[Federal Register Volume 81, Number 209 (Friday, October 28, 2016)]
[Rules and Regulations]
[Pages 75194-75263]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-24759]



[[Page 75193]]

Vol. 81

Friday,

No. 209

October 28, 2016

Part II





Department of Energy





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10 CFR Part 430





 Energy Conservation Program: Energy Conservation Standards for 
Miscellaneous Refrigeration Products; Final Rule

  Federal Register / Vol. 81 , No. 209 / Friday, October 28, 2016 / 
Rules and Regulations  

[[Page 75194]]


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DEPARTMENT OF ENERGY

10 CFR Part 430

[Docket Number EERE-2011-BT-STD-0043]
RIN 1904-AC51


Energy Conservation Program: Energy Conservation Standards for 
Miscellaneous Refrigeration Products

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

ACTION: Direct final rule.

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    Synopsis: The Energy Policy and Conservation Act of 1975, as 
amended, established the Energy Conservation Program for Consumer 
Products Other Than Automobiles. Based on provisions in EPCA that 
enable the Secretary of Energy to classify additional types of consumer 
products as covered products, the U.S. Department of Energy (DOE) 
classified miscellaneous refrigeration products as covered consumer 
products under EPCA. In this direct final rule, DOE is adopting new 
energy conservation standards for these products that correspond to the 
recommendations submitted jointly by interested persons that are fairly 
representative of relevant points of view. DOE has determined that the 
new energy conservation standards for these products would result in 
significant conservation of energy, and are technologically feasible 
and economically justified. A notice of proposed rulemaking that 
proposes identical energy efficiency standards is published elsewhere 
in this Federal Register. If DOE receives adverse comment and 
determines that such comment may provide a reasonable basis for 
withdrawal, DOE will withdraw the direct final rule and will proceed 
with the proposed rule.

DATES: The effective date of this rule is February 27, 2017 unless 
adverse comment is received by February 15, 2017. If adverse comments 
are received that DOE determines may provide a reasonable basis for 
withdrawal of the final rule, a timely withdrawal of this rule will be 
published in the Federal Register. If no such adverse comments are 
received, compliance with the new standards established in this direct 
final rule will be required for miscellaneous refrigeration products as 
detailed in the SUPPLEMENTARY INFORMATION section of this document. 
Compliance with these new standards for miscellaneous refrigeration 
products is required starting on October 28, 2019.

ADDRESSES: Any comments submitted must identify the direct final rule 
for Energy Conservation Standards for miscellaneous refrigeration 
products and provide docket number EERE-2011-BT-STD-0043 and/or 
regulatory information number (RIN) 1904-AC51. 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'').
    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://www.regulations.gov/docket?D=EERE-2011-BT-STD-0043. This Web page 
contains a link to the docket for this document 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. 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].

FOR FURTHER INFORMATION CONTACT: Joseph Hagerman, 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) 586-4549. Email: 
[email protected].

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Synopsis of the Direct Final Rule
    A. Benefits and Costs to Consumers
    B. Impact on Manufacturers
    C. National Benefits and Costs
    D. Conclusion
II. Introduction
    A. Authority
    B. History of Standards Rulemaking for Miscellaneous 
Refrigeration Products
III. General Discussion
    A. Consensus Agreement
    1. Background
    2. Recommendations
    B. Compliance Date
    C. Scope of Coverage
    D. Product Classes
    E. Test Procedure
    F. Technological Feasibility
    1. General
    2. Maximum Technologically Feasible Levels
    G. Energy Savings
    1. Determination of Savings
    2. Significance of Savings
    H. 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
IV. Methodology and Discussion of Related Comments
    A. Market and Technology Assessment
    1. Scope of Coverage
    a. Coolers
    b. Combination Cooler Refrigeration Products
    c. Ice Makers
    d. Non-Compressor Refrigerators
    2. Product Classes
    a. Coolers
    b. Combination Cooler Refrigeration Products
    3. Technology Options
    B. Screening Analysis
    1. Screened-Out Technologies
    2. Remaining Technologies
    C. Engineering Analysis
    1. Coolers
    a. Methodology
    b. Efficiency Levels

[[Page 75195]]

    c. Manufacturer Production Costs
    2. Combination Cooler Refrigeration Products
    a. Methodology
    b. Efficiency Levels
    c. Manufacturer Production Costs
    D. Markups Analysis
    E. Energy Use Analysis
    F. Life-Cycle Cost and Payback Period Analysis
    1. Product Cost
    2. Installation Cost
    3. Annual Energy Consumption
    4. Energy Prices
    5. Maintenance and Repair Costs
    6. Product Lifetime
    7. Discount Rates
    8. Efficiency Distribution in the No-New-Standards Case
    9. Payback Period Analysis
    G. Shipments Analysis
    H. National Impact Analysis
    1. Product Efficiency Trends
    2. National Energy Savings
    3. Net Present Value Analysis
    I. Consumer Subgroup Analysis
    J. Manufacturer Impact Analysis
    1. Overview
    2. Government Regulatory Impact Model
    a. Government Regulatory Impact Model Key Inputs
    b. Government Regulatory Impact Model Scenarios
    3. Manufacturer Interviews
    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
    3. National Impact Analysis
    a. Significance of Energy Savings
    b. Net Present Value of Consumer Costs and Benefits
    c. Indirect Impacts on Employment
    4. Impact on Utility or Performance of Products
    5. Impact of Any Lessening of Competition
    6. Need of the Nation To Conserve Energy
    7. Other Factors
    8. Summary of National Economic Impacts
    9. Conclusion
    a. Benefits and Burdens of TSLs Considered for Coolers
    b. Benefits and Burdens of TSLs Considered for Combination 
Cooler Refrigeration Products
    c. Summary of Annualized Benefits and Costs of the Adopted 
Standards
VI. Procedural Issues and Regulatory Review
    A. Review Under Executive Orders 12866 and 13563
    B. Review Under the Regulatory Flexibility Act
    C. Review Under the Paperwork Reduction Act
    D. Review Under the National Environmental Policy Act of 1969
    E. Review Under Executive Order 13132
    F. Review Under Executive Order 12988
    G. Review Under the Unfunded Mandates Reform Act of 1995
    H. Review Under the Treasury and General Government 
Appropriations Act, 1999
    I. Review Under Executive Order 12630
    J. Review Under the Treasury and General Government 
Appropriations Act, 2001
    K. Review Under Executive Order 13211
    L. Review Under the Information Quality Bulletin for Peer Review
    M. Congressional Notification
VII. Public Participation
    A. Submission of Comments
    B. Issues on Which DOE Seeks Comment
VIII. Approval of the Office of the Secretary

I. Synopsis of the Direct Final Rule

    Title III, Part B \1\ of the Energy Policy and Conservation Act of 
1975 (``EPCA'' or in context, ``the Act''), Public Law 94-163 (42 
U.S.C. 6291-6309, as codified), established the Energy Conservation 
Program for Consumer Products Other Than Automobiles.\2\ In addition to 
specifying a list of covered residential products and commercial 
equipment, EPCA contains provisions that enable the Secretary of Energy 
to classify additional types of consumer products as covered products. 
(42 U.S.C. 6292(a)(20)) In a final determination of coverage published 
in the Federal Register on July 18, 2016 (the July 2016 Final Coverage 
Determination), DOE classified miscellaneous refrigeration products 
(``MREFs'') as covered consumer products under EPCA. 81 FR 46768. The 
MREF category includes refrigeration products such as coolers (e.g., 
wine chillers) and combination cooler refrigeration products (e.g., 
wine chillers combined with a refrigerator, freezer, or refrigerator-
freezer).
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    \1\ For editorial reasons, upon codification in the U.S. Code, 
Part B was redesignated Part A.
    \2\ All references to EPCA in this document refer to the statute 
as amended through the Energy Efficiency Improvement Act of 2015, 
Public Law 114-11 (April 30, 2015).
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    Pursuant to EPCA, any new or amended energy conservation standard 
must be designed to achieve the maximum improvement in energy 
efficiency that is technologically feasible and economically justified. 
(42 U.S.C. 6295(o)(2)(A)) Furthermore, the new or amended standard must 
result in a significant conservation of energy. (42 U.S.C. 
6295(o)(3)(B))
    DOE received a statement submitted jointly by interested persons 
that are fairly representative of relevant points of view (including 
representatives of manufacturers of the covered equipment at issue, 
States, and efficiency advocates) containing recommendations with 
respect to new energy conservation standards for MREFs (see section 
III.A of this document for a description of the jointly-submitted 
statement). DOE has determined that the recommended standards contained 
in the statement are in accordance with 42 U.S.C. 6295(o), which 
prescribes the conditions under which DOE may adopt new standards. 
Under the authority provided by 42 U.S.C. 6295(p)(4), DOE is issuing 
this direct final rule to establish new energy conservation standards 
for MREFs.
    The new MREF standards, which are expressed in maximum allowable 
annual energy use (``AEU'') in kilowatt-hours per year (``kWh/yr'') as 
a function of the calculated adjusted volume (``AV'') in cubic feet 
(``ft\3\''), are shown in Table I.1 and Table I.2. The standards will 
apply to all MREFs listed in Table I.1 and Table I.2 and manufactured 
in, or imported into, the United States starting on October 28, 2019.

          Table I.1--Energy Conservation Standards for Coolers
------------------------------------------------------------------------
             Product class              Maximum  allowable AEU  (kWh/yr)
------------------------------------------------------------------------
Built-in Compact......................  7.88AV [dagger] + 155.8
Built-in..............................
Freestanding Compact..................
Freestanding..........................
------------------------------------------------------------------------
[dagger] AV = Adjusted volume, in ft\3\, as calculated according to
  title 10 of the Code of Federal Regulations (``CFR'') part 430,
  subpart B, appendix A.


[[Page 75196]]


             Table I.2--Energy Conservation Standards for Combination Cooler Refrigeration Products
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        Product class description             Product class designation *      Maximum  allowable AEU  (kWh/yr)
----------------------------------------------------------------------------------------------------------------
Cooler with all-refrigerator--automatic    C-3A............................  4.57AV [dagger] + 130.4
 defrost.
Built-in cooler with all-refrigerator--    C-3A-BI.........................  5.19AV + 147.8
 automatic defrost.
Cooler with upright freezers with          C-9.............................  5.58AV + 147.7
 automatic defrost without an automatic
 icemaker.
Built-in cooler with upright freezer with  C-9-BI..........................  6.38AV + 168.8
 automatic defrost without an automatic
 icemaker.
Cooler with upright freezer with           C-9I............................  5.58AV + 231.7
 automatic defrost with an automatic
 icemaker.
Built-in cooler with upright freezer with  C-9I-BI.........................  6.38AV + 252.8
 automatic defrost with an automatic
 icemaker.
Compact cooler with all-refrigerator--     C-13A...........................  5.93AV + 193.7
 automatic defrost.
Built-in compact cooler with all-          C-13A-BI [dagger][dagger].......  6.52AV + 213.1
 refrigerator--automatic defrost.
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* These product classes are consistent with the current product classes established for refrigerators,
  refrigerator-freezers, and freezers. 10 CFR 430.32.
[dagger] AV = Adjusted volume, in ft\3\, as calculated according to 10 CFR part 430, subpart B, appendix A.
[dagger][dagger] There is no current product class 13A-BI for refrigerators, refrigerator-freezers, or freezers.

A. Benefits and Costs to Consumers

    Table I.3 presents DOE's evaluation of the economic impacts of the 
adopted standards on consumers of MREFs, as measured by the average 
life-cycle cost (``LCC'') savings and the simple payback period 
(``PBP'').\3\ The average LCC savings are positive for all product 
classes affected by the adopted standards, and the PBPs are less than 
the average lifetime of MREFs, which is estimated to be at least 10 
years (see section IV.F of this direct final rule).
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    \3\ The average LCC savings are measured relative to the 
efficiency distribution in the compliance year in the absence of 
standards (see section IV.F of this document). The simple payback 
period, which is designed to compare specific efficiency levels, is 
measured relative to the lowest efficiency level in the no-new-
standards case (see section IV.F.9 of this document).

 Table I.3--Impacts of New Energy Conservation Standards on Consumers of
                                  MREFs
------------------------------------------------------------------------
                                                              Simple
                                            Average LCC       payback
              Product class                  savings *       period *
                                              (2015$)         (years)
------------------------------------------------------------------------
                                 Coolers
------------------------------------------------------------------------
Freestanding compact coolers............             265             1.4
Built-in compact coolers................              28             4.6
Freestanding coolers....................             153             1.8
Built-in coolers........................              77             6.1
------------------------------------------------------------------------
                Combination Cooler Refrigeration Products
------------------------------------------------------------------------
C-3A....................................            n.a.            n.a.
C-3A-BI.................................            n.a.            n.a.
C-9 [dagger]............................            n.a.            n.a.
C-9-BI [dagger].........................            n.a.            n.a.
C-13A...................................              32             4.3
C-13A-BI................................            n.a.            n.a.
------------------------------------------------------------------------
* Calculation of savings and PBP is not applicable (n.a.) if the
  standard is set at an efficiency level that is already met or exceeded
  in the MREF market.
[dagger] Results for C-9 and C-9-BI are also applicable to C-9I and C-9I-
  BI.

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

B. Impact on Manufacturers

    The industry net present value (``INPV'') is the sum of the 
discounted cash flows to the industry from the base year through the 
end of the analysis period (2016 to 2048). Using a real discount rate 
of 7.7 percent, DOE estimates that the INPV for manufacturers of MREFs 
in the case without standards is $263.3 million for coolers and $108.2 
million for combination cooler refrigeration products in 2015$. Under 
the new standards, DOE expects that manufacturers may lose up to 20.8 
percent of this INPV for coolers, which is approximately $54.8 million; 
and manufacturers may lose up to 0.7 percent of this INPV for 
combination cooler refrigeration products, which is approximately $0.8 
million. Additionally, based on DOE's interviews with the manufacturers 
of MREFs, DOE does not expect significant impacts on manufacturing 
capacity or loss of employment for the industry as a whole to result 
from the standards for MREFs adopted in this direct final rule.
    DOE's analysis of the impacts of new standards on manufacturers is 
described in section IV.J of this document.

C. National Benefits and Costs \4\
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    \4\ All monetary values in this section are expressed in 2015 
dollars and, where appropriate, are discounted to 2016 unless 
explicitly stated otherwise. Energy savings in this section refer to 
the full-fuel-cycle (``FFC'') savings (see section IV.H of this 
document for discussion).
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    DOE's analyses indicate that the adopted energy conservation 
standards for MREFs would save a significant amount of energy. Relative 
to the no-new-standards case, the lifetime energy

[[Page 75197]]

savings for MREFs purchased in the 30-year period that begins in the 
anticipated year of compliance with the new standards (2019-2048) 
amount to 1.5 quadrillion Btu (``quads'').\5\ This represents a savings 
of 58 percent relative to the energy use of these products in the no-
new-standards case.
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    \5\ A quad is equal to 10\15\ British thermal units (''Btu''). 
The quantity refers to FFC energy savings. FFC energy savings 
includes the energy consumed in extracting, processing, and 
transporting primary fuels (i.e., coal, natural gas, petroleum 
fuels), and, thus, presents a more complete picture of the impacts 
of energy efficiency standards. For more information on the FFC 
metric, see section IV.H of this document.
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    The cumulative net present value (``NPV'') of total consumer costs 
and savings of the standards for MREFs ranges from $4.78 billion (at a 
7-percent discount rate) to $11.02 billion (at a 3-percent discount 
rate). This NPV expresses the estimated total value of future 
operating-cost savings minus the estimated increased product costs for 
MREFs purchased in 2019-2048.
    In addition, the standards for MREFs are projected to yield 
significant environmental benefits. DOE estimates that the standards 
would result in cumulative greenhouse gas emission reductions (over the 
same period as for energy savings) of 91.8 million metric tons (``Mt'') 
\6\ of carbon dioxide (``CO2''), 54.0 thousand tons of 
sulfur dioxide (``SO2''), 164.0 tons of nitrogen oxides 
(``NOX''), 387.1 thousand tons of methane 
(``CH4''), 1.1 thousand tons of nitrous oxide 
(``N2O''), and 0.2 tons of mercury (``Hg'').\7\ The 
cumulative reduction in CO2 emissions through 2030 amounts 
to 20.2 Mt, which is equivalent to the emissions resulting from the 
annual electricity use of more than 2.8 million homes.
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    \6\ A metric ton is equivalent to 1.1 short tons. Results for 
NOX and Hg are presented in short tons.
    \7\ 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, which generally 
represents current legislation and environmental regulations for 
which implementing regulations were available as of October 31, 
2014.
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    The value of the CO2 reductions is calculated using a 
range of values per metric ton of CO2 (otherwise known as 
the ``Social Cost of Carbon,'' or ``SCC'') developed by a Federal 
interagency working group.\8\ The derivation of the SCC values is 
discussed in section IV.L of this document. Using discount rates 
appropriate for each set of SCC values, DOE estimates that the net 
present monetary value of the CO2 emissions reduction (not 
including CO2 equivalent emissions of other gases with 
global warming potential) is between $0.679 billion and $9.271 billion, 
with a value of $3.047 billion using the central SCC case represented 
by $40.6/t in 2015. DOE also estimates that the net present monetary 
value of the NOX emissions reduction to be $0.142 billion at 
a 7-percent discount rate, and $0.326 billion at a 3-percent discount 
rate.\9\
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    \8\ United States Government-Interagency Working Group on Social 
Cost of Carbon. Technical Support Document: Technical Update of the 
Social Cost of Carbon for Regulatory Impact Analysis Under Executive 
Order 12866. May 2013. Revised July 2015. Available at https://www.whitehouse.gov/sites/default/files/omb/inforeg/scc-tsd-final-july-2015.pdf.
    \9\ DOE estimated the monetized value of NOX 
emissions reductions associated with electricity savings 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 
www.epa.gov/cleanpowerplan/clean-power-plan-final-rule-regulatory-impact-analysis. See section IV.L of this document 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, 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.
---------------------------------------------------------------------------

    Table I.4 summarizes the economic benefits and costs expected to 
result from the adopted standards for MREFs.

     Table I.4--Summary of Economic Benefits and Costs of New Energy
                   Conservation Standards for MREFs *
------------------------------------------------------------------------
                                           Present value
                Category                     (billion      Discount rate
                                              2015$)            (%)
------------------------------------------------------------------------
                                Benefits
------------------------------------------------------------------------
Consumer Operating Cost Savings.........             6.4               7
                                                    13.9               3
CO2 Reduction (using mean SCC at 5%                  0.7               5
 discount rate) **......................
CO2 Reduction (using mean SCC at 3%                  3.0               3
 discount rate) **......................
CO2 Reduction (using mean SCC at 2.5%                4.8             2.5
 discount rate) **......................
CO2 Reduction (using 95th percentile SCC             9.3               3
 at 3% discount rate) **................
NOX Reduction [dagger]..................             0.1               7
                                                     0.3               3
Total Benefits [dagger][dagger].........             9.6               7
                                                    17.3               3
------------------------------------------------------------------------
                                  Costs
------------------------------------------------------------------------
Consumer Incremental Installed Costs....             1.7               7
                                                     2.9               3
------------------------------------------------------------------------
                              Net Benefits
------------------------------------------------------------------------
Including CO2 and NOX Reduction                      8.0               7
 Monetized Value [dagger][dagger].......            14.4               3
------------------------------------------------------------------------
* This table presents the costs and benefits associated with MREFs
  shipped in 2019-2048. These results include benefits to consumers
  which accrue after 2048 from the products purchased in 2019-2048. The
  incremental installed costs include incremental equipment cost as well
  as installation costs. The CO2 reduction benefits are global benefits
  due to actions that occur nationally. Note that the Benefits and Costs
  may not sum to the Net Benefits due to rounding.

[[Page 75198]]

 
** 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 integrated assessment models, at discount rates of 5%, 3%,
  and 2.5%. For example, for 2015 emissions, these values are $12.4/t,
  $40.6/t, and $63.2/t, in 2015$, respectively. The fourth set ($118/t
  in 2015$ for 2015 emissions), which represents the 95th percentile of
  the SCC distribution calculated using a 3% discount rate, is included
  to represent higher-than-expected impacts from temperature change
  further out in the tails of the SCC distribution. The SCC values are
  emission year specific. See section IV.L.1 of this document for more
  details.
[dagger] DOE estimated the monetized value of NOX emissions reductions
  associated with electricity savings 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 www.epa.gov/cleanpowerplan/clean-power-plan-final-rule-regulatory-impact-analysis.) See section IV.L of
  this document 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][dagger] Total Benefits for both the 3% and 7% cases are
  presented using only the average SCC with 3-percent discount rate.

    The benefits and costs of the adopted standards for MREFs sold in 
2019 to 2048 can also be expressed in terms of annualized values. The 
monetary values for the total annualized net benefits are the sum of 
(1) the national economic value of the benefits in reduced operating 
costs, minus (2) the increases in product purchase prices and 
installation costs, plus (3) the value of the benefits of 
CO2 and NOX emission reductions, all 
annualized.\10\
---------------------------------------------------------------------------

    \10\ To convert the time-series of costs and benefits into 
annualized values, DOE calculated a present value in 2015, the year 
used for discounting the NPV of total consumer costs and savings. 
For the benefits, DOE calculated a present value associated with 
each year's shipments in the year in which the shipments occur 
(e.g., 2020 or 2030), and then discounted the present value from 
each year to 2015. The calculation uses discount rates of 3 and 7 
percent for all costs and benefits except for the value of 
CO2 reductions, for which DOE used case-specific discount 
rates, as shown in Table I.4. Using the present value, DOE then 
calculated the fixed annual payment over a 30-year period, starting 
in the compliance year that yields the same present value.
---------------------------------------------------------------------------

    The national operating cost savings are domestic private U.S. 
consumer monetary savings that occur as a result of purchasing the 
covered products. The national operating cost savings is measured for 
the lifetime of MREFs shipped in 2019-2048. The CO2 
reduction is a benefit that accrues globally due to decreased domestic 
energy consumption that is expected to result from this rule. Because 
CO2 emissions have a very long residence time in the 
atmosphere, the SCC values in future years reflect future 
CO2-emissions impacts that continue beyond 2100 through 
2300.
    Estimates of annualized benefits and costs of the adopted standards 
are shown in Table I.5. The results under the primary estimate are as 
follows. Using a 7-percent discount rate for benefits and costs other 
than CO2 reduction (for which DOE used a 3-percent discount 
rate along with the SCC series that has a value of $40.6/t in 
2015),\11\ the estimated cost of the standards in this rule is $153 
million per year in increased equipment costs, while the estimated 
annual benefits are $593 million in reduced equipment operating costs, 
$165 million in CO2 reductions, and $13.1 million in reduced 
NOX emissions. In this case, the net benefit amounts to $619 
million per year.
---------------------------------------------------------------------------

    \11\ 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 of this document).
---------------------------------------------------------------------------

    Using a 3-percent discount rate for all benefits and costs and the 
SCC series has a value of $40.6/t in 2015, the estimated cost of the 
standards is $157 million per year in increased equipment costs, while 
the estimated annual benefits are $754 million in reduced operating 
costs, $165 million in CO2 reductions, and $17.7 million in 
reduced NOX emissions. In this case, the net benefit amounts 
to $779 million per year.

                                          Table I.5--Annualized Benefits and Costs of New Standards for MREFs *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                              Discount rate                Primary estimate        Low net benefits estimate  High net benefits estimate
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      (million 2015$/year)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings...  7%..............................  593.......................  545.......................  649.
                                    3%..............................  754.......................  686.......................  839.
CO2 Reduction (using mean SCC at    5%..............................  49........................  46........................  53.
 5% discount rate) **.
CO2 Reduction (using mean SCC at    3%..............................  165.......................  155.......................  179.
 3% discount rate) **.
CO2 Reduction (using mean SCC at    2.5%............................  242.......................  227.......................  263.
 2.5% discount rate) **.
CO2 Reduction (using 95th           3%..............................  502.......................  471.......................  546.
 percentile SCC at 3% discount
 rate) **.
NOX Reduction [dagger]............  7%..............................  13.1......................  12.4......................  31.6.
                                    3%..............................  17.7......................  16.6......................  43.6.
Total Benefits [dagger][dagger]...  7% plus CO2 range...............  655 to 1,108..............  603 to 1,028..............  733 to 1,226.
                                    7%..............................  771.......................  712.......................  860.
                                    3% plus CO2 range...............  820 to 1,273..............  748 to 1,173..............  935 to 1,428.
                                    3%..............................  937.......................  857.......................  1,062.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                          Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Incremental Product Costs  7%..............................  153.......................  145.......................  118.
 [dagger][dagger][dagger].          3%..............................  157.......................  148.......................  116.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      Net Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total [dagger][dagger]............  7% plus CO2 range...............  503 to 956................  459 to 884................  615 to 1,108.
                                    7%..............................  619.......................  568.......................  742.
                                    3% plus CO2 range...............  663 to 1,116..............  601 to 1,026..............  819 to 1,312.

[[Page 75199]]

 
                                    3%..............................  779.......................  709.......................  946.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* This table presents the annualized costs and benefits associated with MREFs shipped in 2019-2048. These results include benefits to consumers which
  accrue after 2048 from the MREFs purchased from 2019-2048. The incremental installed costs include incremental equipment cost as well as installation
  costs. The CO2 reduction benefits are global benefits due to actions that occur nationally. The Primary, Low Benefits, and High Benefits Estimates
  utilize projections of energy prices and housing starts from the AEO 2015 Reference case, Low Economic Growth case, and High Economic Growth case,
  respectively. In addition, incremental product costs reflect a constant price trend in the Primary Estimate and the Low Benefits Estimate, and a high
  decline rate in the High Benefits Estimate. The methods used to derive projected price trends are explained in section IV.F of this document. Note
  that the Benefits and Costs may not sum to the Net Benefits due to rounding.
** The CO2 reduction benefits are calculated using 4 different sets of SCC values. The first three use the average SCC calculated using 5%, 3%, and 2.5%
  discount rates, respectively. The fourth represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The SCC values
  are emission year specific. See section IV.L.1 of this document for more details.
[dagger] DOE estimated the monetized value of NOX emissions reductions associated with electricity savings 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 www.epa.gov/cleanpowerplan/clean-power-plan-final-rule-regulatory-impact-analysis.) See section IV.L of this document 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 presented using only the average SCC with 3-percent discount rate. In the rows labeled
  ``7% plus CO2 range'' and ``3% plus CO2 range,'' the operating cost and NOX benefits are calculated using the labeled discount rate, and those values
  are added to the full range of CO2 values.
[dagger][dagger][dagger] The value of consumer incremental product costs is lower in the low net benefits estimate than it is in the primary estimate
  because both estimates use the same price trend and there are fewer shipments in the low net benefits estimate. The value of consumer incremental
  product costs is lower in the high net benefits scenario than it is in the primary case because the high net benefits scenario uses a highly declining
  price trend that more than offsets the increase in shipments due to higher economic growth.

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

D. Conclusion

    Based on the analyses culminating in this direct final rule, DOE 
found the benefits to the nation of the standards (energy savings, 
consumer LCC savings, positive NPV of consumer benefit, and emission 
reductions) outweigh the burdens (reduction of INPV for manufacturers). 
DOE has concluded that the standards in this direct final rule 
represent the maximum improvement in energy efficiency that is 
technologically feasible and economically justified, and would result 
in significant conservation of energy.
    Under the authority provided by 42 U.S.C. 6295(p)(4), DOE is 
issuing this direct final rule to establish new energy conservation 
standards for MREFs.

II. Introduction

    The following section briefly discusses the statutory authority 
underlying this direct final rule, as well as some of the relevant 
historical background related to the establishment of standards for 
MREFs.

A. Authority

    As indicated above, EPCA includes provisions covering the products 
addressed by this Direct final rule. EPCA addresses, among other 
things, the energy efficiency of certain types of consumer products. 
Relevant provisions of the Act specifically include definitions (42 
U.S.C. 6291), energy conservation standards (42 U.S.C. 6295), test 
procedures (42 U.S.C. 6293), labeling provisions (42 U.S.C. 6294), and 
the authority to require information and reports from manufacturers (42 
U.S.C. 6296).
    Under 42 U.S.C. 6292(a)(20), DOE may extend coverage over a 
particular type of consumer product provided that DOE determines that 
classifying products of such type as covered products is necessary or 
appropriate to carry out the purposes of EPCA and that the average 
annual per-household energy use by products of such type is likely to 
exceed 100 kilowatt-hours (``kWh'') or its British thermal unit 
(``Btu'') equivalent per year. See 42 U.S.C. 6292(b)(1). EPCA sets out 
the following additional requirements to establish energy conservation 
standards for a new covered product: (1) The average per household 
domestic energy use by such products exceeded 150 kWh or its Btu 
equivalent for any 12-month period ending before such determination; 
(2) the aggregate domestic household energy use by such products 
exceeded 4.2 million kWh or its Btu equivalent for any such 12-month 
period; (3) substantial energy efficiency of the products is 
technologically feasible; and (4) applying a labeling rule is unlikely 
to be sufficient to induce manufacturers to produce, and consumers and 
other persons to purchase, products of such type that achieve the 
maximum level of energy efficiency. See 42 U.S.C. 6295(l)(1).
    Pursuant to EPCA, DOE's energy conservation program for covered 
products consists essentially of four parts: (1) Testing; (2) labeling; 
(3) the establishment of Federal energy conservation standards; and (4) 
certification and enforcement procedures. The Federal Trade Commission 
(``FTC'') is primarily responsible for labeling, and DOE implements the 
remainder of the program. Subject to certain criteria and conditions, 
DOE is required to develop test procedures to measure the energy 
efficiency, energy use, or estimated annual operating cost of each 
covered product. (42 U.S.C. 6295(o)(3)(A) and (r)) Manufacturers of 
covered products must use the prescribed DOE test procedure as the 
basis for certifying to DOE that their products comply with the 
applicable energy conservation standards adopted under EPCA and when 
making representations to the public regarding the energy use or 
efficiency of those products. (42 U.S.C. 6293(c) and 6295(s)) 
Similarly, DOE must use these test procedures to determine whether the 
products comply with standards adopted pursuant to EPCA. (42 U.S.C. 
6295(s)) The DOE test procedure for MREFs currently appears at title 10 
of the Code of Federal Regulations (``CFR'') part 430, subpart B, 
appendix A (appendix A).

[[Page 75200]]

    DOE follows specific criteria when prescribing new or amended 
standards for covered products. As indicated above, any new or amended 
standard for a covered product must be designed to achieve the maximum 
improvement in energy efficiency that is technologically feasible and 
economically justified. (42 U.S.C. 6295(o)(2)(A) and (3)(B)) 
Furthermore, DOE may not adopt any standard that would not result in 
the significant conservation of energy. (42 U.S.C. 6295(o)(3)) 
Moreover, DOE may not prescribe a standard: (1) For certain products, 
including MREFs, if no test procedure has been established for the 
product, or (2) if DOE determines by rule that the new or amended 
standard is not technologically feasible or economically justified. (42 
U.S.C. 6295(o)(3)(A)-(B)) In deciding whether a new or amended standard 
is economically justified, DOE must determine whether the benefits of 
the standard exceed its burdens. (42 U.S.C. 6295(o)(2)(B)(i)) DOE must 
make this determination after receiving comments on the proposed 
standard and considering, to the greatest extent practicable, the 
following seven factors:
    1. The economic impact of the standard on manufacturers and 
consumers of the products subject to the standard;
    2. The savings in operating costs throughout the estimated average 
life of the covered products in the type (or class) compared to any 
increase in the price, initial charges, or maintenance expenses for the 
covered products that are likely to result from the imposition of the 
standard;
    3. The total projected amount of energy, or as applicable, water, 
savings likely to result directly from the imposition of the standard;
    4. Any lessening of the utility or the performance of the covered 
products likely to result from the imposition of the standard;
    5. The impact of any lessening of competition, as determined in 
writing by the Attorney General, that is likely to result from the 
imposition of the standard;
    6. The need for national energy and water conservation; and
    7. Other factors the Secretary of Energy (Secretary) considers 
relevant. (42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII))
    Further, EPCA, as codified, establishes a rebuttable presumption 
that a standard is economically justified if the Secretary finds that 
the additional cost to the consumer of purchasing a product 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))
    EPCA also contains what is known as an ``anti-backsliding'' 
provision, which prevents the Secretary from prescribing any amended 
standard that either increases the maximum allowable energy use or 
decreases the minimum required energy efficiency of a covered product. 
(42 U.S.C. 6295(o)(1)) Also, the Secretary may not prescribe an amended 
or new standard if interested persons have established by a 
preponderance of the evidence that the standard is likely to result in 
the unavailability in the United States in any covered product type (or 
class) of performance characteristics (including reliability), 
features, sizes, capacities, and volumes that are substantially the 
same as those generally available in the United States. (42 U.S.C. 
6295(o)(4))
    Additionally, DOE may set energy conservation standards for a 
covered product that has two or more subcategories. In those instances, 
DOE must specify a different standard level for a type or class of 
products that has the same function or intended use if DOE determines 
that products within such group: (A) Consume a different kind of energy 
from that consumed by other covered products within such type (or 
class); or (B) have a capacity or other performance-related feature 
which other products within such type (or class) do not have and such 
feature justifies a higher or lower standard. (42 U.S.C. 6295(q)(1)) In 
determining whether a performance-related feature justifies a different 
standard for a group of products, DOE must consider such factors as the 
utility to the consumer of such a feature and other factors DOE deems 
appropriate. Id. Any rule prescribing such a standard must include an 
explanation of the basis on which such higher or lower level was 
established. (42 U.S.C. 6295(q)(2))
    Federal energy conservation requirements generally supersede State 
laws or regulations concerning energy conservation testing, labeling, 
and standards. (42 U.S.C. 6297(a)-(c)) DOE may, however, grant waivers 
of Federal preemption for particular State laws or regulations, in 
accordance with the procedures and other provisions set forth under 42 
U.S.C. 6297(d).
    DOE is also required to address standby mode and off mode energy 
use. (42 U.S.C. 6295(gg)(3)) Specifically, when DOE adopts a standard 
for a covered product after that date, it must, if justified by the 
criteria for the adoption of standards under EPCA (42 U.S.C. 6295(o)), 
incorporate standby mode and off mode energy use into a single 
standard, or, if that is not feasible, adopt a separate standard for 
such energy use for that product. (42 U.S.C. 6295(gg)(3)(A)-(B)) DOE's 
test procedures for MREFs address standby mode and off mode energy use, 
as do the new standards adopted in this direct final rule.
    With particular regard to direct final rules, the Energy 
Independence and Security Act of 2007 (``EISA 2007''), Public Law 110-
140 (December 19, 2007), amended EPCA, in relevant part, to grant DOE 
authority to issue a type of final rule (i.e., a ``direct final rule'') 
establishing an energy conservation standard for a product on receipt 
of a statement that is submitted jointly by interested persons that are 
fairly representative of relevant points of view (including 
representatives of manufacturers of covered products, States, and 
efficiency advocates), as determined by the Secretary, and that 
contains recommendations with respect to an energy or water 
conservation standard. In the context of consumer products, if the 
Secretary determines that the recommended standard contained in the 
statement is in accordance with 42 U.S.C. 6295(o), the Secretary may 
issue a final rule establishing the recommended standard. A notice of 
proposed rulemaking (``NOPR'') that proposes an identical energy 
efficiency standard is published simultaneously with the direct final 
rule. A public comment period of at least 110 days is provided. See 42 
U.S.C. 6295(p)(4). Not later than 120 days after the date on which a 
direct final rule issued under this authority is published in the 
Federal Register, the Secretary shall withdraw the direct final rule if 
the Secretary receives one or more adverse public comments relating to 
the direct final rule or any alternative joint recommendation and based 
on the rulemaking record relating to the direct final rule, the 
Secretary determines that such adverse public comments or alternative 
joint recommendation may provide a reasonable basis for withdrawing the 
direct final rule under subsection 42 U.S.C. 6295(o) or any other 
applicable law. On withdrawal of a direct final rule, the Secretary 
shall proceed with the NOPR published simultaneously with the direct 
final rule and publish in the Federal Register the reasons why the 
direct final rule was withdrawn. This direct final rule provision 
applies to the products at issue in this direct final rule. See 42 
U.S.C. 6295(p)(4).
    DOE also notes that it typically finalizes its test procedures for 
a given regulated product or equipment prior to

[[Page 75201]]

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''). In this instance, although DOE has finalized its 
test procedure for MREFs, rather than issue a notice of proposed 
rulemaking to set standards for these products, DOE is moving forward 
with a direct final rule. 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 
implement the test procedure that DOE recently finalized. See 81 FR 
46768 (July 18, 2016). The approach laid out in that final rule is 
consistent with the approach agreed upon by the various Working Group 
members who participated in the negotiated rulemaking. Accordingly, in 
accordance with section 14 of the Process Rule, DOE tentatively 
concludes that deviation from the Process Rule is appropriate here.

