[Federal Register Volume 82, Number 130 (Monday, July 10, 2017)]
[Rules and Regulations]
[Pages 31808-31886]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-14079]



[[Page 31807]]

Vol. 82

Monday,

No. 130

July 10, 2017

Part II





 Department of Energy





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 10 CFR Part 431





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

  Federal Register / Vol. 82 , No. 130 / Monday, July 10, 2017 / Rules 
and Regulations  

[[Page 31808]]


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DEPARTMENT OF ENERGY

10 CFR Part 431

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


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

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

ACTION: Final rule.

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SUMMARY: The Energy Policy and Conservation Act of 1975 (``EPCA''), as 
amended, prescribes energy conservation standards for various consumer 
products and certain commercial and industrial equipment, including 
walk-in coolers and walk-in freezers. This final rule details a series 
of energy conservation standards pertaining to certain discrete classes 
of refrigeration systems used in this equipment. These standards, which 
are consistent with recommendations presented by a working group that 
included refrigeration system manufacturers, installers, and energy 
efficiency advocates, have been determined to result in the significant 
conservation of energy and achieve the maximum improvement in energy 
efficiency that is technologically feasible and economically justified.

DATES: The effective date of this rule is September 8, 2017. Compliance 
with the standards established for WICF refrigeration systems in this 
final rule is required on and after July 10, 2020.

ADDRESSES: The docket for this rulemaking, 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, not all documents listed in 
the index may be publicly available, such as information that is exempt 
from public disclosure.
    The docket web page can be found at www1.eere.energy.gov/buildings/appliance_standards/standards.aspx?productid=56. The docket web page 
contains simple instructions on how to access all documents, including 
public comments, in the docket.
    For further information on how to review the docket, contact the 
Appliance and Equipment Standards Program staff at (202) 586-6636 or by 
email: [email protected].

FOR FURTHER INFORMATION CONTACT:
    Ashley Armstrong, U.S. Department of Energy, Office of Energy 
Efficiency and Renewable Energy, Building Technologies Office, EE-5B, 
1000 Independence Avenue SW., Washington, DC 20585-0121. Telephone: 
(202) 586-6590. Email: [email protected].
    Michael Kido, U.S. Department of Energy, Office of the General 
Counsel, GC-33, 1000 Independence Avenue SW., Washington, DC 20585-
0121. Telephone: (202) 586-8145. Email: [email protected].

