF refrigeration 
equipment, and whether or not they are appropriate for all equipment 
classes and capacities. See section IV.F.7 for details.
    8. DOE requests comment on its assumption that all WICF 
refrigeration systems covered by this rulemaking would be at the 
baseline efficiency level in the compliance year. See section IV.F.9 
for details.
    9. DOE seeks comment on the share of equipment sold as individual 
components versus the share of equipment sold as manufacturer matched 
equipment. See section IV.G for details.
    10. DOE requests comment on its assumption that the WICF 
refrigeration system efficiency of the classes covered in this proposal 
would remain unchanged over time in the absence of adopting the 
proposed standards. See section IV.H for details.
    11. DOE seeks additional information on industry capital and 
product conversion costs that would be required to achieve compliance 
with the proposed WICF refrigeration systems standards. See section 
IV.J.3.c for details.
    12. DOE requests comment on the appropriateness of assuming a 
constant manufacturer markup of 1.35 across all equipment classes and 
efficiency levels for the classes of WICF refrigeration systems 
discussed in this proposed rulemaking. See section IV.J.3.d for 
details.
    13. DOE requests comment and data on the potential impacts to 
direct employment levels. See section V.B.2.b for details.
    14. DOE requests data on conversion costs (upfront investments 
necessary ahead of the standard taking effect) and stranded assets 
manufacturers of complete walk-ins could incur as a result of the 
proposed standard. DOE also requests comment on any direct burdens on 
manufacturers of complete walk-ins that would arise as a result of the 
proposed rule. See section V.B.2.f for details.
    15. DOE seeks comment on whether there are features or attributes 
of more energy-efficient WICF refrigeration systems that manufacturers 
would

[[Page 63049]]

produce to meet the standards in this proposed rule that might affect 
how they would be used by consumers. DOE requests comment specifically 
on how any such effects should be weighed in the choice of standards 
for the final rule. See section V.C.1 for details.
    16. DOE requests comment on the number of small WICF refrigeration 
manufacturers in the industry, data on the market share of those 
manufacturers, and the conversion costs those manufacturers are likely 
to incur. Additionally, DOE requests comment on the conversion costs 
and stranded assets small installers of walk-ins may incur. See section 
VI.B.4 for details.

VIII. Approval of the Office of the Secretary

    The Secretary of Energy has approved publication of this notice of 
proposed rulemaking.

List of Subjects in 10 CFR Part 431

    Administrative practice and procedure, Confidential business 
information, Energy conservation, Incorporation by reference, 
Intergovernmental relations, Small businesses.

    Issued in Washington, DC, on August 30, 2016.
David Friedman,
Acting Assistant Secretary, Energy Efficiency and Renewable Energy.

    For the reasons set forth in the preamble, DOE proposes to amend 
part 431 of chapter II of title 10 of the Code of Federal Regulations, 
as set forth below:

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

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

    Authority: 42 U.S.C. 6291-6317; 28 U.S.C. 2461 note.

0
2. In Sec.  431.306, revise paragraph (e), and add paragraph (f) to 
read as follows:


Sec.  431.306  Energy conservation standards and their effective dates.

* * * * *
    (e) Walk-in cooler and freezer refrigeration systems. All walk-in 
cooler and walk-in freezer refrigeration systems manufactured starting 
on June 5, 2017 and before [DATE THREE YEARS AFTER DATE OF PUBLICATION 
OF THE FINAL RULE IN THE FEDERAL REGISTER], except for walk-in process 
cooling refrigeration systems (as defined in 10 CFR 431.302), must 
satisfy the following standards:

------------------------------------------------------------------------
                                                               Minimum
                      Equipment class                        AWEF (Btu/W-
                                                                  h)
------------------------------------------------------------------------
Dedicated Condensing, Medium Temperature, Indoor System....         5.61
Dedicated Condensing, Medium Temperature, Outdoor System...         7.60
------------------------------------------------------------------------

    (f) Walk-in cooler and freezer refrigeration systems. All walk-in 
cooler and walk-in freezer refrigeration systems manufactured starting 
on [DATE 3 YEARS AFTER DATE OF PUBLICATION OF THE FINAL RULE IN THE 
FEDERAL REGISTER], except for walk-in process cooling refrigeration 
systems (as defined in 10 CFR 431.302), must satisfy the following 
standards:

------------------------------------------------------------------------
        Equipment class                  Minimum AWEF (Btu/W-h) *
------------------------------------------------------------------------
Dedicated Condensing System--    5.61.
 Medium, Indoor.
Dedicated Condensing System--    7.60.
 Medium, Outdoor.
Dedicated Condensing System--
 Low, Indoor with a Net
 Capacity (qnet) of:
    <6,500 Btu/h...............  9.091 x 10-\5\ x qnet + 1.81.
    >=6,500 Btu/h..............  2.40.
Dedicated Condensing System--
 Low, Outdoor with a Net
 Capacity (qnet) of:
    <6,500 Btu/h...............  6.522 x 10-\5\ x qnet + 2.73.
    >=6,500 Btu/h..............  3.15.
Unit Cooler--Medium              9.00.
Unit Cooler--Low with a Net
 Capacity (qnet) of:
    <15,500 Btu/h..............  1.575 x 10-\5\ x qnet + 3.91.
    >=15,500 Btu/h.............  4.15.
------------------------------------------------------------------------
* Where qnet is net capacity as determined in accordance with 10 CFR
  431.304 and certified in accordance with 10 CFR part 429.

[FR Doc. 2016-21583 Filed 9-12-16; 8:45 am]
BILLING CODE 6450-01-P