B. History of Standards Rulemaking for Miscellaneous Refrigeration 
Products

    DOE has not previously established energy conservation standards 
for MREFs. Consistent with its statutory obligations, DOE sought to 
establish regulatory coverage over these products prior to establishing 
energy conservation standards to regulate MREF efficiency. On November 
8, 2011, DOE published a notice of proposed determination of coverage 
(``NOPD'') to address the potential coverage of those refrigeration 
products that do not use a compressor-based refrigeration system. 76 FR 
69147. Rather than employing a compressor/condenser-based system 
typically installed in the refrigerators, refrigerator-freezers, and 
freezers found in most U.S. homes, these ``non-compressor-based'' 
refrigeration products use a variety of other means to introduce 
chilled air into the interior of the storage cabinet of the product. 
Two systems that DOE specifically examined were thermoelectric- and 
absorption-based systems.\12\ The former of these systems is used in 
some wine chiller applications. With respect to the latter group of 
products, DOE indicated its belief that these types of products were 
used primarily in mobile applications and would likely fall outside of 
DOE's scope of coverage. See 42 U.S.C. 6292(a) (excluding from coverage 
``those consumer products designed solely for use in recreational 
vehicles and other mobile equipment'').
---------------------------------------------------------------------------

    \12\ Chapter 3 of the direct final rule technical support 
document provides a detailed description of each of these 
refrigeration technologies.
---------------------------------------------------------------------------

    On February 13, 2012, DOE published a document announcing the 
availability of the framework document, ``Energy Conservation Standards 
Rulemaking Framework Document for Wine Chillers and Miscellaneous 
Refrigeration Products,'' and a public meeting to discuss the proposed 
analytical framework for the energy conservation standards rulemaking. 
77 FR 7547. In the framework document, DOE described the procedural and 
analytical approaches it anticipated using to evaluate potential energy 
conservation standards for four types of consumer refrigeration 
products: Wine chillers, non-compressor refrigerators, hybrid 
refrigerators (i.e., a wine chiller combined with a refrigerator), and 
ice makers.
    DOE held a public meeting on February 22, 2012, to present the 
framework document, describe the analyses DOE planned to conduct during 
the rulemaking, seek comments from interested parties on these 
subjects, and inform them about, and facilitate their involvement in, 
the rulemaking. At the public meeting and during the comment period, 
DOE received multiple comments that addressed issues raised in the 
framework document and identified additional issues relevant to the 
rulemaking.
    On October 31, 2013, DOE published in the Federal Register a 
supplemental notice of proposed determination of coverage (the 
``October 2013 SNOPD''), in which it tentatively determined that the 
four categories of consumer products addressed in the framework 
document (wine chillers, non-compressor refrigeration products, hybrid 
refrigerators, and ice makers) satisfy the provisions of 42 U.S.C. 
6292(b)(1). 78 FR 65223.
    DOE published a notice of public meeting and availability of the 
preliminary technical support document (``TSD'') for the MREF energy 
conservation standards rulemaking on December 3, 2014. 79 FR 71705. The 
preliminary analysis considered potential standards for the products 
proposed for coverage in the October 2013 SNOPD. The preliminary TSD 
includes the results of the following DOE preliminary analyses: (1) 
Market and technology assessment; (2) screening analysis; (3) 
engineering analysis; (4) markups analysis; (5) energy use analysis; 
(6) LCC and PBP analyses; (7) shipments analysis; (8) national impact 
analysis (``NIA''); and (9) preliminary manufacturer impact analysis 
(``MIA'').
    DOE held a public meeting on January 9, 2015, during which it 
presented preliminary results for the engineering and downstream 
economic analyses and sought comments from interested parties on these 
subjects. At the public meeting and during the comment period, DOE 
received comments that addressed issues raised in the preliminary 
analysis and identified additional issues relevant to this rulemaking. 
After reviewing the comments received in response to both the 
preliminary analysis and a test procedure NOPR published on December 
16, 2014 (the ``December 2014 Test Procedure NOPR,'' 79 FR 74894), DOE 
ultimately determined that the development of test procedures and 
potential energy conservation standards for MREFs would benefit from a 
negotiated rulemaking process.
    On April 1, 2015, DOE published a notice of intent to establish an 
Appliance Standards and Rulemaking Federal Advisory Committee 
(``ASRAC'') negotiated rulemaking working group for MREFs (the ``MREF 
Working Group'' or in context, the ``Working Group'') to discuss and, 
if possible, reach consensus on recommended scope of coverage, 
definitions, test procedures, and energy conservation standards. 80 FR 
17355. The MREF Working Group consisted of 15 members, including two 
members from ASRAC and one DOE representative. The MREF Working Group 
met in person during six sets of meetings in 2015: May 4-5, June 11-12, 
July 15-16, August 11-12, September 16-17, and October 20.
    On August 11, 2015, the MREF Working Group reached consensus on a 
term sheet to recommend a scope of coverage, set of definitions, and 
test procedures for MREFs (``Term Sheet #1'').\13\ That document laid 
out the scope of products that the Working Group recommended that DOE 
adopt with respect to MREFs, the definitions that would apply to MREFs 
and certain other refrigeration products, and the test procedure that 
manufacturers of MREFs would need to use when evaluating the energy 
usage of these products. On October 20, 2015, the MREF Working Group 
reached consensus on a term sheet to recommend energy conservation 
standards for coolers and combination cooler refrigeration products 
(``Term Sheet #2''). ASRAC approved Term Sheet #1 during an open

[[Page 75202]]

meeting on December 18, 2015, and Term Sheet #2 during an open meeting 
on January 20, 2016. ASRAC subsequently sent the term sheets to the 
Secretary for consideration.
---------------------------------------------------------------------------

    \13\ The MREF Working Group term sheets are available in docket 
ID EERE-2011-BT-STD-0043 on http://regulations.gov.
---------------------------------------------------------------------------

    In addition to these steps, DOE sought to ensure that it had 
obtained complete information and input regarding certain aspects 
related to manufacturers of thermoelectric refrigeration products. To 
this end, on December 15, 2015, DOE published a notice of data 
availability (the ``December 2015 NODA'') in which it requested 
additional public feedback on the methods and information used in the 
development of the MREF Working Group term sheets. 80 FR 77589. DOE 
noted in particular its interest in information related to 
manufacturers of thermoelectric refrigeration products. Id. at 77590.
    After considering the MREF Working Group recommendations and 
comments received in response to the December 2015 NODA, DOE published 
an SNOPD and notice of proposed rulemaking (the ``March 2016 SNOPD'') 
on March 4, 2016. 81 FR 11454. The March 2016 SNOPD proposed 
establishing coverage, definitions, and terminology consistent with 
Term Sheet #1. It also proposed to determine that coolers and 
combination cooler refrigeration products--as defined under the 
proposal--would meet the requirements under EPCA to be considered 
covered products. Id. at 11456-11459.
    The July 2016 Final Coverage Determination established coolers and 
combination cooler refrigeration products as covered products under 
EPCA. Because DOE did not receive any comments in response to the March 
2016 SNOPD that would substantively alter its proposals, the findings 
of the final determination were unchanged from those presented in the 
March 2016 SNOPD. Moreover, DOE determined in the July 2016 Final 
Coverage Determination that MREFs, on average, consume more than 150 
kWh/yr, and that the aggregate annual national energy use of these 
products exceeds 4.2 TWh. Accordingly, these data indicate that MREFs 
satisfy at least two of the four criteria required under EPCA in order 
for the Secretary to set standards for a product whose coverage is 
added pursuant to 42 U.S.C. 6292(b). See 42 U.S.C. 6295(l)(1)(A)-(D). 
See also 81 FR 46768 at 46773-46775 (detailing the data used to 
evaluate the energy usage of MREF products).
    In addition to establishing coverage, the July 2016 Final Coverage 
Determination established definitions for ``miscellaneous refrigeration 
products,'' ``coolers,'' and ``combination cooler refrigeration 
products'' in 10 CFR 430.2. The July 2016 Final Coverage Determination 
also amended the existing definitions for ``refrigerator,'' 
``refrigerator-freezer,'' and ``freezer'' for consistency with the 
newly established MREF definitions. These definitions were generally 
consistent with the March 2016 SNOPD. Id. at 46775-46778.

III. General Discussion

A. Consensus Agreement

1. Background
    As discussed in section II.B of this document, the MREF Working 
Group approved two term sheets that recommended a scope of coverage, 
definitions, test procedures, and energy conservation standards for 
MREFs. ASRAC approved the two term sheets during open meetings and sent 
them to the Secretary of Energy for consideration.
    After carefully considering the consensus recommendations related 
to new energy conservation standards for MREFs submitted by the MREF 
Working Group and adopted by ASRAC, DOE has determined that these 
recommendations comprise a statement submitted by interested persons 
who are fairly representative of relevant points of view on this 
matter. In reaching this determination, DOE took into consideration the 
fact that the Working Group, in conjunction with ASRAC members who 
approved the recommendations, consisted of representatives of 
manufacturers of covered products, States, and efficiency advocates--
all of which are groups specifically identified by Congress as 
potentially relevant parties to any consensus recommendation submitted 
by ASRAC. (42 U.S.C. 6295(p)(4)(A)) As delineated above, Term Sheet #2 
was submitted by a broad cross-section of interests, including the 
manufacturers who produce the subject products, a trade association 
representing these manufacturers, environmental and energy-efficiency 
advocacy organizations, and an electric utility company. Although 
States were not direct signatories to the Term Sheet, the ASRAC 
Committee approving the Working Group's recommendations included one 
member representing the State of California.\14\ Additionally, in spite 
of the MREF Working Group meetings already being publicized and open to 
all members of the public, DOE published the December 2015 NODA to 
present the data and analyses used in support of developing the term 
sheets to provide an opportunity for further comment from interested 
parties. 80 FR 77589 (December 15, 2015). Moreover, DOE does not read 
the statute as requiring absolute agreement among all interested 
parties before the Department may proceed with issuance of a direct 
final rule. By explicit language of the statute, the Secretary has the 
discretion to determine when a joint recommendation for an energy or 
water conservation standard has met the requirement for 
representativeness (i.e., ``as determined by the Secretary'').
---------------------------------------------------------------------------

    \14\ The individual was David Hungerford (California Energy 
Commission).
---------------------------------------------------------------------------

    By its plain terms, the statute contemplates that the Secretary 
will exercise discretion to determine whether a given statement is 
submitted jointly by interested persons that are fairly representative 
of relevant points of view (including representatives of manufacturers 
of covered products, States, and efficiency advocates). In this case, 
given the broad range of persons participating in the process that led 
to the submission--in the Working Group and in ASRAC--and given the 
breadth of perspectives expressed in that process, DOE has determined 
that the statements it received meet this criterion.
    Pursuant to 42 U.S.C. 6295(p)(4), the Secretary must also determine 
whether a jointly-submitted recommendation for an energy conservation 
standard satisfies the criteria presented in 42 U.S.C. 6295(o). To make 
this determination, DOE has conducted an analysis to evaluate whether 
the potential energy conservation standards under consideration would 
meet these requirements. This evaluation is the same comprehensive 
approach that DOE typically conducts whenever it considers potential 
energy conservation standards for a given type of product or equipment. 
DOE applies the same principles to any consensus recommendations it may 
receive to satisfy its statutory obligation to ensure that any energy 
conservation standard that it adopts achieves the maximum improvement 
in energy efficiency that is technologically feasible and economically 
justified and will result in the significant conservation of energy. 
Upon review, the Secretary determined that the standards recommended in 
Term Sheet #2 submitted to DOE through ASRAC meet the standard-setting 
criteria set forth under 42 U.S.C. 6295(o). The consensus-recommended 
efficiency levels were included as trial standard level (``TSL'') 2 for 
coolers and TSL 1 for combination cooler refrigeration products (see 
section V.A of this document for a description of all of the considered 
TSLs). The details regarding how the consensus-

[[Page 75203]]

recommended TSLs comply with the standard-setting criteria are 
discussed and demonstrated in the relevant sections throughout this 
document.
    In sum, as the relevant criteria under 42 U.S.C. 6295(p)(4) have 
been satisfied, the Secretary has determined that it is appropriate to 
adopt the consensus-recommended energy conservation standards for MREFs 
as presented in Term Sheet #2 through this direct final rule.
    Pursuant to the same statutory provision, DOE is also 
simultaneously publishing a NOPR proposing that the identical standard 
levels contained in this direct final rule be adopted. Consistent with 
the statute, DOE is providing a 110-day public comment period on this 
direct final rule. Based on the comments received during this period, 
the direct final rule will either become effective or DOE will withdraw 
it if: (1) One or more adverse comments is received; and (2) DOE 
determines that those comments, when viewed in light of the rulemaking 
record related to the direct final rule, provide a reasonable basis for 
withdrawal of the direct final rule under 42 U.S.C. 6295(o) and for DOE 
to continue this rulemaking under the NOPR. (Receipt of an alternative 
joint recommendation may also trigger a DOE withdrawal of the direct 
final rule in the same manner.) See 42 U.S.C. 6295(p)(4)(C). Typical of 
other rulemakings, it is the substance, rather than the quantity, of 
comments that will ultimately determine whether a direct final rule 
will be withdrawn. To this end, the substance of any adverse comment(s) 
received will be weighed against the anticipated benefits of the 
jointly-submitted recommendations and the likelihood that further 
consideration of the comment(s) would change the results of the 
rulemaking. DOE notes that, to the extent an adverse comment had been 
previously raised and addressed in the rulemaking proceeding, such a 
submission will not typically provide a basis for withdrawal of a 
direct final rule.
2. Recommendations
    The MREF Working Group recommended standards for all MREF product 
classes of coolers and combination cooler refrigeration products. Table 
III.1 and Table III.2 show the recommended standard levels, which are 
expressed as an equation whose value varies based on the calculated AV 
of a given product. The MREF Working Group recommended that these 
standard levels take effect three years following the publication of 
the direct final rule. See Term Sheet #2.

     Table III.1--Consensus-Recommended Standard Levels for Coolers
------------------------------------------------------------------------
             Product class               Maximum  allowable AEU (kWh/yr)
------------------------------------------------------------------------
Built-in Compact......................  7.88AV[dagger] + 155.8
Built-in..............................
Freestanding Compact..................
Freestanding..........................
------------------------------------------------------------------------
[dagger] AV = Adjusted volume, in ft\3\, as calculated according to
  title 10 CFR part 430, subpart B, appendix A.


        Table III.2--Consensus-Recommended Standard Levels for Combination Cooler Refrigeration Products
----------------------------------------------------------------------------------------------------------------
        Product class description             Product class designation *      Maximum  allowable AEU (kWh/yr)
----------------------------------------------------------------------------------------------------------------
Cooler with all-refrigerator--automatic    C-3A............................  4.57AV[dagger] + 130.4
 defrost.
Built-in cooler with all-refrigerator--    C-3A-BI.........................  5.19AV + 147.8
 automatic defrost.
Cooler with upright freezers with          C-9.............................  5.58AV + 147.7
 automatic defrost without an automatic
 icemaker.
Built-in cooler with upright freezer with  C-9-BI..........................  6.38AV + 168.8
 automatic defrost without an automatic
 icemaker.
Cooler with upright freezer with           C-9I............................  5.58AV + 231.7
 automatic defrost with an automatic
 icemaker.
Built-in cooler with upright freezer with  C-9I-BI.........................  6.38AV + 252.8
 automatic defrost with an automatic
 icemaker.
Compact cooler with all-refrigerator--     C-13A...........................  5.93AV + 193.7
 automatic defrost.
Built-in compact cooler with all-          C-13A-BI[dagger][dagger]........  6.52AV + 213.1
 refrigerator--automatic defrost.
----------------------------------------------------------------------------------------------------------------
* These product classes are consistent with the current product classes established for refrigerators,
  refrigerator-freezers, and freezers. 10 CFR 430.32.
[dagger] AV = Adjusted volume, in ft\3\, as calculated according to 10 CFR part 430, subpart B, appendix A.
[dagger][dagger] There is no current product class 13A-BI for refrigerators, refrigerator-freezers, or freezers.

B. Compliance Date

    When establishing new standards for products not previously 
covered, EPCA provides that newly-established standards shall not apply 
to products manufactured within five years after the publication of the 
final rule. See 42 U.S.C. 6295(l)(2). As part of its set of 
comprehensive recommendations, the MREF Working Group recommended that 
DOE instead apply a 3-year lead time.
    DOE has the authority under section 42 U.S.C. 6295(p)(4) to accept 
recommendations for compliance dates contained in a joint submission 
recommending amended standards. In DOE's view, the direct final rule 
authority provision specifies the finding DOE has to make. 
Specifically, Congress specified that if DOE determines that the 
recommended standard is in accordance with 42 U.S.C. 6295(o), DOE may 
issue a final rule establishing those standards. See 42 U.S.C. 
6295(p)(4)(A)(i). Applying the direct final rule provision in this 
manner meets Congress's goal to promote consensus agreements that 
reflect broad input from interested parties who can fashion agreements 
that best promote the aims of the statute. In the absence of a 
consensus agreement, DOE notes that the more specific prescriptions of 
EPCA would ordinarily prevail. However, when DOE receives a 
recommendation resulting from the appropriate process--in this case, 
the detailed procedure laid out in the direct final rule provision of 
EPCA--that process provides the necessary fidelity to the statute, 
along with compliance with section 6295(o), that Congress instructed 
DOE to apply.

[[Page 75204]]

    DOE notes that its analysis of whether the consensus-recommended 
and other TSLs satisfy the criteria presented in 42 U.S.C. 6295(o) 
contemplates two compliance periods. For consensus-recommended TSLs, 
the analysis is based on a 2019 compliance date, as recommended by the 
MREF Working Group. The analysis for all other TSLs is based on a 2021 
compliance date consistent with EPCA, which provides that newly-
established standards shall not apply to products manufactured within 
five years after the publication of the final rule. In other words, DOE 
followed the prescriptions of EPCA for all TSLs that were not 
recommended by the MREF Working Group. The two different compliance 
dates are indicated in the relevant sections throughout this document.

C. Scope of Coverage

    In the preliminary analysis, DOE considered potential standards for 
four consumer product categories proposed for coverage in the October 
2013 SNOPD: Cooled cabinets, non-compressor refrigerators, ice makers, 
and hybrid products. See chapter 3 of the preliminary TSD.
    Based on comments received in response to the preliminary analysis, 
and on the recommendations of the MREF Working Group, DOE subsequently 
proposed in the March 2016 SNOPD that consumer ice makers and non-
compressor refrigerators would not be included within MREFs. DOE 
proposed to remove ice makers from the scope of MREFs because they are 
significantly different from the other product types being considered 
for coverage, consistent with the MREF Working Group's recommendation. 
For non-compressor refrigerators, DOE is not aware of any products 
available on the market that would be considered non-compressor 
refrigerators. Instead, non-compressor products available on the market 
would be considered coolers under the March 2016 SNOPD proposal. DOE 
also revised the proposed definitions for cooled cabinets and hybrid 
products to designate these products as coolers and combination cooler 
refrigeration products, respectively, in accordance with the 
definitions recommended by the MREF Working Group in Term Sheet #1. See 
81 FR 11454, 11456, 11458-11459. Interested parties generally supported 
the scope of coverage, energy use analysis, and definitions proposed in 
the March 2016 SNOPD. Therefore, in the July 2016 Final Coverage 
Determination, DOE determined that MREFs (including coolers and 
combination cooler refrigeration products) are covered products under 
EPCA. The July 2016 Final Coverage Determination also established 
definitions for these products that are generally consistent with the 
March 2016 SNOPD proposal. 81 FR 46768. This direct final rule 
establishes energy conservation standards for MREFs as defined in the 
July 2016 Final Coverage Determination.

D. Product Classes

    When evaluating and establishing energy conservation standards, DOE 
divides covered products into product classes by the type of energy 
used or by capacity or other performance-related features that justify 
differing standards. In making a determination whether a performance-
related feature justifies a different standard, DOE must consider such 
factors as the utility of the feature to the consumer and other factors 
DOE determines are appropriate. (42 U.S.C. 6295(q))
    In this direct final rule, DOE is establishing energy conservation 
standards for four product classes of coolers and nine product classes 
of combination cooler refrigeration products. These product classes are 
consistent with those recommended by the MREF Working Group in Term 
Sheet #2. The product classes established in this direct final rule and 
their descriptions are provided in Table III.3.

                    Table III.3--MREF Product Classes
------------------------------------------------------------------------
        Product class                  Product class description
------------------------------------------------------------------------
                                 Coolers
------------------------------------------------------------------------
Built-in compact.............  Total refrigerated volume less than 7.75
                                ft \3\ and meeting the built-in
                                definition requirements
Built-in.....................  Total refrigerated volume 7.75 ft \3\ or
                                greater and meeting the built-in
                                definition requirements
Freestanding Compact.........  Total refrigerated volume less than 7.75
                                ft \3\ and not built-in
Freestanding.................  Total refrigerated volume 7.75 ft \3\ or
                                greater and not built-in
------------------------------------------------------------------------
                Combination Cooler Refrigeration Products
------------------------------------------------------------------------
C-3A.........................  Cooler with all-refrigerator--automatic
                                defrost
C-3A-BI......................  Built-in cooler with all-refrigerator--
                                automatic defrost
C-9..........................  Cooler with upright freezer with
                                automatic defrost without an automatic
                                icemaker
C-9-BI.......................  Built-in cooler with upright freezer with
                                automatic defrost without an automatic
                                icemaker
C-9I.........................  Cooler with upright freezer with
                                automatic defrost with an automatic
                                icemaker
C-9I-BI......................  Built-in cooler with upright freezer with
                                automatic defrost with an automatic
                                icemaker
C-13A........................  Compact cooler with all-refrigerator--
                                automatic defrost
C-13A-BI.....................  Built-In compact cooler with all-
                                refrigerator--automatic defrost
------------------------------------------------------------------------

E. Test Procedure

    EPCA sets forth generally applicable criteria and procedures for 
DOE's adoption and amendment of test procedures. (42 U.S.C. 6293) 
Manufacturers of covered products must use these test procedures to 
certify to DOE that their product complies with energy conservation 
standards and to quantify the efficiency of their product. Similarly, 
DOE must use these test procedures to determine compliance with its 
energy conservation standards. (42 U.S.C. 6295(s))
    DOE published the December 2014 Test Procedure NOPR on December 16, 
2014, in which it proposed to establish definitions and test procedures 
for the product categories proposed for coverage in the October 2013 
SNOPD. The proposed test procedures would measure the energy 
efficiency, energy use, and estimated annual operating cost of these 
products during a representative average use period and that would not 
be unduly burdensome to conduct, as required under 42 U.S.C. 
6293(b)(3). 79 FR 74894.
    After reviewing comments responding to the December 2014 Test 
Procedure NOPR, DOE ultimately determined that developing the test 
procedures for these products would benefit from a negotiated 
rulemaking process. Therefore, DOE included potential test procedures 
within the scope of work for

[[Page 75205]]

the MREF Working Group. On August 11, 2015, the MREF Working Group 
reached consensus on Term Sheet #1, which recommended scope of 
coverage, definitions, and test procedures for MREFs. The MREF Working 
Group generally agreed with the approach proposed in the December 2014 
Test Procedure NOPR, but recommended updating usage factors, ambient 
temperatures, and volume adjustment factors. See Term Sheet #1. ASRAC 
approved the term sheet during an open meeting on December 18, 2015, 
and subsequently sent it to the Secretary for consideration.
    The test procedures for MREFs, which are consistent with the MREF 
Working Group Recommendation, were codified in appendix A by the July 
2016 Final Coverage Determination. 81 FR 46768. The test procedures, 
which follow a similar methodology to those in place for refrigerators, 
refrigerator-freezers, and freezers, provide the provisions for 
determining a product's annual energy usage (kWh/yr) and total AV, 
which are the basis of the energy conservation standards established in 
this direct final rule.

F. Technological Feasibility

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

G. Energy Savings

1. Determination of Savings
    For each TSL, DOE projected energy savings from application of the 
TSL to MREFs purchased in the 30-year period that begins in the year of 
compliance with any new standards (2019-2048 for the TSLs recommended 
by the MREF Working Group, 2021-2050 for all other TSLs).\15\ The 
savings are measured over the entire lifetime of products purchased in 
the 30-year analysis period. DOE quantified the energy savings 
attributable to each TSL as the difference in energy consumption 
between each standards case and the no-new-standards case. The no-new-
standards case represents a projection of energy consumption that 
reflects how the market for a product would likely evolve in the 
absence of energy conservation standards.
---------------------------------------------------------------------------

    \15\ DOE also presents a sensitivity analysis that considers 
impacts for products shipped in a 9-year period.
---------------------------------------------------------------------------

    DOE used its NIA spreadsheet models to estimate energy savings from 
potential standards for MREFs. The NIA spreadsheet model (described in 
section IV.H of this document) calculates savings in site energy, which 
is the energy directly consumed by products at the locations where they 
are used. Based on the site energy, DOE calculates national energy 
savings (``NES'') in terms of primary energy savings at the site or at 
power plants, and also in terms of full-fuel-cycle (``FFC'') energy 
savings. The FFC metric includes the energy consumed in extracting, 
processing, and transporting primary fuels (i.e., coal, natural gas, 
petroleum fuels), and thus presents a more complete picture of the 
impacts of energy conservation standards.\16\ DOE's approach is based 
on the calculation of an FFC multiplier for each of the energy types 
used by covered products or equipment. For more information on FFC 
energy savings, see section IV.H.2 of this document. For natural gas, 
the primary energy savings are considered to be equal to the site 
energy savings.
---------------------------------------------------------------------------

    \16\ 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 standards for a covered product, DOE must determine that 
such action would result in ``significant'' energy savings. (42 U.S.C. 
6295(o)(3)(B)) Although the term ``significant'' is not defined in the 
Act, the U.S. Court of Appeals, for the District of Columbia Circuit in 
Natural Resources Defense Council v. Herrington, 768 F.2d 1355, 1373 
(D.C. Cir. 1985), indicated that Congress intended ``significant'' 
energy savings in the context of EPCA to be savings that were not 
``genuinely trivial.'' The energy savings for all the TSLs considered 
in this rulemaking, including the adopted standards, are nontrivial, 
and, therefore, DOE considers them ``significant'' within the meaning 
of section 325 of EPCA.

H. 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)-(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 potential energy conservation 
standards on manufacturers, DOE conducts a manufacturer impact analysis 
(i.e., MIA), as discussed in section IV.J of this document. DOE first 
uses an annual cash-flow approach to determine the quantitative 
impacts. This step includes both a short-term assessment--based on the 
cost and capital requirements during the period between when a 
regulation is

[[Page 75206]]

issued and when entities must comply with the regulation--and a long-
term assessment over a 30-year period. The industry-wide impacts 
analyzed include: (1) INPV, which values the industry on the basis of 
expected future cash flows; (2) cash flows by year; (3) changes in 
revenue and income; and (4) other measures of impact, as appropriate. 
Second, DOE analyzes and reports the impacts on different types of 
manufacturers, including impacts on small manufacturers. Third, DOE 
considers the impact of standards on domestic manufacturer employment 
and manufacturing capacity, as well as the potential for standards to 
result in plant closures and loss of capital investment. Finally, DOE 
takes into account cumulative impacts of various DOE regulations and 
other regulatory requirements on manufacturers.
    For individual consumers, measures of economic impact include the 
changes in LCC and PBP associated with new standards. These measures 
are discussed further in the following section. For consumers in the 
aggregate, DOE also calculates the national NPV of the economic impacts 
applicable to a particular rulemaking. DOE often also evaluates the LCC 
impacts of potential standards on identifiable subgroups of consumers 
that may be affected disproportionately by a national standard, such as 
low income and senior households. In the case of MREFs, the available 
house sample sizes for identifiable subgroups were insufficient to 
yield meaningful results.
b. Savings in Operating Costs Compared to Increase in Price (LCC and 
PBP)
    EPCA requires DOE to consider the savings in operating costs 
throughout the estimated average life of the covered product in the 
type (or class) compared to any increase in the price of, or in the 
initial charges for, or maintenance expenses of, the covered product 
that are likely to result from a standard. (42 U.S.C. 
6295(o)(2)(B)(i)(II)) DOE conducts this comparison in its LCC and PBP 
analysis.
    The LCC is the sum of the purchase price of a product (including 
its installation) and the operating cost (including energy, 
maintenance, and repair expenditures) discounted over the lifetime of 
the product. The LCC analysis requires a variety of inputs, such as 
product prices, product energy consumption, energy prices, maintenance 
and repair costs, product lifetime, and discount rates appropriate for 
consumers. To account for uncertainty and variability in specific 
inputs, such as product lifetime and discount rate, DOE uses a 
distribution of values, with probabilities attached to each value.
    The PBP is the estimated amount of time (in years) it takes 
consumers to recover the increased purchase cost (including 
installation) of a more-efficient product through lower operating 
costs. DOE calculates the PBP by dividing the change in purchase cost 
due to a more-stringent standard by the change in annual operating cost 
for the year that standards are assumed to take effect.
    For its LCC and PBP analysis, DOE assumes that consumers will 
purchase the covered products in the first year of compliance with new 
standards. The LCC savings for the considered efficiency levels are 
calculated relative to the case that reflects projected market trends 
in the absence of new standards (the no-new-standards case). DOE's LCC 
and PBP analysis is discussed in further detail in section IV.F of this 
document.
c. Energy Savings
    Although significant conservation of energy is a separate statutory 
requirement for adopting an energy conservation standard, EPCA requires 
DOE, in determining the economic justification of a standard, to 
consider the total projected energy savings that are expected to result 
directly from the standard. (42 U.S.C. 6295(o)(2)(B)(i)(III)) As 
discussed in section IV.H of this document, DOE uses the NIA 
spreadsheet models to project national energy savings.
d. Lessening of Utility or Performance of Products
    In establishing product 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 products. (42 U.S.C. 6295(o)(2)(B)(i)(IV)) Based on data 
available to DOE, the standards adopted in this direct final rule would 
not reduce the utility or performance of the products under 
consideration in this rulemaking.
e. Impact of Any Lessening of Competition
    EPCA directs DOE to consider the impact of any lessening of 
competition, as determined in writing by the Attorney General that is 
likely to result from a proposed standard. (42 U.S.C. 
6295(o)(1)(B)(i)(V)) Specifically, it instructs DOE to consider the 
impact of any lessening of competition, as determined in writing by the 
Attorney General that is likely to result from the imposition of the 
standard. DOE is simultaneously publishing a NOPR containing proposed 
energy conservation standards identical to those set forth in this 
direct final rule and has transmitted a copy of the rule and the 
accompanying TSD to the Attorney General, requesting that the U.S. 
Department of Justice (``DOJ'') provide its determination on this 
issue. DOE will consider DOJ's comments on the direct final rule in 
determining whether to proceed with finalizing its standards. DOE will 
also publish and respond to the DOJ's comments in the Federal Register 
in a separate notice.
f. Need for National Energy Conservation
    DOE also considers the need for national energy conservation in 
determining whether a new standard is economically justified. (42 
U.S.C. 6295(o)(2)(B)(i)(VI)) The energy savings from the adopted 
standards are likely to provide improvements to the security and 
reliability of the nation's energy system. Reductions in the demand for 
electricity also may result in reduced costs for maintaining the 
reliability of the nation's electricity system. DOE conducts a utility 
impact analysis to estimate how standards may affect the nation's 
needed power generation capacity, as discussed in section IV.0 of this 
document.
    Additionally, apart from the savings described above, the adopted 
standards also are likely to result in environmental benefits in the 
form of reduced emissions of air pollutants and greenhouse gases 
associated with energy production and use. DOE conducts an emissions 
analysis to estimate how potential standards may affect these 
emissions, as discussed in section IV.K of this document; the emissions 
impacts are reported in section V.B.6 of this document. DOE also 
estimates the economic value of emissions reductions resulting from the 
considered TSLs, as discussed in section IV.L of this document.
g. Other Factors
    In determining whether a standard is economically justified, DOE 
may consider any other factors that it deems to be relevant. (42 U.S.C. 
6295(o)(2)(B)(i)(VII)) In developing the direct final rule, DOE has 
considered the submission of the jointly-submitted Term Sheet #2 from 
the MREF Working Group. In DOE's view, the term sheet sets forth a 
statement by interested persons that are fairly representative of 
relevant points of view (including representatives of manufacturers of 
covered equipment, States, and efficiency advocates) and contains 
recommendations with respect to energy

[[Page 75207]]

conservation standards that are in accordance with 42 U.S.C. 6295(o), 
as required by EPCA's direct final rule provision. See 42 U.S.C. 
6295(p)(4). DOE has encouraged the submission of agreements such as the 
one developed and submitted by the MREF Working Group as a way to bring 
diverse stakeholders together, to develop an independent and probative 
analysis useful in DOE standard setting, and to expedite the rulemaking 
process. DOE also believes that the standard levels recommended in Term 
Sheet #2 may increase the likelihood for regulatory compliance, while 
decreasing the risk of litigation.
2. Rebuttable Presumption
    As set forth in 42 U.S.C. 6295(o)(2)(B)(iii), EPCA creates a 
rebuttable presumption that an energy conservation standard is 
economically justified if the additional cost to the consumer of a 
product that meets the standard is less than three times the value of 
the first year's energy savings resulting from the standard, as 
calculated under the applicable DOE test procedure. DOE's LCC and PBP 
analyses generate values used to calculate the effect potential new 
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). 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 direct final rule.

IV. Methodology and Discussion of Related Comments

    This section addresses the analyses DOE has performed for this 
rulemaking with regard to MREFs. Separate subsections address each 
component of DOE's analyses.
    DOE presented information on its initial analytical approach in the 
preliminary analysis. As discussed in section II.B of this direct final 
rule, DOE received comments from interested parties in response to both 
the preliminary analysis and the December 2014 Test Procedure NOPR 
indicating that these rulemakings would benefit from a negotiated 
rulemaking process. Based on the subsequent MREF Working Group 
discussions, in the July 2016 Final Coverage Determination, DOE revised 
its scope of coverage, product definitions, and test procedures for 
MREFs, which resulted in significant changes to the rulemaking 
analysis. 81 FR 46786. Because of these significant changes, many 
comments received in response to the preliminary analysis are no longer 
applicable.
    Additionally, the substantive comments received in response to the 
preliminary analysis were from interested parties that were represented 
by members of the MREF Working Group. The Working Group discussed in 
detail all of the issues identified by these interested parties. As a 
result of these discussions, many MREF Working Group members revised 
their position on certain issues with respect to the analysis. To avoid 
presenting information that may not reflect the current opinions of 
Working Group members, DOE has not included summaries of comments 
received from Working Group members in response to the preliminary 
analysis in the following sections describing the direct final rule 
analyses. Rather, DOE has included summaries of the Working Group 
discussions, including citations to the relevant Working Group meeting 
transcripts that addressed issues with the preliminary analysis and 
recommended approaches for DOE in this direct final rule analysis.
    DOE used several analytical tools to estimate the impact of the 
standards considered in this document. The first tool is a spreadsheet 
that calculates the LCC savings and PBP of potential amended or new 
energy conservation standards. The NIA uses a second spreadsheet set 
that provides shipments forecasts and calculates 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 are available on the DOE Web site for 
this rulemaking: https://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/71. Additionally, DOE used 
output from the latest version of the Energy Information 
Administration's (``EIA'') 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

1. Scope of Coverage
    DOE develops information in the market and technology assessment 
that provides an overall picture of the market for the products 
concerned, including the purpose of the products, the industry 
structure, manufacturers, market characteristics, and technologies used 
in the products. This activity includes both quantitative and 
qualitative assessments, based primarily on publicly-available 
information. The subjects addressed in the market and technology 
assessment for this rulemaking include: (1) A determination of the 
scope of the rulemaking and product 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 MREFs. The 
key findings of DOE's market assessment are summarized below. See 
chapter 3 of the direct final rule TSD for further discussion of the 
market and technology assessment.
    In the preliminary market and technology assessment, and consistent 
with the October 2013 SNOPD, DOE identified four consumer product 
categories that would be subject to potential energy conservation 
standards. These were: Cooled cabinets, non-compressor refrigerators, 
hybrid refrigerators, and ice makers. DOE received multiple comments 
about the scope of coverage and the product classes considered in the 
preliminary analysis, summarized in the following sections. As 
described in section II.B of this document, the MREF Working Group 
discussed concerns regarding scope of coverage raised in comments 
received in response to the preliminary analysis.
    The following sections describe how DOE has revised its scope of 
coverage for MREFs since the preliminary analysis and after considering 
the MREF Working Group recommendations. DOE initially proposed a 
revised scope of coverage in the March 2016 SNOPD (81 FR 11454), and 
finalized the scope of coverage in the July 2016 Final Coverage 
Determination. 81 FR 46768.
a. Coolers
    In the December 2014 Test Procedure NOPR, DOE generally proposed to 
define the term ``cooled cabinet'' as a product with a refrigeration 
system that requires electric energy input only that does not meet the 
regulatory definition for ``refrigerator'' because its compartment 
temperatures are warmer

[[Page 75208]]

than the 39 degrees Fahrenheit ([deg]F) threshold established for 
refrigerators, as determined in a 72[emsp14][deg]F ambient temperature. 
79 FR 74894, 74901-74902 (December 16, 2014). In the preliminary 
analysis, DOE presented information regarding cooled cabinets that, 
based on the proposed definition, included those products using either 
vapor-compression or non-compressor refrigeration systems. See chapter 
3 of the preliminary TSD.
    The MREF Working Group's Term Sheet #1 recommended that DOE revise 
the term ``cooled cabinet'' to ``cooler'' and incorporated a number of 
other changes to the proposed definition of this new term. The Working 
Group recommended that compartment temperatures be determined during 
operation in a 90[emsp14][deg]F ambient temperature to maintain 
consistency with the test conditions used for other refrigeration 
products. (ASRAC Public Meeting Transcript, No. 44 at pp. 158-202) \17\ 
The Working Group also recommended excluding products designed to be 
used without doors, consistent with the exclusions DOE had proposed for 
the refrigerator, refrigerator-freezer, and freezer definitions in the 
December 2014 Test Procedure NOPR. 79 FR 74894, 74900 (December 16, 
2014). The purpose of the exclusion would be to differentiate between 
consumer products and commercial equipment -- in other words, products 
designed for use without doors (e.g. reach-in freezers) would be 
treated as commercial equipment rather than consumer products, 
consistent with the statutory coverage of refrigerators, refrigerator-
freezers, and freezers. See 42 U.S.C. 6292(a)(1). (ASRAC Public Meeting 
Transcript, No. 85 at pp. 9-11; No. 92 at pp. 18-25) The Working Group 
further recommended the requirement that coolers operate on single-
phase, alternating current rather than simply specifying operation with 
electric energy input. This approach would exclude those products 
designed for direct current or 3-phase power supplies, which, because 
of the nature of these power sources, would likely apply to products 
intended for use in mobile or commercial applications, respectively. 
(ASRAC Public Meeting Transcript, No. 45 at pp. 83-97; No. 86 at pp. 
19-21) See Term Sheet #1.
---------------------------------------------------------------------------

    \17\ A notation in the form ``ASRAC Public Meeting Transcript, 
No. 44 at pp. 158-202'' identifies a comment: (1) Made during an 
MREF Working Group public meeting; (2) recorded in document number 
44 that is filed in the docket of this energy conservation standards 
rulemaking (Docket No. EERE-2011-BT-STD-0043) and available for 
review at www.regulations.gov; and (3) which appears on pages 158 
through 202 of document number 44.
---------------------------------------------------------------------------

    In the March 2016 SNOPD, DOE proposed to define coolers based on 
its proposed definition from the December 2014 Test Procedure NOPR but 
updated to reflect the Working Group's recommendations. 81 FR at 11458-
11459. DOE did not receive any comments that would substantively change 
this proposed updated definition in response to the March 2016 SNOPD. 
Hence, in the July 2016 Final Coverage Determination, DOE established 
the definition for cooler as proposed in the March 2016 SNOPD, with 
minor revisions, in 10 CFR 430.2. 81 FR at 46775-46776.
b. Combination Cooler Refrigeration Products
    In the December 2014 Test Procedure NOPR, DOE proposed the term 
``hybrid refrigeration product'' to refer to products with a warm-
temperature compartment (e.g., a wine chiller), making up at least 50 
percent of a product's volume, combined with a fresh food and/or 
freezer compartment. 79 FR at 74903-74904. DOE conducted the 
preliminary analysis for hybrid refrigeration products using that 
proposal's definitional scope. See chapter 3 of the preliminary TSD.
    The MREF Working Group discussed the proposed definition and 
recommended that DOE revise the term from ``hybrid refrigeration 
product'' to ``combination cooler refrigeration product'' to more 
clearly describe the product category. The Working Group also 
recommended that DOE refer to the warmer compartment within combination 
cooler refrigeration products as a ``cooler compartment'' (defined by 
the same temperature ranges as proposed for coolers) and that DOE drop 
the proposed requirement that cooler compartments make up at least 50 
percent of a combination cooler refrigeration product's total volume. 
The Working Group noted that all products with cooler compartments 
would likely be used in the same way and asserted that the 50-percent 
threshold was an arbitrary cutoff. It further recommended that DOE 
exclude products designed for use without doors from the combination 
cooler refrigeration product definitions for the same reasons discussed 
for coolers (i.e., differentiating between commercial equipment and 
consumer products). (ASRAC Public Meeting Transcript, No. 85 at pp. 31-
52; No. 91 at pp. 55-58) See Term Sheet #1.
    DOE agreed with the recommended changes from the MREF Working Group 
and the Working Group's reasoning for each of them. The term 
``combination cooler refrigeration product'' more clearly describes the 
characteristics of the products that would fall in this category. 
Additionally, the recommendation to remove the 50-percent threshold 
would limit the potential for circumvention by manufacturing products 
with cooler compartment volumes either just above or below the 
threshold. Removing the cooler compartment volume threshold ensures 
that all products with cooler compartments (which are likely to be used 
in the same way, as indicated by the MREF Working Group) are 
categorized consistently. Therefore, DOE proposed to define terms for 
combination cooler refrigeration products in the March 2016 SNOPD 
consistent with the definitions included in Term Sheet #1. See 81 FR at 
11459 (detailing DOE's rationale for adopting the Working Group's 
approach). DOE did not receive any comments that would substantively 
change the proposed definitions of combination cooler refrigeration 
products in response to the March 2016 SNOPD; therefore, DOE 
subsequently codified the definition, with only minor revisions, in 10 
CFR 430.2 through the July 2016 Final Coverage Determination. Further, 
the July 2016 Final Coverage Determination codified the definition for 
``cooler compartment'' as recommended by the MREF Working Group into 
appendix A. See 81 FR at 46776-46777.
c. Ice Makers
    In the preliminary analysis, DOE presented information regarding 
ice makers, which DOE tentatively defined as a consumer product other 
than a refrigerator, refrigerator-freezer, freezer, hybrid 
refrigeration product, non-compressor refrigerator, or cooled cabinet 
designed to automatically produce and harvest ice, but excluding any 
basic model that is certified under American National Standards 
Institute (ANSI)/NSF International (NSF) 12-2012 ``Automatic Ice Making 
Equipment.'' \18\ Such a product would also include a means for storing 
ice, dispensing ice, or storing and dispensing ice. See chapter 3 of 
the preliminary TSD.
---------------------------------------------------------------------------

    \18\ ANSI/NSF 12-2012 is available for purchase online at http://www.techstreet.com/nsf.
---------------------------------------------------------------------------