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Synopsis of the Final Rule
    A. Benefits and Costs to Consumers
    B. Impact on Manufacturers
    C. National Benefits and Costs
    D. Conclusion
II. Introduction
    A. Authority
    B. Background
III. General Discussion
    A. Equipment Classes and Scope of Coverage
    B. Test Procedure
    C. Technological Feasibility
    1. General
    2. Maximum Technologically Feasible Levels
    D. Energy Savings
    1. Determination of Savings
    2. Significance of Savings
    E. Economic Justification
    1. Specific Criteria
    a. Economic Impact on Manufacturers and Consumers
    b. Savings in Operating Costs Compared to Increase in Price (LCC 
and PBP)
    c. Energy Savings
    d. Lessening of Utility or Performance of Products
    e. Impact of Any Lessening of Competition
    f. Need for National Energy Conservation
    g. Other Factors
    2. Rebuttable Presumption
    F. Compliance Date of Standards
IV. Methodology and Discussion of Related Comments
    A. General Rulemaking Issues
    1. Proposed Standard Levels
    2. Test Procedure
    a. Process Cooling
    b. Preparation Room Refrigeration Systems
    c. Single-Package Dedicated System
    d. Hot Gas Defrost
    e. High-Temperature Freezers
    3. Rulemaking Timeline
    4. ASRAC Working Group Representation
    B. Market and Technology Assessment
    1. Scope of Coverage and Product Classes
    2. Technology Options
    C. Screening Analysis
    1. Technologies Having No Effect on Rated Energy Consumption
    2. Adaptive Defrost and On-Cycle Variable-Speed Evaporator Fans
    3. Screened-Out Technologies
    4. Remaining Technologies
    D. Engineering Analysis
    1. Component-Based Analysis
    2. Refrigerants
    3. As-Tested Versus Field-Representative Performance Analysis
    4. Representative Equipment for Analysis
    5. Manufacturer Production Cost and Manufacturer Sales Price
    6. Component and System Efficiency Model
    a. Unit Coolers (Formerly Termed the ``Multiplex Condensing'' 
Class)
    b. Condensing Units/Dedicated Condensing Class
    c. Field-Representative Paired Dedicated Condensing Systems
    d. Analysis Adjustment
    7. Baseline Specifications
    8. Design Options
    a. Higher Efficiency Compressors
    b. Improved Condenser Coil
    c. Floating Head Pressure
    9. Cost-Efficiency Curves
    10. Engineering Efficiency Levels
    E. Markups Analysis
    F. Energy Use Analysis
    1. Oversize Factors
    2. Net Capacity Adjustment Factors
    3. Temperature Adjustment Factors
    G. Life-Cycle Cost and Payback Period Analysis
    1. System Boundaries
    a. Field-Paired
    b. Condensing Unit-Only
    c. Unit Cooler Only
    d. System Boundary and Equipment Class Weights
    2. Equipment Cost
    3. Installation Cost
    4. Annual Energy Use
    5. Energy Pricing and Projections
    6. Maintenance and Repair Costs
    7. Equipment Lifetime
    8. Discount Rates
    9. Energy Efficiency Distribution in the No-New-Standards Case
    10. Payback Period (PBP) Analysis
    H. Shipments Analysis
    I. National Impact Analysis
    1. Equipment Efficiency Trends
    2. National Energy Savings
    3. Net Present Value Analysis
    J. Consumer Subgroup Analysis
    K. Manufacturer Impact Analysis
    1. Definition of Manufacturer
    2. Overview
    3. Government Regulatory Impact Model and Key Inputs
    a. Manufacturer Production Costs
    b. Shipment Scenarios
    c. Capital and Product Conversion Costs
    d. Testing and Labeling Costs
    e. Manufacturer Markup Scenarios
    4. Discussion of Comments
    L. Emissions Analysis
    M. Monetizing Carbon Dioxide and Other Emissions Impacts
    1. Social Cost of Carbon
    a. Monetizing Carbon Dioxide Emissions
    b. Current Approach and Key Assumptions
    2. Social Cost of Methane and Nitrous Oxide
    3. Social Cost of Other Air Pollutants
    N. Utility Impact Analysis

[[Page 31809]]

    O. 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. Impacts on Direct Employment
    b. Impacts on Manufacturing Capacity
    c. Impacts on Subgroups of Manufacturers
    d. Cumulative Regulatory Burden
    e. Impact on Manufacturers of Complete Walk-Ins
    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
    C. Summary of National Economic Impacts
    D. Conclusion
    1. Benefits and Burdens of TSLs Considered for WICF 
Refrigeration System Standards
    2. Annualized Benefits and Costs of the Adopted Standards
VI. Procedural Issues and Regulatory Review
    A. Review Under Executive Orders 12866 and 13563
    B. Review Under the Regulatory Flexibility Act
    1. Need for, and Objectives of, the Rule
    2. Significant Issues Raised in Response to the IRFA
    3. Description on Estimated Number of Small Entities Regulated
    4. Description and Estimate of Compliance Requirements, 
Including Differences in Cost, if Any, for Different Groups of Small 
Entities
    5. Significant Alternatives to the Rule
    C. Review Under the Paperwork Reduction Act
    D. Review Under the National Environmental Policy Act of 1969
    E. Review Under Executive Order 13132
    F. Review Under Executive Order 12988
    G. Review Under the Unfunded Mandates Reform Act of 1995
    H. Review Under the Treasury and General Government 
Appropriations Act, 1999
    I. Review Under Executive Order 12630
    J. Review Under the Treasury and General Government 
Appropriations Act, 2001
    K. Review Under Executive Order 13211
    L. Information Quality
    M. Congressional Notification
VII. Approval of the Office of the Secretary