    In response to the preliminary analysis, DOE received feedback from 
several interested parties regarding ice maker coverage within MREFs. 
As such, the MREF Working Group discussed the issue of whether ice 
makers should be considered MREFs for coverage under EPCA. The MREF 
Working Group

[[Page 75209]]

decided that ice makers are fundamentally different from the other 
product categories considered to be MREFs, as evidenced by DOE 
proposing a separate test procedure for ice makers in the December 2014 
Test Procedure NOPR. The Working Group also noted that ice makers are 
currently covered as commercial equipment, and that there is no clear 
means to differentiate between consumer and commercial ice makers. 
(ASRAC Public Meeting Transcript, No. 44 at pp. 143-145, No. 45 at pp. 
134-145; No. 92 at pp. 39-51). Accordingly, the Working Group 
recommended that DOE not maintain coverage of ice makers under MREFs. 
(ASRAC Public Meeting Transcript, No. 92 at p. 138) See Term Sheet #1.
    Consistent with the MREF Working Group's recommendation, the March 
2016 SNOPD proposed excluding ice makers from coverage as MREFs. 81 FR 
at 11456. DOE did not receive comments opposing this approach in 
response to the March 2016 SNOPD, and, therefore, excluded ice makers 
from coverage as MREFs in the July 2016 Final Coverage Determination. 
81 FR at 46773. Accordingly, DOE has not analyzed or adopted standards 
for ice makers as part of this direct final rule.
d. Non-Compressor Refrigerators
    EPCA specifies that refrigerators, refrigerator-freezers, and 
freezers with compressor and condenser units as integral parts of the 
cabinet assembly (i.e., products that utilize vapor-compression 
refrigeration technology) are covered consumer products. (42 U.S.C. 
6292(a)(1)(B)) In the preliminary analysis, DOE stated that it had 
identified products that use thermoelectric and/or absorption 
technology that were sold as refrigerators but was unaware of any 
products using these technologies sold as refrigerator-freezers or 
freezers. For the preliminary analysis, DOE considered a non-compressor 
refrigerator as a cabinet that has a source of refrigeration that does 
not include a compressor and condenser unit, requires electric energy 
input only, and is capable of maintaining compartment temperatures 
above 32 [deg]F (0 [deg]C) and below 39 [deg]F (3.9 [deg]C) as 
determined in a 72 [deg]F ambient temperature. See chapter 3 of the 
preliminary TSD.
    DOE tested six non-compressor refrigerator models in support of the 
preliminary analysis. In that testing, DOE determined that none of the 
six models were able to maintain compartment temperatures in the 
specified refrigerator range when tested in a 90 [deg]F ambient 
temperature consistent with the current DOE test procedure for 
refrigerators and the approach recommended by the Working Group. See 
chapter 5 of the preliminary TSD.
    The MREF Working Group discussed whether non-compressor 
refrigerators should be considered MREFs. As discussed in the March 
2016 SNOPD, the Working Group recommended that the compartment 
temperature ranges included in definitions be determined during product 
operation in a 90 [deg]F ambient temperature. 81 FR at 11458-11460. 
Based on this suggested definition, the Working Group members stated 
that they were unaware of any products that would be considered non-
compressor refrigerators available on the market, and recommended that 
DOE not establish a definition for this product category. (ASRAC Public 
Meeting Transcript, No. 45 at pp. 49-52; No. 91 at pp. 157-158) See 
Term Sheet #1.
    In examining the merits of creating a separate product category and 
definition for non-compressor refrigerators, DOE conducted additional 
literature reviews and manufacturer interviews. DOE, however, did not 
find any non-compressor (thermoelectric or absorption) products 
available on the market that would be capable of maintaining 
compartment temperatures in the range necessary for a refrigerator as 
specified in 10 CFR 430.2 when tested in a 90 [deg]F ambient 
temperature consistent with the current refrigerator test procedure and 
the approach ultimately recommended by the Working Group. Accordingly, 
in light of the Working Group's recommendation, DOE did not establish a 
separate product category for non-compressor refrigerators under MREFs, 
a discussed in the July 2016 Final Coverage Determination. See 81 FR at 
46775-46776. DOE notes that products previously analyzed as non-
compressor refrigerators would be covered as coolers under the MREF 
definitions established in the July 2016 Final Coverage Determination.
2. Product Classes
a. Coolers
    In the preliminary analysis, DOE proposed a single product class 
for all coolers (at the time referred to as ``cooled cabinets''). DOE 
was aware of both vapor-compression and non-compressor coolers 
available on the market; however, DOE did not analyze these products in 
separate product classes because it did not identify any unique 
consumer utility associated with the different refrigeration systems. 
See chapter 3 of the preliminary TSD.
    The MREF Working Group discussed the topic of product classes when 
considering recommended standards for MREFs. For coolers, the Working 
Group agreed with DOE's preliminary analysis determination that there 
is no unique consumer utility associated with either thermoelectric or 
vapor-compression refrigeration systems. (ASRAC Public Meeting 
Transcript, No. 45 at pp. 13-14, 162) Working Group members also 
compared coolers to refrigerators, refrigerator-freezers, and freezers, 
and considered similar characteristics for differentiating product 
classes. Working Group members noted that compact and built-in coolers 
each provide unique consumer utility and have different energy use 
characteristics compared to full-size or freestanding coolers, 
respectively. (ASRAC Public Meeting Transcript, No. 44 at pp. 155-157; 
No. 45 at pp. 160-166) Accordingly, the Working Group recommended that 
DOE establish definitions and energy conservation standards for four 
cooler product classes: Built-in compact, built-in, freestanding 
compact, and freestanding. See Term Sheets #1 and #2.
    DOE sought additional information related to the consideration of 
non-compressor products in the December 2015 NODA. 80 FR 77589. DOE did 
not receive any information indicating that the approach used by the 
MREF Working Group was inappropriate.
    Based on the recommendations of the MREF Working Group, DOE 
proposed definitions for each of the cooler product classes in the 
March 2016 SNOPD, and subsequently codified the definitions in 10 CFR 
430.2 in the July 2016 Final Coverage Determination. 81 FR at 11459; 81 
FR at 46775-46776. The standards adopted in this direct final rule are 
based on these four cooler product classes discussed above.
b. Combination Cooler Refrigeration Products
    In the preliminary analysis, DOE proposed that combination cooler 
refrigeration products (at the time referred to as ``hybrid 
refrigeration products'') would be subject to the same product class 
structure as currently in place for refrigerators, refrigerator-
freezers, and freezers. See generally, 10 CFR 430.32(a) (detailing the 
different classes applicable to refrigerators, refrigerator-freezers, 
and freezers). Under this approach, the applicable product class would 
be determined based on the total product volume, the compartment 
temperature ranges for the non-cooler compartments, and any relevant 
product features (e.g., configuration, defrost type, ice making,

[[Page 75210]]

etc.). See chapter 3 of the preliminary TSD.
    The MREF Working Group discussed the topic of product classes when 
considering recommended standards for MREFs. Similar to coolers, the 
Working Group discussed how combination cooler refrigeration products 
are similar to refrigerators, refrigerator-freezers, and freezers. The 
Working Group considered whether the product class structure DOE 
proposed in the preliminary analysis would be appropriate. However, the 
Working Group indicated that because only certain of the previously 
considered product classes were available on the market or likely to 
become available on the market, DOE should only conduct analysis and 
consider potential standards for these product classes. Accordingly, 
the Working Group recommended that DOE establish eight product classes 
for combination cooler refrigeration products. These eight product 
classes represent the combination cooler refrigeration products that 
are either currently available on the market or very similar to 
products currently available (i.e., the associated freestanding 
equivalent to a built-in product). Although combination cooler 
refrigeration products are not currently available in each of the eight 
product classes, the MREF Working Group included the additional product 
classes as a means to prevent circumvention. For example, if DOE 
established only built-in product classes, a manufacturer could readily 
modify a product to be freestanding to avoid having to meet the MREF 
standards. Accordingly, the Working Group recommended product classes 
for both built-in and freestanding configurations for each product type 
currently available. (ASRAC Public Meeting Transcript, No. 103 at pp. 
55-67, 72-86, 104-109) See Term Sheets #1 and #2.
    Based on the recommendations of the MREF Working Group, in this 
direct final rule, DOE is establishing eight product classes for 
combination cooler refrigeration products. DOE has determined that each 
product class offers a unique consumer utility and has different energy 
use characteristics, warranting separate product classes. Table I.2 of 
this direct final rule includes a description of the eight product 
classes. More detailed descriptions of each of the product classes can 
be found in chapter 3 of the direct final rule TSD.
3. Technology Options
    In the preliminary analysis, DOE identified multiple technology 
options that may be used to improve MREF efficiencies. The preliminary 
analysis technology options are listed in Table IV.1 and described in 
chapter 3 of the preliminary TSD.

           Table IV.1--Preliminary Analysis Technology Options
------------------------------------------------------------------------
                                             Technology options
------------------------------------------------------------------------
Compressor........................  Improved compressor efficiency.
                                    Variable-speed compressor.
                                    Linear compressor.
Evaporator........................  Increased surface area.
                                    Enhanced heat exchanger.
                                    Forced-convection evaporator.
Condenser.........................  Increased surface area.
                                    Enhanced heat exchanger.
                                    Forced-convection condenser.
Fan and Fan Motor.................  Higher-efficiency fan motors.
                                    Higher-efficiency fan blades.
Insulation........................  Improved resistivity of insulation.
                                    Increased insulation thickness.
                                    Vacuum-insulated panels (``VIPs'').
                                    Gas-filled panels.
Gasket............................  Improved gaskets.
                                    Double-door gaskets.
                                    Improved door face frame.
Doors.............................  Improved resistivity of glass door.
                                    Solid door.
Expansion Valve...................  Improved: Thermostatic expansion
                                     valves (``TXV'') or electronic
                                     expansion valves (``EEV'').
Cycling Losses....................  Fluid control or solenoid valve.
Defrost...........................  Off-cycle defrost.
                                    Reduced energy.
                                    Adaptive defrost.
                                    Hot-gas bypass.
Controls..........................  Electronic temperature control.
Alternative Refrigeration System..  Conversion to alternative
                                     refrigeration system.
Alternative Heat Transfer.........  Heat pipe.
Other.............................  Component location.
------------------------------------------------------------------------

    After receiving feedback from interested parties, conducting 
manufacturer interviews, and participating in the MREF Working Group 
discussions, DOE did not identify any additional technology options 
beyond those considered in the preliminary analysis. In this direct 
final rule, DOE considered the same list of technology options as 
presented in Table IV.1.

B. Screening Analysis

    DOE uses the following four screening criteria to determine which 
technology options are suitable for further consideration in an energy 
conservation standards rulemaking:
    1. Technological feasibility. Technologies that are not 
incorporated in commercial products or in working prototypes will not 
be considered further.
    2. Practicability to manufacture, install, and service. If it is 
determined that mass production and reliable installation and servicing 
of a

[[Page 75211]]

technology in commercial products could not be achieved on the scale 
necessary to serve the relevant market at the time of the projected 
compliance date of the standard, then that technology will not be 
considered further.
    3. Impacts on product utility or product availability. If it is 
determined that a technology would have significant adverse impact on 
the utility of the product to significant subgroups of consumers or 
would result in the unavailability of any covered product type with 
performance characteristics (including reliability), features, sizes, 
capacities, and volumes that are substantially the same as products 
generally available in the United States at the time, it will not be 
considered further.
    4. Adverse impacts on health or safety. If it is determined that a 
technology would have significant adverse impacts on health or safety, 
it will not be considered further.
    10 CFR part 430, subpart C, appendix A, 4(a)(4) and 5(b).
    In sum, if DOE determines that a technology, or a combination of 
technologies, fails to meet one or more of the above four criteria, it 
will be excluded from further consideration in the engineering 
analysis. The reasons for eliminating any technology are discussed 
below.
1. Screened-Out Technologies
    In the preliminary analysis, DOE assessed the feasibility of each 
of the technologies listed in Table IV.1. Several of these technology 
options were found not to meet the four required screening criteria and 
were therefore screened out from further consideration in DOE's 
analysis. Table IV.2 lists the technology options DOE screened out for 
the preliminary analysis. More details on why these technology options 
were screened out can be found in chapter 4 of the preliminary TSD.

    Table IV.2--Preliminary Analysis Screened Out Technology Options
------------------------------------------------------------------------
            Technology                    Reason for screening out
------------------------------------------------------------------------
Linear Compressors................  Lack of information on commercially-
                                     available compressors, uncertainty
                                     on whether they would be readily
                                     incorporated on a widespread basis.
Increased Evaporator and Condenser  No physical room to increase the
 Surface Area.                       face area or add tubes, would
                                     impact product utility by requiring
                                     larger cabinets.
Improved Evaporator Heat Exchange.  Most fin enhancements would increase
                                     frost accumulation, decreasing
                                     product utility.
Improved Condenser Heat Exchange..  Maintenance concerns requiring more
                                     frequent cleaning of heat-
                                     exchanger, impacting product
                                     utility.
Forced-Convection Condensers......  Already in use by baseline products,
                                     hence eliminated from consideration
                                     in subsequent analyses.
Higher-Efficiency Fan Blades......  Likely already in use in baseline
                                     products, lack of information to
                                     provide credible calculation of
                                     savings and costs.
Improved Resistivity of Insulation  Lack of information on available
 Panels.                             options, not technologically
                                     feasible based on available
                                     information.
Gas-Filled Panels.................  Not commercially-available, not
                                     practicable to manufacture on the
                                     scale necessary for the market.
Solid Doors (for coolers, and       Would affect consumer utility (i.e.,
 cooler compartments).               availability of glass-door units).
Improved Gaskets..................  Already in use by nearly all MREF
                                     products.
Improved Expansion Valves.........  Automatic valves or EEV's are
                                     typically oversized for these
                                     products, not practicable to
                                     manufacture on the scale necessary
                                     for the market.
Fluid-Control Valves..............  Potential decrease in product
                                     reliability, negatively impacting
                                     consumer utility.
Off-Cycle Defrost, Reduced Energy   Already in use by nearly all MREF
 for Automatic Defrost, Adaptive     products.
 Defrost, and Hot-Gas Bypass
 Defrost.
Electronic Temperature Control....  Lack of data on costs and savings.
Conversion to Thermoelectric or     Unlikely to result in energy
 Absorption Refrigeration Systems.   savings.
Component Location (internal        Already in use by nearly all MREF
 arrangement of components).         products.
------------------------------------------------------------------------

    For this direct final rule analysis, DOE has maintained one 
technology option for consideration in the engineering analysis that 
was screened out in the preliminary analysis. DOE is no longer 
screening out improved evaporator and condenser heat exchange. DOE 
received feedback during confidential manufacturer interviews that 
there may be opportunities to optimize evaporator and condenser designs 
for more effective heat transfer. For this direct final rule, DOE has 
continued to screen out the remaining technology options listed in 
Table IV.2.
2. Remaining Technologies
    Through a review of each technology, DOE concludes that all of the 
other identified technology options listed in section IV.A.3 of this 
document meet all four screening criteria to be examined further as 
design options in the direct final rule engineering analysis. In 
summary, and as explained further in this section, DOE did not screen 
out the following technology options shown in Table IV.3.

         Table IV.3--Direct Final Rule Remaining Design Options
------------------------------------------------------------------------
                              Design option
-------------------------------------------------------------------------
Improved compressor efficiency.
Variable-speed compressors.
Improved evaporator and condenser heat exchange.
Higher-efficiency fan motors.
Increased insulation thickness.
Vacuum-insulated panels.
Improved glass door resistivity.
Conversion to vapor-compression.
Heat pipes.
------------------------------------------------------------------------

    DOE determined that these technology options are technologically

[[Page 75212]]

feasible because they are being used or have previously been used in 
commercially-available products or working prototypes. DOE also found 
that all of the remaining technology options meet the other screening 
criteria (i.e., are practicable to manufacture, install, and service 
and do not result in adverse impacts on consumer utility, product 
availability, health, or safety). For additional details, see chapter 4 
of the direct final rule TSD.

C. Engineering Analysis

    In the engineering analysis, DOE establishes the relationship 
between the manufacturer production cost (``MPC'') and improved 
efficiency of MREFs. 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 product to model 
different levels of efficiency. The efficiency-level approach uses 
estimates of costs and efficiencies of products available on the market 
at distinct efficiency levels to develop the cost-efficiency 
relationship. The reverse-engineering approach involves testing 
products for efficiency and determining cost from a detailed bill of 
materials (``BOM'') derived from reverse-engineering representative 
products. The efficiency ranges from that of the least-efficient MREFs 
sold today to the max-tech efficiency level. At each efficiency level 
examined, DOE determines the MPC; this relationship is referred to as a 
cost-efficiency curve.
1. Coolers
a. Methodology
    In the preliminary analysis, DOE adopted a combined efficiency-
level/design-option/reverse-engineering approach to develop cost-
efficiency curves for coolers. DOE first established efficiency levels 
by defining annual energy use as a percent of the California Energy 
Commission (``CEC'')-equivalent energy use. This is the maximum 
allowable energy use of the CEC energy standards for wine chillers with 
automatic defrost, adjusted to account for the fact that the CEC test 
procedure uses a different usage factor than DOE considered in its 
analysis. DOE based its analysis on the potential efficiency 
improvements associated with groups of design options. See chapter 5 of 
the preliminary TSD.
    DOE then developed manufacturing cost models based on its reverse-
engineering of various MREF products. These reverse-engineering efforts 
yielded additional information that helped support DOE's calculation of 
the incremental costs associated with efficiency improvements. To 
develop the analytically derived cost-efficiency curves, DOE collected 
information from various sources on the manufacturing costs and energy 
use reductions associated with each of the considered design options. 
DOE reviewed product literature, conducted testing and reverse-
engineering of current products, and interviewed component and product 
manufacturers. DOE modeled energy use reductions associated with design 
options using the Efficient Refrigerator Analysis program developed for 
the 2011 residential refrigeration products rulemaking and modified for 
this MREF standards rulemaking analysis. The incremental cost estimates 
combined with test data and energy modeling results led to the cost-
efficiency curves for coolers developed for the preliminary analysis. 
See chapter 5 of the preliminary TSD.
    DOE did not receive any feedback on the overall methodology used 
for the coolers preliminary engineering analysis. In this direct final 
rule, DOE conducted the engineering analysis using the same approach as 
the preliminary analysis. However, DOE has updated its analysis to 
reflect the changes to the scope of coverage and product classes as 
discussed in sections IV.A.1 and IV.A.2 of this document. DOE also 
incorporated feedback from manufacturers obtained during additional 
interviews and information from MREF Working Group members during the 
Working Group discussions. Additional information on the methodology 
used for this direct final rule engineering analysis is available in 
chapter 5 of the direct final rule TSD.
b. Efficiency Levels
    As described in section IV.C.1.a of this document, for the 
preliminary analysis, DOE considered efficiency levels defined by their 
performance with respect to the CEC-equivalent baseline level. DOE 
considered the CEC-equivalent standard level to be the baseline point 
of comparison for coolers; however, DOE observed that certain coolers 
performed worse than the CEC-equivalent standard level. From DOE's test 
sample, the worst-performing unit was a non-compressor cooler that 
tested at 267 percent of the CEC-equivalent standard. DOE used this 
level as the baseline in its preliminary engineering analysis. The 
best-performing unit in DOE's test sample was a vapor-compression 
cooler that tested at 48 percent of the CEC-equivalent standard. DOE 
estimates that this level represented the maximum efficiency available 
on the market. In the preliminary analysis, DOE considered efficiency 
levels beyond the maximum available by using energy modeling. The 
energy model for the maximum technologically feasible (max-tech) level 
was based on incorporating all applicable design options for coolers. 
That energy modeling resulted in an efficiency level at 32 percent of 
the CEC-equivalent standard level. DOE analyzed efficiency levels at 
10-percent intervals between the CEC-equivalent and max-tech levels, 
and at somewhat larger intervals between the baseline and CEC-
equivalent levels.
    Table IV.4 lists the efficiency levels considered for coolers in 
the preliminary analysis. Chapter 5 of the preliminary TSD provides 
additional information on the development of the preliminary analysis 
efficiency levels.

        Table IV.4--Preliminary Analysis Cooler Efficiency Levels
------------------------------------------------------------------------
                                                         Percent of CEC-
                                                           equivalent
                   Efficiency level                          energy
                                                           consumption
------------------------------------------------------------------------
Baseline..............................................               267
1.....................................................               200
2.....................................................               160
3.....................................................               130
4 (CEC-Equivalent)....................................               100
5.....................................................                90
6.....................................................                80
7.....................................................                70
8.....................................................                60
9.....................................................                50
10....................................................                40
11 (Max-Tech).........................................                32
------------------------------------------------------------------------

    For this direct final rule, DOE primarily relied on the same test 
data and modeling data as used in the preliminary analysis to evaluate 
efficiency levels. However, because DOE is establishing four separate 
product classes for coolers, DOE used this information to determine 
appropriate efficiency levels for each product class.
    The test data from the preliminary analysis apply to both the 
freestanding and freestanding compact product classes. Accordingly, DOE 
analyzed the same efficiency levels for these product classes as 
considered in the preliminary analysis. However, DOE also tested one 
additional freestanding unit with an energy consumption at 
approximately 300 percent of the CEC-equivalent level. DOE therefore 
revised the

[[Page 75213]]

corresponding baseline efficiency level in this direct final rule to 
account for the higher energy consumption of this newly tested unit.

    Table IV.5--Direct Final Rule Efficiency Levels--Freestanding and
                      Freestanding Compact Coolers
------------------------------------------------------------------------
                                                        Percent of  CEC-
                                                           equivalent
                   Efficiency level                          energy
                                                           consumption
------------------------------------------------------------------------
Baseline..............................................               300
1.....................................................               250
2.....................................................               200
3.....................................................               150
4 (CEC-Equivalent)....................................               100
5.....................................................                90
6.....................................................                80
7.....................................................                70
8.....................................................                60
9.....................................................                50
10....................................................                40
11 (Max-Tech).........................................                32
------------------------------------------------------------------------

    For the built-in product classes, DOE reviewed available market 
information and sought information on product availability from 
manufacturers during interviews and during the MREF Working Group 
discussions. DOE determined that all built-in coolers use vapor-
compression refrigeration systems, and that there are no built-in 
coolers available at efficiencies lower than the CEC-equivalent level. 
So, for built-in coolers and built-in compact coolers, DOE established 
Efficiency Level 4 (100 percent of the CEC-equivalent) as the baseline 
efficiency level.
    DOE also received feedback from MREF Working Group members 
indicating that built-in coolers use more energy than similarly 
constructed freestanding coolers, consistent with the higher maximum 
allowable annual energy use standards for built-in refrigerator, 
refrigerator-freezer, and freezer product classes as compared to their 
corresponding freestanding counterparts. The MREF Working Group 
recommended that DOE consider a similar energy adder for built-in 
coolers in its analysis. (ASRAC Public Meeting Transcript, No. 44 at 
pp. 155-157; No. 87 at pp. 74-77) DOE compared the built-in 
refrigerator, refrigerator-freezer, and freezer product classes to 
their equivalent freestanding counterparts, and determined that built-
in products similar to coolers typically have approximately 10-percent 
higher energy use than freestanding products. See chapter 5 of the 
direct final rule TSD for the comparison of built-in and freestanding 
performance. DOE applied this 10-percent adder to its analysis for 
built-in coolers. DOE maintained intermediate efficiency levels at 10-
percent CEC-equivalent intervals between the baseline and max-tech 
efficiency levels, so the built-in adder is only apparent at the max-
tech efficiency level (i.e., 32 percent of CEC-equivalent for 
freestanding plus a 10-percent energy use adder equals 35 percent of 
CEC-equivalent).

   Table IV.6--Table Direct Final Rule Efficiency Levels--Built-in and
                        Built-in Compact Coolers
------------------------------------------------------------------------
                                                        Percent of  CEC-
                                                           equivalent
                   Efficiency level                          energy
                                                           consumption
------------------------------------------------------------------------
4 (CEC-Equivalent)....................................               100
5.....................................................                90
6.....................................................                80
7.....................................................                70
8.....................................................                60
9.....................................................                50
10....................................................                40
11 (Max-Tech).........................................                35
------------------------------------------------------------------------

    Additional details regarding the selection of efficiency levels for 
coolers are available in chapter 5 of the direct final rule TSD.
c. Manufacturer Production Costs
    In the preliminary analysis, DOE developed cost-efficiency curves 
for coolers with total refrigerated volumes of 2 ft\3\ and 6 ft\3\. DOE 
focused its analysis on these product volumes because it determined 
they were most representative of products available on the market. The 
2-ft\3\ product represents the smaller units that would typically sit 
on a countertop, while the 6-ft\3\ volume represents products designed 
to be installed underneath the counter.
    For 2-ft\3\ coolers, DOE developed a cost-efficiency curve using 
data from two reverse-engineered 2-ft\3\ coolers and additional scaled 
data from reverse-engineered 6-ft\3\ coolers to estimate costs at 
higher efficiencies. DOE used its cost model to estimate the MPCs of 
modeled units incorporating design options not included in the reverse-
engineered units. For 2-ft\3\ coolers, the cost-efficiency curve 
represents starting with a non-compressor cooler at the baseline 
efficiency level and converting to vapor-compression to reach the 
higher efficiency levels.
    DOE followed a similar approach for developing a cost-efficiency 
curve for 6-ft\3\ coolers in the preliminary analysis. DOE reverse-
engineered three 6-ft\3\ coolers at the CEC-equivalent efficiency 
level, a mid-efficiency level, and the maximum available efficiency 
level. DOE used its cost model to estimate the MPCs of modeled units 
incorporating design options not observed in the reverse-engineered 
units. For 6-ft\3\ products, DOE was not aware of any non-compressor 
products available at the time of the preliminary analysis. 
Accordingly, DOE based the 6-ft\3\ analysis only on vapor-compression 
coolers, with a baseline efficiency at the CEC-equivalent level.
    Table IV.7 presents the cost-efficiency curves developed for 2-
ft\3\ and 6-ft\3\ coolers in the preliminary analysis. Chapter 5 of the 
preliminary TSD provides additional discussion regarding the 
development of the preliminary cost-efficiency curves.

     Table IV.7--Preliminary Analysis Cooler Cost-Efficiency Curves
                                 [2013$]
------------------------------------------------------------------------
                                                  Incremental MPC
   Efficiency level  (percent of CEC-    -------------------------------
     equivalent energy consumption)           6-ft\3\         2-ft\3\
------------------------------------------------------------------------
Baseline (267)                            ..............  ..............
1 (200).................................  ..............             $21
2 (160).................................  ..............              34
3 (130).................................  ..............              44
4 (100--CEC-Equivalent).................  ..............              54
5 (90)..................................             $12              57
6 (80)..................................              21              72
7 (70)..................................              33              88
8 (60)..................................              47             100
9 (50)..................................              62             112

[[Page 75214]]

 
10 (40).................................             135             170
11 (32--Max-Tech).......................             205             225
------------------------------------------------------------------------

    DOE used the preliminary engineering analysis as the basis for the 
MPCs in this direct final rule engineering analysis. The primary 
updates made to the preliminary analysis MPCs reflected the 
incorporation of the four cooler product classes and updated market 
information.
    Similar to the preliminary engineering analysis, DOE analyzed 
products at representative volumes in each of the four cooler product 
classes for this direct final rule. DOE did not reverse-engineer 
products at each of these volumes. To develop MPCs for those products, 
DOE used its cost model and scaled certain components to reflect the 
changes that would be necessary with different cabinet sizes. DOE also 
relied on market information to verify cost information and product 
specifications. Table IV.8 shows the representative product volumes DOE 
considered for this direct final rule engineering analysis.

                Table IV.8--Representative Cooler Volumes
------------------------------------------------------------------------
               Product class                   Representative volumes
------------------------------------------------------------------------
Freestanding..............................  8-ft\3\, 12-ft\3\, 16-ft\3\
Built-in..................................  8-ft\3\, 12-ft\3\, 16-ft\3\
Freestanding Compact......................  2-ft\3\, 4-ft\3\, 6-ft\3\
Compact Built-in..........................  6-ft\3\
------------------------------------------------------------------------

    After reviewing updated market information, DOE is now aware of 
products with volumes greater than 2 ft\3\ that use non-compressor 
refrigeration systems. In particular, DOE identified non-compressor 
coolers with volumes up to 12 ft\3\ available on the market. DOE 
observed non-compressor products for only the two freestanding product 
classes, so for these product classes, DOE analyzed the changes and 
costs associated with moving from a baseline non-compressor product 
(i.e., 300 percent of the CEC-equivalent standard) to the max-tech 
level. For the built-in product classes, which include only vapor-
compression products, DOE analyzed the changes necessary to move from 
Efficiency Level 4 (the CEC-equivalent standard) to the max-tech.
    For this direct final rule, DOE expects that manufacturers would 
rely on the same design changes as considered in the preliminary 
analysis to reach higher efficiency levels. DOE presented the design 
option changes associated with higher efficiencies to manufacturers 
during interviews conducted under non-disclosure agreements and to the 
MREF Working Group. Feedback from the manufacturers and Working Group 
members generally supported the design option changes and their 
corresponding efficiency increases.\19\
---------------------------------------------------------------------------

    \19\ See document numbers 54, 58, and 75 in docket ID EERE-2011-
BT-STD-0043 on http://www.regulations.gov for engineering materials 
presented to the MREF Working Group.
---------------------------------------------------------------------------

    DOE used the preliminary analysis as the basis for the costs 
associated with these design changes; however, DOE updated its cost 
estimates based on feedback from manufacturer interviews and from the 
MREF Working Group. This updated information included feedback on 
specific component pricing and on the order in which manufacturers 
would apply the different design options.
    In addition to the revised analysis, DOE also updated its cost 
estimates to 2015$, the most recent year for which full-year cost data 
was available at the time of the direct final rule analysis. Based on 
these updates to the preliminary analysis, DOE developed cost-
efficiency curves presented in Table IV.9 for each of the analyzed 
volumes for the cooler product classes established in this direct final 
rule. Chapter 5 of the direct final rule TSD includes additional 
information on the engineering analysis.

                                               Table IV.9--Direct Final Rule Cooler Cost-Efficiency Curves
                                                                         [2015$]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       Compact (<7.75 ft\3\)                                Full-size (>=7.75 ft\3\)
                                           -------------------------------------------------------------------------------------------------------------
             Efficiency level                         Freestanding            Built-in            Freestanding                       Built-in
                                           -------------------------------------------------------------------------------------------------------------
                                             2-ft\3\    4-ft\3\    6-ft\3\    6-ft\3\    8-ft\3\    12-ft\3\   16-ft\3\   8-ft\3\    12-ft\3\   16-ft\3\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline..................................         $0         $0         $0         $0         $0         $0         $0         $0         $0         $0
1.........................................          0         16         14          0         27         36          0          0          0          0
2.........................................          0         33         28          0         53         71          0          0          0          0
3.........................................          0         49         42          0         80        107          0          0          0          0
4.........................................         54         65         56          0        106        143          0          0          0          0
5.........................................         57         73         64          7        118        160         22          8         10         11
6.........................................         65         82         73         18        129        175         41         22         29         34
7.........................................         76         95         88         31        149        204         74         38         51         58
8.........................................         89        108        102         46        163        219         91         53         66         73
9.........................................        102        120        113         51        173        227         98         57         68         75
10........................................        147        192        198        155        235        302        181        175        236        265
11........................................        237        282        288        223        378        500        403        259        337        376
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 75215]]

2. Combination Cooler Refrigeration Products
a. Methodology
    In the preliminary analysis, DOE observed that combination coolers 
were very similar in design to refrigerators, refrigerator-freezers, 
and freezers. Because of these similarities, DOE did not conduct a full 
engineering analysis for these products. Instead, DOE considered 
whether it would be appropriate to apply the standards currently in 
place for refrigerators, refrigerator-freezers, and freezers to 
combination cooler refrigeration products. To do this, DOE modeled the 
heat loads for various combination product configurations at two 
representative product volumes (6 ft\3\ and 12 ft\3\) incorporating 
different combinations of design options. From the modeling results, 
DOE concluded that all of the product configurations would be capable 
of meeting the existing standard for the corresponding product class 
for all-refrigerators with automatic defrost. Although DOE determined 
that combination cooler refrigeration products would be able to reach 
that efficiency level by incorporating certain design options, DOE did 
not estimate the incremental MPCs associated with improving performance 
to that level. See chapter 5 of the preliminary TSD.
    During the MREF Working Group discussions, Working Group members 
recommended that DOE conduct the full analysis, including establishing 
product classes, efficiency levels, and incremental MPC estimates for 
these products.\20\
---------------------------------------------------------------------------

    \20\ See docket transcript documents EERE-2011-BT-STD-0043-0090 
and EERE-2011-BT-STD-0043-0103 for the discussions of the 
combination cooler refrigeration products analysis.
---------------------------------------------------------------------------

    For this direct final rule engineering analysis, DOE conducted the 
full engineering analysis as recommended by the MREF Working Group. DOE 
used an approach based on modeling different product configurations and 
design options to estimate performance. This approach was similar to 
what DOE used in the preliminary engineering analysis. DOE conducted 
its engineering analysis on three of the eight product classes of 
combination cooler refrigeration products, as discussed in section 
IV.A.2 of this document, and on the typical product configurations 
(i.e., compartment volumes and door types) available on the market. DOE 
did not test or reverse-engineer any combination cooler refrigeration 
products, so it relied on modeling to determine baseline performance 
and incremental efficiency improvements. DOE modeled the typical 
product configurations observed in products available on the market, 
and incorporated design options to improve the refrigeration system 
efficiency and reduce the thermal load on the unit. DOE concluded that 
combination cooler refrigeration products would rely on the same design 
options to improve efficiency as for coolers. Accordingly, DOE applied 
similar cost estimates to each design option. DOE used its cost model 
to scale the design option cost estimates, as necessary, based on the 
different product configurations for combination cooler refrigeration 
products. A more detailed description of the methodology used in this 
direct final rule engineering analysis is available in chapter 5 of the 
direct final rule TSD.
b. Efficiency Levels
    For the preliminary engineering analysis, DOE did not specifically 
analyze different efficiency levels for combination cooler 
refrigeration products. DOE instead modeled sets of design options 
corresponding to the baseline and higher efficiencies to determine 
whether these products would be capable of meeting the existing energy 
conservation standards for refrigerators, refrigerator-freezers, and 
freezers.
    In this direct final rule, DOE is establishing eight product 
classes for combination cooler refrigeration products, representing the 
product types either currently available on the market or likely to be 
available in the future. For the purposes of the engineering analysis, 
DOE analyzed only the product classes with current product offerings 
(C-3A, C-9, and C-13A). DOE applied this analysis to the remaining 
similar product classes in the downstream analyses. Based on market 
data, DOE identified a representative total refrigerated volume and 
configuration for each of these three analyzed product classes, as 
described in Table IV.10. For all three product classes, DOE observed 
that the cooler compartment typically had a glass door, while the fresh 
food or freezer compartment had a solid door.

               Table IV.10--Representative Combination Cooler Refrigeration Product Configurations
----------------------------------------------------------------------------------------------------------------
                                                                                   Fresh food or
                                                                      Cooler          freezer          Total
                          Product class                             compartment     compartment    refrigerated
                                                                  volume (ft\3\)  volume (ft\3\)  volume (ft\3\)
----------------------------------------------------------------------------------------------------------------
C-3A............................................................               6               6              12
C-9.............................................................               6               6              12
C-13A...........................................................             1.2             3.6             4.8
----------------------------------------------------------------------------------------------------------------

    DOE then used its modeling tool (discussed in detail in chapter 5 
of the direct final rule TSD) to evaluate the thermal load on a typical 
baseline unit (i.e., thinnest insulation and baseline glass for the 
cooler compartment). DOE assumed that a baseline refrigeration system 
would be equivalent to the baseline refrigeration system for a 
corresponding refrigerator, refrigerator-freezer, or freezer. With the 
estimated thermal load and refrigeration system efficiency, DOE 
calculated the associated energy performance for the baseline 
combination cooler refrigeration products.
    For performance at higher efficiency levels, DOE modeled the 
thermal load impacts of increased insulation thickness and improved 
glass door resistivity. These design changes would reduce the total 
thermal load for the refrigeration system to offset. At the higher 
efficiency levels DOE also considered improved refrigeration system 
efficiencies through higher-efficiency compressors and optimized heat 
exchangers, similar to the design options analyzed for coolers. DOE 
estimated max-tech performance by combining the lowest modeled thermal 
load with the highest-efficiency refrigeration system. DOE considered 
intermediate efficiency levels at even increments between the baseline 
and max-tech. For each product class, DOE

[[Page 75216]]

analyzed an intermediate efficiency level corresponding to the 
equivalent level of the refrigerator, refrigerator-freezer, and freezer 
energy conservation standards that apply to those manufacturers who 
have received permission to use a test procedure waiver, which provides 
a usage factor that compensates for the less frequent door openings for 
these products.
    Based on the updated product class structure and DOE's modeling 
analysis, DOE analyzed the efficiency levels as shown in Table IV.11. 
The values corresponding to each efficiency level reflect the modeled 
energy use relative to the existing standards for the corresponding 
refrigerator, refrigerator-freezer, or freezer product classes, where 
100 percent represents the current standard level for products tested 
according to the existing test procedure waivers. Chapter 5 of the 
direct final rule TSD provides more information on the development of 
combination cooler refrigeration product efficiency levels.

            Table IV.11--Direct Final Rule Combination Cooler Refrigeration Product Efficiency Levels
----------------------------------------------------------------------------------------------------------------
                                                                       Percent of DOE refrigerator  standard
                                                                                    equivalent
                        Efficiency level                         -----------------------------------------------
                                                                       C-3A             C-9            C-13A
----------------------------------------------------------------------------------------------------------------
Baseline........................................................             136             145             171
1...............................................................             128             128             149
2...............................................................             100             106             128
3...............................................................              85             100             100
4...............................................................              77              85              85
5...............................................................              68              77              77
6...............................................................              60              68              68
7 (Max-tech)....................................................              46              58              60
----------------------------------------------------------------------------------------------------------------

c. Manufacturer Production Costs
    As discussed in section IV.C.2.a of this document, DOE did not 
estimate the increases in MPC associated with improving combination 
cooler refrigeration product efficiencies in the preliminary analysis. 
For this direct final rule, DOE extended the engineering analysis to 
include the development of combination cooler refrigeration product 
cost-efficiency curves.
    Because combination cooler refrigeration products are similar to 
coolers and refrigerators, DOE used data from the reverse-engineering 
of coolers and refrigerators to inform the cost estimates associated 
with design options. DOE also considered information from confidential 
manufacturer interviews to determine which design options would be 
appropriate for combination cooler refrigeration products and to gather 
feedback on cost estimates. DOE used its cost model to scale certain 
design options to the three typical volumes identified for each of the 
analyzed product classes, as described in section IV.C.2.b of this 
document. DOE presented its initial updates to the engineering analysis 
to the MREF Working Group \21\ and made additional revisions based on 
feedback from Working Group members. (ASRAC Public Meeting Transcript, 
No. 90 at pp. 128-135)
---------------------------------------------------------------------------

    \21\ See document numbers 78, 79, and 99 in docket ID EERE-2011-
BT-STD-0043 on http://www.regulations.gov for engineering materials 
presented to the MREF Working Group.
---------------------------------------------------------------------------

    To develop the cost-efficiency curves, DOE determined that 
manufacturers would likely make incremental improvements to both the 
thermal load and the refrigeration system when moving from baseline to 
max-tech. Table IV.12 presents the incremental MPCs, in 2015$, 
associated with these improvements for the three product classes 
considered in this engineering analysis. Chapter 5 of the direct final 
rule TSD includes additional information regarding the cost-efficiency 
curves.

         Table IV.12--Direct Final Rule Combination Cooler Refrigeration Product Cost-Efficiency Curves
----------------------------------------------------------------------------------------------------------------
                                                                                  Incremental MPC
                        Efficiency level                         -----------------------------------------------
                                                                       C-3A             C-9            C-13A
----------------------------------------------------------------------------------------------------------------
Baseline........................................................              $0              $0              $0
1...............................................................               6              15               6
2...............................................................              28              45              15
3...............................................................              42              47              35
4...............................................................              44              50              52
5...............................................................              65              60             100
6...............................................................             116             132             155
7 (Max-tech)....................................................             256             264             207
----------------------------------------------------------------------------------------------------------------

D. Markups Analysis

    The markups analysis develops appropriate markups (e.g., 
manufacturer markups, retailer markups, wholesaler markups, contractor 
markups) in the distribution chain and sales taxes to convert the MPC 
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 product to cover business costs and profit 
margin.
    For MREFs, the main distribution chain goes from manufacturers to 
appliance retailers, and then to

[[Page 75217]]

consumers. DOE included only this distribution channel during the 
preliminary analysis. Based on feedback from manufacturers, and the 
MREF Working Group, DOE understands a small fraction of freestanding 
coolers and combination cooler refrigeration products, and all built-in 
coolers and combination cooler refrigeration products, go through 
another distribution channel, in which manufacturers sell the products 
to wholesalers, who in turn sell the products to retailers and then to 
consumers. (ASRAC Public Meeting, No. 85 at pp. 142-145)
    The manufacturer markup converts MPC to manufacturer selling price 
(``MSP''). DOE developed an average manufacturer markup by examining 
the annual Securities and Exchange Commission (``SEC'') 10-K reports 
filed by publicly-traded manufacturers engaged in producing MREFs.
    For retailers and wholesalers, DOE developed separate markups for 
baseline products (baseline markups) and for the incremental cost of 
more-efficient products (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 used the 2012 
Annual Retail Trade Survey \22\ and 2012 Annual Wholesale Trade Report 
\23\ from the U.S. Census Bureau to estimate average baseline and 
incremental markups for retailers and wholesalers, respectively.
---------------------------------------------------------------------------

    \22\ U.S. Census Bureau, 2012 Annual Retail Trade Survey (2012) 
(Available at: http://www.census.gov/retail/index.html) (Last 
Accessed November 12, 2015).
    \23\ U.S. Census Bureau, 2012 Annual Wholesale Trade Report 
(2012), (Available at: http://www.census.gov/wholesale/index.html) 
(Last Accessed April 23, 2015).
---------------------------------------------------------------------------

    Chapter 6 of the direct final rule TSD provides details on DOE's 
development of markups for MREFs.

E. Energy Use Analysis

    The purpose of the energy use analysis is to determine the annual 
energy consumption of MREFs at different efficiencies in representative 
U.S. households, and to assess the energy savings potential of 
increased MREF efficiency. The energy use analysis estimates the range 
of energy use of MREFs in the field (i.e., as they are actually used by 
consumers). The energy use analysis provides the basis for other 
analyses DOE performs, particularly assessments of the energy savings 
and the savings in consumer operating costs that could result from the 
adoption of new standards.
    DOE determined a range of annual energy use of MREFs as a function 
of unit volume. DOE developed a sample of households that use MREFs 
from surveys of MREF owners.\24\ For each sample household, DOE 
randomly assigned a product volume from the volumes analyzed in the 
engineering analysis. For each volume and considered efficiency level, 
DOE derived the energy consumption as measured by the DOE test 
procedure in appendix A.
---------------------------------------------------------------------------

    \24\ J.B. Greenblatt et al. U.S. Residential Miscellaneous 
Refrigeration Products: Results from Amazon Mechanical Turk Surveys. 
2014. Lawrence Berkeley National Laboratory: Berkeley, CA. Report 
No. LBNL-6537E. See also S.M. Donovan, S.J. Young and J.B. 
Greenblatt. Ice-Making in the U.S.: Results from an Amazon 
Mechanical Turk Survey. 2015. Lawrence Berkeley National Laboratory: 
Berkeley, CA. Report No. LBNL-183899.
---------------------------------------------------------------------------

    DOE developed distributions of product volumes for each product 
class based on the MREF models listed in DOE's Compliance Certification 
Management System (``CCMS'') database,\25\ the CEC database,\26\ the 
Natural Resources Canada (``NRCan'') database,\27\ as well as 
manufacturer and retailer Web sites.
---------------------------------------------------------------------------

    \25\ For more information see: www.regulations.doe.gov/certification-data/CCMS-77803762689.html.
    \26\ Available at: https://cacertappliances.energy.ca.gov.
    \27\ Available at: http://oee.nrcan.gc.ca/pml-lmp/index.cfm?action=app.search-recherche&appliance=REFRIGERATORS.
---------------------------------------------------------------------------

    Chapter 7 of the direct final rule TSD provides details on DOE's 
energy use analysis for MREFs.

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 
MREFs. The effect of new or amended 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 product over the life of that product, consisting of 
total installed cost (MPC, manufacturer markups, 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 product.
     The PBP (payback period) is the estimated amount of time 
(in years) it takes consumers to recover the increased purchase cost 
(including installation) of a more-efficient product through lower 
operating costs. DOE calculates the PBP by dividing the change in 
purchase cost 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 MREFs in the absence of new energy 
conservation standards. In contrast, the PBP for a given efficiency 
level is measured relative to the lowest efficiency level in the no-
new-standards distribution.
    For each considered efficiency level in each product class, DOE 
calculated the LCC and PBP for a nationally representative set of 
housing units. As stated previously, DOE developed household samples 
from the results of a study on MREFs using online surveys. For each 
sample household, DOE determined the energy consumption for the MREFs 
and the appropriate electricity price. By developing a representative 
sample of households, the analysis captured the variability in energy 
consumption and energy prices associated with the use of MREFs.
    Inputs to the calculation of total installed cost include the cost 
of the product--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, product lifetimes, and discount rates. DOE created 
distributions of values for product lifetimes, 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, which 
incorporates Crystal Ball\TM\ (a commercially-available software 
program), relies on a Monte Carlo simulation to incorporate uncertainty 
and variability into the analysis. The Monte Carlo simulations randomly 
sample input values from the probability distributions and MREF user 
samples. The model calculated the LCC and PBP for products at each 
efficiency level for 10,000 housing units per simulation run.
    DOE calculated the LCC and PBP for all consumers as if each were to 
purchase a new product in the expected year of compliance with new 
standards. In its analysis, DOE used two different

[[Page 75218]]

compliance dates. For the consensus-recommended TSLs, the analysis is 
based on a 2019 compliance date, as recommended by the MREF Working 
Group. The analysis for all other TSLs is based on a 2021 compliance 
date consistent with EPCA, which provides that newly-established 
standards shall not apply to products manufactured within five years 
after the publication of the final rule. In other words, DOE followed 
the prescriptions of EPCA for all TSLs that were not recommended by the 
MREF Working Group. The two different compliance dates are indicated in 
the relevant sections of the results and discussed in section III.B of 
this document.
    Table IV.13 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 direct final rule TSD and its appendices.

      Table IV.13--Summary of Inputs for the LCC and PBP Analysis *
------------------------------------------------------------------------
              Inputs                            Source/method
------------------------------------------------------------------------
Product Cost......................  Derived by multiplying MPCs by
                                     manufacturer and retailer markups
                                     and sales tax, as appropriate.
Installation Costs................  Did not include because no change
                                     with efficiency level.
Annual Energy Use.................  Annual weighted-average values are a
                                     function of energy use at each TSL
                                     and distribution of efficiencies
                                     observed on the market.
Energy Prices.....................  Based on Edison Electric Institute
                                     (``EEI'') Typical Bills and Average
                                     Rates reports for summer and winter
                                     2014.
Energy Price Trends...............  Based on AEO 2015 price forecasts.
Repair and Maintenance Costs......  Did not include because no change
                                     with efficiency level.
Product Lifetime..................  Based on MREF Working Group feedback
                                     and values previously determined
                                     for refrigerators and freezers.
Discount Rates....................  Approach involves identifying all
                                     possible debt or asset classes that
                                     might be used to purchase the
                                     considered appliances, or might be
                                     affected indirectly. Primary data
                                     source was the Federal Reserve
                                     Board's Survey of Consumer
                                     Finances.
Compliance Date...................  TSLs recommended by the MREF Working
                                     Group: 2019; Other TSLs: 2021.
------------------------------------------------------------------------
* Collectively, the references for the data sources mentioned in this
  table are either provided in the sections following the table or in
  chapter 8 of the direct final rule TSD.

1. Product Cost
    To calculate consumer product costs, DOE multiplied the MPCs 
developed in the engineering analysis by the markups described above 
(along with sales taxes). DOE used different markups for baseline 
products and higher-efficiency products, because DOE applies an 
incremental markup to the increase in MSP associated with higher-
efficiency products.
    Historical price data specific to MREFs are not available. Hence, 
DOE used a constant price assumption as the default product price trend 
to project the prices of MREFs sold in each year in the forecast 
period.
2. Installation Cost
    Installation cost includes labor, overhead, and any miscellaneous 
materials and parts needed to install the product. DOE included 
installation cost as part of the LCC analysis during the preliminary 
analysis, but the cost did not vary with efficiency levels. As part of 
the MREF Working Group discussions, stakeholders confirmed that 
installation cost for MREFs does not vary between efficiency levels. 
(ASRAC Public Meeting, No. 85 at pp. 155-157) As a result, DOE did not 
include installation cost as part of the analysis for this direct final 
rule.
3. Annual Energy Consumption
    For each sampled household, DOE determined the energy consumption 
for MREFs at different efficiency levels using the approach described 
in section IV.E of this document.
4. Energy Prices
    For the LCC and PBP analysis, DOE used average electricity prices 
(for baseline products) and marginal prices (for higher-efficiency 
products) which vary by region. DOE estimated these prices using data 
published with the EEI Typical Bills and Average Rates reports for 
summer and winter 2014.\28\ The report provides, for most of the major 
investor-owned utilities (``IOUs'') in the country, the total bill 
assuming household consumption levels of 500, 750, and 1,000 kWh for 
the billing period.
---------------------------------------------------------------------------

    \28\ Edison Electric Institute. Typical Bills and Average Rates 
Report. Winter 2014 published April 2014, Summer 2014 published 
October 2014. See http://www.eei.org/resourcesandmedia/products/Pages/Products.aspx.
---------------------------------------------------------------------------

    DOE defined the average price as the ratio of the total bill to the 
total electricity consumption. DOE used the EEI data to also define a 
marginal price as the ratio of the change in the bill to the change in 
energy consumption.
    Regional weighted-average values for each type of price were 
calculated for the nine census divisions and four large States (CA, FL, 
NY and TX). Each EEI utility in a division or large State was assigned 
a weight based on the number of consumers it serves. Consumer counts 
were taken from the most recent EIA Form 861 data (2012).\29\ DOE 
adjusted these regional weighted-average prices to account for 
systematic differences between IOUs and publicly-owned utilities, as 
the latter are not included in the EEI data set. Appropriate prices 
were assigned to each sample household depending on its location.
---------------------------------------------------------------------------

    \29\ U.S. Department of Energy, Energy Information 
Administration. Form EIA-861 Annual Electric Power Industry 
Database. www.eia.doe.gov/cneaf/electricity/page/eia861.html.
---------------------------------------------------------------------------

    To estimate future prices, DOE used the projected annual changes in 
average residential electricity prices in the Reference case projection 
in AEO 2015. The AEO price trends do not distinguish between marginal 
and average prices, so DOE used the same trends for both. DOE reviewed 
the EEI data for the years 2007 to 2014 and determined that there is no 
systematic difference in the trends for marginal vs. average prices in 
the data.
5. Maintenance and Repair Costs
    Repair costs are associated with repairing or replacing product 
components that have failed in an appliance; maintenance costs are 
associated with maintaining the operation of the product. DOE included 
maintenance and repair costs as part of the LCC analysis during the 
preliminary analysis, but the costs did not vary with efficiency 
levels. As part of the MREF Working Group discussions, stakeholders 
confirmed that maintenance and repair costs for MREFs

[[Page 75219]]

do not vary between efficiency levels. (ASRAC Public Meeting, No. 85 at 
p. 171) As a result, DOE did not include maintenance and repair costs 
as part of the analysis for this direct final rule.
6. Product Lifetime
    DOE is aware of only limited available data to be used in the 
modeling and analysis of MREF lifetimes. In the preliminary analysis, 
DOE estimated the average product lifetime for coolers based on survey 
data.\30\ However, several MREF Working Group members indicated that 
the estimated lifetime for coolers was too short and that these 
products operate using the same refrigeration technology as currently 
covered refrigerators and refrigerator-freezers for which the projected 
lifetime is much longer. (ASRAC Public Meeting, No. 85 at pp. 164-170) 
Therefore, as part of the MREF Working Group deliberations, DOE applied 
the lifetime of related refrigeration products to all MREFs in this 
direct final rule.
---------------------------------------------------------------------------

    \30\ J.B. Greenblatt et al. U.S. Residential Miscellaneous 
Refrigeration Products: Results from Amazon Mechanical Turk Surveys. 
2014. Lawrence Berkeley National Laboratory: Berkeley, CA. Report 
No. LBNL-6537E.
---------------------------------------------------------------------------

    For all full-size MREF product classes, DOE applied the lifetime 
distribution used for full-size refrigerators in the 2011 
refrigerators, refrigerator-freezers, and freezers final rule, with an 
average lifetime of 17.4 years. 76 FR 57516 (September 15, 2011). For 
all compact MREF product classes, DOE scaled the lifetime distribution 
used for compact freezers in the 2011 refrigerators, refrigerator-
freezers, and freezers final rule to match the estimated 10-year 
average lifetime provided by the Association of Home Appliance 
Manufacturers (``AHAM'') and manufacturer feedback. (ASRAC Public 
Meeting, No. 85 at p. 160; ASRAC Public Meeting, No. 87 at pp. 93-94, 
175-176) This resulted in an average lifetime of 10.3 years for compact 
MREF product classes. See chapter 8 of the direct final rule TSD.
7. Discount Rates
    In calculating the LCC, DOE applies discount rates appropriate to 
households to estimate the present value of future operating costs. DOE 
estimated a distribution of residential discount rates for MREFs based 
on consumer financing costs and opportunity cost of funds related to 
appliance energy cost savings and maintenance costs.
    To establish residential discount rates for the LCC analysis, DOE 
identified all relevant household debt or asset classes in order to 
approximate a consumer's opportunity cost of funds related to appliance 
energy cost savings. It estimated the average percentage shares of the 
various types of debt and equity by household income group using data 
from the Federal Reserve Board's Survey of Consumer Finances \31\ 
(``SCF'') for 1995, 1998, 2001, 2004, 2007, and 2010. Using the SCF and 
other sources, DOE developed a distribution of rates for each type of 
debt and asset by income group to represent the rates that may apply in 
the year in which new standards would take effect. DOE assigned each 
sample household a specific discount rate drawn from one of the 
distributions. The average rate across all types of household debt and 
equity and income groups, weighted by the shares of each type, is 5.1 
percent. See chapter 8 of the direct final rule TSD for further details 
on the development of consumer discount rates.
---------------------------------------------------------------------------

    \31\ The Federal Reserve Board, SCF 1989, 1992, 1995, 1998, 
2001, 2004, 2007, 2010. http://www.federalreserve.gov/pubs/oss/oss2/scfindex.html.
---------------------------------------------------------------------------

8. 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 product efficiencies in the no-new-
standards case (i.e., the case without amended or new energy 
conservation standards).
    DOE estimated the current distribution of product efficiencies 
using product owner surveys; \32\ information from AHAM (AHAM, No. 
106), and the databases maintained by DOE (CCMS),\33\ the CEC,\34\ and 
NRCan; \35\ and information from manufacturer and retailer Web sites 
and manufacturer feedback. The approach is described in chapter 8 of 
the direct final rule TSD. DOE projected that the current distribution 
of product efficiencies would remain constant in future years in the 
absence of standards. Table IV.14 and Table IV.15 show the efficiency 
distributions that DOE used.
---------------------------------------------------------------------------

    \32\ J.B. Greenblatt et al. U.S. Residential Miscellaneous 
Refrigeration Products: Results from Amazon Mechanical Turk Surveys. 
2014. Lawrence Berkeley National Laboratory: Berkeley, CA. Report 
No. LBNL-6537E. See also S.M. Donovan, S.J. Young and J.B. 
Greenblatt. Ice-Making in the U.S.: Results from an Amazon 
Mechanical Turk Survey. 2015. Lawrence Berkeley National Laboratory: 
Berkeley, CA. Report No. LBNL-183899.
    \33\ For more information see: www.regulations.doe.gov/certification-data/CCMS-77803762689.html.
    \34\ Available at: https://cacertappliances.energy.ca.gov.
    \35\ Available at: http://oee.nrcan.gc.ca/pml-lmp/index.cfm?action=app.search-recherche&appliance=REFRIGERATORS.

            Table IV.14--Percentage of Coolers at Each Efficiency Level in the No-New-Standards Case
----------------------------------------------------------------------------------------------------------------
                                                                           Product class
                                                 ---------------------------------------------------------------
                Efficiency level                   Freestanding      Built-in
                                                      compact         compact      Freestanding      Built-in
----------------------------------------------------------------------------------------------------------------
EL0.............................................              10               0               3               0
EL1.............................................              14               0               0               0
EL2.............................................              24               0               1               0
EL3.............................................              25               0               7               0
EL4.............................................               9              17              28              47
EL5.............................................               6              50              25              20
EL6.............................................               7              17              23              27
EL7.............................................               3              17              11               7
EL8.............................................               2               0               1               0
EL9.............................................               0               0               0               0
EL10............................................               0               0               0               0
EL11............................................               1               0               0               0
----------------------------------------------------------------------------------------------------------------


[[Page 75220]]


               Table IV.15--Percentage of Combination Cooler Refrigeration Products at Each Efficiency Level in the No-New-Standards Case
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                   Product class
                    Efficiency level                     -----------------------------------------------------------------------------------------------
                                                               C-3A           C-3A-BI           C-9           C-9-BI           C-13A         C-13A-BI
--------------------------------------------------------------------------------------------------------------------------------------------------------
EL0.....................................................               0               0               0               0               0               0
EL1.....................................................               0               0               0               0               0               0
EL2.....................................................             100             100               0               0              25               0
EL3.....................................................               0               0             100             100              75             100
EL4.....................................................               0               0               0               0               0               0
EL5.....................................................               0               0               0               0               0               0
EL6.....................................................               0               0               0               0               0               0
EL7.....................................................               0               0               0               0               0               0
--------------------------------------------------------------------------------------------------------------------------------------------------------

9. Payback Period Analysis
    The PBP is the amount of time it takes the consumer to recover the 
additional installed cost of more-efficient products, compared to 
baseline products, through energy cost savings. PBPs are expressed in 
years. PBPs that exceed the life of the product mean that the increased 
total installed cost is not recovered in reduced operating expenses.
    The inputs to the PBP calculation for each efficiency level are the 
change in total installed cost of the product and the change in the 
first-year annual operating expenditures relative to the baseline. The 
PBP calculation uses the same inputs as the LCC analysis, except that 
discount rates are not needed.
    As noted above, 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 a product 
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 new standards would 
be required.

G. Shipments Analysis

    DOE uses forecasts of annual product shipments to calculate the 
national impacts of potential new energy conservation standards on 
energy use, NPV, and future manufacturer cash flows.\36\ The shipments 
model takes an accounting approach, tracking market shares of each 
product class and the vintage of units in the stock. Stock accounting 
uses product shipments as inputs to estimate the age distribution of 
in-service product stocks for all years. The age distribution of in-
service product 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.
---------------------------------------------------------------------------

    \36\ DOE used data on manufacturer shipments as a proxy for 
national sales, as aggregate data on sales are lacking. In general 
one would expect a close correspondence between shipments and sales.
---------------------------------------------------------------------------

    To estimate cooler shipments, DOE first estimated total stock based 
on estimates of market saturation and stock from manufacturer feedback 
and surveys on product ownership.\37\ DOE then estimated annual 
shipments by dividing the estimated stock by the average product 
lifetime. DOE verified that the estimated shipments agreed with 
estimates from AHAM. (AHAM, No. 106) DOE estimated that shipments would 
increase in line with the projected increase in the housing stock from 
the AEO 2015 \38\ estimates in order to project shipments forward to 
2050. DOE allocated shipments to each product class using the 
distribution of available models on the market and feedback from 
manufacturers, the MREF Working Group, and AHAM. (See, e.g., AHAM, No. 
106)
---------------------------------------------------------------------------

    \37\ J.B. Greenblatt et al. U.S. Residential Miscellaneous 
Refrigeration Products: Results from Amazon Mechanical Turk Surveys. 
2014. Lawrence Berkeley National Laboratory: Berkeley, CA. Report 
No. LBNL-6537E. See also S.M. Donovan, S.J. Young and J.B. 
Greenblatt. Ice-Making in the U.S.: Results from an Amazon 
Mechanical Turk Survey. 2015. Lawrence Berkeley National Laboratory: 
Berkeley, CA. Report No. LBNL 183899.
    \38\ U.S. Department of Energy-Energy Information 
Administration. Annual Energy Outlook 2015 with projections to 2040. 
April 2015. Washington, DC. DOE/EIA-0383 (2015). Available for 
download at: http://www.eia.gov/forecasts/aeo/.
---------------------------------------------------------------------------

    For combination cooler refrigeration products, DOE used 
manufacturer feedback from confidential interviews to estimate the 
number of units shipped in 2014. DOE estimated that shipments would 
increase in line with the increase in housing stock in the United 
States in order to project shipments forward to 2050. DOE used the 
distribution of available models to allocate shipments to each product 
class.
    MREFs are a discretionary product and sales would be expected to be 
sensitive to the product price. To estimate the effect of new standards 
on MREF shipments, which are expected to result in higher prices, DOE 
applied relative price elasticity in the shipments model. This approach 
gives some weight to the operating cost savings from higher-efficiency 
products. In general, price elasticity reflects the expectation that 
demand will decrease when prices increase. The price elasticity value 
is derived from data on refrigerators, clothes washers, and 
dishwashers.\39\ Based on evidence that the price elasticity of demand 
is significantly different over the short run and long run for other 
consumer goods (i.e., automobiles), DOE assumed that the elasticity 
declines over time. DOE estimated shipments in each standards case 
using the relative price elasticity along with the change in the 
product price and operating costs between a standards case and the no-
new-standards case.
---------------------------------------------------------------------------

    \39\ Dale, L. and S.K. Fujita, An Analysis of the Price 
Elasticity of Demand of Household Appliances. 2008. Lawrence 
Berkeley National Laboratory: Berkeley, CA. Report No. LBNL-326E.
---------------------------------------------------------------------------

    For details on the shipments analysis, see chapter 9 of the direct 
final rule TSD.

H. National Impact Analysis

    The NIA assesses the national energy savings (i.e., NES) and the 
national net present value (i.e., NPV) of total consumer costs and 
savings that would be expected to result from new or amended standards 
at specific efficiency levels.\40\ (``Consumer'' in this context refers 
to consumers of the product being regulated.) DOE calculates the NES 
and NPV based on projections of annual product shipments, along with 
the annual energy consumption and total

[[Page 75221]]

installed cost data from the energy use and LCC analyses. For most of 
the TSLs considered in this direct final rule, DOE forecasted the 
energy savings, operating cost savings, product costs, and NPV of 
consumer benefits over the lifetime of MREFs sold from 2021-2050. For 
the TSLs that represent the MREF Working Group recommendations, DOE 
accounted for the lifetime impacts of MREFs sold from 2019-2048.
---------------------------------------------------------------------------

    \40\ The NIA accounts for impacts in the 50 states and U.S. 
territories.
---------------------------------------------------------------------------

    DOE evaluates the impacts of new and amended 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 
product class in the absence of new or amended energy conservation 
standards. For this projection, DOE considers historical trends in 
efficiency and various forces that are likely to affect the mix of 
efficiencies over time. DOE compares the no-new-standards case with 
projections characterizing the market for each product class if DOE 
adopted new or amended standards at specific 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 products with efficiencies greater than the standard.
    DOE uses a spreadsheet model to calculate the energy savings and 
the national consumer costs and savings from each TSL. Interested 
parties can review DOE's analyses by changing various input quantities 
within the spreadsheet. The NIA spreadsheet model uses typical values 
(as opposed to probability distributions) as inputs.
    Table IV.16 summarizes the inputs and methods DOE used for the NIA 
analysis for this direct final rule. Discussion of these inputs and 
methods follows the table. See chapter 10 of the direct final rule TSD 
for further details.

   Table IV.16--Summary of Inputs and Methods for the National Impact
                                Analysis
------------------------------------------------------------------------
                Inputs                               Method
------------------------------------------------------------------------
Shipments............................  Annual shipments from shipments
                                        model.
Compliance Date of Standard..........  TSLs recommended by the MREF
                                        Working Group: 2019; Other TSLs:
                                        2021.
Efficiency Trends....................  Constant.
Annual Energy Consumption per Unit...  Annual weighted-average values
                                        are a function of energy use at
                                        each TSL.
Total Installed Cost per Unit........  Annual weighted-average values
                                        are a function of cost at each
                                        TSL. Incorporates projection of
                                        constant future product prices.
Annual Energy Cost per Unit..........  Annual weighted-average values as
                                        a function of the annual energy
                                        consumption per unit and energy
                                        prices.
Energy Prices........................  AEO 2015 forecasts (to 2040) and
                                        extrapolation through 2050.
Energy Site-to-Primary and FFC         A time-series conversion factor
 Conversion.                            based on AEO 2015.
Discount Rate........................  Three and seven percent.
Present Year.........................  2016.
------------------------------------------------------------------------

1. Product Efficiency Trends
    A key component of the NIA is the trend in energy efficiency 
projected for the no-new-standards case and each of the standards 
cases. As described in section IV.F.8 of this document, DOE developed 
an energy efficiency distribution for the no-new-standards case (which 
yields a shipment-weighted average efficiency) for each of the 
considered product classes. Because there are no data on trends in 
efficiency for MREFs, DOE assumed that these efficiency distributions 
will remain constant throughout the analysis period.
    For the standards cases, DOE used a ``roll-up'' scenario to 
establish the shipment-weighted efficiency for the year that standards 
are assumed to become effective (2019 for TSLs from the MREF Working 
Group recommendations and 2021 for other TSLs). In this scenario, the 
market share of products in the no-new-standards case that do not meet 
the standard under consideration would ``roll up'' to meet the new 
standard level, and the market share of products above the standard 
would remain unchanged.
2. National Energy Savings
    The national energy savings analysis involves a comparison of 
national energy consumption of the considered products in each 
potential standards case (TSL) with consumption in the case with no new 
or amended energy conservation standards. DOE calculated the national 
energy consumption by multiplying the number of units (stock) of each 
product (by vintage or age) by the unit energy consumption (also by 
vintage). DOE calculated annual NES based on the difference in national 
energy consumption for the no-new-standards case and for each higher 
efficiency standard case. 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 marginal conversion factors 
derived from AEO 2015. Cumulative energy savings are the sum of the NES 
for each year over the timeframe of the analysis.
    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 full-fuel-cycle (``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 \41\ that EIA uses to prepare its AEO. The approach 
used for deriving FFC measures of energy use and emissions is described 
in appendix 10B of the direct final rule TSD.
---------------------------------------------------------------------------

    \41\ For more information on NEMS, refer to U.S. Energy 
Information Administration Web site (Available at: http://www.eia.gov/forecasts/aeo/assumptions/).
---------------------------------------------------------------------------

3. 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

[[Page 75222]]

each year as the difference between the no-new-standards case and each 
standards case in terms of total savings in operating costs versus 
total increases in installed costs. DOE calculates operating cost 
savings over the lifetime of each product shipped during the forecast 
period.
    As discussed in section IV.F.1 of this document, DOE assumed a 
constant MREF price trend to forecast prices for each product class at 
each considered efficiency level throughout the analysis period.
    To evaluate the effect of uncertainty regarding the price trend 
estimates, DOE investigated the impact of different product price 
forecasts on the consumer NPV for the considered TSLs for MREFs. In 
addition to the default constant price trend, DOE considered two 
product price sensitivity cases: (1) A high price decline case based on 
the Producer Price Index (``PPI'') for household refrigerator and home 
freezer manufacturing from 1991 to 2014; \42\ and (2) a low price 
decline case based on the same PPI series from 1976 to 1990. The 
derivation of these price trends and the results of these sensitivity 
cases are described in appendix 10C of the direct final rule TSD.
---------------------------------------------------------------------------

    \42\ Household refrigerator and home freezer manufacturing PPI 
series ID: PCU 335222335222 (Available at: http://www.bls.gov/ppi/).
---------------------------------------------------------------------------

    The operating cost savings are energy cost savings, which are 
calculated using the estimated energy savings in each year and the 
projected price of electricity. To estimate energy prices in future 
years, DOE multiplied the average regional energy prices by the 
forecast of annual national-average residential energy 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 2025 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 10C of the direct final 
rule TSD.
    In calculating the NPV, DOE multiplies the net savings in future 
years by a discount factor to determine their present value. For this 
direct final rule, DOE estimated the NPV of consumer benefits using 
both a 3-percent and a 7-percent real discount rate. DOE uses these 
discount rates in accordance with guidance provided by the Office of 
Management and Budget (`OMB') to Federal agencies on the development of 
regulatory analysis.\43\ 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.
---------------------------------------------------------------------------

    \43\ 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 new or amended standards on 
consumers, DOE evaluates the impact on identifiable subgroups of 
consumers that may be disproportionately affected by a new or amended 
national standard, such as low-income and senior households. DOE 
evaluates impacts on subgroups of consumers by analyzing the LCC 
impacts and PBP for those particular consumers from alternative 
standard levels. For this final rule, DOE analyzed the impacts of the 
considered standard levels on two subgroups: (1) Low-income households 
and (2) senior-only households. The analysis used subsets of the full 
household sample composed of households that meet the criteria for the 
considered subgroups. DOE used the LCC and PBP spreadsheet model to 
estimate the impacts of the considered efficiency levels on these 
subgroups. Chapter 11 in the final rule TSD describes the consumer 
subgroup analysis.

J. Manufacturer Impact Analysis

1. Overview
    DOE performed an MIA to estimate the potential financial impacts of 
energy conservation standards on manufacturers of MREFs and to estimate 
the potential impacts of such standards on employment and manufacturing 
capacity. The MIA has both quantitative and qualitative aspects and 
includes analyses of forecasted industry cash flows, the INPV, 
investments in research and development (``R&D'') and manufacturing 
capital, and domestic manufacturing employment. Additionally, the MIA 
seeks to determine how energy conservation standards might affect 
manufacturing employment, capacity, and competition, as well as how 
standards contribute to overall regulatory burden. Finally, the MIA 
serves to identify any disproportionate impacts on manufacturer 
subgroups, including small business manufacturers.
    The quantitative 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, product shipments, 
manufacturer markups, and investments in R&D and manufacturing capital 
required to produce compliant products. The key GRIM outputs are the 
INPV, which is the sum of industry annual cash flows over the analysis 
period, discounted using the industry-weighted average cost of capital, 
and the impact to domestic manufacturing employment. The model uses 
standard accounting principles to estimate the impacts of more-
stringent energy conservation standards on a given industry by 
comparing changes in INPV and domestic manufacturing employment between 
a no-new-standards case and the various TSLs. To capture the 
uncertainty relating to manufacturer pricing strategy following new 
standards, the GRIM estimates a range of possible impacts under 
different markup scenarios.
    The qualitative part of the MIA addresses manufacturer 
characteristics and market trends. Specifically, the MIA considers such 
factors as manufacturing capacity, competition within the industry, the 
cumulative impact of other DOE and non-DOE regulations, and impacts on 
manufacturer subgroups. The complete MIA is outlined in chapter 12 of 
the direct final rule TSD.
    DOE conducted the MIA for this rulemaking in three phases. In Phase 
1 of the MIA, DOE prepared a profile of the MREF manufacturing industry 
based on the market and technology assessment, preliminary manufacturer 
interviews, and publicly-available information. This included a top-
down analysis of MREF manufacturers that DOE used to derive preliminary 
financial inputs for the GRIM (e.g., revenues; materials, labor, 
overhead, and depreciation expenses; selling, general, and 
administrative expenses (``SG&A''); and R&D expenses). DOE used public 
sources of information to further calibrate its initial 
characterization of MREFs, including company SEC 10-K filings, 
corporate annual reports, the U.S. Census

[[Page 75223]]

Bureau's Economic Census,\44\ and Hoover's reports.\45\
---------------------------------------------------------------------------

    \44\ U.S. Census Bureau, Annual Survey of Manufactures: General 
Statistics: Statistics for Industry Groups and Industries (Available 
at: http://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=ASM_2011_31GS101&prodType=table).
    \45\ Hoovers Inc., Company Profiles, Various Companies 
(Available at: http://www.hoovers.com). Last Accessed December 15, 
2015.
---------------------------------------------------------------------------

    In Phase 2 of the MIA, DOE prepared an industry cash-flow analysis 
to quantify the potential impacts of new energy conservation standards. 
The GRIM uses several factors to determine a series of annual cash 
flows starting with the announcement of the standard and extending over 
a 30-year period following the compliance date of the standard. These 
factors include annual expected revenues, costs of sales, SG&A and R&D 
expenses, taxes, and capital expenditures. In general, energy 
conservation standards can affect manufacturer cash flow in three 
distinct ways: (1) Create a need for increased investment; (2) raise 
production costs per unit; and (3) alter revenue due to higher per-unit 
prices and changes in sales volumes.
    In addition, during Phase 2, DOE conducted structured, detailed 
interviews with manufacturers of MREFs in order to develop other key 
GRIM inputs, including product and capital conversion costs, and to 
gather additional information on the anticipated effects of energy 
conservation standards on revenues, direct employment, capital assets, 
industry competitiveness, and subgroup impacts. Before the interviews, 
DOE distributed an interview guide to interviewees. The interview 
guides are available in appendix 12A of the direct final rule TSD. See 
section IV.J.3 of this document for a description of the key issues 
raised by manufacturers during the interviews.
    In Phase 3 of the MIA, DOE evaluated subgroups of manufacturers 
that may be disproportionately impacted by new 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 
(``LVMs''), niche players, and/or manufacturers exhibiting a cost 
structure that largely differs from the industry average. DOE 
identified two MREF manufacturer subgroups for which average cost 
assumptions may not hold: Small businesses and domestic LVMs.
Small Businesses
    Manufacturers of MREFs have primary North American Industry 
Classification System (``NAICS'') codes of 335222, ``Household 
Refrigerator and Home Freezer Manufacturing'' and 333415, ``Air-
Conditioning and Warm Air Heating Equipment and Commercial and 
Industrial Refrigeration Equipment Manufacturing.'' Based on the size 
standards published by the Small Business Administration (``SBA''), to 
be categorized as a small business manufacturer of MREFs under NAICS 
codes 335222 or 333415, a MREF manufacturer and its affiliates may 
employ a maximum of 1,250 employees or less.\46\ The 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 one 
manufacturer and one importer that qualify as small businesses.
---------------------------------------------------------------------------

    \46\ The size standards are codified at 13 CFR part 121. The 
standards are listed by North American Industry Classification 
System (NAICS) code and industry description and are available at 
https://www.sba.gov/sites/default/files/files/Size_Standards_Table.pdf.
---------------------------------------------------------------------------

Low-Volume Manufacturers
    In addition to the small, domestic businesses described above, DOE 
identified three domestic manufacturers of niche MREF products that 
have much lower revenues than their diversified competitors. Although 
these manufacturers do not qualify as small businesses under the SBA 
definition, they are concentrated in the production of residential 
refrigeration products and, in some cases, commercial refrigeration 
equipment. DOE subsequently assigned these manufacturers to an LVM 
subgroup to evaluate any disproportionate impacts of new standards for 
MREFs on these manufacturers.
    The MREF manufacturer subgroup analysis is discussed in greater 
detail in chapter 12 of the direct final rule TSD and in sections V.B.2 
and VI.B of this document.
    In addition, in Phase 3 of the MIA, DOE used feedback obtained from 
manufacturer interviews to assess the impacts of new standards on 
direct employment and manufacturing capacity within the MREF industry, 
and on the cumulative regulatory burdens felt by MREF manufacturers.
2. Government Regulatory Impact Model
    DOE uses the GRIM to quantify the changes in cash flow due to new 
standards that result in a higher or lower industry value. The GRIM 
analysis uses a standard annual, discounted cash-flow methodology that 
incorporates manufacturer costs, markups, shipments, and industry 
financial information as inputs. The GRIM models changes in costs, 
distribution of shipments, investments, and manufacturer margins that 
could result from new energy conservation standards. The GRIM 
spreadsheet uses the inputs to arrive at a series of annual cash flows, 
beginning in 2016 (the base year of the analysis) and continuing to 
2048 (the end of the analysis period for TSLs with a 3-year compliance 
period) or 2050 (the end of the analysis period for TSLs with a 5-year 
compliance period).\47\ DOE calculated INPVs by summing the stream of 
annual discounted cash flows during this period. For MREF 
manufacturers, DOE used a real discount rate of 7.7 percent, which was 
derived from industry financials and feedback received during 
manufacturer interviews.
---------------------------------------------------------------------------

    \47\ As described in section III.B of this document, the MREF 
Working Group recommended a 3-year compliance period for the 
standards recommended in Term Sheet #2. DOE analyzed these 
recommended standards (TSL 2 for coolers and TSL 1 for combination 
cooler refrigeration products) using a 3-year compliance period. DOE 
analyzed all other TSLs in this direct final rule (representing 
standards not recommended by the MREF Working Group) using a 5-year 
compliance period consistent with the EPCA provisions for newly-
established standards.
---------------------------------------------------------------------------

    The GRIM calculates cash flows using standard accounting principles 
and compares changes in INPV between the no-new-standards case and each 
standards case. The difference in INPV between the no-new-standards 
case and a standards case represents the financial impact of the new 
energy conversation standards on manufacturers. DOE collected this 
information on the critical GRIM inputs from a number of sources, 
including publicly-available data, interviews with manufacturers, and 
MREF Working Group meetings, including information gathered from 
manufacturers by a third-party consultant on behalf of AHAM.\48\ The 
GRIM results are shown in section V.B.2 of this document. Additional 
details about the GRIM, the discount rate, and other financial 
parameters can be found in chapter 12 of the direct final rule TSD.
---------------------------------------------------------------------------

    \48\ Information presented during the MREF Working Group meeting 
which was a source of information for the MIA is available on http://regulations.gov under document ID EERE-2011-BT-STD-0043-0104.