I. Synopsis of the Final Rule

    Title III, Part C \1\ of the Energy Policy and Conservation Act of 
1975 (``EPCA'' or, in context, ``the Act''), Public Law 94-163 (42 
U.S.C. 6291-6309, as codified), established the Energy Conservation 
Program for Consumer Products Other Than Automobiles.\2\ The Act, and 
its numerous amendments, reaches a variety of products and equipment 
that the Department of Energy (``DOE'') must treat as covered products 
and equipment (and thus that are subject to regulation). Among the 
types of covered equipment that DOE must regulate are walk-in coolers 
and walk-in freezers (collectively, ``WICFs'' or ``walk-ins''). 
Included within this regulatory scope are the refrigeration systems 
used in this equipment, such as low-temperature dedicated condensing 
systems and both medium- and low-temperature unit coolers,\3\ the 
subjects of this rulemaking.
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    \1\ For editorial reasons, upon codification in the U.S. Code, 
Part B was redesignated Part A and Part C as Part A-1.
    \2\ All references to EPCA in this document refer to the statute 
as amended through the Energy Efficiency Improvement Act of 2015, 
Public Law 114-11 (April 30, 2015).
    \3\ In previous proceedings, most notably the June 2014 final 
rule, DOE used the terminology ``multiplex condensing'' (abbreviated 
``MC'') to refer to the class of equipment represented by a unit 
cooler, which for purposes of testing and certification is rated as 
though it would be connected to a multiplex condensing system. In a 
separate test procedure rulemaking, DOE has changed the terminology 
to better reflect the equipment itself, which consists of a unit 
cooler sold without a condensing unit, and which can ultimately be 
used in either a multiplex condensing or dedicated condensing 
application. Accordingly, in this document, DOE has changed the 
class name from ``multiplex condensing'' to ``unit cooler'' and the 
class abbreviation from ``MC'' to ``UC.''
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    Pursuant to EPCA, any new or amended energy conservation standard 
must be designed to achieve the maximum improvement in energy 
efficiency that DOE determines is technologically feasible and 
economically justified. (42 U.S.C. 6313(f)(4)(A)) Furthermore, the new 
or amended standard must result in significant conservation of energy. 
(42 U.S.C. 6316(a) and 6295(o)(3)(B))
    In accordance with these and other statutory provisions discussed 
in this document, DOE is adopting energy conservation standards for the 
following classes of WICF refrigeration systems: Low-temperature 
dedicated condensing refrigeration systems and both medium- and low-
temperature unit coolers. These standards that will be in addition to 
the standards that DOE has already promulgated for medium-temperature 
dedicated condensing refrigeration systems. See 10 CFR 431.306(e) as 
amended by 80 FR 69837 (November 12, 2015). The adopted standards, 
which are expressed in terms of an annual walk-in energy factor 
(``AWEF''), are shown in Table I-1. AWEF is an annualized refrigeration 
efficiency metric that expresses the ratio of the heat load that a 
system can reject (in Btus) to the energy required to reject that load 
(in watt-hours). These standards apply to all applicable WICF 
refrigeration systems listed in Table I-1 and manufactured in, or 
imported into, the United States starting on the compliance date 
specified at the beginning of this document and in the regulatory text 
that follows this discussion.

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


[[Page 31810]]

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

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

    For reference, DOE will use the following acronyms to denote the 
two equipment classes of walk-in refrigeration systems which are not 
subject to this rulemaking but for which standards were established in 
the previous WICF rulemaking:
--DC.M.I (dedicated condensing, medium-temperature, indoor unit)
--DC.M.O (dedicated condensing, medium-temperature, outdoor unit)

A. Benefits and Costs to Consumers

    Table I-2 presents DOE's evaluation of the economic impacts of the 
adopted standards on consumers of the considered WICF refrigeration 
systems (i.e., medium- and low-temperature unit coolers and dedicated 
condensing low-temperature systems), as measured by the average life-
cycle cost (``LCC'') savings and the simple payback period 
(``PBP'').\4\ DOE's analysis demonstrates that the projected average 
LCC savings are positive for all considered equipment classes, and the 
projected PBP is less than the average lifetime of the considered WICF 
refrigeration systems, which is estimated to be 11 years (see section 
IV.F).
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    \4\ The average LCC savings are measured relative to the 
efficiency distribution in the no-new-standards case, which depicts 
the market in the compliance year in the absence of standards (see 
section IV.F.9). The simple PBP, which is designed to compare 
specific efficiency levels, is measured relative to baseline 
equipment (see section IV.CD.7)

     Table I-2--Impacts of Adopted Energy Conservation Standards on Consumers of WICF Refrigeration Systems
                                                     [TSL 3]
----------------------------------------------------------------------------------------------------------------
                                                                                   Average life-
                                                                                    cycle cost    Simple payback
          Equipment class                Application            Design path           savings     period (years)
                                                                                      (2015$)
----------------------------------------------------------------------------------------------------------------
DC.L.I............................  Dedicated, Indoor....  Condensing Unit Only            1,272             1.5
                                                            *.
                                    Dedicated, Indoor....  Field--Paired **.....           1,397             1.5
                                    Dedicated, Indoor....  Unit Cooler Only                  135             4.8
                                                            [dagger].
DC.L.O............................  Dedicated, Outdoor...  Condensing Unit Only.           2,839             1.2
                                    Dedicated, Outdoor...  Field--Paired........           3,294             1.4
                                    Dedicated, Outdoor...  Unit Cooler Only.....             288             4.5
UC.L..............................  Multiplex............  Unit Cooler Only.....             $74             7.6
UC.M..............................  Dedicated, Indoor....  Unit Cooler Only.....              89             1.4
UC.M..............................  Dedicated, Outdoor...  Unit Cooler Only.....              87             1.8
UC.M..............................  Multiplex............  Unit Cooler Only.....              75             3.0
----------------------------------------------------------------------------------------------------------------
Note: DOE separately considers the impacts of unit cooler standards when the unit cooler is combined in an
  application with dedicated condensing equipment versus multiplex condensing equipment. In addition to low-
  temperatures unit coolers and dedicated condensing equipment DOE is examining the impacts of unit coolers that
  are combined with medium-temperature dedicated condensing equipment (DC.M.I and DC.M.O). DOE is not
  establishing standards for the latter, as they are covered by the June 2014 final rule and were not vacated by
  the Fifth Circuit order discussed below.
* Condensing Unit Only (CU-Only): This analysis evaluates standard levels applied to a condensing unit for a
  scenario in which a new condensing unit is installed to replace a failed condensing unit, but the existing
  baseline unit cooler is not replaced. See section IV.G.1.b for more details.
** Field-Paired (FP): This analysis evaluates a scenario in which both a new condensing unit and a new unit
  cooler are installed as paired equipment in the field. See section IV.G.1.a for more details.
[dagger] Unit Cooler Only (UC-Only): This analysis evaluates standard levels applied to a unit cooler for a
  scenario in which a new unit cooler is installed to replace a failed unit cooler, but the existing baseline
  condensing unit (or multiplex system) is not replaced. See section IV.G.1.c for more details.

    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 (2016-2049). Using a real discount rate of 
10.2 percent, DOE estimates that the INPV for manufacturers of WICF 
refrigeration systems in the case without amended standards is $97.9 
million in 2015$. Under the adopted standards, DOE expects the change 
in INPV to range from -14.6 percent to -6.3 percent, which is 
approximately -$14.3 million to -$6.1 million. In order to bring 
products into compliance with standards, DOE expects the industry to 
incur total conversion costs of $18.7 million.
    DOE's analysis of the impacts of the adopted standards on 
manufacturers is described in section IV.J and section V.B.2 of this 
document.