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

[[Page 75224]]

a. Government Regulatory Impact Model Key Inputs
Manufacturer Production Costs
    Manufacturing higher-efficiency products is typically more costly 
than manufacturing baseline products due to the use of more complex 
components, which are typically more expensive than baseline 
components. The changes in the MPC of the analyzed products can affect 
the revenues, gross margins, and cash flow of the industry, making 
these product cost data key GRIM inputs for DOE's analysis.
    In the MIA, DOE used the MPCs for each considered efficiency level 
calculated in the engineering analysis, as described in section IV.C of 
this document and further detailed in chapter 5 of the direct final 
rule TSD. In addition, DOE used information from its teardown analysis, 
described in chapter 5 of the direct final rule TSD, to disaggregate 
the MPCs into material, labor, and overhead costs. To calculate the 
MPCs for products above the baseline, DOE added the incremental 
material, labor, and overhead costs from the engineering cost-
efficiency curves to the baseline MPCs. These cost breakdowns were 
validated and revised based on manufacturer comments received during 
interviews and the MREF Working Group discussions.
Shipments Forecasts
    The GRIM estimates manufacturer revenues based on total unit 
shipment forecasts and the distribution of these values by product 
class and efficiency level. Changes in sales volumes and efficiency mix 
over time can significantly affect manufacturer finances. For the MREF 
analysis, the GRIM used the shipments analysis to estimate shipments 
either from 2016 (the base year of the analysis) and continuing to 2048 
(the end of the analysis period for TSLs with a 3-year compliance 
period) or 2050 (the end of the analysis period for TSLs with a 5-year 
compliance period). See chapter 9 of the direct final rule TSD for 
additional details.
Conversion Costs
    A new energy conservation standard would cause manufacturers to 
incur one-time conversion costs to bring their production facilities 
and product designs into compliance. DOE evaluated the level of 
conversion-related expenditures that would be needed to comply with 
each considered efficiency level in each product class. For the MIA, 
DOE classified these conversion costs into two major groups: (1) 
Product conversion costs and (2) capital conversion costs. Product 
conversion costs are one-time investments in R&D, testing, marketing, 
and other non-capitalized costs necessary to make product designs 
comply with the new energy conservation standard. Capital conversion 
costs are one-time investments in property, plant, and equipment 
necessary to adapt or change existing production facilities such that 
products with new, compliant designs can be fabricated and assembled.
    DOE used manufacturer interviews to gather data needed to evaluate 
the level of capital conversion expenditures manufacturers would likely 
incur to comply with new energy conservation standards at each 
efficiency level for MREFs. DOE also obtained information relating to 
capital conversion costs from manufacturers during the MREF Working 
Group meetings, including information gathered from manufacturers by a 
third-party consultant on behalf of AHAM.\49\ DOE supplemented 
manufacturer comments with estimates of capital expenditure 
requirements derived from the engineering analysis.
---------------------------------------------------------------------------

    \49\ The information presented during the MREF Working Group 
meeting is available on http://regulations.gov under document ID 
EERE-2011-BT-STD-0043-0104 at p. 6.
---------------------------------------------------------------------------

    DOE assessed the product conversion costs at each considered 
efficiency level by integrating data from quantitative and qualitative 
sources. DOE considered market-share-weighted feedback regarding the 
potential cost of each efficiency level from multiple manufacturers 
during confidential interviews and during the MREF Working Group 
meetings \50\ to estimate product conversion costs, and validated those 
numbers against engineering estimates of redesign efforts. In general, 
DOE 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 the new standard. The conversion cost 
figures used in the GRIM can be found in section V.B.2.a of this 
document. For additional information on the estimated product and 
capital conversion costs, see chapter 12 of the direct final rule TSD.
---------------------------------------------------------------------------

    \50\ Id.
---------------------------------------------------------------------------

b. Government Regulatory Impact Model Scenarios
Manufacturer Markup Scenarios
    To calculate the MSPs in the GRIM, DOE applied manufacturer markups 
to the MPCs estimated in the engineering analysis for each product 
class and efficiency level. Modifying these manufacturer markups in the 
standards case yields different sets of manufacturer impacts. 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 
energy conservation standards: (1) A preservation of gross margin 
percentage markup scenario; and (2) a preservation of per-unit 
operating profit markup scenario. These scenarios lead to different 
manufacturer markup values that, when applied to the inputted MPCs, 
result in varying revenue and cash flow impacts.
    Under the preservation of gross margin percentage scenario, DOE 
applied a single uniform ``gross margin percentage'' markup across all 
efficiency levels, which assumes that manufacturers would be able to 
maintain the same amount of profit as a percentage of revenues at all 
efficiency levels within a product class. As production costs increase 
with efficiency, this scenario implies that the absolute dollar markup 
will increase as well. Based on publicly-available financial 
information for manufacturers of MREFs as well as comments from 
manufacturer interviews, DOE estimated the average manufacturer markups 
by product class as shown in Table IV.17.

               Table IV.17--Baseline Manufacturer Markups
------------------------------------------------------------------------
                        Product class                            Markup
------------------------------------------------------------------------
Built-In Compact Coolers.....................................       1.41
Freestanding Compact Coolers.................................       1.25
Built-In Coolers.............................................       1.41
Freestanding Coolers.........................................       1.41
C-3A/C-3A-BI.................................................       1.41
C-9/C-9-BI...................................................       1.41
C-13A/C-13A-BI...............................................       1.41
------------------------------------------------------------------------

    This markup scenario assumes that manufacturers would be able to 
maintain their gross margin percentage markup as production costs 
increase in response to a new energy conservation standard. 
Manufacturers stated that this scenario is optimistic and represents a 
high bound to industry profitability.
    In the preservation of operating profit scenario, manufacturer 
markups are set so that operating profit one year after the compliance 
date of the new energy conservation standard is the same as in the no-
new-standards case. Under this scenario, as the costs of production 
increase under a standards case, manufacturers are generally required 
to reduce their markups to a level that maintains no-new-standards case 
operating profit. The implicit assumption behind this markup

[[Page 75225]]

scenario is that the industry can only maintain its operating profit in 
absolute dollars after compliance with the new standard is required. 
Therefore, operating margin in percentage terms is reduced between the 
no-new-standards case and standards case. DOE adjusted (i.e., lowered) 
the manufacturer markups in the GRIM at each TSL to yield approximately 
the same earnings before interest and taxes in the standards case as in 
the no-new-standards case. This markup scenario represents a low bound 
to industry profitability under a new energy conservation standard.
3. Manufacturer Interviews
    To inform the MIA, DOE interviewed several manufacturers with an 
estimated total cooler market share of approximately 25 percent and an 
estimated total combination cooler refrigeration products market share 
of 60 to 70 percent. (The remaining manufacturers in the market consist 
of overseas companies or those who were contacted but declined to 
participate.) The information gathered during these interviews enabled 
DOE to tailor the GRIM to reflect the unique financial characteristics 
of the MREF industry. These confidential interviews provided 
information that DOE used to evaluate the impacts of new energy 
conservation standards on manufacturer cash flows, manufacturing 
capacity, and employment levels.
    During the interviews, DOE asked manufacturers to describe the 
major issues they anticipate to result from new energy conservation 
standards for MREFs. The following sections describe the most 
significant issues identified by manufacturers.
Cumulative Regulatory Burden
    During confidential interviews, multiple manufacturers expressed 
concerns related to the impact of cumulative regulatory burdens on the 
MREF industry if DOE finalizes new energy conservation standards for 
MREFs. Because most manufacturers produce other residential products 
and commercial equipment, they already face regulations by DOE, the 
Environmental Protection Agency (``EPA''), the European Union, and 
Canada, as well as third-party industry certifications and standards. 
Complying with various overlapping regulatory and environmental 
standards puts a strain on manufacturers' resources and profitability. 
Additionally, smaller, domestic manufacturers of high-end MREFs 
expressed concern that they have significantly less human and capital 
resources to devote to regulatory compliance than larger, more 
diversified manufacturers. This has a direct impact on the amount of 
resources these companies are able to devote to product innovation, and 
thus MREF manufacturers expect that energy conservation standards would 
negatively impact their competitive position in the MREF industry.
Manufacturer Subgroup Impacts
    Multiple manufacturers expressed concerns regarding the impact of 
new energy conservations standards for MREFs on smaller, domestic 
manufacturers (referred to as small businesses and LVMs in this direct 
final rule). These manufacturers stated that smaller, domestic 
manufacturers must devote a much larger percentage of their engineering 
resources to regulatory compliance than do the larger, multi-national 
companies selling MREFs in the United States. These manufacturers also 
noted that the smaller, domestic manufacturers have substantially fewer 
overall shipments than larger, diversified manufacturers, and MREFs 
make up a much larger portion of the smaller, domestic companies' 
sales. Finally, manufacturers commented that smaller, domestic 
manufacturers produce high-end, niche products. Accordingly, 
manufacturers stated that, depending on the stringency of new energy 
conservation standards for MREFs, the availability of these products 
could be threatened if these manufacturers are forced to drop certain 
product lines.

K. Emissions Analysis

    The emissions analysis consists of two components. The first 
component estimates the effect of potential energy conservation 
standards on power sector and site (where applicable) combustion 
emissions of CO2, NOX, SO2, and Hg. 
The second component estimates the impacts of potential standards on 
emissions of two additional greenhouse gases, CH4 and 
N2O, as well as the reductions to emissions of all species 
due to ``upstream'' activities in the fuel production chain. These 
upstream activities comprise extraction, processing, and transporting 
fuels to the site of combustion. The associated emissions are referred 
to as upstream emissions.
    The analysis of power sector emissions uses marginal emissions 
factors that were derived from data in AEO 2015, as described in 
section IV.K of this document. The methodology is described in chapters 
13 and 15 of the direct final rule TSD.
    Combustion emissions of CH4 and N2O are 
estimated using emissions intensity factors published by the EPA, GHG 
Emissions Factors Hub.\51\ The FFC upstream emissions are estimated 
based on the methodology described in chapter 15 of the direct final 
rule TSD. The upstream emissions include both emissions from fuel 
combustion during extraction, processing, and transportation of fuel, 
and ``fugitive'' emissions (direct leakage to the atmosphere) of 
CH4 and CO2.
---------------------------------------------------------------------------

    \51\ 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 megawatt-hour (MWh) or million Btu of site energy savings. 
Total emissions reductions are estimated using the energy savings 
calculated in the NIA.
    For CH4 and N2O, DOE calculated emissions 
reduction in tons and also in terms of units of carbon dioxide 
equivalent (CO2eq). Gases are converted to CO2eq 
by multiplying each ton of gas by the gas' global warming potential 
(GWP) over a 100-year time horizon. Based on the Fifth Assessment 
Report of the Intergovernmental Panel on Climate Change,\52\ DOE used 
GWP values of 28 for CH4 and 265 for N2O.
---------------------------------------------------------------------------

    \52\ Intergovernmental Panel on Climate Change. Anthropogenic 
and Natural Radiative Forcing. In Climate Change 2013: The Physical 
Science Basis. Contribution of Working Group I to the Fifth 
Assessment Report of the Intergovernmental Panel on Climate Change. 
Chapter 8. 2013. 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, Editors. Cambridge University Press: Cambridge, United 
Kingdom and New York, NY, USA.
---------------------------------------------------------------------------

    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

[[Page 75226]]

the District of Columbia Circuit, but it remained in effect.\53\ 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,\54\ and the court 
ordered EPA to continue administering CAIR. On April 29, 2014, the U.S. 
Supreme Court reversed the judgment of the D.C. Circuit and remanded 
the case for further proceedings consistent with the Supreme Court's 
opinion.\55\ On October 23, 2014, the D.C. Circuit lifted the stay of 
CSAPR.\56\ Pursuant to this action, CSAPR went into effect (and CAIR 
ceased to be in effect) as of January 1, 2015.
---------------------------------------------------------------------------

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

    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 relevant for the purpose of 
DOE's analysis of emissions impacts from energy conservation standards.
    The attainment of emissions caps is typically flexible among EGUs 
and is enforced through the use of emissions allowances and tradable 
permits. Under existing EPA regulations, any excess SO2 
emissions allowances resulting from the lower electricity demand caused 
by the adoption of an efficiency standard could be used to permit 
offsetting increases in SO2 emissions by any regulated EGU. 
In past rulemakings, DOE recognized that there was uncertainty about 
the effects of efficiency standards on SO2 emissions covered 
by the existing cap-and-trade system, but it concluded that negligible 
reductions in power sector SO2 emissions would occur as a 
result of standards.
    Beginning in 2016, however, SO2 emissions will fall as a 
result of the Mercury and Air Toxics Standards (MATS) for power plants. 
77 FR 9304 (Feb. 16, 2012). In the MATS rule, EPA established a 
standard for hydrogen chloride as a surrogate for acid gas hazardous 
air pollutants (HAP), and also established a standard for 
SO2 (a non-HAP acid gas) as an alternative equivalent 
surrogate standard for acid gas HAP. The same controls are used to 
reduce HAP and non-HAP acid gas; thus, SO2 emissions will be 
reduced as a result of the control technologies installed on coal-fired 
power plants to comply with the MATS requirements for acid gas. 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.\57\ Therefore, DOE believes that energy conservation standards 
will generally reduce SO2 emissions in 2016 and beyond.
---------------------------------------------------------------------------

    \57\ DOE notes that the Supreme Court recently remanded EPA's 
2012 rule regarding national emission standards for hazardous air 
pollutants from certain electric utility steam generating units. See 
Michigan v. EPA (Case No. 14-46, 2015). DOE has tentatively 
determined that the remand of the MATS rule does not change the 
assumptions regarding the impact of energy efficiency standards on 
SO2 emissions. Further, while the remand of the MATS rule 
may have an impact on the overall amount of mercury emitted by power 
plants, it does not change the impact of the energy efficiency 
standards on mercury emissions. DOE will continue to monitor 
developments related to this case and respond to them as 
appropriate.
---------------------------------------------------------------------------

    CAIR established a cap on NOX emissions in 28 eastern 
States and the District of Columbia.\58\ 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 direct final rule for these States.
---------------------------------------------------------------------------

    \58\ CSAPR also applies to NOX and it would supersede 
the regulation of NOX under CAIR. As stated previously, 
the current analysis assumes that CAIR, not CSAPR, is the regulation 
in force. The difference between CAIR and CSAPR with regard to DOE's 
analysis of NOX emissions is slight.
---------------------------------------------------------------------------

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

L. Monetizing Carbon Dioxide and Other Emissions Impacts

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

[[Page 75227]]

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 \59\ 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.
---------------------------------------------------------------------------

    \59\ National Research Council, Hidden Costs of Energy: Unpriced 
Consequences of Energy Production and Use, National Academies Press: 
Washington, DC (2009).
---------------------------------------------------------------------------

    Despite the limits of both quantification and monetization, SCC 
estimates can be useful in estimating the social benefits of reducing 
CO2 emissions. The agency can estimate the benefits from 
reduced (or costs from increased) emissions in any future year by 
multiplying the change in emissions in that year by the SCC values 
appropriate for that year. The NPV of the benefits can then be 
calculated by multiplying each of these future benefits by an 
appropriate discount factor and summing across all affected years.
    It is important to emphasize that the interagency process is 
committed to updating these estimates as the science and economic 
understanding of climate change and its impacts on society improves 
over time. In the meantime, the interagency group will continue to 
explore the issues raised by this analysis and 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 an SCC for use in regulatory analysis. The 
results of this preliminary effort were presented in several proposed 
and final rules.
c. Current Approach and Key Assumptions
    After the release of the interim values, the interagency group 
reconvened on a regular basis to generate improved SCC estimates. 
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,\60\ although preference is given to consideration of the 
global benefits of reducing CO2 emissions. Table IV.18 
presents the values in the 2010 interagency group report,\61\ which is 
reproduced in appendix 14A of the direct final rule TSD.
---------------------------------------------------------------------------

    \60\ 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.
    \61\ 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).

[[Page 75228]]



                     Table IV.18--Annual SCC Values From 2010 Interagency Report, 2010-2050
                                           [2007$ per metric ton CO2]
----------------------------------------------------------------------------------------------------------------
                                                                          Discount rate
                                               -----------------------------------------------------------------
                     Year                             5%              3%             2.5%              3%
                                               -----------------------------------------------------------------
                                                    Average         Average         Average      95th percentile
----------------------------------------------------------------------------------------------------------------
2010..........................................             4.7            21.4            35.1              64.9
2015..........................................             5.7            23.8            38.4              72.8
2020..........................................             6.8            26.3            41.7              80.7
2025..........................................             8.2            29.6            45.9              90.4
2030..........................................             9.7            32.8            50.0             100.0
2035..........................................            11.2            36.0            54.2             109.7
2040..........................................            12.7            39.2            58.4             119.3
2045..........................................            14.2            42.1            61.7             127.8
2050..........................................            15.7            44.9            65.0             136.2
----------------------------------------------------------------------------------------------------------------

    The SCC values used for this direct final rule 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).\62\ Table IV.19 shows the updated sets of SCC estimates from the 
latest interagency update in 5-year increments from 2010 to 2050. The 
full set of annual SCC estimates between 2010 and 2050 is reported in 
appendix 14B of the direct final rule TSD. The central value that 
emerges is the average SCC across models at the 3-percent discount 
rate. However, for purposes of capturing the uncertainties involved in 
regulatory impact analysis, the interagency group emphasizes the 
importance of including all four sets of SCC values.
---------------------------------------------------------------------------

    \62\ Technical Update of the Social Cost of Carbon for 
Regulatory Impact Analysis Under Executive Order 12866, Interagency 
Working Group on Social Cost of Carbon, United States Government 
(May 2013; revised July 2015) (Available at: http://www.whitehouse.gov/sites/default/files/omb/inforeg/scc-tsd-final-july-2015.pdf).

           Table IV.19--Annual SCC Values From 2013 Interagency Update (Revised July 2015), 2010-2050
                                           [2007$ per metric ton CO2]
----------------------------------------------------------------------------------------------------------------
                                                                          Discount rate
                                               -----------------------------------------------------------------
                     Year                             5%              3%             2.5%              3%
                                               -----------------------------------------------------------------
                                                    Average         Average         Average      95th percentile
----------------------------------------------------------------------------------------------------------------
2010..........................................              10              31              50                86
2015..........................................              11              36              56               105
2020..........................................              12              42              62               123
2025..........................................              14              46              68               138
2030..........................................              16              50              73               152
2035..........................................              18              55              78               168
2040..........................................              21              60              84               183
2045..........................................              23              64              89               197
2050..........................................              26              69              95               212
----------------------------------------------------------------------------------------------------------------

    It is important to recognize that a number of key uncertainties 
remain, and that current SCC estimates should be treated as provisional 
and revisable because they will evolve with improved scientific and 
economic understanding. The interagency group also recognizes that the 
existing models are imperfect and incomplete. The 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.\63\
---------------------------------------------------------------------------

    \63\ 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

[[Page 75229]]

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 reduce site NOX emissions 
nationwide and decrease power sector NOX emissions in those 
22 States not affected by the CAIR.
    DOE estimated the monetized value of NOX emissions 
reductions from electricity generation 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.\64\ 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 chapter 14 of the direct final rule TSD. DOE primarily relied on the 
low estimates to be conservative.\65\ 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 MREFs using a method 
described in appendix 14C of the direct final rule TSD.
---------------------------------------------------------------------------

    \64\ Available at 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.
    \65\ 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 14 of the final 
rule TSD for further description of the studies mentioned above.)
---------------------------------------------------------------------------

    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 industry that would result from the adoption of new or 
amended energy conservation standards. The utility impact analysis 
estimates the changes in installed electrical capacity and generation 
that would result for each TSL. The analysis is based on published 
output from the NEMS associated with 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 
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 direct final rule TSD.
    The output of this analysis is a set of time-dependent coefficients 
that capture the change in electricity generation, primary fuel 
consumption, installed capacity and power sector emissions due to a 
unit reduction in demand for a given end use. These coefficients are 
multiplied by the stream of electricity savings calculated in the NIA 
to provide estimates of selected utility impacts of new or amended 
energy conservation standards.

N. Employment Impact Analysis

    DOE considers employment impacts in the domestic economy as one 
factor in selecting a standard. Employment impacts from new or amended 
energy conservation standards include both direct and indirect impacts. 
Direct employment impacts are any changes in the number of employees of 
manufacturers of the products subject to standards, their suppliers, 
and related service firms. The MIA addresses those impacts. Indirect 
employment impacts are changes in national employment that occur due to 
the shift in expenditures and capital investment caused by the purchase 
and operation of more-efficient appliances. Indirect employment impacts 
from standards consist of the net jobs created or eliminated in the 
national economy, other than in the manufacturing sector being 
regulated, caused by: (1) Reduced spending by end users on energy; (2) 
reduced spending on new energy supplies by the utility industry; (3) 
increased consumer spending on new products to which the new standards 
apply; and (4) the effects of those three factors throughout the 
economy.
    One method for assessing the possible effects on the demand for 
labor of such shifts in economic activity is to compare sector 
employment statistics developed by the Labor Department's Bureau of 
Labor Statistics (``BLS'').\66\ BLS regularly publishes its estimates 
of the number of jobs per million dollars of economic activity in 
different sectors of the economy, as well as the jobs created elsewhere 
in the economy by this same economic activity. Data from BLS indicate 
that expenditures in the utility sector generally create fewer jobs 
(both directly and indirectly) than expenditures in other sectors of 
the economy.\67\ 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, based 
on the BLS data alone, DOE believes net national employment may 
increase due to shifts in economic activity resulting from energy 
conservation standards.
---------------------------------------------------------------------------

    \66\ 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].
    \67\ 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 direct final rule using an input/output model 
of the U.S. economy called Impact of Sector Energy Technologies version 
3.1.1 (``ImSET'').\68\ 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

[[Page 75230]]

sectors most relevant to industrial, commercial, and residential 
building energy use.
---------------------------------------------------------------------------

    \68\ 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, where these uncertainties are 
reduced. For more details on the employment impact analysis, see 
chapter 16 of the direct final rule TSD.

V. Analytical Results and Conclusions

    The following section addresses the results from DOE's analyses 
with respect to the considered energy conservation standards for MREFs. 
It addresses the TSLs examined by DOE, the projected impacts of each of 
these levels if adopted as energy conservation standards for MREFs, and 
the standards levels that DOE is adopting in this direct final rule. 
Additional details regarding DOE's analyses are contained in the direct 
final rule TSD supporting this notice.

A. Trial Standard Levels

    DOE analyzed the benefits and burdens of four TSLs for coolers and 
four TSLs for combination cooler refrigeration products. These TSLs 
were developed by combining specific efficiency levels for each of the 
product classes analyzed by DOE. DOE presents the results for the TSLs 
in this document, while the results for all efficiency levels that DOE 
analyzed are in the direct final rule TSD.
    Table V.1 presents the TSLs and the corresponding efficiency levels 
for coolers. TSL 4 represents the max-tech efficiency levels for all 
product classes. TSL 3 consists of the efficiency levels with maximum 
consumer NPV at 7-percent discount rate. TSL 2 corresponds to the 
standard levels recommended by the MREF Working Group. TSL 1 represents 
the current CEC energy efficiency standard for wine chillers.

                    Table V.1--Efficiency Levels Within Each Trial Standard Level for Coolers
----------------------------------------------------------------------------------------------------------------
                                                                       Trial standard levels
                  Product class                  ---------------------------------------------------------------
                                                         1               2               3               4
----------------------------------------------------------------------------------------------------------------
Freestanding Compact Coolers....................               4               7               9              11
Built-in Compact Coolers........................               4               7               9              11
Freestanding Coolers............................               4               7               9              11
Built-in Coolers................................               4               7               9              11
----------------------------------------------------------------------------------------------------------------

    Table V.2 presents the TSLs and the corresponding efficiency levels 
for combination cooler refrigeration products. TSL 4 represents the 
max-tech efficiency levels for all product classes. TSL 3 represents a 
mid-point between TSL 2 and TSL 4. TSL 2 consists of the efficiency 
levels with maximum consumer NPV at 7-percent discount rate. TSL 1 
corresponds to the standard levels recommended by the MREF Working 
Group.

   Table V.2--Efficiency Levels Within Each Trial Standard Level for Combination Cooler Refrigeration Products
----------------------------------------------------------------------------------------------------------------
                                                                       Trial standard levels
                  Product class                  ---------------------------------------------------------------
                                                         1               2               3               4
----------------------------------------------------------------------------------------------------------------
C-3A............................................               2               4               5               7
C-3A-BI.........................................               2               4               5               7
C-9 *...........................................               3               5               6               7
C-9-BI *........................................               3               5               6               7
C-13A...........................................               3               4               6               7
C-13A-BI........................................               3               4               6               7
----------------------------------------------------------------------------------------------------------------
* Results for C-9 and C-9-BI are also applicable to C-9I and C-9I-BI.

    In its analysis of the benefits and burdens of each TSL, DOE used 
two different compliance dates. For the consensus-recommended TSLs, the 
analysis is based on a 2019 compliance date as recommended by the MREF 
Working Group. For all other TSLs the analysis is based on a 2021 
compliance date consistent with EPCA, which provides that newly-
established standards shall not apply to products manufactured within 
five years after the publication of the final rule. In other words, DOE 
followed the prescriptions of EPCA for all TSLs that were not 
recommended by the MREF Working Group. The two different compliance 
dates are indicated in the relevant sections of the results and 
discussed in section III.B of this document.

B. Economic Justification and Energy Savings

1. Economic Impacts on Individual Consumers
    DOE analyzed the economic impacts on MREF consumers by looking at 
the effects that potential new standards at each TSL would have on the 
LCC and PBP. These analyses are discussed below.
a. Life-Cycle Cost and Payback Period
    In general, higher-efficiency products affect consumers in two 
ways: (1) Purchase prices increase and (2) annual operating costs 
decrease. Inputs used for calculating the LCC and PBP include total 
installed costs (i.e., product 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 product lifetime and a discount rate. Chapter 8 of the direct 
final rule TSD provides detailed information on the LCC and PBP 
analyses.

[[Page 75231]]

    Table V.3 through Table V.22 show the LCC and PBP results for the 
TSL efficiency levels considered for each product class. In the first 
of each pair of tables, the simple payback is measured relative to the 
baseline product. In the second table, the impacts are measured 
relative to the efficiency distribution in the no-new-standards case in 
the compliance year (see section IV.F of this document). The average 
savings reflect the fact that some consumers purchase products with 
higher efficiency in the no-new-standards case, and the savings refer 
only to the other consumers who are affected by a standard at a given 
TSL. Consumers for whom the LCC increases at a given TSL experience a 
net cost.

                               Table V.3--Average LCC and PBP Results by Efficiency Level for Freestanding Compact Coolers
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     Average costs (2015$)
                                              -------------------------------------------------------------------   Simple payback     Average lifetime
                TSL *                    EL                        First year's        Lifetime                         (years)             (years)
                                                Installed cost    operating cost    operating cost       LCC
--------------------------------------------------------------------------------------------------------------------------------------------------------
1...................................        4               400                40               325          726                 1.1                10.3
2...................................        7               438                26               220          658                 1.4                10.3
3...................................        9               478                19               158          636                 1.6                10.3
4...................................       11               702                12                98          800                 3.5                10.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
* For TSL 2, the results are forecasted over the lifetime of products sold in 2019. For the other TSLs, the results are forecasted over the lifetime of
  products sold in 2021.
Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the
  lowest efficiency level in the no-new-standards case efficiency distribution.


      Table V.4--Average LCC Savings Relative to the No-New-Standards Case for Freestanding Compact Coolers
----------------------------------------------------------------------------------------------------------------
                                                                                                   Percent of
                                                                               Average LCC       consumers that
                           TSL *                                  EL            savings **       experience net
                                                                                 (2015$)              cost
----------------------------------------------------------------------------------------------------------------
1.........................................................               4                279                  6
2.........................................................               7                265                  9
3.........................................................               9                288                 12
4.........................................................              11                123                 51
----------------------------------------------------------------------------------------------------------------
* For TSL 2, the results are forecasted over the lifetime of products sold in 2019. For the other TSLs, the
  results are forecasted over the lifetime of products sold in 2021.
** The savings represent the average LCC savings for affected consumers.


                                 Table V.5--Average LCC and PBP Results by Efficiency Level for Built-in Compact Coolers
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     Average costs (2015$)
                                              -------------------------------------------------------------------  Simple payback **   Average lifetime
                TSL *                    EL                        First year's        Lifetime                         (years)             (years)
                                                Installed cost    operating cost    operating cost       LCC
--------------------------------------------------------------------------------------------------------------------------------------------------------
1...................................        4               832                45               370         1202                n.a.                10.3
2...................................        7               894                30               250         1144                 4.6                10.3
3...................................        9               934                22               180         1114                 4.4                10.3
4...................................       11              1281                15               123         1404                14.8                10.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
* For TSL 2, the results are forecasted over the lifetime of products sold in 2019. For the other TSLs, the results are forecasted over the lifetime of
  products sold in 2021.
** The PBP is measured relative to the lowest efficiency level in the no-new-standards case efficiency distribution. Calculation of PBP is not
  applicable (n.a.) when the efficiency level is already met or exceeded in the MREF market.
Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level.


        Table V.6--Average LCC Savings Relative to the No-New-Standards Case for Built-in Compact Coolers
----------------------------------------------------------------------------------------------------------------
                                                                                                   Percent of
                                                                               Average LCC       consumers that
                           TSL *                                  EL            savings **       experience net
                                                                                 (2015$)              cost
----------------------------------------------------------------------------------------------------------------
1.........................................................               4               n.a.                  0
2.........................................................               7                 28                 29
3.........................................................               9                 60                 27
4.........................................................              11              (230)                 93
----------------------------------------------------------------------------------------------------------------
* For TSL 2, the results are forecasted over the lifetime of products sold in 2019. For the other TSLs, the
  results are forecasted over the lifetime of products sold in 2021.
** The savings represent the average LCC savings for affected consumers. Calculation of savings is not
  applicable (n.a.) when the efficiency level is already met or exceeded in the MREF market.


[[Page 75232]]


                                   Table V.7--Average LCC and PBP Results by Efficiency Level for Freestanding Coolers
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     Average costs (2015$)
                                              -------------------------------------------------------------------   Simple payback     Average lifetime
                TSL *                    EL                        First year's        Lifetime                         (years)             (years)
                                                Installed cost    operating cost    operating cost       LCC
--------------------------------------------------------------------------------------------------------------------------------------------------------
1...................................        4              1303                58               728         2032                 1.0                17.4
2...................................        7              1418                38               497         1915                 1.8                17.4
3...................................        9              1460                28               359         1819                 1.8                17.4
4...................................       11              1955                17               226         2180                 4.8                17.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
* For TSL 2, the results are forecasted over the lifetime of products sold in 2019. For the other TSLs, the results are forecasted over the lifetime of
  products sold in 2021.
Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the
  lowest efficiency level in the no-new-standards case efficiency distribution.


          Table V.8--Average LCC Savings Relative to the No-New-Standards Case for Freestanding Coolers
----------------------------------------------------------------------------------------------------------------
                                                                                                   Percent of
                                                                               Average LCC       consumers that
                           TSL *                                  EL            savings **       experience net
                                                                                 (2015$)              cost
----------------------------------------------------------------------------------------------------------------
1.........................................................               4                648                  0
2.........................................................               7                153                 22
3.........................................................               9                240                  9
4.........................................................              11              (121)                 78
----------------------------------------------------------------------------------------------------------------
* For TSL 2, the results are forecasted over the lifetime of products sold in 2019. For the other TSLs, the
  results are forecasted over the lifetime of products sold in 2021.
** The savings represent the average LCC savings for affected consumers.


                                     Table V.9--Average LCC and PBP Results by Efficiency Level for Built-in Coolers
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     Average costs (2015$)
                                              -------------------------------------------------------------------  Simple payback **   Average lifetime
                TSL *                    EL                        First year's        Lifetime                         (years)             (years)
                                                Installed cost    operating cost    operating cost       LCC
--------------------------------------------------------------------------------------------------------------------------------------------------------
1...................................        4              1679                58               728         2407                n.a.                17.4
2...................................        7              1785                38               497         2281                 6.1                17.4
3...................................        9              1819                28               359         2178                 4.7                17.4
4...................................       11              2372                19               248         2619                17.7                17.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
* For TSL 2, the results are forecasted over the lifetime of products sold in 2019. For the other TSLs, the results are forecasted over the lifetime of
  products sold in 2021.
** The PBP is measured relative to the lowest efficiency level in the no-new-standards case efficiency distribution. Calculation of PBP is not
  applicable (n.a.) when the efficiency level is already met or exceeded in the MREF market.
Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level.


           Table V.10--Average LCC Savings Relative to the No-New-Standards Case for Built-in Coolers
----------------------------------------------------------------------------------------------------------------
                                                                                                   Percent of
                                                                               Average LCC       consumers that
                           TSL *                                  EL            savings **       experience net
                                                                                 (2015$)              cost
----------------------------------------------------------------------------------------------------------------
1.........................................................               4               n.a.                  0
2.........................................................               7                 77                 22
3.........................................................               9                187                  7
4.........................................................              11              (254)                 86
----------------------------------------------------------------------------------------------------------------
* For TSL 2, the results are forecasted over the lifetime of products sold in 2019. For the other TSLs, the
  results are forecasted over the lifetime of products sold in 2021.
** The savings represent the average LCC savings for affected consumers. Calculation of savings is not
  applicable (n.a.) when the efficiency level is already met or exceeded in the MREF market.


                                          Table V.11--Average LCC and PBP Results by Efficiency Level for C-3A
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     Average costs (2015$)
                                              -------------------------------------------------------------------  Simple payback **   Average lifetime
                TSL *                    EL                        First year's        Lifetime                         (years)             (years)
                                                Installed cost    operating cost    operating cost       LCC
--------------------------------------------------------------------------------------------------------------------------------------------------------
1...................................        2              5839                28               360         6199                n.a.                17.4

[[Page 75233]]

 
2...................................        4              5868                22               278         6146                 4.1                17.4
3...................................        5              5904                20               247         6152                 6.8                17.4
4...................................        7              6246                13               168         6413                25.3                17.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
* For TSL 1, the results are forecasted over the lifetime of products sold in 2019. For the other TSLs, the results are forecasted over the lifetime of
  products sold in 2021.
** The PBP is measured relative to the lowest efficiency level in the no-new-standards case efficiency distribution. Calculation of PBP is not
  applicable (n.a.) when the efficiency level is already met or exceeded in the MREF market.
Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level.


                 Table V.12--Average LCC Savings Relative to the No-New-Standards Case for C-3A
----------------------------------------------------------------------------------------------------------------
                                                                                                   Percent of
                                                                               Average LCC       consumers that
                           TSL *                                  EL            savings **       experience net
                                                                                 (2015$)              cost
----------------------------------------------------------------------------------------------------------------
1.........................................................               2               n.a.                  0
2.........................................................               4                 58                  4
3.........................................................               5                 53                 26
4.........................................................               7              (209)                 92
----------------------------------------------------------------------------------------------------------------
* For TSL 1, the results are forecasted over the lifetime of products sold in 2019. For the other TSLs, the
  results are forecasted over the lifetime of products sold in 2021.
** The savings represent the average LCC savings for affected consumers. Calculation of savings is not
  applicable (n.a.) when an efficiency level is already met or exceeded in the MREF market.


                                         Table V.13--Average LCC and PBP Results by Efficiency Level for C-3A-BI
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     Average costs (2015$)
                                              -------------------------------------------------------------------  Simple payback **   Average lifetime
                TSL *                    EL                        First year's        Lifetime                         (years)             (years)
                                                Installed cost    operating cost    operating cost       LCC
--------------------------------------------------------------------------------------------------------------------------------------------------------
1...................................        2              8594                32               406         9000                n.a.                17.4
2...................................        4              8627                25               314         8941                 4.1                17.4
3...................................        5              8668                22               279         8947                 6.8                17.4
4...................................        7              9055                15               189         9243                25.4                17.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
* For TSL 1, the results are forecasted over the lifetime of products sold in 2019. For the other TSLs, the results are forecasted over the lifetime of
  products sold in 2021.
** The PBP is measured relative to the lowest efficiency level in the no-new-standards case efficiency distribution. Calculation of PBP is not
  applicable (n.a.) when the efficiency level is already met or exceeded in the MREF market.
Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level.


                Table V.14--Average LCC Savings Relative to the No-New-Standards Case for C-3A-BI
----------------------------------------------------------------------------------------------------------------
                                                                                                   Percent of
                                                                               Average LCC       consumers that
                           TSL *                                  EL            savings **       experience net
                                                                                 (2015$)              cost
----------------------------------------------------------------------------------------------------------------
1.........................................................               2               n.a.                  0
2.........................................................               4                 66                  4
3.........................................................               5                 59                 26
4.........................................................               7              (237)                 92
----------------------------------------------------------------------------------------------------------------
* For TSL 1, the results are forecasted over the lifetime of products sold in 2019. For the other TSLs, the
  results are forecasted over the lifetime of products sold in 2021.
** The savings represent the average LCC savings for affected consumers. Calculation of savings is not
  applicable (n.a.) when an efficiency level is already met or exceeded in the MREF market.


                                           Table V.15--Average LCC and PBP Results by Efficiency Level for C-9
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     Average costs (2015$)
                                              -------------------------------------------------------------------  Simple payback **   Average lifetime
                TSL *                    EL                        First year's        Lifetime                         (years)             (years)
                                                Installed cost    operating cost    operating cost       LCC
--------------------------------------------------------------------------------------------------------------------------------------------------------
1...................................        3              4373                36               465         4837                n.a.                17.4

[[Page 75234]]

 
2...................................        5              4396                29               359         4755                 2.6                17.4
3...................................        6              4523                26               319         4841                12.1                17.4
4...................................        7              4757                22               269         5026                23.3                17.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
* For TSL 1, the results are forecasted over the lifetime of products sold in 2019. For the other TSLs, the results are forecasted over the lifetime of
  products sold in 2021.
** The PBP is measured relative to the lowest efficiency level in the no-new-standards case efficiency distribution. Calculation of PBP is not
  applicable (n.a.) when the efficiency level is already met or exceeded in the MREF market.
Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level.


                  Table V.16--Average LCC Savings Relative to the No-New-Standards Case for C-9
----------------------------------------------------------------------------------------------------------------
                                                                                                   Percent of
                                                                               Average LCC       consumers that
                           TSL *                                  EL            savings **       experience net
                                                                                 (2015$)              cost
----------------------------------------------------------------------------------------------------------------
1.........................................................               3               n.a.                  0
2.........................................................               5                 89                  0
3.........................................................               6                  3                 62
4.........................................................               7              (182)                 90
----------------------------------------------------------------------------------------------------------------
* For TSL 1, the results are forecasted over the lifetime of products sold in 2019. For the other TSLs, the
  results are forecasted over the lifetime of products sold in 2021.
** The savings represent the average LCC savings for affected consumers. Calculation of savings is not
  applicable (n.a.) when an efficiency level is already met or exceeded in the MREF market.


                                         Table V.17--Average LCC and PBP Results by Efficiency Level for C-9-BI
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     Average costs (2015$)
                                              -------------------------------------------------------------------  Simple payback **   Average lifetime
                TSL *                    EL                        First year's        Lifetime                         (years)             (years)
                                                Installed cost    operating cost    operating cost       LCC
--------------------------------------------------------------------------------------------------------------------------------------------------------
1...................................        3              6438                41               530         6968                n.a.                17.4
2...................................        5              6464                33               410         6874                 2.6                17.4
3...................................        6              6608                29               364         6972                12.0                17.4
4...................................        7              6874                25               307         7181                23.2                17.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
* For TSL 1, the results are forecasted over the lifetime of products sold in 2019. For the other TSLs, the results are forecasted over the lifetime of
  products sold in 2021.
** The PBP is measured relative to the lowest efficiency level in the no-new-standards case efficiency distribution. Calculation of PBP is not
  applicable (n.a.) when the efficiency level is already met or exceeded in the MREF market.
Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level.


                Table V.18--Average LCC Savings Relative to the No-New-Standards Case for C-9-BI
----------------------------------------------------------------------------------------------------------------
                                                                                                   Percent of
                                                                               Average LCC       consumers that
                           TSL *                                  EL            savings **       experience net
                                                                                 (2015$)              cost
----------------------------------------------------------------------------------------------------------------
1.........................................................               3               n.a.                  0
2.........................................................               5                102                  0
3.........................................................               6                  4                 63
4.........................................................               7              (205)                 90
----------------------------------------------------------------------------------------------------------------
* For TSL 1, the results are forecasted over the lifetime of products sold in 2019. For the other TSLs, the
  results are forecasted over the lifetime of products sold in 2021.
** The savings represent the average LCC savings for affected consumers. Calculation of savings is not
  applicable (n.a.) when an efficiency level is already met or exceeded in the MREF market.


                                          Table V.19--Average LCC and PBP Results by Efficiency Level for C-13A
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     Average costs (2015$)
                                              -------------------------------------------------------------------   Simple payback     Average lifetime
                TSL *                    EL                        First year's        Lifetime                         (years)             (years)
                                                Installed cost    operating cost    operating cost       LCC
--------------------------------------------------------------------------------------------------------------------------------------------------------
1...................................        3              2062                30               248         2310                 4.3                10.3

[[Page 75235]]

 
2...................................        4              2092                26               214         2306                 5.0                10.3
3...................................        6              2275                21               170         2446                13.3                10.3
4...................................        7              2368                18               149         2517                16.0                10.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
* For TSL 1, the results are forecasted over the lifetime of products sold in 2019. For the other TSLs, the results are forecasted over the lifetime of
  products sold in 2021.
Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the
  lowest efficiency level in the no-new-standards case efficiency distribution.


                 Table V.20--Average LCC Savings Relative to the No-New-Standards Case for C-13A
----------------------------------------------------------------------------------------------------------------
                                                                                                   Percent of
                                                                               Average LCC       consumers that
                           TSL *                                  EL            savings **       experience net
                                                                                 (2015$)              cost
----------------------------------------------------------------------------------------------------------------
1.........................................................               3                 32                  6
2.........................................................               4                 17                 44
3.........................................................               6              (123)                 94
4.........................................................               7              (194)                 96
----------------------------------------------------------------------------------------------------------------
* For TSL 1, the results are forecasted over the lifetime of products sold in 2019. For the other TSLs, the
  results are forecasted over the lifetime of products sold in 2021.
** The savings represent the average LCC savings for affected consumers.