C. National Benefits and Costs 5
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    \5\ All monetary values in this document are expressed in 2015 
dollars and, where appropriate, are discounted to 2016 unless 
explicitly stated otherwise.
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    DOE's analyses indicate that the adopted energy conservation 
standards for the considered WICF refrigeration systems would save a 
significant amount of energy. Relative to the case without adopting the 
standards, the lifetime energy savings for the considered WICF 
refrigeration systems purchased in the 30-year period that begins in 
the anticipated year of compliance with the standards (2020-2049), 
amount to 0.9 quadrillion British thermal units (``Btu''), or quads.\6\ 
This represents a savings of 24 percent relative to the energy use of 
these

[[Page 31811]]

products in the case without standards (referred to as the ``no-new-
standards case'').
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    \6\ The quantity refers to full-fuel-cycle (``FFC'') energy 
savings. FFC energy savings includes the energy consumed in 
extracting, processing, and transporting primary fuels (i.e., coal, 
natural gas, petroleum fuels), and, thus, presents a more complete 
picture of the impacts of energy efficiency standards. For more 
information on the FFC metric, see section IV.H.1.
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    The cumulative net present value (``NPV'') of total consumer 
benefits of the standards for the considered WICF refrigeration systems 
ranges from $1.4 billion (at a 7-percent discount rate) to $3.2 billion 
(at a 3-percent discount rate). This NPV expresses the estimated total 
value of future operating-cost savings minus the estimated increased 
equipment costs for the considered WICF refrigeration systems purchased 
in 2020-2049.
    In addition, the adopted standards for the considered WICF 
refrigeration systems are projected to yield significant environmental 
benefits. DOE estimates that the standards will result in cumulative 
emission reductions (over the same period as for energy savings) of 46 
million metric tons (Mt) \7\ of carbon dioxide (CO2), 36 
thousand tons of sulfur dioxide (SO2), 58 tons of nitrogen 
oxides (NOX), 218 thousand tons of methane (CH4), 
0.7 thousand tons of nitrous oxide (N2O), and 0.1 tons of 
mercury (Hg).\8\ The estimated cumulative reduction in CO2 
emissions through 2030 amounts to 7.4 Mt, which is equivalent to the 
emissions resulting from the annual electricity use of more than 783 
thousand homes.
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    \7\ A metric ton is equivalent to 1.1 short tons. Results for 
emissions other than CO2 are presented in short tons.
    \8\ DOE calculated emissions reductions relative to the no-new-
standards-case, which reflects key assumptions in the Annual Energy 
Outlook 2016 (AEO2016). AEO2016 represents current federal and state 
legislation and final implementation of regulations as of the end of 
February 2016. See section IV.L fur further discussion of AEO2016 
assumptions that effect air pollutant emissions.
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    The value of the CO2 reduction is calculated using a 
range of values per metric ton (t) of CO2 (otherwise known 
as the ``social cost of CO2,'' or ``SC-CO2'') 
developed by a Federal interagency working group.\9\ The derivation of 
the SC-CO2 values is discussed in section IV.M.1. Using discount rates 
appropriate for each set of SC-CO2 values, DOE estimates 
that the present value of the CO2 emissions reduction is 
between $0.3 billion and $4.5 billion, with a value of $1.5 billion 
using the central SC-CO2 case represented by $47.4/metric 
ton (t) in 2020.
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    \9\ 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. 
www.whitehouse.gov/sites/default/files/omb/inforeg/scc-tsd-final-july-2015.pdf.
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    DOE also calculated the value of the reduction in emissions of 
methane and nitrous oxide, using values for the social cost of methane 
(``SC-CH4'') and the social cost of nitrous oxide (``SC-
N2O'') recently developed by the interagency working 
group.\10\ See section IV.L.2 for a description of the methodology and 
the values used for DOE's analysis. The estimated present value of the 
methane emissions reduction is between $0.1 billion and $0.6 billion, 
with a value of $0.2 billion using the central SC-CH4 case, 
and the estimated present value of the SC-N2O emissions 
reduction is between $0.002 billion and $0.02 billion, with a value of 
$0.01 billion using the central SC-N2O case. In this rule, 
DOE uses the term ``greenhouse gases'' (``GHGs'') to refer to carbon 
dioxide, methane, and nitrous oxide.
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    \10\ United States Government--Interagency Working Group on 
Social Cost of Greenhouse Gases. Addendum to Technical Support 
Document on Social Cost of Carbon for Regulatory Impact Analysis 
under Executive Order 12866: Application of the Methodology to 
Estimate the Social Cost of Methane and the Social Cost of Nitrous 
Oxide. August 2016. www.whitehouse.gov/sites/default/files/omb/inforeg/august_2016_sc_ch4_sc_n2o_addendum_final_8_26_16.pdf.
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    DOE also estimates the present value of the NOX 
emissions reduction to be $0.10 billion using a 7-percent discount 
rate, and $0.04 billion using a 3-percent discount rate.\11\ DOE is 
still investigating appropriate valuation of the reduction in other 
emissions, and therefore did not include any such values for those 
emissions in the analysis for this final rule. Because the inclusion of 
such values would only increase the already positive net benefit of the 
new standards, however, it would not affect the outcome of this 
rulemaking.
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    \11\ 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.3 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. _ , 
136 S.Ct. 999_ (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. To be conservative, DOE 
is primarily using a lower 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-3 summarizes the economic benefits and costs expected to 
result from the adopted standards for the considered WICF refrigeration 
systems.