                                        Table V.21--Average LCC and PBP Results by Efficiency Level for C-13A-BI
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     Average costs (2015$)
                                              -------------------------------------------------------------------  Simple payback **   Average lifetime
                TSL *                    EL                        First year's        Lifetime                         (years)             (years)
                                                Installed cost    operating cost    operating cost       LCC
--------------------------------------------------------------------------------------------------------------------------------------------------------
1...................................        3              3019                33               273         3292                n.a.                10.3
2...................................        4              3054                29               235         3289                 6.5                10.3
3...................................        6              3261                23               187         3448                21.6                10.3
4...................................        7              3366                20               164         3530                24.6                10.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
* For TSL 1, the results are forecasted over the lifetime of products sold in 2019. For the other TSLs, the results are forecasted over the lifetime of
  products sold in 2021.
** The PBP is measured relative to the lowest efficiency level in the no-new-standards case efficiency distribution. Calculation of PBP is not
  applicable (n.a.) when the efficiency level is already met or exceeded in the MREF market.
Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level.


               Table V.22--Average LCC Savings Relative to the No-New-Standards Case for C-13A-BI
----------------------------------------------------------------------------------------------------------------
                                                                                                   Percent of
                                                                               Average LCC       consumers that
                           TSL *                                  EL            savings **       experience net
                                                                                 (2015$)              cost
----------------------------------------------------------------------------------------------------------------
1.........................................................               3               n.a.                  0
2.........................................................               4                  8                 49
3.........................................................               6              (151)                 97
4.........................................................               7              (232)                 98
----------------------------------------------------------------------------------------------------------------
* For TSL 1, the results are forecasted over the lifetime of products sold in 2019. For the other TSLs, the
  results are forecasted over the lifetime of products sold in 2021.
** The savings represent the average LCC savings for affected consumers. Calculation of savings is not
  applicable (n.a.) when an efficiency level is already met or exceeded in the MREF market.

b. Consumer Subgroup Analysis
    In the consumer subgroup analysis, DOE estimated the impact of the 
considered TSLs on low-income households and senior-only households. 
DOE is not presenting the consumer subgroup results in this final rule, 
because the household sample sizes for the above subgroups were not 
large enough to yield meaningful results. For information purposes, 
chapter 11 of the final rule TSD presents the LCC and PBP results for 
the subgroups.
c. Rebuttable Presumption Payback
    As discussed in section III.H.2 of this document, EPCA establishes 
a rebuttable presumption that an energy conservation standard is 
economically justified if the increased purchase cost for a product 
that meets the standard is

[[Page 75236]]

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 
values, and, as required by EPCA, based the energy use calculation on 
the DOE test procedures for MREFs.
    Table V.23 presents the rebuttable-presumption payback periods for 
the considered TSLs. While DOE examined the rebuttable-presumption 
criterion, it considered whether the standard levels evaluated for this 
rule are economically justified through a more detailed analysis of the 
economic impacts of those levels, pursuant to 42 U.S.C. 
6295(o)(2)(B)(i), which 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-Presumption Payback Period (in Years) for MREFs
----------------------------------------------------------------------------------------------------------------
                                                                       Trial standard level
                  Product class                  ---------------------------------------------------------------
                                                         1               2               3               4
----------------------------------------------------------------------------------------------------------------
                                                     Coolers
----------------------------------------------------------------------------------------------------------------
Freestanding Compact Coolers....................             1.1             1.4             1.6             3.5
Built-in Compact Coolers........................          n.a. *             4.6             4.4            14.8
Freestanding Coolers............................             1.0             1.8             1.8             4.8
Built-in Coolers................................            n.a.             6.1             4.7            17.7
----------------------------------------------------------------------------------------------------------------
                                    Combination Cooler Refrigeration Products
----------------------------------------------------------------------------------------------------------------
C-3A............................................            n.a.             4.1             6.8            25.3
C-3A-BI.........................................            n.a.             4.1             6.8            25.4
C-9.............................................            n.a.             2.6            12.1            23.3
C-9-BI..........................................            n.a.             2.6            12.0            23.2
C-13A...........................................             4.3             5.0            13.3            16.0
C-13A-BI........................................            n.a.             6.5            21.6            24.6
----------------------------------------------------------------------------------------------------------------
* Calculation of PBP is not applicable (n.a.) if the efficiency level is already met or exceeded in the MREF
  market.

2. Economic Impacts on Manufacturers
    DOE performed an MIA to estimate the impact of new energy 
conservation standards on manufacturers of MREFs. The section below 
describes the expected impacts on manufacturers at each TSL. Chapter 12 
of the direct final rule TSD explains the analysis in further detail.
a. Industry Cash Flow Analysis Results
    The following tables illustrate the estimated financial impacts 
(represented by changes in INPV) of new energy conservation standards 
on manufacturers of MREFs, as well as the conversion costs that DOE 
estimates manufacturers would incur for each product class at each TSL. 
To evaluate the range of cash flow impacts on MREF manufacturers, DOE 
modeled two different markup scenarios using different assumptions that 
correspond to the range of anticipated market responses to potential 
new energy conservation standards: (1) The preservation of gross margin 
percentage, and (2) the preservation of per-unit operating profit. Each 
of these scenarios is discussed below.
    To assess the lower (less severe) end of the range of potential 
impacts, DOE modeled a preservation of gross margin percentage markup 
scenario, in which a uniform ``gross margin percentage'' markup is 
applied across all potential efficiency levels. In this scenario, DOE 
assumed that a manufacturer's absolute dollar markup would increase as 
production costs increase in the standards case. During confidential 
interviews, manufacturers indicated that it is optimistic to assume 
that they would be able to maintain the same gross margin markup as 
their production costs increase in response to a new energy 
conservation standard, particularly at higher TSLs.
    To assess the higher (more severe) end of the range of potential 
impacts, DOE modeled the preservation of per-unit operating profit 
markup scenario, which assumes that manufacturers would be able to earn 
the same operating margin in absolute dollars per-unit in the standards 
case as in the no-new-standards case. In this scenario, while 
manufacturers make the necessary investments required to convert their 
facilities to produce new standards-compliant products, operating 
profit does not change in absolute dollars per unit 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 that results 
from the sum of discounted cash flows from the base year 2016 through 
2048 (the end of the analysis period for TSLs with a 3-year compliance 
period, as recommended by the MREF Working Group) or 2050 (the end of 
the analysis period for TSLs with a 5-year compliance period).\69\ To 
provide perspective on the short-run cash flow impact, DOE includes in 
the discussion of the results below a comparison on free cash flow 
between the no-new-standards case and the standards case at each TSL in 
the year before new standards would take effect. This figure provides 
an understanding of the magnitude of the required conversion costs 
relative to the cash flow generated by the industry in the no-new-
standards case.
---------------------------------------------------------------------------

    \69\ As described in section III.B of this document, the MREF 
Working Group recommended a 3-year compliance period for the 
standards recommended in Term Sheet #2. DOE analyzed these 
recommended standards (TSL 2 for coolers and TSL 1 for combination 
cooler refrigeration products) using a 3-year compliance period. DOE 
analyzed all other TSLs in this direct final rule (representing 
standards not recommended by the MREF Working Group) using a 5-year 
compliance period consistent with the EPCA provisions for newly-
established standards.
---------------------------------------------------------------------------

    DOE modeled separate INPV impacts for the cooler and combination 
cooler refrigeration product industries. Table V.24 and Table V.25 
display the potential INPV impacts on the cooler industry under the 
preservation of gross margin markup scenario and preservation of 
operating profit markup

[[Page 75237]]

scenarios, respectively. Table V.26 and Table V.27 contain estimated 
INPV impacts for the combination cooler refrigeration product industry 
under the preservation of gross margin markup scenario and preservation 
of operating profit markup scenarios, respectively.

                     Table V.24--Manufacturer Impact Analysis for Coolers--Preservation of Gross Margin Percentage Markup Scenario *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                               Trial standard level
                                                 Units           No-new-standards case   ---------------------------------------------------------------
                                                                                                 1             2 **              3               4
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV...................................  2015$ M.............  263.3....................           264.0           253.3           226.5           283.8
Change in INPV.........................  2015$ M.............  .........................             0.7          (10.0)          (36.8)            20.5
                                         %...................  .........................             0.3           (3.8)          (14.0)             7.8
Product Conversion Costs...............  2015$ M.............  .........................            12.1            54.8            74.6            84.1
Capital Conversion Costs...............  2015$ M.............  .........................            13.7            19.7            63.8           105.0
Total Conversion Costs.................  2015$ M.............  .........................            25.8            74.6           138.4           189.1
Free Cash Flow in 2020 (2018 for TSL 2)  2015$ M.............  16.7 (16.3 for TSL 2)....             7.1           (8.3)          (35.2)          (57.9)
Free Cash Flow change from no-new-       %...................  .........................          (57.7)         (151.0)         (310.0)         (446.0)
 standards case in 2020.
(2018 for TSL 2).......................
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative values. All values have been rounded to the nearest tenth.
** TSL recommended by the MREF Working Group with 2019 compliance date (i.e. a 3-year compliance period); all other TSLs have a modeled compliance date
  of 2021 (i.e. a 5-year compliance period).


                         Table V.25 Manufacturer Impact Analysis for Coolers--Preservation of Operating Profit Markup Scenario*
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                               Trial standard level
                                                 Units           No-new-standards case   ---------------------------------------------------------------
                                                                                                 1             2 **              3               4
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV...................................  2015$ M.............  263.3....................           244.3           208.5           168.4           110.5
Change in INPV.........................  2015$ M.............  .........................          (19.0)          (54.8)          (94.8)         (152.8)
                                         %...................  .........................           (7.2)          (20.8)          (36.0)          (58.0)
Product Conversion Costs...............  2015$ M.............  .........................            12.1            54.8            74.6            84.1
Capital Conversion Costs...............  2015$ M.............  .........................            13.7            19.7            63.8           105.0
Total Conversion Costs.................  2015$ M.............  .........................            25.8            74.6           138.4           189.1
Free Cash Flow in 2020 (2018 for TSL 2)  2015$ M.............  16.7 (16.3 for TSL 2)....             7.1           (8.3)          (35.2)          (57.9)
Free Cash Flow change from no-new-       %...................  .........................          (57.7)         (151.0)         (310.0)         (446.0)
 standards case in 2020 (2018 for TSL
 2).
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative values. All values have been rounded to the nearest tenth.
** TSL recommended by the MREF Working Group with 2019 compliance date (i.e. a 3-year compliance period); all other TSLs have a modeled compliance date
  of 2021 (i.e. a 5-year compliance period).

    At TSL 1, DOE estimates impacts on INPV of cooler manufacturers to 
range from $244.3 million to $264.0 million, or a change in INPV of -
7.2 percent to 0.3 percent under the preservation of per-unit operating 
profit markup scenario and preservation of gross margin percentage 
markup scenario, respectively. At TSL 1, industry free cash flow is 
expected to decrease by approximately 57.7 percent to $7.1 million, 
compared to the no-new-standards case value of $16.7 million in 2020, 
the year prior to the 2021 compliance year.
    An estimated 71 percent of cooler industry shipments are below the 
efficiency level corresponding to TSL 1 (EL 4, the CEC-equivalent level 
for all cooler product classes). DOE estimated that compliance with TSL 
1 will require a total industry investment of $25.8 million. Implicit 
in this estimate is that DOE expects approximately two-thirds of cooler 
models using non-vapor-compression refrigeration systems will switch to 
vapor-compression refrigeration systems to reach TSL 1. Industry 
conversion costs are related to the integration of heat pipes for a 
portion of the non-vapor-compression coolers remaining on the market, 
increased production capacity for vapor-compression coolers, and 
testing and marketing costs associated with all cooler models.
    At TSL 2, the TSL recommended by the MREF Working Group, DOE 
estimates INPV for cooler manufacturers to range from $208.5 million to 
$253.3 million, or a change in INPV of -20.8 percent to -3.8 percent. 
At this standard level, industry free cash flow is estimated to 
decrease by as much as 151.0 percent to -$8.3 million, compared to the 
no-new-standards case value of $16.3 million in 2018, the year prior to 
the 2019 compliance year.
    An estimated 95 percent of cooler industry shipments are below the 
efficiency level corresponding to TSL 2

[[Page 75238]]

(EL 7 for all cooler product classes). DOE estimated that compliance 
with TSL 2 will require a total industry investment of $74.6 million. 
DOE assumed that, at this level, the majority of cooler models using 
non-vapor-compression refrigeration systems will not be able to reach 
TSL 2, and the corresponding share of the market will switch to coolers 
using vapor-compression refrigeration systems. Major sources of 
industry conversion costs include the integration of heat pipes and 
insulation changes for a portion of the non-vapor-compression coolers 
remaining on the market, increased production capacity for vapor-
compression coolers, and testing and marketing costs associated with 
all cooler models.
    At TSL 3, DOE estimates impacts on INPV for cooler manufacturers to 
range from $168.4 million to $226.5 million, or a change in INPV of -
36.0 percent to -14.0 percent. At this standard level, industry free 
cash flow is estimated to decrease by as much as 310.0 percent to -
$35.2 million, compared to the no-new-standards case value of $16.7 
million in 2020.
    An estimated 99 percent of cooler industry shipments are below the 
efficiency level corresponding to TSL 3 (EL 9 for all cooler product 
classes). DOE estimated that compliance with TSL 3 will require a total 
industry investment of $138.4 million. Again, implicit in this estimate 
is that the majority of cooler models using non-vapor-compression 
refrigeration systems will not be able to reach TSL 3, and the 
corresponding share of the market will switch to coolers using vapor-
compression refrigeration systems. Industry conversion costs are 
related to the integration of heat pipes and insulation changes for all 
non-vapor-compression coolers remaining on the market. For vapor-
compression coolers, industry conversion costs are related to improved 
glass, increases in insulation thickness, the integration of forced-
convection evaporators, more efficient compressors, and increased 
production capacity for vapor-compression coolers. Finally, all cooler 
models would incur testing and marketing costs.
    At TSL 4, DOE estimates impacts on INPV for cooler manufacturers to 
range from $110.5 million to $283.8 million, or a change in INPV of -
58.0 percent to 7.8 percent. At TSL 4, industry free cash flow is 
estimated to decrease by as much as 446.0 percent to -$57.9 million, 
compared to the no-new-standards case value of $16.7 million in 2020.
    Similar to TSL 3, an estimated 99 percent of cooler industry 
shipments are below the efficiency level corresponding to TSL 4 (EL 11 
for all cooler product classes). DOE estimated that compliance with TSL 
4 will require a total industry investment of $189.1 million. At TSL 4, 
DOE assumed that none of the cooler models using non-vapor-compression 
refrigeration systems will be able to reach TSL 4, and the 
corresponding share of the market will switch to coolers using vapor-
compression refrigeration systems. For vapor-compression coolers, in 
addition to the design changes associated with reaching TSL 3, industry 
conversion costs are related to improved heat exchangers, the 
integration of VIPs and triple-pane glass, and switching to brushless 
direct current (DC) condenser fan motors and variable-speed 
compressors.

    Table V.26--Manufacturer Impact Analysis for Combination Cooler Refrigeration Products--Preservation of Gross Margin Percentage Markup Scenario *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                               Trial standard level
                                                 Units           No-new-standards case   ---------------------------------------------------------------
                                                                                               1 **              2               3               4
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV...................................  2015$ M.............  108.2....................           107.6           107.5           117.7           128.5
Change in INPV.........................  2015$ M.............  .........................           (0.5)           (0.6)             9.6            20.3
                                         %...................  .........................           (0.5)           (0.6)             8.9            18.8
Product Conversion Costs...............  2015$ M.............  .........................             0.5             3.1             4.3             4.6
Capital Conversion Costs...............  2015$ M.............  .........................             0.5             3.7             5.2             6.7
Total Conversion Costs.................  2015$ M.............  .........................             1.0             6.8             9.5            11.3
Free Cash Flow in 2020 (2018 for TSL 1)  2015$ M.............  6.9 (6.7 for TSL 1)......             6.3             4.3             3.3             2.6
Free Cash Flow change from no-new-       %...................  .........................           (5.7)          (36.9)          (51.9)          (62.9)
 standards case in 2020 (2018 for TSL
 1).
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative values. All values have been rounded to the nearest tenth.
** TSL recommended by the MREF Working Group with 2019 compliance date (i.e. a 3-year compliance period); all other TSLs have a modeled compliance date
  of 2021 (i.e. a 5-year compliance period).


       Table V.27--Manufacturer Impact Analysis for Combination Cooler Refrigeration Products--Preservation of Operating Profit Markup Scenario *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                               Trial standard level
                                                 Units           No-new-standards case   ---------------------------------------------------------------
                                                                                                1 *              2               3               4
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV...................................  2015$ M.............  108.2....................           107.4           103.7           101.6           100.1
Change in INPV.........................  2015$ M.............  .........................           (0.8)           (4.4)           (6.5)           (8.1)
                                         %...................  .........................           (0.7)           (4.1)           (6.0)           (7.5)
Product Conversion Costs...............  2015$ M.............  .........................             0.5             3.1             4.3             4.6
Capital Conversion Costs...............  2015$ M.............  .........................             0.5             3.7             5.2             6.7
Total Conversion Costs.................  2015$ M.............  .........................             1.0             6.8             9.5            11.3

[[Page 75239]]

 
Free Cash Flow in 2020 (2018 for TSL 1)  2015$ M.............  6.9 (6.7 for TSL 1)......             6.3             4.3             3.3             2.6
Free Cash Flow change from no-new-       %...................  .........................           (5.7)          (36.9)          (51.9)          (62.9)
 standards case in 2020 (2018 for TSL
 1).
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative values. All values have been rounded to the nearest tenth.
** TSL recommended by the MREF Working Group with 2019 compliance date (i.e. a 3-year compliance period); all other TSLs have a modeled compliance date
  of 2021 (i.e. a 5-year compliance period).

    TSL 1, the MREF Working Group recommended level, corresponds to EL 
2 for combination cooler refrigeration product classes C-3A and C-3A-
BI, and EL 3 for product classes C-9, C-9-BI, C-13A and C-13A-BI. At 
TSL 1, DOE estimates INPV for combination cooler refrigeration product 
manufacturers to range from $107.4 million to $107.6 million, or a 
change in INPV of -0.7 percent to -0.5 percent, relative to the no-new-
standards case. At this TSL, industry free cash flow is estimated to 
decrease by as much as 5.7 percent to $6.3 million, compared to the no-
new-standards case value of $6.7 million in 2018, the year before the 
2019 compliance year.
    An estimated 11 percent of combination cooler refrigeration product 
industry shipments are below the efficiency levels corresponding to TSL 
1. Products with efficiencies below those corresponding to TSL 1 are 
concentrated in product class C-13A. At TSL 1, DOE estimated that 
manufacturers of C-13A combination cooler refrigeration products will 
incur conversion costs of $1.0 million in order to comply with the 2019 
standard. The design changes associated with this conversion cost 
estimate include increased compressor efficiency and increased 
insulation thickness.
    At TSL 2, DOE estimates INPV for combination cooler refrigeration 
product manufacturers to range from $103.7 million to $107.5 million, 
or a change in INPV of -4.1 percent to -0.6 percent. At this TSL, 
industry free cash flow is estimated to decrease by as much as 36.9 
percent to $4.3 million, compared to the no-new-standards case value of 
$6.9 million in 2020.
    In contrast to TSL 1, an estimated 100 percent of combination 
cooler refrigeration product industry shipments are below the 
efficiency levels corresponding to TSL 2 (EL 4 for product classes C-
3A, C-3A-BI, C-13A and C-13A-BI; EL 5 for product classes C-9 and C-9-
BI). DOE estimated that compliance with TSL 2 will require a total 
industry investment of $6.8 million by 2021. The design changes 
associated with this conversion cost estimate include increased 
compressor efficiency, changes to insulation thickness, and the 
incorporation of VIPs.
    At TSL 3, DOE estimates INPV for combination cooler refrigeration 
product manufacturers to range from $101.6 million to $117.7 million, 
or a change in INPV of -6.0 percent to 8.9 percent. At this TSL, 
industry free cash flow is estimated to decrease by as much as 51.9 
percent to $3.3 million, compared to the no-new-standards case value of 
$6.9 million in 2020.
    An estimated 100 percent of combination cooler refrigeration 
product industry shipments are below the efficiency levels 
corresponding to TSL 3 (EL 5 for product classes C-3A, C-3A-BI; EL 6 
for product classes C-13A, C-13A-BI, C-9, and C-9-BI). DOE estimated 
that compliance with TSL 3 will require a total industry investment of 
$9.5 million by 2021. Again, the design changes associated with this 
conversion cost estimate relate increased compressor efficiency, 
changes to insulation thickness, and the incorporation of VIPs. 
Incorporation of high efficiency glass would also be required for some 
product classes at TSL 3.
    At TSL 4, DOE estimates INPV for combination cooler refrigeration 
product manufacturers to range from $100.1 million to $128.5 million, 
or a change in INPV of -7.5 percent to 18.8 percent. At this TSL, 
industry free cash flow is estimated to decrease by as much as 62.9 
percent to $2.6 million, compared to the no-new-standards case value of 
$6.9 million in 2020.
    An estimated 100 percent of combination cooler refrigeration 
product industry shipments are below the efficiency levels 
corresponding to TSL 4 (EL 7 for all combination cooler product 
classes). DOE estimated that compliance with TSL 4 will require a total 
industry investment of $11.3 million by 2021. Again, the design changes 
associated with this conversion cost estimate relate increased 
compressor efficiency, changes to insulation thickness, and the 
incorporation of VIPs. Incorporation of high-efficiency glass would 
also be required for all product classes at TSL 4.
b. Impacts on Direct Employment
    To quantitatively asses the impacts of energy conservation 
standards on direct employment in the MREF industry, DOE used the GRIM 
to estimate the domestic labor expenditures and number of employees in 
the no-new-standards case and at each TSL from 2016 through either 2048 
or 2050, the end of the analysis period depending on the TSL. DOE used 
statistical data from the U.S. Census Bureau's 2011 Annual Survey of 
Manufactures (``ASM''),\70\ the results of the engineering analysis, 
and interviews with manufacturers to determine the inputs necessary to 
calculate industry-wide labor expenditures and domestic employment 
levels. Labor expenditures related to manufacturing of the product are 
a function of the labor intensity of the product, 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.
---------------------------------------------------------------------------

    \70\ ``Annual Survey of Manufactures (ASM),'' U.S. Census Bureau 
(2011) (Available at: http://www.census.gov/manufacturing/asm/).
---------------------------------------------------------------------------

    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 2011 ASM). DOE estimates that approximately 8 percent of 
coolers and 43 percent of

[[Page 75240]]

combination cooler refrigeration products sold in the United States are 
manufactured domestically. The estimates of production workers in this 
section include line-supervisors who are directly involved in 
fabricating and assembling a product within the manufacturing facility. 
Workers performing services that are closely associated with production 
operations, such as materials handling tasks using forklifts, are also 
included as production labor.
    DOE's estimates only account for production workers who manufacture 
the specific products covered by this rulemaking. Thus, the estimated 
number of impacted employees in the MIA is separate and distinct from 
the total number of employees used to determine whether a manufacturer 
is a small business. Finally, this analysis also does not factor in the 
dependence by some manufacturers on production volumes to make their 
operations viable.
    In the GRIM, DOE used the labor content of each product and 
manufacturing production costs from the engineering analysis to 
estimate the annual labor expenditures in the MREF manufacturing 
industry. DOE used information gained through interviews with 
manufacturers to estimate the portion of the total labor expenditures 
that can be attributed to domestic production labor. The employment 
impacts shown in Table V.28 represent the range of potential production 
employment impacts in the cooler industry that could result in the 
compliance year of new energy conservation standards and Table V.29 
represents the range of potential production employment impacts in the 
combination cooler refrigeration product industry that could result in 
the compliance year of new energy conservation standards.
    The upper end of the results in the tables represents the maximum 
increase in the number of production workers after the implementation 
of new energy conservation standards and assumes that manufacturers 
would continue to produce the same covered products within the United 
States. This corresponds to the direct employment impacts calculated in 
the GRIM. In general, more efficient products are more complex and more 
labor intensive to manufacture. Per-unit labor requirements and 
production time requirements increase with a higher energy conservation 
standard. As a result, if shipments remain relatively steady, the model 
forecasts job growth at the upper bound of direct employment impacts.
    The lower bound assumes that as the standard increases, 
manufacturers choose to retire sub-standard product lines (or to move 
production of sub-standard product lines abroad) rather than invest in 
domestic manufacturing facility conversions and product redesigns. In 
this scenario, there is a loss of employment because manufacturers 
consolidate and operate fewer domestic production lines. To estimate 
this lower bound, DOE assumed that the percentage loss in employment 
relative to the no-new-standards case would be equal to the percentage 
of non-compliant, domestically-produced platforms relative to all 
domestically-produced platforms. Because this represents a worst-case 
scenario for employment, there is no consideration given to the fact 
that there may be employment growth in higher-efficiency product lines.
    DOE estimates that in the absence of new energy conservation 
standards, there would be 168 and 173 domestic production workers in 
the cooler industry in 2019 and 2021, respectively, and 130 and 134 
domestic production workers in the combination cooler refrigeration 
product industry in 2019 and 2021, respectively.

                  Table V.28--Potential Changes in the Number of Industry Production Worker Employment for Coolers in Compliance Year *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                   Trial standard level **
                                    --------------------------------------------------------------------------------------------------------------------
                                      No-new-standards case             1                      2                      3                      4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Number of Domestic Production  173 (168 for TSL 2)...  145 to 194............  66 to 207............  20 to 232............  12 to 307
 Workers in Compliance Year.
Potential Changes in Domestic        ......................  (28) to 21............  (102) to 39..........  (153) to 59..........  (161) to 134
 Production Workers in Compliance
 Year.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The standards compliance year is 2019 for TSL 2, as recommended by the MREF Working Group; all other TSLs have a modeled compliance year of 2021.
** Numbers in parentheses represent negative values.


 Table V.29--Potential Changes in the Number of Industry Production Worker Employment for Combination Cooler Refrigeration Products in Compliance Year *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                   Trial standard level **
                                    --------------------------------------------------------------------------------------------------------------------
                                      No-new-standards case             1                      2                      3                      4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Number of Domestic Production  134 (130 for TSL 1)...  130 to 130............  0 to 141.............  0 to 160.............  0 to 180
 Workers in Compliance Year.
Potential Changes in Domestic        ......................  0 to 0................  (134) to 7...........  (134) to 26..........  (134) to 46
 Production Workers in Compliance
 Year.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The standards compliance year is 2019 for TSL 1, as recommended by the MREF Working Group; all other TSLs have a modeled compliance year of 2021.
** Numbers in parentheses represent negative values.


[[Page 75241]]

    Direct production employment impacts are also detailed in chapter 
12 of the direct final rule TSD.
    DOE notes that the direct employment impacts discussed here are 
independent of the indirect employment impacts to the broader U.S. 
economy, which are documented in chapter 16 of the direct final rule 
TSD.
c. Impacts on Manufacturing Capacity
    Based on feedback from domestic MREF manufacturers during 
confidential interviews and MREF Working Group meetings, DOE does not 
expect significant impacts on domestic manufacturing capacity for the 
industry as a whole to result from the standards for MREFs adopted in 
this direct final rule. However, at more stringent standard levels than 
those adopted in this direct final rule, disproportionate impacts 
experienced by domestic manufacturers could lead these manufacturers to 
abandon certain niche production lines.
    Additionally, although DOE does not believe the standards adopted 
in this direct final rule will lead to a decrease in manufacturing 
capacity for the MREF industry as a whole, DOE recognizes that 
standards will likely lead to decreased manufacturing capacity for 
cooler products using non-vapor-compression cooling technologies.
d. Impacts on Subgroups of Manufacturers
    Small manufacturers, niche equipment manufacturers, and 
manufacturers exhibiting a cost structure substantially different from 
the industry average could be disproportionately affected by new energy 
conservation standards for MREFs. Using average cost assumptions 
developed for an industry cash-flow estimate is adequate to assess 
differential impacts among manufacturer subgroups. For the MREF 
industry, DOE identified and evaluated the impact of new energy 
conservation standards on two subgroups: Small businesses and domestic 
LVMs.
Small Businesses
    The SBA defines a ``small business'' as having 1,250 employees or 
less for both NAICS 335222 (``Household Refrigeration and Home Freezer 
Manufacturing'') and NAICS 333415 (``Air-Conditioning and Warm Air 
Heating Equipment and Commercial and Industrial Refrigeration Equipment 
Manufacturing''). Based on the SBA employee threshold of 1,250 
employees, DOE identified two entities involved in the sale of MREF 
products in the United States that qualify as small businesses. One of 
these businesses is a manufacturer of MREF products. The other small 
business imports and rebrands MREFs for sale in the United States. For 
a discussion of the potential impacts on the small manufacturer 
subgroup, see section VI.B of this document and chapter 12 of the TSD.
Domestic, Low-Volume Manufacturers
    In addition to the small businesses discussed previously, DOE 
identified three domestic LVMs of MREFs that could be 
disproportionately affected by a DOE energy conservation standard for 
MREFs. Unlike the larger, diversified manufacturers selling MREFs in 
the United States, these businesses are highly concentrated in specific 
market segments (refrigeration) and/or earn a greater proportion of 
their sales from products covered by this rulemaking. Additionally, 
although the LVMs do not qualify as small businesses according to the 
SBA criteria discussed above (i.e., employee count exceeds 1,250), 
these manufacturers are significantly smaller in terms of annual 
revenues than the larger, diversified manufacturers selling MREFs in 
the United States. Table V.30 lists the range of the product offerings 
and annual sales figures for the LVMs. Table V.31 contains the range of 
annual sales figures for some of the large, diversified manufacturers 
selling MREFs in the U.S. market. Table V.31 also contains the range of 
segment concentration for these larger manufacturers.

           Table V.30--LVM 2014 Revenues and Product Offerings
------------------------------------------------------------------------
                                      Annual
       Manufacturer type         revenues (2015$     Product offering
                                       M) *
------------------------------------------------------------------------
LVMs...........................    216-1,600 **   High-end, built-in or
                                                   fully integrated
                                                   residential
                                                   refrigeration
                                                   products
                                                   (undercounter and
                                                   standard), commercial
                                                   refrigeration
                                                   equipment, and
                                                   cooking products.
------------------------------------------------------------------------
* Annual sales values are from Hoovers: http://www.hoovers.com/.
** This range reflects parent company revenues, where an LVM is owned by
  another company.


                Table V.31--2014 Revenues and Segment Concentration for Large MREF Manufacturers
----------------------------------------------------------------------------------------------------------------
                                                                                            Concentration in
                                                               Annual revenues (2015$      segment containing
                      Manufacturer type                                 M) *                   residential
                                                                                         refrigeration  products
----------------------------------------------------------------------------------------------------------------
Larger, Diversified Manufacturers...........................           11,400-150,000                    5%-76%
----------------------------------------------------------------------------------------------------------------
* Annual sales values are from Hoovers: http://www.hoovers.com./

    Based on manufacturer feedback, DOE believes that the three LVMs, 
along with the small domestic manufacturer identified by DOE, are four 
of only five manufacturers producing MREFs domestically. In contrast, 
the entities with the greatest estimated overall market share in the 
U.S. MREF market rebrand coolers and combination cooler refrigeration 
products sourced from foreign original equipment manufacturers 
(``OEMs'').
    DOE has estimated that two of the LVMs and the small MREF 
manufacturer account for approximately 50 percent of built-in cooler 
basic models (both compact and full-size) that are currently available 
in the U.S. market. DOE estimates that the standard adopted in this 
direct final rule (70 percent of the CEC-Equivalent) will require the 
LVMs to update over 70 percent of their cooler models (overall, and for 
built-in coolers only).\71\
---------------------------------------------------------------------------

    \71\ This estimate is based on the LVM models for which energy 
use values are available.
---------------------------------------------------------------------------

    Additionally, two of the LVMs are the only manufacturers producing 
combination cooler refrigeration products domestically. Combined, these

[[Page 75242]]

two LVMs account for 40 percent of combination cooler refrigeration 
product basic models that are currently available in the United States. 
One of these LVMs is the only company to manufacture a combination 
cooler refrigeration product classified as C-3A-BI. The other LVM 
produces a C-13A-BI combination cooler refrigeration product. Both 
products have rated energy consumptions at the standard level 
established in this direct final rule. Accordingly, both manufacturers 
would incur product and capital conversion expenses to reach standard 
efficiency levels beyond those adopted in this direct final rule for 
combination cooler refrigeration products.
    Generally, manufacturers indicated during confidential interviews 
that the MREF products produced by the domestic LVMs are niche products 
and are more expensive to produce (and, therefore, have higher selling 
prices) than the majority of the MREFs sold in the United States. The 
LVMs generally utilize a two-tier distribution system for MREFs, unlike 
large-scale manufacturers that sell directly to large-volume retail 
outlets. (ASRAC Public Meeting, No. 85 at p. 144) Accordingly, the cost 
and markup structure of these two types of manufacturers are 
significantly different.
    Manufacturers also expressed during confidential interviews that 
LVMs (along with the small manufacturer) typically pay higher prices 
for components because of lower purchasing volumes, while their large 
competitors likely receive volume purchasing discounts. Despite the 
fact that the MREF industry as a whole is a relatively low-volume 
industry, larger manufacturers, with a significantly larger proportion 
of their total sales derived from the sale of other products (non-MREF 
products), are able to purchase components in high quantities due to 
the similarities between MREFs and the other higher-volume products 
they sell (e.g., refrigerators and freezers). Alternatively, these 
larger manufacturers may produce their own components in-house.
    LVMs may also be disproportionately affected by product and capital 
conversion costs. Product redesign, testing, and certification costs 
tend to be fixed per basic model and do not scale with sales volume. 
Both large manufacturers and LVMs must make investments in R&D to 
redesign their products, but LVMs lack the sales volumes to 
sufficiently recoup these upfront investments without substantially 
marking up their products' selling prices. Furthermore, the LVMs and 
major re-branders both offer similar numbers of MREF basic models. Up-
front capital investments in new manufacturing for each platform 
redesign and any depreciated manufacturing capital would be spread 
across a lower volume of shipments for LVMs.
    To this end, feedback from LVMs received during confidential 
interviews suggested that new energy conservation standards for MREFs 
could result in such a significant increase in their costs (both per-
unit and upfront costs) that selling prices would increase beyond what 
consumers are willing to pay. This could cause the LVMs to discontinue 
certain model lines that, in turn, would negatively impact customer 
choice, competition, and domestic employment within the MREF industry.
    Finally, the LVMs considered in this analysis have fewer resources 
to devote to the cumulative regulations impacting the appliance 
industry. According to manufacturer feedback received during 
confidential interviews, the LVMs will be particularly challenged in 
meeting amended energy conservation standards for commercial 
refrigeration equipment (with an estimated compliance date of 2017) and 
for residential refrigerators and freezers (with an estimated 
compliance date of 2020), in addition to the EPA Significant New 
Alternatives Policy Program (SNAP) program restrictions relating to 
foam blowing agents and any future restrictions relating to acceptable 
refrigerants for use in consumer refrigeration products. Table V.32 
lists the impending DOE energy conservation standards that may have a 
significant impact on the MREF LVMs, the corresponding expected 
industry conversion costs (where available), and the LVM U.S. market 
share for the products being regulated.

                   Table V.32--Other Federal Energy Conservation Standards Affecting MREF LVMs
----------------------------------------------------------------------------------------------------------------
                                                   Expected     Expected total
                  Regulation                       effective       industry           LVM U.S. market share
                                                    date(s)       investment
----------------------------------------------------------------------------------------------------------------
Commercial Refrigeration Equipment............            2017     $184 M \72\  41% of commercial refrigerator
                                                                       (2012$)   market.\73\
Refrigerators and Freezers....................            2020             TBD  75% of built-in undercounter
                                                                                 refrigerator market; 5% of
                                                                                 compact refrigerator
                                                                                 market.\74\
----------------------------------------------------------------------------------------------------------------

    In summary, DOE recognizes that, depending on the TSL selected, new 
energy conservation standards may have disproportionate impacts on the 
LVMs relative to the larger, diversified competitors, and that this 
could impact domestic MREF production as well as the availability of 
certain MREF product types. In this industry, larger manufacturers may 
have a competitive advantage compared to the LVMs due to overall 
production volumes and the ability to procure components at a lower 
cost (either by purchasing component parts at a discount or producing 
components in-house).
---------------------------------------------------------------------------

    \72\ Estimated industry conversion expenses were published in 
the TSD for the March 2014 commercial refrigeration energy 
conservation standards final rule. 79 FR 17725 (March 28, 2014).
    \73\ 2008 market share estimates were published in the TSD for 
the March 2014 commercial refrigeration equipment energy 
conservation standards final rule. 79 FR 17725 (March 28, 2014). 
Estimates are from Appliance Magazine, which does not provide a 
precise definition of what a commercial refrigerator is. It is 
therefore unclear what specific types of equipment that data 
covers--whether it is equipment that is self-contained or remote 
condensing, or equipment with doors or without doors.
    \74\ 2007 market share estimates were published in the TSD for 
the September 2011 residential refrigerators, refrigerator-freezers, 
and freezers energy conservation standards final rule. 76 FR 57516 
(Sept. 15, 2011).
---------------------------------------------------------------------------

e. 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 or equipment. 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,

[[Page 75243]]

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 aims to recognize and seeks to mitigate the overlapping effects 
on manufacturers of new or revised DOE standards and other regulatory 
actions affecting the same products, components, and other equipment. 
DOE estimates that there are approximately 48 entities selling MREFs in 
the United States. Only approximately 16 of these entities are OEMs of 
MREF products. In addition to new energy conservation standards for 
MREFs, DOE identified a number of requirements that MREF manufacturers 
will face for products they manufacture approximately 3 years prior to 
and 3 years after the estimated compliance date of these new standards. 
The following section addresses key concerns that manufacturers raised 
during interviews regarding cumulative regulatory burden.

              Table V.33--Other Federal Energy Conservation Standards Affecting MREF Manufacturers
----------------------------------------------------------------------------------------------------------------
                                                  Number of MREF                     Industry        Industry
 Federal energy conservation       Number of       manufacturers      Approx.       conversion      conversion
           standard             manufacturers *   from this rule  standards year       costs      costs/ revenue
                                                        **                         (millions $)       *** (%)
----------------------------------------------------------------------------------------------------------------
Microwave Ovens 78 FR 36316                   12               2            2016    43.1 (2011$)              <1
 (June 17, 2013).............
Commercial Refrigeration                      54               3            2017     184 (2012$)             2.0
 Equipment 79 FR 17725 (March
 28, 2014)...................
Commercial Clothes Washers 79                  6               1            2018    10.2 (2013$)             2.2
 FR 74492 (December 15, 2014)
Residential Clothes Washers                   16               3            2018   418.5 (2010$)             4.8
 77 FR 32308 (May 31, 2012)..                                                           [dagger]
Residential Dehumidifiers 81                  24               1            2019    52.5 (2014$)             4.5
 FR 38338 (June 13, 2016)....
Residential Kitchen Ranges                    20               5            2019   109.9 (2014$)             1.1
 and Ovens [dagger][dagger]
 80 FR 33030 (June 10, 2015).
Residential Boilers 81 FR                     27               1            2021    2.48 (2014$)              <1
 2320 (January 15, 2016).....
----------------------------------------------------------------------------------------------------------------
* 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 MREFs that are also listed as manufacturers in the
  listed energy conservation standard contributing to cumulative regulatory burden.
*** This column presents conversion costs as a percentage of cumulative revenue for the industry during the
  conversion period. 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.
[dagger] Energy conservation standards for residential clothes washers (77 FR 32308) are tiered, with standards
  years of 2015 and 2018. The conversion costs presented are for both the 2015 and 2018 standards.
[dagger][dagger] The final rule for this energy conservation standard has not been published. The compliance
  date and analysis of conversion costs have not been finalized at this time. Values in this row are estimates
  for the standard level proposed in the NOPR.

    In addition to Federal energy conservation standards, DOE 
identified other Federal-level and state-level regulatory burdens and 
third-party standard programs that would affect MREF manufacturers. For 
more details, see chapter 12 of the direct final rule TSD.
    DOE will evaluate its approach to assessing cumulative regulatory 
burden for use in future rulemakings to ensure that it is effectively 
capturing the overlapping impacts of its regulations. In particular, 
DOE will assess whether looking at rules where any portion of the 
compliance period potentially overlaps with the compliance period for 
the subject rulemaking would yield a more accurate reflection of 
cumulative regulatory burdens.
3. National Impact Analysis
a. Significance of Energy Savings
    To estimate the energy savings attributable to potential standards 
for MREFs, DOE compared the energy consumption of those products under 
the no-new-standards case to their anticipated energy consumption under 
each TSL. The savings are measured over the entire lifetime of products 
purchased in the 30-year period that begins in the year of anticipated 
compliance with new standards (2019-2048 for the TSLs that represent 
the MREF Working Group recommendations and 2021-2050 for other TSLs). 
Table V.34 and Table V.35 present DOE's projections of the national 
energy savings for each TSL considered for coolers and combination 
cooler refrigeration products, respectively. The savings were 
calculated using the approach described in section IV.H of this 
document.

                           Table V.34--Cumulative National Energy Savings for Coolers
----------------------------------------------------------------------------------------------------------------
                                                                      Trial standard level *
                                                 ---------------------------------------------------------------
                                                         1               2               3               4
----------------------------------------------------------------------------------------------------------------
                                                                               Quads
                                                 ---------------------------------------------------------------
Primary energy..................................            1.08            1.44            1.76            1.93

[[Page 75244]]

 
FFC energy......................................            1.13            1.51            1.84            2.02
----------------------------------------------------------------------------------------------------------------
* For TSL 2, the results are forecasted over the lifetime of products sold from 2019-2048. For the other TSLs,
  the results are forecasted over the lifetime of products sold from 2021-2050.


          Table V.35--Cumulative National Energy Savings for Combination Cooler Refrigeration Products
----------------------------------------------------------------------------------------------------------------
                                                                      Trial standard level *
                                                 ---------------------------------------------------------------
                                                         1               2               3               4
----------------------------------------------------------------------------------------------------------------
                                                                               Quads
                                                 ---------------------------------------------------------------
Primary energy..................................        0.000802         0.00705          0.0117          0.0153
FFC energy......................................        0.000838         0.00737          0.0123          0.0160
----------------------------------------------------------------------------------------------------------------
* For TSL 1, the results are forecasted over the lifetime of products sold from 2019-2048. For the other TSLs,
  the results are forecasted over the lifetime of products sold from 2021-2050.

    OMB Circular A-4 \75\ 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 product shipments. The choice of a 9-year period is a proxy for the 
timeline in EPCA for the review of certain energy conservation 
standards and potential revision of and compliance with such revised 
standards.\76\ The review timeframe established in EPCA is generally 
not synchronized with the product lifetime, product manufacturing 
cycles, or other factors specific to MREFs. Thus, such results are 
presented for informational purposes only and are not indicative of any 
change in DOE's analytical methodology. The NES sensitivity analysis 
results for coolers and combination cooler refrigeration products based 
on a 9-year analytical period are presented in Table V.36 and Table 
V.37 respectively.
---------------------------------------------------------------------------

    \75\ 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/).
    \76\ Section 325(m) of EPCA requires DOE to review its standards 
at least once every 6 years, and requires, for certain products, a 
3-year period after any new standard is promulgated before 
compliance is required, except that in no case may any new standards 
be required within 6 years of the compliance date of the previous 
standards. While adding a 6-year review to the 3-year compliance 
period adds up to 9 years, DOE notes that it may undertake reviews 
at any time within the 6 year period and that the 3-year compliance 
date may yield to the 6-year backstop. A 9-year analysis period may 
not be appropriate given the variability that occurs in the timing 
of standards reviews and the fact that for some consumer products, 
the compliance period is 5 years rather than 3 years.

               Table V.36--Cumulative National Energy Savings for Coolers; Nine Years of Shipments
----------------------------------------------------------------------------------------------------------------
                                                                      Trial standard level *
                                                 ---------------------------------------------------------------
                                                         1               2               3               4
----------------------------------------------------------------------------------------------------------------
                                                                               Quads
                                                 ---------------------------------------------------------------
Primary energy..................................           0.294           0.389           0.479           0.513
FFC energy......................................           0.307           0.407           0.500           0.537
----------------------------------------------------------------------------------------------------------------
* For TSL 2, the results are forecasted over the lifetime of products sold from 2019-2027. For the other TSLs,
  the results are forecasted over the lifetime of products sold from 2021-2029.


   Table V.37--Cumulative National Energy Savings for Combination Cooler Refrigeration Products; Nine Years of
                                                    Shipments
----------------------------------------------------------------------------------------------------------------
                                                                      Trial standard level *
                                                 ---------------------------------------------------------------
                                                         1               2               3               4
----------------------------------------------------------------------------------------------------------------
                                                                               Quads
                                                 ---------------------------------------------------------------
Primary energy..................................        0.000216         0.00191         0.00317         0.00414
FFC energy......................................        0.000226         0.00200         0.00331         0.00432
----------------------------------------------------------------------------------------------------------------
* For TSL 1, the results are forecasted over the lifetime of products sold from 2019-2027. For the other TSLs,
  the results are forecasted over the lifetime of products sold from 2021-2029.


[[Page 75245]]

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 MREFs. In 
accordance with OMB's guidelines on regulatory analysis,\77\ DOE 
calculated NPV using both a 7-percent and a 3-percent real discount 
rate. Table V.38 and Table V.39 show the consumer NPV results with 
impacts counted over the lifetime of products purchased in the relevant 
analysis period for each TSL.
---------------------------------------------------------------------------

    \77\ 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.38--Cumulative Net Present Value of Consumer Benefits for Coolers
----------------------------------------------------------------------------------------------------------------
                                                                      Trial standard level *
                  Discount rate                  ---------------------------------------------------------------
                                                         1               2               3               4
----------------------------------------------------------------------------------------------------------------
                                                                           Billion 2015$
                                                 ---------------------------------------------------------------
3 percent.......................................            8.34           11.02           12.19            6.83
7 percent.......................................            3.41            4.78            4.81            1.81
----------------------------------------------------------------------------------------------------------------
* For TSL 2, the results are forecasted over the lifetime of products sold from 2019-2048. For the other TSLs,
  the results are forecasted over the lifetime of products sold from 2021-2050.


   Table V.39--Cumulative Net Present Value of Consumer Benefits for Combination Cooler Refrigeration Products
----------------------------------------------------------------------------------------------------------------
                                                                      Trial standard level *
                  Discount rate                  ---------------------------------------------------------------
                                                         1               2               3               4
----------------------------------------------------------------------------------------------------------------
                                                                           Billion 2015$
                                                 ---------------------------------------------------------------
3 percent.......................................         0.00447          0.0347        (0.0575)         (0.142)
7 percent.......................................         0.00172          0.0110        (0.0422)        (0.0904)
----------------------------------------------------------------------------------------------------------------
* For TSL 1, the results are forecasted over the lifetime of products sold from 2019-2048. For the other TSLs,
  the results are forecasted over the lifetime of products sold from 2021-2050.

    The NPV results based on the aforementioned 9-year analytical 
period are presented in Table V.40 and Table V.41. 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.40--Cumulative Net Present Value of Consumer Benefits for Coolers; Nine Years of Shipments
----------------------------------------------------------------------------------------------------------------
                                                                      Trial standard level *
                  Discount rate                  ---------------------------------------------------------------
                                                         1               2               3               4
----------------------------------------------------------------------------------------------------------------
                                                                           Billion 2015$
                                                 ---------------------------------------------------------------
3 percent.......................................            2.73            3.60            3.97            2.02
7 percent.......................................            1.48            2.06            2.07            0.68
----------------------------------------------------------------------------------------------------------------
* For TSL 2, the results are forecasted over the lifetime of products sold from 2019-2027. For the other TSLs,
  the results are forecasted over the lifetime of products sold from 2021-2029.


  Table V.41--Cumulative Net Present Value of Consumer Benefits for Combination Cooler Refrigeration Products;
                                             Nine Years of Shipments
----------------------------------------------------------------------------------------------------------------
                                                                      Trial standard level *
                  Discount rate                  ---------------------------------------------------------------
                                                         1               2               3               4
----------------------------------------------------------------------------------------------------------------
                                                                           Billion 2015$
                                                 ---------------------------------------------------------------
3 percent.......................................         0.00142          0.0110         -0.0218         -0.0516
7 percent.......................................        0.000719         0.00456         -0.0199         -0.0420
----------------------------------------------------------------------------------------------------------------
* For TSL 1, the results are forecasted over the lifetime of products sold from 2019-2027. For the other TSLs,
  the results are forecasted over the lifetime of products sold from 2021-2029.

    The above results reflect the use of a constant default trend to 
estimate the change in price for MREFs over the analysis period (see 
section IV.H.3 of this document). DOE also conducted a sensitivity 
analysis that considered one scenario with low price decline and one 
scenario with high price decline. The results of these alternative 
cases are

[[Page 75246]]

presented in appendix 10C of the direct final rule TSD.
c. Indirect Impacts on Employment
    DOE expects energy conservation standards for MREFs to reduce 
energy bills for consumers of those products, with the resulting net 
savings being redirected to other forms of economic activity. These 
expected shifts in spending and economic activity could affect the 
demand for labor. 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 within five years of 
the compliance date, where these uncertainties are reduced.
    The results suggest that the adopted standards are likely to have a 
negligible impact on the net demand for labor in 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 direct final rule TSD presents detailed 
results regarding anticipated indirect employment impacts.
4. Impact on Utility or Performance of Products
    As discussed in section IV.A.2.a of this document and chapter 3 of 
the direct final rule TSD, DOE has concluded that the standards adopted 
in this direct final rule would not reduce the utility or performance 
of the MREFs under consideration in this rulemaking. Manufacturers of 
these products currently offer units that meet or exceed the adopted 
standards.
5. Impact of Any Lessening of Competition
    As discussed in section III.H.1.e of this document, the Attorney 
General of the United States (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 the 
impact. DOE published a proposed rule containing energy conservation 
standards identical to those set forth in this direct final rule and 
transmitted a copy of this direct final rule and the accompanying TSD 
to the Attorney General, requesting that DOJ provide its determination 
on this issue. DOE will consider DOJ's comments on the rule in 
determining whether to proceed with the direct final rule. DOE will 
also publish and respond to DOJ's comments in the Federal Register in a 
separate document.
6. Need of the Nation To Conserve Energy
    Enhanced energy efficiency, where economically justified, improves 
the Nation's energy security, strengthens the economy, and reduces the 
environmental impacts (costs) of energy production. Reduced electricity 
demand due to energy conservation standards is also likely to reduce 
the cost of maintaining the reliability of the electricity system, 
particularly during peak-load periods. As a measure of this reduced 
demand, chapter 15 in the direct final rule TSD presents the estimated 
reduction in generating capacity, relative to the no-new-standards 
case, for the TSLs that DOE considered in this rulemaking.
    Energy conservation resulting from new standards for MREFs is 
expected to yield environmental benefits in the form of reduced 
emissions of air pollutants and greenhouse gases. Table V.42 and Table 
V.43 provide DOE's estimate of cumulative emissions reductions expected 
to result from the TSLs considered in this rulemaking. The tables 
include both power sector emissions and upstream emissions. The 
emissions were calculated using the multipliers discussed in section 
IV.K of this document. DOE reports annual emissions reductions for each 
TSL in chapter 13 of the direct final rule TSD. The energy conservation 
standards being adopted by this direct final rule are economically 
justified under EPCA with regard to the added benefits achieved through 
reduced emissions of air pollutants and greenhouse gases.

                             Table V.42--Cumulative Emissions Reduction for Coolers
----------------------------------------------------------------------------------------------------------------
                                                                      Trial standard level *
                                                 ---------------------------------------------------------------
                                                         1               2               3               4
----------------------------------------------------------------------------------------------------------------
                                             Power Sector Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......................            64.3            87.0           104.7           114.9
SO2 (thousand tons).............................            38.7            53.1            63.0            69.1
NOX (thousand tons).............................            70.7            95.1           115.1           126.3
Hg (tons).......................................             0.1             0.2             0.2             0.3
CH4 (thousand tons).............................             5.6             7.6             9.0             9.9
N2O (thousand tons).............................             0.8             1.1             1.3             1.4
----------------------------------------------------------------------------------------------------------------
                                               Upstream Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......................             3.6             4.8             5.9             6.4
SO2 (thousand tons).............................             0.7             0.9             1.1             1.2
NOX (thousand tons).............................            51.7            68.7            84.2            92.5
Hg (tons).......................................             0.0             0.0             0.0             0.0
CH4 (thousand tons).............................           285.6           379.5           465.3           510.9
N2O (thousand tons).............................             0.0             0.0             0.1             0.1
----------------------------------------------------------------------------------------------------------------
                                               Total FFC Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......................            67.9            91.8           110.6           121.3
SO2 (thousand tons).............................            39.4            54.0            64.1            70.3
NOX (thousand tons).............................           122.4           163.9           199.4           218.8
Hg (tons).......................................             0.1             0.2             0.2             0.3
CH4 (thousand tons).............................           291.1           387.1           474.3           520.9
CH4 (thousand tons CO2eq) **....................          8151.8         10839.3         13281.4         14583.8

[[Page 75247]]

 
N2O (thousand tons).............................             0.8             1.1             1.3             1.5
N2O (thousand tons CO2eq) **....................           217.0           296.9           353.4           387.2
----------------------------------------------------------------------------------------------------------------
* For TSL 2, the results are forecasted over the lifetime of products sold from 2019-2048. For the other TSLs,
  the results are forecasted over the lifetime of products sold from 2021-2050.
** CO2eq is the quantity of CO2 that would have the same global warming potential (GWP).


            Table V.43--Cumulative Emissions Reduction for Combination Cooler Refrigeration Products
----------------------------------------------------------------------------------------------------------------
                                                                      Trial standard level *
                                                 ---------------------------------------------------------------
                                                         1               2               3               4
----------------------------------------------------------------------------------------------------------------
                                             Power Sector Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......................          0.0483          0.4173          0.6941          0.9075
SO2 (thousand tons).............................          0.0295          0.2501          0.4163          0.5440
NOX (thousand tons).............................          0.0528          0.4595          0.7640          0.9991
Hg (tons).......................................          0.0001          0.0009          0.0015          0.0020
CH4 (thousand tons).............................          0.0042          0.0359          0.0597          0.0781
N2O (thousand tons).............................          0.0006          0.0051          0.0085          0.0110
----------------------------------------------------------------------------------------------------------------
                                               Upstream Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......................          0.0027          0.0235          0.0391          0.0512
SO2 (thousand tons).............................          0.0005          0.0043          0.0072          0.0095
NOX (thousand tons).............................          0.0382          0.3377          0.5610          0.7341
Hg (tons).......................................        0.000001        0.000009        0.000016        0.000021
CH4 (thousand tons).............................          0.2107          1.8657          3.0996          4.0559
N2O (thousand tons).............................         0.00002          0.0002          0.0004          0.0005
----------------------------------------------------------------------------------------------------------------
                                               Total FFC Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......................           0.051           0.441           0.733           0.959
SO2 (thousand tons).............................           0.030           0.254           0.423           0.553
NOX (thousand tons).............................           0.091           0.797           1.325           1.733
Hg (tons).......................................          0.0001           0.001           0.002           0.002
CH4 (thousand tons).............................           0.215           1.902           3.159           4.134
CH4 (thousand tons CO2eq) **....................            6.02           53.24           88.46          115.75
N2O (thousand tons).............................           0.001           0.005           0.009           0.012
N2O (thousand tons CO2eq) **....................           0.165           1.403           2.335           3.052
----------------------------------------------------------------------------------------------------------------
* For TSL 1, the results are forecasted over the lifetime of products sold from 2019-2048. For the other TSLs,
  the results are forecasted over the lifetime of products sold from 2021-2050.
** CO2eq is the quantity of CO2 that would have the same global warming potential (GWP).

    As part of the analysis for this rule, DOE estimated monetary 
benefits likely to result from the reduced emissions of CO2 
and NOX that DOE estimated for each of the considered TSLs 
for MREFs. 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.44 and Table V.45 present the global value of 
CO2 emissions reductions at each TSL. For each of the four 
cases, DOE calculated a present value of the stream of annual values 
using the same discount rate as was used in the studies upon which the 
dollar-per-ton values are based. DOE calculated domestic values as a 
range from 7 percent to 23 percent of the global values; these results 
are presented in chapter 14 of the direct final rule TSD.

[[Page 75248]]



              Table V.44--Estimates of Global Present Value of CO2 Emissions Reduction for Coolers
----------------------------------------------------------------------------------------------------------------
                                                                        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.......................................               453              2073              3292              6321
2.......................................               644              2886              4561              8787
3.......................................               737              3373              5358             10285
4.......................................               805              3691              5865             11255
----------------------------------------------------------------------------------------------------------------
                                               Upstream Emissions
----------------------------------------------------------------------------------------------------------------
1.......................................                25               115               183               351
2.......................................                35               157               249               480
3.......................................                41               187               298               572
4.......................................                44               205               327               627
----------------------------------------------------------------------------------------------------------------
                                               Total FFC Emissions
----------------------------------------------------------------------------------------------------------------
1.......................................               478              2189              3476              6673
2.......................................               679              3044              4810              9266
3.......................................               777              3561              5656             10856
4.......................................               849              3897              6192             11882
----------------------------------------------------------------------------------------------------------------
* 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).
** For TSL 2, the results are forecasted over the lifetime of products sold from 2019-2048. For the other TSLs,
  the results are forecasted over the lifetime of products sold from 2021-2050.


  Table V.45--Estimates of Global Present Value of CO2 Emissions Reduction for Combination Cooler Refrigeration
                                                    Products
----------------------------------------------------------------------------------------------------------------
                                                                        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.......................................              0.36              1.60              2.54              4.89
2.......................................              2.84             13.15             20.95             40.08
3.......................................              4.75             21.96             34.97             66.95
4.......................................              6.18             28.64             45.63             87.31
----------------------------------------------------------------------------------------------------------------
                                               Upstream Emissions
----------------------------------------------------------------------------------------------------------------
1.......................................              0.02              0.09              0.14              0.27
2.......................................              0.16              0.74              1.17              2.24
3.......................................              0.26              1.23              1.96              3.74
4.......................................              0.34              1.60              2.55              4.88
----------------------------------------------------------------------------------------------------------------
                                               Total FFC Emissions
----------------------------------------------------------------------------------------------------------------
1.......................................              0.38              1.69              2.67              5.15
2.......................................              2.99             13.88             22.13             42.32
3.......................................              5.01             23.19             36.93             70.69
4.......................................              6.53             30.24             48.18             92.19
----------------------------------------------------------------------------------------------------------------
* 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).
** For TSL 1, the results are forecasted over the lifetime of products sold from 2019-2048. For the other TSLs,
  the results are forecasted over the lifetime of products sold from 2021-2050.

    DOE is well aware that scientific and economic knowledge about the 
contribution of CO2 and other GHG emissions to changes in 
the future global climate and the potential resulting damages to the 
world economy continues to evolve rapidly. Thus, any value placed on 
reduced CO2 emissions in this rulemaking is subject to 
change. DOE, together with other Federal agencies, will continue to 
review various methodologies for estimating the monetary value of 
reductions in CO2 and other GHG emissions. This ongoing 
review will consider the comments on

[[Page 75249]]

this subject that are part of the public record for this and other 
rulemakings, as well as other methodological assumptions and issues. 
However, consistent with DOE's legal obligations, and taking into 
account the uncertainty involved with this particular issue, DOE has 
included in this rule the most recent values and analyses resulting 
from the interagency review process.
    DOE also estimated the cumulative monetary value of the economic 
benefits associated with NOX emissions reductions 
anticipated to result from the considered TSLs for MREFs. The dollar-
per-ton value that DOE used is discussed in section IV.L of this 
document. Table V.46 and Table V.47 present the cumulative present 
values for NOX emissions for each TSL, for coolers and 
combination cooler refrigeration products respectively, calculated 
using 7-percent and 3-percent discount rates.

  Table V.46--Estimates of Present Value of NOX Emissions Reduction for
                                 Coolers
------------------------------------------------------------------------
                                                   Million 2015$
                                         -------------------------------
                  TSL *                     3% discount     7% discount
                                               rate            rate
------------------------------------------------------------------------
                         Power Sector Emissions
------------------------------------------------------------------------
1.......................................          133.86           54.53
2.......................................          191.46           84.35
3.......................................          217.63           88.51
4.......................................          237.63           96.02
------------------------------------------------------------------------
                           Upstream Emissions
------------------------------------------------------------------------
1.......................................           95.75           38.02
2.......................................          134.60           57.52
3.......................................          155.70           61.73
4.......................................          170.25           67.08
------------------------------------------------------------------------
                           Total FFC Emissions
------------------------------------------------------------------------
1.......................................          229.60           92.55
2.......................................          326.06          141.86
3.......................................          373.33          150.23
4.......................................          407.87          163.10
------------------------------------------------------------------------
* For TSL 2, the results are forecasted over the lifetime of products
  sold from 2019-2048. For the other TSLs, the results are forecasted
  over the lifetime of products sold from 2021-2050.


  Table V.47--Estimates of Present Value of NOX Emissions Reduction for
                Combination Cooler Refrigeration Products
------------------------------------------------------------------------
                                                   Million 2015$
                                         -------------------------------
                  TSL *                     3% discount     7% discount
                                               rate            rate
------------------------------------------------------------------------
                         Power Sector Emissions
------------------------------------------------------------------------
1.......................................            0.11            0.05
2.......................................            0.84            0.33
3.......................................            1.40            0.55
4.......................................            1.82            0.72
------------------------------------------------------------------------
                           Upstream Emissions
------------------------------------------------------------------------
1.......................................            0.07            0.03
2.......................................            0.60            0.23
3.......................................            1.01            0.39
4.......................................            1.31            0.50
------------------------------------------------------------------------
                           Total FFC Emissions
------------------------------------------------------------------------
1.......................................            0.18            0.08
2.......................................            1.44            0.56
3.......................................            2.40            0.94
4.......................................            3.13            1.22
------------------------------------------------------------------------
* For TSL 1, the results are forecasted over the lifetime of products
  sold from 2019-2048. For the other TSLs, the results are forecasted
  over the lifetime of products sold from 2021-2050.


[[Page 75250]]

7. Other Factors
    The Secretary of Energy, in determining whether a standard is 
economically justified, may consider any other factors that the 
Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)) In 
developing the direct final rule, DOE has considered the submission of 
the jointly-submitted Term Sheet #2 from the MREF Working Group and 
approved by ASRAC. In DOE's view, Term Sheet #2 sets forth a statement 
by interested persons that are fairly representative of relevant points 
of view (including representatives of manufacturers of covered 
equipment, States, and efficiency advocates) and contains 
recommendations with respect to energy conservation standards that are 
in accordance with 42 U.S.C. 6295(o), as required by EPCA's direct 
final rule provision. See 42 U.S.C. 6295(p)(4). DOE has encouraged the 
submission of agreements such as the one developed and submitted by the 
MREF Working Group as a way to bring diverse stakeholders together, to 
develop an independent and probative analysis useful in DOE standard 
setting, and to expedite the rulemaking process. DOE also believes that 
standard levels recommended in Term Sheet #2 may increase the 
likelihood for regulatory compliance, while decreasing the risk of 
litigation.
8. Summary of National Economic Impacts
    The NPV of the monetized benefits associated with emissions 
reductions can be viewed as a complement to the NPV of the consumer 
savings calculated for each TSL considered in this rulemaking. Table 
V.48 and Table V.49 present the NPV value that results 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 for coolers and combination cooler 
refrigeration products, at both a 7-percent and 3-percent discount 
rate. The CO2 values used in the columns of each table 
correspond to the four sets of SCC values discussed above.

Table V.48--Net Present Value of Consumer Savings Combined with Present Value of Monetized Benefits from CO2 and
                                      NOX Emissions Reductions for Coolers
----------------------------------------------------------------------------------------------------------------
                                                                           Billion 2015$
                                                 ---------------------------------------------------------------
                                                           Consumer NPV at 3% discount rate added with:
                                                 ---------------------------------------------------------------
                      TSL *                       SCC Case $12.4/ SCC Case $40.6/ SCC Case $63.2/ SCC Case $118/
                                                  metric ton and  metric ton and  metric ton and  metric ton and
                                                   3% NOX Value    3% NOX Value    3% NOX Value    3% NOX Value
 
----------------------------------------------------------------------------------------------------------------
1...............................................             9.0            10.8            12.0            15.2
2...............................................            12.0            14.4            16.2            20.6
3...............................................            13.3            16.1            18.2            23.4
4...............................................             8.1            11.1            13.4            19.1
----------------------------------------------------------------------------------------------------------------
                                                                           Billion 2015$
                                                 ---------------------------------------------------------------
TSL *                                                      Consumer NPV at 7% discount rate added with:
                                                 ---------------------------------------------------------------
                                                  SCC Case $12.4/ SCC Case $40.6/ SCC Case $63.2/ SCC Case $118/
                                                  metric ton and  metric ton and  metric ton and  metric ton and
                                                    7% NOX Value    7% NOX Value    7% NOX Value    7% NOX Value
----------------------------------------------------------------------------------------------------------------
1...............................................             4.0             5.7             7.0            10.2
2...............................................             5.6             8.0             9.7            14.2
3...............................................             5.7             8.5            10.6            15.8
4...............................................             2.8             5.9             8.2            13.9
----------------------------------------------------------------------------------------------------------------
* For TSL 2, the results are forecasted over the lifetime of products sold from 2019-2048. For the other TSLs,
  the results are forecasted over the lifetime of products sold from 2021-2050.


Table V.49--Net Present Value of Consumer Savings Combined with Present Value of Monetized Benefits from CO2 and
                     NOX Emissions Reductions for Combination Cooler Refrigeration Products
----------------------------------------------------------------------------------------------------------------
                                                                           Billion 2015$
                                                 ---------------------------------------------------------------
                                                           Consumer NPV at 3% discount rate added with:
                                                 ---------------------------------------------------------------
                      TSL *                       SCC Case $12.4/ SCC Case $40.6/ SCC Case $63.2/ SCC Case $118/
                                                  metric ton and  metric ton and  metric ton and  metric ton and
                                                   3% NOX Value    3% NOX Value    3% NOX Value    3% NOX Value
 
----------------------------------------------------------------------------------------------------------------
1...............................................           0.005           0.006           0.007           0.010
2...............................................           0.039           0.050           0.058           0.078
3...............................................         (0.050)         (0.032)         (0.018)           0.016
4...............................................         (0.132)         (0.108)         (0.090)         (0.046)
----------------------------------------------------------------------------------------------------------------


[[Page 75251]]


Table V.49--Net Present Value of Consumer Savings Combined with Present Value of Monetized Benefits from CO2 and
                NOX Emissions Reductions for Combination Cooler Refrigeration Products--Continued
----------------------------------------------------------------------------------------------------------------
                                                                           Billion 2015$
                                                 ---------------------------------------------------------------
                                                           Consumer NPV at 7% discount rate added with:
                                                 ---------------------------------------------------------------
                      TSL *                       SCC Case $12.4/ SCC Case $40.6/ SCC Case $63.2/ SCC Case $118/
                                                  metric ton and  metric ton and  metric ton and  metric ton and
                                                   7% NOX Value    7% NOX Value    7% NOX Value    7% NOX Value
 
----------------------------------------------------------------------------------------------------------------
1...............................................           0.002           0.003           0.004           0.007
2...............................................           0.015           0.025           0.034           0.054
3...............................................         (0.036)         (0.018)         (0.004)           0.029
4...............................................         (0.083)         (0.059)         (0.041)           0.003
----------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values.
* For TSL 1, the results are forecasted over the lifetime of products sold from 2019-2048. For the other TSLs,
  the results are forecasted over the lifetime of products sold from 2021-2050.

    In considering the above results, two issues are relevant. First, 
the national operating cost savings are domestic U.S. monetary savings 
that occur as a result of market transactions, while the value of 
CO2 reductions is based on a global value. Second, the 
assessments of operating cost savings and the SCC are performed with 
different methods that use different time frames for analysis. The 
national operating cost savings is measured for the lifetime of 
products shipped in the applicable analysis period. Because 
CO2 emissions have a very long residence time in the 
atmosphere,\78\ the SCC values in future years reflect future climate-
related impacts that continue beyond 2100.
---------------------------------------------------------------------------

    \78\ 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).
---------------------------------------------------------------------------

9. Conclusion
    When considering standards, the new or amended energy conservation 
standards that DOE adopts for any type (or class) of covered product 
must be designed to achieve the maximum improvement in energy 
efficiency that the Secretary determines is technologically feasible 
and economically justified. (42 U.S.C. 6295(o)(2)(A)) In determining 
whether a standard is economically justified, the Secretary must 
determine whether the benefits of the standard exceed its burdens by, 
to the greatest extent practicable, considering the seven statutory 
factors discussed previously. (42 U.S.C. 6295(o)(2)(B)(i)). The new or 
amended standard must also result in significant conservation of 
energy. (42 U.S.C. 6295(o)(3)(B))
    For this direct final rule, DOE considered the impacts of new 
standards for MREFs 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, 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.
    DOE also notes that the economics literature provides a wide-
ranging discussion of how consumers trade off upfront costs and energy 
savings in the absence of government intervention. Much of this 
literature attempts to explain why consumers appear to undervalue 
energy efficiency improvements. There is evidence that consumers 
undervalue future energy savings as a result of: (1) A lack of 
information; (2) a lack of sufficient salience of the long-term or 
aggregate benefits; (3) a lack of sufficient savings to warrant 
delaying or altering purchases; (4) excessive focus on the short term, 
in the form of inconsistent weighting of future energy cost savings 
relative to available returns on other investments; (5) computational 
or other difficulties associated with the evaluation of relevant 
tradeoffs; and (6) a divergence in incentives (for example, between 
renters and owners, or builders and purchasers). Having less than 
perfect foresight and a high degree of uncertainty about the future, 
consumers may trade off these types of investments at a higher than 
expected rate between current consumption and uncertain future energy 
cost savings.
    In DOE's current regulatory analysis, potential changes in the 
benefits and costs of a regulation due to changes in consumer purchase 
decisions are included in two ways. First, if consumers forego the 
purchase of a product in the standards case, this decreases sales for 
product manufacturers, and the impact on manufacturers attributed to 
lost revenue is included in the MIA. Second, DOE accounts for energy 
savings attributable only to products actually used by consumers in the 
standards case; if a regulatory option decreases the number of products 
purchased by consumers, this decreases the potential energy savings 
from an energy conservation standard. DOE provides estimates of 
shipments and changes in the volume of product purchases in chapter 9 
of the direct final rule TSD. However, DOE's current analysis does not 
explicitly control for heterogeneity in consumer preferences, 
preferences across subcategories of products or specific features, or 
consumer price sensitivity variation according to household income.\79\
---------------------------------------------------------------------------

    \79\ P.C. Reiss and M.W. White, Household Electricity Demand, 
Revisited, Review of Economic Studies (2005) 72, 853-883.
---------------------------------------------------------------------------

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

[[Page 75252]]

which these impacts are defined and estimated in the regulatory 
process.\80\ DOE welcomes comments on how to more fully assess the 
potential impact of energy conservation standards on consumer choice 
and how to quantify this impact in its regulatory analysis in future 
rulemakings.
---------------------------------------------------------------------------

    \80\ Alan Sanstad, Notes on the Economics of Household Energy 
Consumption and Technology Choice. Lawrence Berkeley National 
Laboratory (2010) (Available online at: http://www1.eere.energy.gov/buildings/appliance_standards/pdfs/consumer_ee_theory.pdf).
---------------------------------------------------------------------------

a. Benefits and Burdens of TSLs Considered for Coolers
    Table V.50 and Table V.51 summarize the quantitative impacts 
estimated for each TSL for coolers. The national impacts are measured 
over the lifetime of coolers purchased in the 30-year period that 
begins in the anticipated year of compliance with new standards (2019-
2048 for TSL 2, and 2021-2050 for the other TSLs). The energy savings, 
emissions reductions, and value of emissions reductions refer to full-
fuel-cycle results. The efficiency levels contained in each TSL are 
described in section V.A of this document.

                                         Table V.50--Summary of Analytical Results for Coolers: National Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
              Category                          TSL 1 *                      TSL 2 *                      TSL 3 *                      TSL 4 *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                     Cumulative FFC National Energy Savings (quads)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Quads..............................  1.13........................  1.51.......................  1.84.......................  2.02.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                   NPV of Consumer Costs and Benefits (2015$ billion)
--------------------------------------------------------------------------------------------------------------------------------------------------------
3% discount rate...................  8.34........................  11.02......................  12.19......................  6.83.
7% discount rate...................  3.41........................  4.78.......................  4.81.......................  1.81.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                Cumulative FFC Emissions Reduction (Total FFC Emissions)
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)..........  67.91.......................  91.76......................  110.61.....................  121.30.
SO2 (thousand tons)................  39.38.......................  54.04......................  64.13......................  70.26.
NOX (thousand tons)................  122.38......................  163.86.....................  199.36.....................  218.79.
Hg (tons)..........................  0.15........................  0.20.......................  0.24.......................  0.26.
CH4 (thousand tons)................  291.14......................  387.12.....................  474.33.....................  520.85.
CH4 (thousand tons CO2eq) **.......  8151.79.....................  10839.31...................  13281.37...................  14583.83.
N2O (thousand tons)................  0.82........................  1.12.......................  1.33.......................  1.46.
N2O (thousand tons CO2eq) **.......  217.02......................  296.92.....................  353.41.....................  387.24.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                   Value of Emissions Reduction (Total FFC Emissions)
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (2015$ billion) [dagger].......  0.478 to 6.673..............  0.679 to 9.266.............  0.777 to 10.856............  0.849 to 11.882.
NOX--3% discount rate (2015$         229.6 to 523.5..............  326.1 to 743.4.............  373.3 to 851.2.............  407.9 to 929.9.
 million).
NOX--7% discount rate (2015$         92.5 to 208.7...............  141.9 to 319.9.............  150.2 to 338.7.............  163.1 to 367.8.
 million).
--------------------------------------------------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values.
* For TSL 2, the results are forecasted over the lifetime of products sold from 2019-2048. For the other TSLs, the results are forecasted over the
  lifetime of products sold from 2021-2050.
** CO2eq is the quantity of CO2 that would have the same global warming potential (GWP).
[dagger] Range of the economic value of CO2 reductions is based on estimates of the global benefit of reduced CO2 emissions.


                                Table V.51--Summary of Analytical Results for Coolers: Manufacturer and Consumer Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
              Category                          TSL 1 *                      TSL 2 *                      TSL 3 *                      TSL 4 *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  Manufacturer Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
Industry NPV (2015$ million) (No-    244.3 to 264.0..............  208.5 to 253.3.............  168.4 to 226.5.............  110.5 to 283.8.
 new-standards case INPV = 263.3).
Industry NPV (% change)............  -7.2 to 0.3.................  -20.8 to -3.8..............  -36.0 to -14.0.............  -58.0 to 7.8.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          Consumer Average LCC Savings (2015$)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Freestanding Compact Coolers.......  279.........................  265........................  288........................  123.
Built-in Compact Coolers...........  n.a. **.....................  28.........................  60.........................  (230).
Freestanding Coolers...............  648.........................  153........................  240........................  (121).
Built-in Coolers...................  n.a.........................  77.........................  187........................  (254).
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Consumer Simple PBP (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Freestanding Compact Coolers.......  1.1.........................  1.4........................  1.6........................  3.5.
Built-in Compact Coolers...........  n.a.........................  4.6........................  4.4........................  14.8.
Freestanding Coolers...............  1.0.........................  1.8........................  1.8........................  4.8.
Built-in Coolers...................  n.a.........................  6.1........................  4.7........................  17.7.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                         % of Consumers that Experience Net Cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
Freestanding Compact Coolers.......  6...........................  9..........................  12.........................  51.
Built-in Compact Coolers...........  0...........................  29.........................  27.........................  93.

[[Page 75253]]

 
Freestanding Coolers...............  0...........................  22.........................  9..........................  78.
Built-in Coolers...................  0...........................  22.........................  7..........................  86.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values.
* For TSL 2, the results are forecasted over the lifetime of products sold from 2019-2048. For the other TSLs, the results are forecasted over the
  lifetime of products sold from 2021-2050.
** Calculation of savings and PBP is not applicable (n.a.) for an efficiency level that is already met or exceeded in the MREF market.

    DOE first considered TSL 4, which represents the max-tech 
efficiency levels. TSL 4 would save 2.02 quads of energy, an amount DOE 
considers significant. Under TSL 4, the NPV of consumer benefit would 
be $1.81 billion using a discount rate of 7 percent, and $6.83 billion 
using a discount rate of 3 percent.
    The cumulative emissions reductions at TSL 4 are 121.3 Mt of 
CO2, 70.3 thousand tons of SO2, 218.8 thousand 
tons of NOX, 0.26 ton of Hg, 520.9 thousand tons of 
CH4, and 1.5 thousand tons of N2O. The estimated 
monetary value of the CO2 emissions reduction at TSL 4 
ranges from $849 million to $11,882 million.
    At TSL 4, the average LCC savings range from -$254 to $123. The 
simple payback period ranges from 3.5 years to 17.7 years. The fraction 
of consumers experiencing a net LCC cost ranges from 51 percent to 93 
percent.
    At TSL 4, the projected change in INPV ranges from a decrease of 
$152.8 million to an increase of $20.5 million, which correspond to a 
decrease of 58.0 percent to an increase of 7.8 percent, respectively. 
Manufacturer feedback during confidential interviews indicated that all 
cooler segments are highly price sensitive, and therefore the lower 
bound of INPV impacts is more likely to occur. Additionally, at TSL 4, 
disproportionate impacts on the LVMs may be severe. This could have a 
direct impact on domestic manufacturing capacity and production 
employment in the cooler industry.
    The Secretary concludes that at TSL 4 for coolers, the benefits of 
energy savings, positive NPV of consumer benefits, emission reductions, 
and the estimated monetary value of the emissions reductions would be 
outweighed by the economic burden on some consumers, and the impacts on 
manufacturers, including the conversion costs and profit margin impacts 
that could result in a large reduction in INPV. Consequently, the 
Secretary has concluded that TSL 4 is not economically justified.
    DOE then considered TSL 3, which would save an estimated 1.84 quads 
of energy, an amount DOE considers significant. Under TSL 3, the NPV of 
consumer benefit would be $4.81 billion using a discount rate of 7 
percent, and $12.19 billion using a discount rate of 3 percent.
    The cumulative emissions reductions at TSL 3 are 110.6 Mt of 
CO2, 64.1 thousand tons of SO2, 199.4 thousand 
tons of NOX, 0.24 tons of Hg, 474.3 thousand tons of 
CH4, and 1.33 thousand tons of N2O. The estimated 
monetary value of the CO2 emissions reduction at TSL 3 
ranges from $777 million to $10,856 million.
    At TSL 3, the average LCC savings range from $60 to $288. The 
simple payback period ranges from 1.6 years to 4.7 years. The fraction 
of consumers experiencing a net LCC cost ranges from 7 percent to 27 
percent.
    At TSL 3, the projected change in INPV ranges from a decrease of 
$94.8 million to a decrease of $36.8 million, which correspond to 
decreases of 36.0 percent and 14.0 percent, respectively. Manufacturer 
feedback from confidential interviews indicated that all cooler 
segments are highly price sensitive, and therefore the lower bound of 
INPV impacts is more likely to occur. Again, at TSL 3, disproportionate 
impacts on the LVMs may be severe. This could have a direct impact on 
domestic manufacturing capacity and production employment in the cooler 
industry.
    The Secretary concludes that at TSL 3 for coolers, the benefits of 
energy savings, positive NPV of consumer benefits, emission reductions, 
and the estimated monetary value of the emissions reductions would be 
outweighed by the impacts on manufacturers, including the conversion 
costs and profit margin impacts that could result in a large reduction 
in INPV. Consequently, the Secretary has concluded that TSL 3 is not 
economically justified.
    DOE then considered TSL 2, which reflects the standard levels 
recommended by the MREF Working Group. TSL 2 would save an estimated 
1.51 quads of energy, an amount DOE considers significant. Under TSL 2, 
the NPV of consumer benefit would be $4.78 billion using a discount 
rate of 7 percent, and $11.02 billion using a discount rate of 3 
percent.
    The cumulative emissions reductions at TSL 2 are 91.8 Mt of 
CO2, 54.0 thousand tons of SO2, 163.9 thousand 
tons of NOX, 0.20 tons of Hg, 387.1 thousand tons of 
CH4, and 1.12 thousand tons of N2O. The estimated 
monetary value of the CO2 emissions reduction at TSL 2 
ranges from $679 million to $9,266 million.
    At TSL 2, the average LCC savings range from $28 to $265. The 
simple payback period ranges from 1.4 years to 6.1 years. The fraction 
of consumers experiencing a net LCC cost ranges from 9 percent to 29 
percent.
    At TSL 2, the projected change in INPV ranges from a decrease of 
$54.8 million to a decrease of $10.0 million, which represent decreases 
of 20.8 percent and 3.8 percent, respectively. Feedback from the LVMs 
indicated that TSL 2 would not impede their ability to maintain their 
current MREF product offerings.
    After considering the analysis and weighing the benefits and 
burdens, DOE has determined that the recommended standards for coolers 
are in accordance with 42 U.S.C. 6295(o). Specifically, the Secretary 
has determined 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, including 
the conversion costs that could result in a reduction in INPV for 
manufacturers. Accordingly, the Secretary has concluded that TSL 2 
would offer the maximum improvement in efficiency that is 
technologically feasible and economically justified, and would result 
in the significant conservation of energy.
    Under the authority provided by 42 U.S.C. 6295(p)(4), DOE is 
issuing this direct final rule that establishes new energy conservation 
standards for coolers at TSL 2. The new energy conservation standards 
for coolers, which are expressed as maximum annual energy use, in kWh/
yr, as a

[[Page 75254]]

function of AV, in ft\3\, are shown in Table V.52.