Table I-3--Selected Categories of Economic Benefits and Costs of Adopted
   Energy Conservation Standards for the Considered WICF Refrigeration
                                 Systems
                                [TSL 3] *
------------------------------------------------------------------------
                                      Present value      Discount rate
             Category                (billion 2015$)       (percent)
------------------------------------------------------------------------
                                Benefits
------------------------------------------------------------------------
Consumer Operating Cost Savings...                1.7                  7
                                                  3.8                  3
GHG Reduction (using avg. social                  0.4                  5
 costs at 5% discount rate) **....
GHG Reduction (using avg. social                  1.7                  3
 costs at 3% discount rate) **....
GHG Reduction (using avg. social                  2.7                2.5
 costs at 2.5% discount rate) **..
GHG Reduction (using 95th                         5.1                  3
 percentile social costs at 3%
 discount rate) **................
NOX Reduction [dagger]............                0.0                  7
                                                  0.1                  3
Total Benefits [Dagger]...........                3.5                  7
                                                  5.6                  3
------------------------------------------------------------------------

[[Page 31812]]

 
                                  Costs
------------------------------------------------------------------------
Consumer Incremental Installed                    0.3                  7
 Costs............................                0.6                  3
------------------------------------------------------------------------
                           Total Net Benefits
------------------------------------------------------------------------
Including GHG and NOX Reduction                   3.1                  7
 Monetized Value [Dagger].........                5.0                  3
------------------------------------------------------------------------
* This table presents the costs and benefits associated with considered
  WICF refrigeration systems shipped in 2020-2049. These results include
  benefits to consumers which accrue after 2049 from the products
  shipped in 2020-2049. The incremental installed costs include
  incremental equipment cost as well as installation costs. The costs
  account for the incremental variable and fixed costs incurred by
  manufacturers due to the adopted standards, some of which may be
  incurred in preparation for the rule. The GHG reduction benefits are
  global benefits due to actions that occur domestically.
** The interagency group selected four sets of SC-CO2, SC-CH4, and SC-
  N2O values for use in regulatory analyses. Three sets of values are
  based on the average social costs from the integrated assessment
  models, at discount rates of 5 percent, 3 percent, and 2.5 percent.
  The fourth set, which represents the 95th percentile of the social
  cost distributions calculated using a 3-percent discount rate, is
  included to represent higher-than-expected impacts from climate change
  further out in the tails of the social cost distributions. The social
  cost values are emission year specific. See section IV.L.1 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.M.3 for
  further discussion. To be conservative, DOE is primarily using a
  national benefit-per-ton estimate for NOX emitted from the electricity
  generation sector based on an estimate of premature mortality derived
  from the ACS study (Krewski et al. 2009). If the benefit-per-ton
  estimates were based on the Six Cities study (Lepuele et al. 2011),
  the values would be nearly two-and-a-half times larger.
[Dagger] Total Benefits for both the 3-percent and 7-percent cases are
  presented using the average social costs with 3-percent discount rate.