        Table V.52--New Energy Conservation Standards for Coolers
------------------------------------------------------------------------
             Product class              Maximum  allowable AEU  (kWh/yr)
------------------------------------------------------------------------
Built-in Compact......................  7.88AV [dagger] + 155.8
Built-in..............................
Freestanding Compact..................
Freestanding..........................
------------------------------------------------------------------------
[dagger] AV = Adjusted volume, in ft\3\, as calculated according to
  title 10 CFR part 430, subpart B, appendix A.

b. Benefits and Burdens of TSLs Considered for Combination Cooler 
Refrigeration Products
    Table V.53 and Table V.54 summarize the quantitative impacts 
estimated for each TSL for combination cooler refrigeration products. 
The national impacts are measured over the lifetime of products 
purchased in the 30-year period that begins in the anticipated year of 
compliance with new standards (2019-2048 for TSL 1, and 2021-2050 for 
the other TSLs). The energy savings, emissions reductions, and value of 
emissions reductions refer to FFC results. The efficiency levels 
contained in each TSL are described in section V.A of this document.

                      Table V.53--Summary of Analytical Results for Combination Cooler Refrigeration Product TSLs: National Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
              Category                          TSL 1 *                      TSL 2 *                      TSL 3 *                      TSL 4 *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                     Cumulative FFC National Energy Savings (quads)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Quads..............................  0.00084.....................  0.007......................  0.012......................  0.016.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                   NPV of Consumer Costs and Benefits (2015$ billion)
--------------------------------------------------------------------------------------------------------------------------------------------------------
3% discount rate...................  0.0045......................  0.035......................  (0.06).....................  (0.14).
7% discount rate...................  0.0017......................  0.011......................  (0.04).....................  (0.09).
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                Cumulative FFC Emissions Reduction (Total FFC Emissions)
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)..........  0.05........................  0.44.......................  0.73.......................  0.96.
SO2 (thousand tons)................  0.03........................  0.25.......................  0.42.......................  0.55.
NOX (thousand tons)................  0.09........................  0.80.......................  1.32.......................  1.73.
Hg (tons)..........................  0.00........................  0.00.......................  0.00.......................  0.00.
CH4 (thousand tons)................  0.21........................  1.90.......................  3.16.......................  4.13.
CH4 (thousand tons CO2eq) **.......  6.02........................  53.24......................  88.46......................  115.75.
N2O (thousand tons)................  0.00........................  0.01.......................  0.01.......................  0.01.
N2O (thousand tons CO2eq) **.......  0.16........................  1.40.......................  2.34.......................  3.05.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                   Value of Emissions Reduction (Total FFC Emissions)
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (2015$ billion) [dagger].......  0.000 to 0.005..............  0.003 to 0.042.............  0.005 to 0.071.............  0.007 to 0.092.
NOX--3% discount rate (2015$         0.2 to 0.4..................  1.4 to 3.3.................  2.4 to 5.5.................  3.1 to 7.1.
 million).
NOX--7% discount rate (2015$         0.1 to 0.2..................  0.6 to 1.3.................  0.9 to 2.1.................  1.2 to 2.7.
 million).
--------------------------------------------------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values.
* For TSL 1, the results are forecasted over the lifetime of products sold from 2019-2048. For the other TSLs, the results are forecasted over the
  lifetime of products sold from 2021-2050.
** CO2eq is the quantity of CO2 that would have the same global warming potential (GWP).
[dagger] Range of the economic value of CO2 reductions is based on estimates of the global benefit of reduced CO2 emissions.


             Table V.54--Summary of Analytical Results for Combination Cooler Refrigeration Product TSLs: Manufacturer and Consumer Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
              Category                          TSL 1 *                      TSL 2 *                      TSL 3 *                      TSL 4 *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  Manufacturer Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
Industry NPV (2015$ million) (No-    107.4 to 107.6..............  103.7 to 107.5.............  101.6 to 117.7.............  100.1 to 128.5.
 new-standards case INPV = 108.2).
Industry NPV (% change)............  -0.7 to -0.5................  -4.1 to -0.6...............  -6.0 to 8.9................  -7.5 to 18.8.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          Consumer Average LCC Savings (2015$)
--------------------------------------------------------------------------------------------------------------------------------------------------------
C-3A...............................  n.a. **.....................  58.........................  53.........................  (209).
C-3A-BI............................  n.a.........................  66.........................  59.........................  (237).

[[Page 75255]]

 
C-9................................  n.a.........................  89.........................  3..........................  (182).
C-9-BI.............................  n.a.........................  102........................  4..........................  (205).
C-13A..............................  32..........................  17.........................  (123)......................  (194).
C-13A-BI...........................  n.a.........................  8..........................  (151)......................  (232).
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Consumer Simple PBP (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
C-3A...............................  n.a.........................  4.1........................  6.8........................  25.3.
C-3A-BI............................  n.a.........................  4.1........................  6.8........................  25.4.
C-9................................  n.a.........................  2.6........................  12.1.......................  23.3.
C-9-BI.............................  n.a.........................  2.6........................  12.0.......................  23.2.
C-13A..............................  4.3.........................  5.0........................  13.3.......................  16.0.
C-13A-BI...........................  n.a.........................  6.5........................  21.6.......................  24.6.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                         % of Consumers that Experience Net Cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
C-3A...............................  0...........................  4..........................  26.........................  92.
C-3A-BI............................  0...........................  4..........................  26.........................  92.
C-9................................  0...........................  0..........................  62.........................  90.
C-9-BI.............................  0...........................  0..........................  63.........................  90.
C-13A..............................  6...........................  44.........................  94.........................  96.
C-13A-BI...........................  0...........................  49.........................  97.........................  98.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values.
* For TSL 1, the results are forecasted over the lifetime of products sold from 2019-2048. For the other TSLs, the results are forecasted over the
  lifetime of products sold from 2021-2050.
** Calculation of savings and PBP is not applicable (n.a.) for an efficiency level that is already met or exceeded in the MREF market.

    DOE first considered TSL 4, which represents the max-tech 
efficiency levels. TSL 4 would save 0.016 quads of energy, an amount 
DOE considers significant. Under TSL 4, the NPV of consumer benefit 
would be -$0.09 billion using a discount rate of 7 percent, and -$0.14 
billion using a discount rate of 3 percent.
    The cumulative emissions reductions at TSL 4 are 0.96 Mt of 
CO2, 0.55 thousand tons of SO2, 1.73 thousand 
tons of NOX, 0.0 ton of Hg, 4.13 thousand tons of 
CH4, and 0.01 thousand tons of N2O. The estimated 
monetary value of the CO2 emissions reduction at TSL 4 
ranges from $7 million to $92 million.
    At TSL 4, the average LCC savings range from -$237 to -$182. The 
simple payback period ranges from 16.0 years to 25.4 years. The 
fraction of consumers experiencing a net LCC cost ranges from 90 
percent to 98 percent.
    At TSL 4, the projected change in INPV ranges from a decrease of 
$8.1 million to an increase of $20.3 million, which correspond to a 
decrease of 7.5 percent to an increase of 18.8 percent, respectively. 
Similar to coolers, manufacturer feedback from confidential interviews 
indicated that combination cooler refrigeration products are highly 
price sensitive, and therefore the lower bound of INPV impacts is more 
likely to occur. Additionally, in the context of new standards for 
coolers and other cumulative regulatory burdens, at TSL 4, 
disproportionate impacts on domestic LVMs of combination cooler 
refrigeration products may be severe. This could have a direct impact 
on the availability of certain niche combination cooler refrigeration 
products, as well as on competition, domestic manufacturing capacity, 
and production employment related to the combination cooler 
refrigeration product industry.
    The Secretary concludes that at TSL 4 for combination cooler 
refrigeration products, the benefits of energy savings, emission 
reductions, and the estimated monetary value of the emissions 
reductions would be outweighed by the negative NPV of consumer 
benefits, the economic burden on some consumers, and the 
disproportionate impacts on the LVMs, which could directly impact the 
availability of certain niche combination cooler products. 
Consequently, the Secretary has concluded that TSL 4 is not 
economically justified.
    DOE then considered TSL 3, which would save an estimated 0.012 
quads of energy, an amount DOE considers significant. Under TSL 3, the 
NPV of consumer benefit would be -$0.04 billion using a discount rate 
of 7 percent, and -$0.06 billion using a discount rate of 3 percent.
    The cumulative emissions reductions at TSL 3 are 0.73 Mt of 
CO2, 0.42 thousand tons of SO2, 1.32 thousand 
tons of NOX, 0.00 tons of Hg, 3.16 thousand tons of 
CH4, and 0.01 thousand tons of N2O. The estimated 
monetary value of the CO2 emissions reduction at TSL 3 
ranges from $5 million to $71 million.
    At TSL 3, the average LCC savings range from -$151 to $59. The 
simple payback period ranges from 6.8 years to 21.6 years. The fraction 
of consumers experiencing a net LCC cost ranges from 26 percent to 97 
percent.
    At TSL 3, the projected change in INPV ranges from a decrease of 
$6.5 million to an increase of $9.6 million, which represent a decrease 
of 6.0 percent and an increase of 8.9 percent, respectively. Again, 
manufacturers indicated that combination cooler refrigeration products 
are highly price sensitive, and therefore the lower bound of INPV 
impacts is more likely to occur. In the context of new standards for 
coolers and other cumulative regulatory burdens, at TSL 3, 
disproportionate impacts on domestic LVMs of combination cooler 
refrigeration products may be severe. This could have a direct impact 
on the availability of certain niche combination cooler refrigeration 
products, as well as on competition, domestic manufacturing capacity 
and production employment related to the combination cooler 
refrigeration product industry.
    The Secretary concludes that at TSL 3 for combination cooler 
refrigeration products, the benefits of energy savings, emission 
reductions, and the estimated monetary value of the emissions

[[Page 75256]]

reductions would be outweighed by the negative NPV of consumer benefits 
and disproportionate impacts on the LVMs, which could directly impact 
the availability of certain niche combination cooler products. 
Consequently, the Secretary has concluded that TSL 3 is not 
economically justified.
    DOE then considered TSL 2, which reflects the efficiency levels 
with maximum consumer NPV at seven percent discount rate. TSL 2 would 
save an estimated 0.007 quads of energy, an amount DOE considers 
significant. Under TSL 2, the NPV of consumer benefit would be $0.011 
billion using a discount rate of 7 percent, and $0.035 billion using a 
discount rate of 3 percent.
    The cumulative emissions reductions at TSL 2 are 0.44 Mt of 
CO2, 0.25 thousand tons of SO2, 0.8 thousand tons 
of NOX, 0.00 tons of Hg, 1.90 thousand tons of 
CH4, and 0.013 thousand tons of N2O. The 
estimated monetary value of the CO2 emissions reduction at 
TSL 2 ranges from $3 million to $42 million.
    At TSL 2, the average LCC savings range from $8 to $102. The simple 
payback period ranges from 2.6 years to 6.5 years. The fraction of 
consumers experiencing a net LCC cost ranges from zero percent to 49 
percent.
    At TSL 2, the projected change in INPV ranges from a decrease of 
$4.4 million to a decrease of $0.6 million, which represent decreases 
of 4.1 percent and 0.6 percent, respectively. Again, in the context of 
new standards for coolers and other cumulative regulatory burdens, at 
TSL 2, disproportionate impacts on domestic LVMs may be severe. This 
could have a direct impact on the availability of certain niche 
combination cooler refrigeration products, as well as on competition, 
domestic manufacturing capacity and production employment related to 
the combination cooler refrigeration product industry.
    The Secretary concludes that at TSL 2 for combination cooler 
refrigeration products, the benefits of energy savings, positive NPV of 
consumer benefits, emission reductions, and the estimated monetary 
value of the emissions reductions would again be outweighed by the 
disproportionate impacts on the domestic LVMs, which could directly 
impact the availability of certain niche combination cooler products. 
Consequently, the Secretary has concluded that TSL 2 is not 
economically justified.
    DOE then considered TSL 1, which reflects the standard levels 
recommended by the MREF Working Group. TSL 1 would save an estimated 
0.00084 quads of energy, an amount DOE considers significant. Under TSL 
1, the NPV of consumer benefit would be $0.0017 billion using a 
discount rate of 7 percent, and $0.0045 billion using a discount rate 
of 3 percent.
    The cumulative emissions reductions at TSL 1 are 0.05 Mt of 
CO2, 0.03 thousand tons of SO2, 0.09 thousand 
tons of NOX, 0.00 tons of Hg, 0.21 thousand tons of 
CH4, and 0.00 thousand tons of N2O. The estimated 
monetary value of the CO2 emissions reduction at TSL 1 
ranges from $0 million to $5 million.
    At TSL 1, the combination cooler refrigeration products currently 
available on the market already meet or exceed the corresponding 
efficiency levels in all product classes except for C-13A. As a result, 
for five of the product classes, no consumers experience a net cost, 
and the LCC savings and simple payback period are not applicable. For 
product class C-13A, the average LCC savings is $32, the simple payback 
period is 4.3 years, and the fraction of consumers experiencing a net 
LCC cost is 6 percent.
    At TSL 1, the projected change in INPV ranges from a decrease of 
$0.8 million to a decrease of $0.5 million, which represent decreases 
of 0.7 percent and 0.5 percent, respectively. DOE estimated that all 
combination cooler refrigeration products manufactured domestically by 
LVMs currently meet the standard levels corresponding to TSL 1. 
Therefore, at TSL 1, DOE believes that domestic manufacturers will 
continue to offer the same combination cooler refrigeration products as 
those they currently offer.
    After considering the analysis and weighing the benefits and 
burdens, DOE has determined that the recommended standards for 
combination cooler refrigeration products are in accordance with 42 
U.S.C. 6295(o). Specifically, the Secretary has determined 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, including the conversion costs 
that could result in a reduction in INPV for manufacturers. 
Accordingly, the Secretary has concluded that TSL 1 would offer the 
maximum improvement in efficiency that is technologically feasible and 
economically justified, and would result in the significant 
conservation of energy.
    Under the authority provided by 42 U.S.C. 6295(p)(4), DOE is 
issuing this direct final rule that establishes new energy conservation 
standards for combination cooler refrigeration products at TSL 1. The 
new energy conservation standards for combination cooler refrigeration 
products, which are expressed as maximum annual energy use, in kWh/yr, 
as a function of AV, in ft \3\, are shown in Table V.55.

           Table V.55--New Energy Conservation Standards for Combination Cooler Refrigeration Products
----------------------------------------------------------------------------------------------------------------
        Product class description              Product class designation        Maximum allowable AEU (kWh/yr)
----------------------------------------------------------------------------------------------------------------
Cooler with all-refrigerator--automatic    C-3A............................  4.57AV [dagger] + 130.4
 defrost.
Built-in cooler with all-refrigerator--    C-3A-BI.........................  5.19AV + 147.8
 automatic defrost.
Cooler with upright freezers with          C-9.............................  5.58AV + 147.7
 automatic defrost without an automatic
 icemaker.
Built-in cooler with upright freezer with  C-9-BI..........................  6.38AV + 168.8
 automatic defrost without an automatic
 icemaker.
Cooler with upright freezer with           C-9I............................  5.58AV + 231.7
 automatic defrost with an automatic
 icemaker.
Built-in cooler with upright freezer with  C-9I-BI.........................  6.38AV + 252.8
 automatic defrost with an automatic
 icemaker.
Compact cooler with all-refrigerator--     C-13A...........................  5.93AV + 193.7
 automatic defrost.
Built-in compact cooler with all-          C-13A-BI........................  6.52AV + 213.1
 refrigerator--automatic defrost.
----------------------------------------------------------------------------------------------------------------
[dagger] AV = Adjusted volume, in ft \3\, as calculated according to title 10 CFR part 430, subpart B, appendix
  A.


[[Page 75257]]

c. Summary of Annualized Benefits and Costs of the Adopted Standards
    The benefits and costs of the adopted standards can also be 
expressed in terms of annualized values. The annualized net benefit is 
the sum of: (1) The annualized national economic value (expressed in 
2015$) of the benefits from operating products that meet the adopted 
standards (consisting primarily of operating cost savings from using 
less energy, minus increases in product purchase costs, and (2) the 
annualized monetary value of the benefits of CO2 and 
NOX emission reductions.\81\
---------------------------------------------------------------------------

    \81\ To convert the time-series of costs and benefits into 
annualized values, DOE calculated a present value in 2016, 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 2016. 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.56 shows the annualized values for MREFs under TSL 2 for 
coolers and TSL 1 for combination cooler refrigeration products, 
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 SCC series that has a value of $40.6/t in 
2015),\82\ the estimated cost of the standards in this rule is $153 
million per year in increased equipment costs, while the estimated 
annual benefits are $593 million in reduced equipment operating costs, 
$165 million in CO2 reductions, and $13.1 million in reduced 
NOX emissions. In this case, the net benefit amounts to $619 
million per year.
---------------------------------------------------------------------------

    \82\ 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 of this document).
---------------------------------------------------------------------------

    Using a 3-percent discount rate for all benefits and costs and the 
SCC series has a value of $40.6/t in 2015, the estimated cost of the 
standards is $157 million per year in increased equipment costs, while 
the estimated annual benefits are $754 million in reduced operating 
costs, $165 million in CO2 reductions, and $17.1 million in 
reduced NOX emissions. In this case, the net benefit amounts 
to $779 million per year.

                                         Table V.56--Annualized Benefits and Costs of New Standards for MREFs *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                      Million 2015$/year
                                            Discount rate (%)        -----------------------------------------------------------------------------------
                                                                           Primary estimate        Low net benefits estimate  High net benefits estimate
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings...  7...............................  593.......................  545.......................  649.
                                    3...............................  754.......................  686.......................  839.
CO2 Reduction (using mean SCC at    5...............................  49........................  46........................  53.
 5% discount rate) **.
CO2 Reduction (using mean SCC at    3...............................  165.......................  155.......................  179.
 3% discount rate) **.
CO2 Reduction (using mean SCC at    2.5.............................  242.......................  227.......................  263.
 2.5% discount rate) **.
CO2 Reduction (using 95th           3...............................  502.......................  471.......................  546.
 percentile SCC at 3% discount
 rate) **.
NOX Reduction Value [dagger]......  7...............................  13.1......................  12.4......................  31.6.
                                    3...............................  17.7......................  16.6......................  43.6.
                                   ---------------------------------------------------------------------------------------------------------------------
    Total Benefits                  7% plus CO2 range...............  655 to 1,108..............  603 to 1,028..............  733 to 1,226.
     [dagger][dagger].
                                    7...............................  771.......................  712.......................  860.
                                    3% plus CO2 range...............  820 to 1,273..............  748 to 1,173..............  935 to 1,428.
                                    3...............................  937.......................  857.......................  1,062.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                          Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Incremental Product Costs  7...............................  153.......................  145.......................  118.
 [dagger][dagger][dagger].          3...............................  157.......................  148.......................  116.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      Net Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
    Total [dagger][dagger]........  7% plus CO2 range...............  503 to 956................  459 to 884................  615 to 1,108.
                                    7...............................  619.......................  568.......................  742.
                                    3% plus CO2 range...............  663 to 1,116..............  601 to 1,026..............  819 to 1,312.
                                    3...............................  779.......................  709.......................  946.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* This table presents the annualized costs and benefits associated with MREFs shipped in 2019-2048. These results include benefits to consumers which
  accrue after 2048 from the MREFs purchased from 2019-2048. The incremental installed costs include incremental equipment cost as well as installation
  costs. The CO2 reduction benefits are global benefits due to actions that occur nationally. The Primary, Low Benefits, and High Benefits Estimates
  utilize projections of energy prices and housing starts from the AEO 2015 Reference case, Low Economic Growth case, and High Economic Growth case,
  respectively. In addition, incremental product costs reflect a constant price trend in the Primary Estimate and the Low Benefits Estimate, and a high
  decline rate in the High Benefits Estimate. The methods used to derive projected price trends are explained in section IV.F of this document. Note
  that the Benefits and Costs may not sum to the Net Benefits due to rounding.
** The CO2 reduction benefits are calculated using 4 different sets of SCC values. The first three use the average SCC calculated using 5%, 3%, and 2.5%
  discount rates, respectively. The fourth represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The SCC values
  are emission year specific. See section IV.L.1 of this document for more details.

[[Page 75258]]

 
[dagger] DOE estimated the monetized value of NOX emissions reductions associated with electricity savings 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 www.epa.gov/cleanpowerplan/clean-power-plan-final-rule-regulatory-impact-analysis.) See section IV.L of this document 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 presented using only the average SCC with 3-percent discount rate. In the rows labeled
  ``7% plus CO2 range'' and ``3% plus CO2 range,'' the operating cost and NOX benefits are calculated using the labeled discount rate, and those values
  are added to the full range of CO2 values.
[dagger][dagger][dagger] The value of consumer incremental product costs is lower in the low net benefits estimate than it is in the primary estimate
  because both estimates use the same price trend and there are fewer shipments in the low net benefits estimate. The value of consumer incremental
  product costs is lower in the high net benefits scenario than it is in the primary case because the high net benefits scenario uses a highly declining
  price trend that more than offsets the increase in shipments due to higher economic growth.

VI. Procedural Issues and Regulatory Review

A. Review Under Executive Orders 12866 and 13563

    Section 1(b)(1) of Executive Order 12866, ``Regulatory Planning and 
Review,'' 58 FR 51735 (Oct. 4, 1993), requires each agency to identify 
the problem that it intends to address, including, where applicable, 
the failures of private markets or public institutions that warrant new 
agency action, as well as to assess the significance of that problem. 
The problems that the adopted standards for MREFs 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, which is likely to result in the least costly equipment being 
purchased rather than more efficient alternatives that would benefit 
the users of that equipment.
    (3) There are external benefits resulting from improved energy 
efficiency of MREFs 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 attempts to qualify some of the external benefits through 
use of social cost of carbon values.
    The Administrator of the Office of Information and Regulatory 
Affairs (``OIRA'') in the OMB has determined that 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 of 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 (January 21, 2011). 
Executive Order 13563 is supplemental to and explicitly reaffirms the 
principles, structures, and definitions governing regulatory review 
established in Executive Order 12866. To the extent permitted by law, 
agencies are required by Executive Order 13563 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 direct final 
rule is consistent with these principles, including the requirement 
that, to the extent permitted by law, benefits justify costs and that 
net benefits are maximized.

B. Review Under the Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires 
preparation of an initial regulatory flexibility analysis (``IRFA'') 
for any rule that by law must be proposed for public comment and a 
final regulatory flexibility analysis (``FRFA'') for any such rule that 
an agency adopts as a final rule, unless the agency certifies that the 
rule, if promulgated, will not have a significant economic impact on a 
substantial number of small entities. A regulatory flexibility analysis 
examines the impact of the rule on small entities

[[Page 75259]]

and considers alternative ways of reducing negative effects. As 
required by Executive Order 13272, ``Proper Consideration of Small 
Entities in Agency Rulemaking,'' 67 FR 53461 (August 16, 2002), DOE 
published procedures and policies on February 19, 2003, to ensure that 
the potential impacts of its rules on small entities are properly 
considered during the rulemaking process. 68 FR 7990. DOE has made its 
procedures and policies available on the Office of the General 
Counsel's Web site (http://energy.gov/gc/office-general-counsel). DOE 
reviewed this direct final rule and corresponding NOPR (published 
elsewhere in this Federal Register) pursuant to the Regulatory 
Flexibility Act and the procedures and policies discussed above. DOE 
has concluded that this rule would not have a significant impact on a 
substantial number of small entities. The factual basis for this 
certification is set forth below. DOE will consider any comments on the 
certification or economic impacts of the rule in determining whether to 
adopt the standards contained in this direct final rule.
    For manufacturers of MREFs, the SBA has set a size threshold, which 
defines those entities classified as ``small businesses'' for the 
purposes of the statute. Manufacturers of MREFs have primary NAICS 
codes of 335222, ``Household Refrigerator and Home Freezer 
Manufacturing'' and 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 both NAICS 
335222 and NAICS 333415.
    DOE conducted a market survey using available public information to 
identify potential small manufacturers. DOE first attempted to identify 
all potential MREF manufacturers by researching the CEC \83\ and NRCan 
\84\ product databases, individual company Web sites, market research 
tools (e.g., Hoovers reports \85\), and information from the 2011 
energy conservation standards rulemaking for residential refrigerators, 
refrigerator-freezers, and freezers. DOE also asked stakeholders and 
industry representatives during manufacturer interviews and at DOE 
public meetings if they were aware of any other small manufacturers. 
DOE reviewed publicly-available data and contacted select companies, as 
necessary, to determine whether they met the SBA's definition of a 
small business manufacturer of covered MREFs. DOE screened out 
companies that do not offer products covered by this rulemaking, do not 
meet the definition of a ``small business,'' or are foreign-owned.
---------------------------------------------------------------------------

    \83\ CEC. California Energy Commission Appliance Database. Last 
Accessed December 14, 2015. https://cacertappliances.energy.ca.gov/Pages/ApplianceSearch.aspx.
    \84\ NRCan. Natural Resources Canada EnerGuide. Last Accessed 
August 6, 2015. http://oee.nrcan.gc.ca/pml-lmp/index.cfm?action=app.search-recherche&appliance=REFRIGERATORS.
    \85\ Hoovers. www.hoovers.com/.
---------------------------------------------------------------------------

    The MREF industry in the United States is primarily an import 
industry. DOE estimated that less than 8 percent of coolers sold in the 
United States are produced domestically. The percentage of domestic 
production of the niche combination cooler refrigeration products is 
much larger (approximately 40 percent), although total shipments for 
the combination cooler refrigeration products segment equal only 
approximately 2 percent of cooler shipments in the United States. DOE 
estimates that there are approximately 48 entities involved in the sale 
and/or manufacture of MREFs sold in the U.S. market. Based on 
manufacturer interview feedback and publicly-available information, DOE 
determined that 46 of these entities either exceed the size thresholds 
defined by SBA or are completely foreign-owned and operated. DOE 
determined that the remaining two companies meet the SBA's definition 
of a ``small business.''
    One of the two small, domestic businesses selling MREFs in the 
United States, accounting for an estimated 1 percent of MREF shipments, 
does not manufacture any of the MREFs covered by this rulemaking but 
instead outsources the manufacture of them to foreign OEMs. Because 
this business does not manufacture MREFs, DOE believes that this 
company would incur no fixed capital costs related to new energy 
conservation standards for MREFs. However, this entity may incur costs 
related to testing, certification, and marketing in order to comply 
with the standards adopted in this direct final rule. As discussed in 
section VII.B of the July 2016 Final Coverage Determination, DOE 
assumes that existing cooler models that are being sold in the United 
States have already been tested according to test methods similar to 
those established in the July 2016 Final Coverage Determination and 
would require only an adjustment of the calculated energy use. Using 
the costs of adjusting calculated energy use outlined in section VII.B 
of the July 2016 Final Coverage Determination, as well as an estimate 
of $50,000 for updates to product literature and marketing materials as 
a result of new MREF standards, DOE conservatively estimates that the 
small importer may incur approximately $63,000 in product conversion 
costs in order to maintain its current MREF product offering. 81 FR at 
46786-46787. DOE assumes these upfront costs will be spread over a 3-
year period leading up to the compliance year. Accordingly, on an 
annual basis, the estimated upfront product conversion costs equate to 
less than 0.1 percent of this entity's annual revenues.
    The second small, domestic business identified by DOE manufactures 
compact coolers. Based on DOE's research, this manufacturer accounts 
for less than 1 percent of MREF market share in the United States. The 
models produced and sold by this manufacturer correspond with an 
estimated four unique platforms with associated efficiencies at or just 
below (less efficient than) the standard efficiency levels for coolers 
adopted in this direct final rule. DOE expects that this manufacturer 
will likely be able to comply with the standards adopted in this direct 
final rule by making component changes within its existing products 
(i.e., a more efficient compressor, improved glass, or targeted 
integration of VIPs). DOE, therefore, determined that this manufacturer 
would likely not incur fixed capital costs. DOE estimated that this 
small manufacturer may incur approximately $900,000 in upfront product 
conversion costs (related to research and development, testing, 
certification and marketing) in order to maintain its current product 
offering. DOE assumes these upfront costs will be spread over a 3-year 
period leading up to the compliance year. Accordingly, on an annual 
basis, the estimated upfront product conversion costs equate to roughly 
8 percent of this manufacturer's annual revenues from its U.S. sales of 
MREFs. Overall annual sales figures for this manufacturer are not 
publicly-available. However, this manufacturer's product line also 
includes commercial bar and beverage equipment.
    As discussed above, although the small manufacturer and small 
importer will incur some costs related to compliance with new MREF 
standards, the costs to these entities represent a small portion of 
their annual revenues. For this reason, DOE certifies that the 
standards for MREFs set forth in this direct final rule would not have 
a significant economic impact on a substantial number of small 
entities. Accordingly, DOE has not prepared a regulatory flexibility 
analysis for this

[[Page 75260]]

rulemaking. DOE will transmit this certification to the SBA as required 
by 5 U.S.C. 605(b).

C. Review Under the Paperwork Reduction Act

    DOE has determined that MREFs are a covered product under EPCA. 81 
FR 46768 (July 18, 2016). Because MREFs are a covered product, 
manufacturers would need to certify to DOE that their products comply 
with any applicable energy conservation standards. In certifying 
compliance, manufacturers must test their products according to the DOE 
test procedures for MREFs, 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 MREFs. See generally 10 CFR part 429. 
The collection-of-information requirement for the certification and 
recordkeeping is subject to review and approval by OMB under the 
Paperwork Reduction Act (``PRA''). This requirement has been approved 
by OMB under OMB control number 1910-1400. Public reporting burden for 
the certification is estimated to average 30 hours per response, 
including the time for reviewing instructions, searching existing data 
sources, gathering and maintaining the data needed, and completing and 
reviewing the collection of information.
    Notwithstanding any other provision of the law, no person is 
required to respond to, nor shall any person be subject to a penalty 
for failure to comply with, a collection of information subject to the 
requirements of the PRA, unless that collection of information displays 
a currently valid OMB Control Number.

D. Review Under the National Environmental Policy Act of 1969

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

E. Review Under Executive Order 13132

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

F. Review Under Executive Order 12988

    With respect to the review of existing regulations and the 
promulgation of new regulations, section 3(a) of Executive Order 12988, 
``Civil Justice Reform,'' imposes on Federal agencies the general duty 
to adhere to the following requirements: (1) Eliminate drafting errors 
and ambiguity; (2) write regulations to minimize litigation; (3) 
provide a clear legal standard for affected conduct rather than a 
general standard; and (4) promote simplification and burden reduction. 
61 FR 4729 (February 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 direct final rule meets the 
relevant standards of Executive Order 12988.

G. Review Under the Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (``UMRA'') 
requires each Federal agency to assess the effects of Federal 
regulatory actions on State, local, and Tribal governments and the 
private sector. Public Law 104-4, sec. 201 (codified at 2 U.S.C. 1531). 
For a regulatory action likely to result in a rule that may cause the 
expenditure by State, local, and Tribal governments, in the aggregate, 
or by the private sector of $100 million or more in any one year 
(adjusted annually for inflation), section 202 of UMRA requires a 
Federal agency to publish a written statement that estimates the 
resulting costs, benefits, and other effects on the national economy. 
(2 U.S.C. 1532(a), (b)) The UMRA also requires a Federal agency to 
develop an effective process to permit timely input by elected officers 
of State, local, and Tribal governments on a ``significant 
intergovernmental mandate,'' and requires an agency plan for giving 
notice and opportunity for timely input to potentially affected small 
governments before establishing any requirements that might 
significantly or uniquely affect them. On March 18, 1997, DOE published 
a statement of policy on its process for intergovernmental consultation 
under UMRA. 62 FR 12820. DOE's policy statement is also available at 
http://energy.gov/sites/prod/files/gcprod/documents/umra_97.pdf.
    DOE reviewed this rule and determined that it does not contain a 
Federal intergovernmental mandate, nor is it expected to require 
expenditures of $100 million or more in any one year by the private 
sector. As a result, no further assessment or analysis is required 
under UMRA.

[[Page 75261]]

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 direct final rule will 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 direct final rule 
will 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 direct final rule under the 
OMB and DOE guidelines and has concluded that it is consistent with 
applicable policies in those guidelines.

K. Review Under Executive Order 13211

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

L. Review Under the Information Quality Bulletin for Peer Review

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

M. Congressional Notification

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

VII. Public Participation

    DOE will accept comments, data, and information regarding this rule 
until the date provided in the DATES section at the beginning of this 
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 rule.
    DOE welcomes comments on any aspect of the analysis as described in 
this direct final rule. DOE is also interested in receiving comments 
and views of interested parties concerning the following issues:
    1. Whether the standards outlined in this rulemaking would result 
in any lessening of utility for MREFs, including whether certain 
features would be eliminated from these products. See sections 
III.H.1.d and IV.2 of this rule.
    2. The incremental manufacturer production costs DOE estimated at 
each efficiency level. See section IV.C of this rule.
    3. DOE's method to estimate MREF shipments under the no-new-
standards case and under potential energy conservation standards 
levels. See section IV.G of this rule.
    4. The assumption that installation, maintenance, and repair costs 
do not vary for MREFs at higher efficiency levels. See section IV.F of 
this rule.
    5. The manufacturer conversion costs (both product and capital) 
used in DOE's analysis. See section V.B.2.d this rule.
    6. The cumulative regulatory burden to MREF manufacturers 
associated with the standards in this direct final rule and on the 
approach DOE used in evaluating cumulative regulatory burden, including 
the timeframes and regulatory dates evaluated. See section V.B.2.e of 
this rule.
    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

[[Page 75262]]

difficulties, DOE will use this information to contact you. If DOE 
cannot read your comment due to technical difficulties and cannot 
contact you for clarification, DOE may not be able to consider your 
comment.
    However, your contact information will be publicly viewable if you 
include it in the comment itself or in any documents attached to your 
comment. Any information that you do not want to be publicly viewable 
should not be included in your comment, nor in any document attached to 
your comment. Otherwise, persons viewing comments will see only first 
and last names, organization names, correspondence containing comments, 
and any documents submitted with the comments.
    Do not submit to www.regulations.gov information for which 
disclosure is restricted by statute, such as trade secrets and 
commercial or financial information (hereinafter referred to as 
Confidential Business Information (CBI)). Comments submitted through 
www.regulations.gov cannot be claimed as CBI. Comments received through 
the Web site will waive any CBI claims for the information submitted. 
For information on submitting CBI, see the Confidential Business 
Information section below.
    DOE processes submissions made through www.regulations.gov before 
posting. Normally, comments will be posted within a few days of being 
submitted. However, if large volumes of comments are being processed 
simultaneously, your comment may not be viewable for up to several 
weeks. Please keep the comment tracking number that www.regulations.gov 
provides after you have successfully uploaded your comment.
    Submitting comments via email, hand delivery/courier, or mail. 
Comments and documents submitted via email, hand delivery/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).

VIII. Approval of the Office of the Secretary

    The Secretary of Energy has approved publication of this direct 
final rule.

List of Subjects in 10 CFR Part 430

    Administrative practice and procedure, Confidential business 
information, Energy conservation, Household appliances, Imports, 
Intergovernmental relations, Reporting and recordkeeping requirements, 
Small businesses.

    Issued in Washington, DC, on October 4, 2016.
David J. Friedman,
Acting Assistant Secretary, Energy Efficiency and Renewable Energy.

    For the reasons set forth in the preamble, DOE amends part 430 of 
chapter II, subchapter D, of title 10 of the Code of Federal 
Regulations, as set forth below:

PART 430--ENERGY CONSERVATION PROGRAM FOR CONSUMER PRODUCTS

0
1. The authority citation for part 430 continues to read as follows:

    Authority:  42 U.S.C. 6291-6309; 28 U.S.C. 2461 note.

0
2. Amend Sec.  430.32 by adding paragraph (aa) to read as follows:


Sec.  430.32  Energy and water conservation standards and their 
compliance dates.

* * * * *
    (aa) Miscellaneous refrigeration products. The energy standards as 
determined by the equations of the following table(s) shall be rounded 
off to the nearest kWh per year. If the equation calculation is halfway 
between the nearest two kWh per year values, the standard shall be 
rounded up to the higher of these values.
    (1) Coolers manufactured starting on October 28, 2019 shall have 
Annual Energy Use (AEU) no more than:

------------------------------------------------------------------------
             Product class                         AEU (kWh/yr)
------------------------------------------------------------------------
1. Built-in compact....................  7.88AV + 155.8
2. Built-in
3. Freestanding compact
4. Freestanding
------------------------------------------------------------------------
AV = Total adjusted volume, expressed in ft\3\, as calculated according
  to appendix A of subpart B of this part.

    (2) Combination cooler refrigeration products manufactured starting 
on October 28, 2019 shall have Annual Energy Use (AEU) no more than:

[[Page 75263]]



------------------------------------------------------------------------
             Product class                         AEU (kWh/yr)
------------------------------------------------------------------------
C-3A. Cooler with all-refrigerator--     4.57AV + 130.4
 automatic defrost.
C-3A-BI. Built-in cooler with all-       5.19AV + 147.8
 refrigerator--automatic defrost.
C-9. Cooler with upright freezers with   5.58AV + 147.7
 automatic defrost without an automatic
 icemaker.
C-9-BI. Built-in cooler with upright     6.38AV + 168.8
 freezer with automatic defrost without
 an automatic icemaker.
C-9I. Cooler with upright freezer with   5.58AV + 231.7
 automatic defrost with an automatic
 icemaker.
C-9I-BI. Built-in cooler with upright    6.38AV + 252.8
 freezer with automatic defrost with an
 automatic icemaker.
C-13A. Compact cooler with all-          5.93AV + 193.7
 refrigerator--automatic defrost.
C-13A-BI. Built-in compact cooler with   6.52AV + 213.1
 all-refrigerator--automatic defrost.
------------------------------------------------------------------------
AV = Total adjusted volume, expressed in ft\3\, as calculated according
  to appendix A of subpart B of this part.

[FR Doc. 2016-24759 Filed 10-27-16; 8:45 am]
 BILLING CODE 6450-01-P