    The benefits and costs of the adopted standards, for the considered 
WICF refrigeration systems sold in 2020-2049, can also be expressed in 
terms of annualized values. The monetary values for the total 
annualized net benefits are (1) the reduced consumer operating costs, 
minus (2) the increases in product purchase prices and installation 
costs, plus (3) the value of the benefits of GHG and NOX 
emission reductions, all annualized.\12\
---------------------------------------------------------------------------

    \12\ 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 
(e.g., 2020 or 2030), 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 GHG 
reductions, for which DOE used case-specific discount rates, as 
shown in Table I-3. Using the present value, DOE then calculated the 
fixed annual payment over a 30-year period, starting in the 
compliance year, that yields the same present value.
---------------------------------------------------------------------------

    The national operating cost savings are domestic private U.S. 
consumer monetary savings that occur as a result of purchasing the 
covered products and are measured for the lifetime of the considered 
WICF refrigeration systems shipped in 2020-2049. The benefits 
associated with reduced GHG emissions achieved as a result of the 
adopted standards are also calculated based on the lifetime of WICF 
refrigeration systems shipped in 2020-2049. Because CO2 
emissions have a very long residence time in the atmosphere, the SC-
CO2 values for CO2 emissions in future years 
reflect impacts that continue through 2300. The CO2 
reduction is a benefit that accrues globally. DOE maintains that 
consideration of global benefits is appropriate because of the global 
nature of the climate change problem.
    Estimates of annualized benefits and costs of the adopted standards 
are shown in Table I-4. The results under the primary estimate are as 
follows. Using a 7-percent discount rate for benefits and costs other 
than GHG reductions (for which DOE used average social costs with a 3-
percent discount rate),\13\ the estimated cost of the adopted standards 
for the considered WICF refrigeration systems is $34 million per year 
in increased equipment costs, while the estimated annual benefits are 
$169 million in reduced equipment operating costs, $95 million in GHG 
reductions, and $4.2 million in reduced NOX emissions. In 
this case, the net benefit amounts to $234 million per year.
---------------------------------------------------------------------------

    \13\ DOE used average social costs with a 3-percent discount 
rate because these values are considered as the ``central'' 
estimates by the interagency group.
---------------------------------------------------------------------------

    Using a 3-percent discount rate for all benefits and costs, the 
estimated cost of the adopted standards for the considered WICF 
refrigeration systems is $36 million per year in increased equipment 
costs, while the estimated annual benefits are $213 million in reduced 
equipment operating costs, $95 million in GHG reductions, and $5.8 
million in reduced NOX emissions. In this case, the net 
benefit amounts to $279 million per year.

[[Page 31813]]



         Table I-4--Selected Categories of Annualized Benefits and Costs of Adopted Standards (TSL 3) for Considered WICF Refrigeration Systems
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                         Discount rate (percent)           Primary estimate        Low-net-benefits estimate  High-net-benefits estimate
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Million 2015$/year
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings...  7...............................  169.3.....................  158.4.....................  183.0.
                                    3...............................  213.4.....................  196.9.....................  233.9.
GHG Reduction (using avg. social    5...............................  29.8......................  27.2......................  32.4.
 costs at 5% discount rate) **.
GHG Reduction (using avg. social    3...............................  95.3......................  86.7......................  104.0.
 costs at 3% discount rate) **.
GHG Reduction (using avg. social    2.5.............................  137.7.....................  125.1.....................  150.4.
 costs at 2.5% discount rate) **.
GHG Reduction (using 95th           3...............................  285.8.....................  259.8.....................  311.9.
 percentile social costs at 3%
 discount rate) **.
NOX Reduction [dagger]............  7...............................  4.2.......................  3.9.......................  10.1.
                                    3...............................  5.8.......................  5.3.......................  14.3.
Total Benefits [dagger][dagger]...  7 plus GHG range................  203 to 459................  190 to 422................  225 to 505.
                                    7...............................  269.......................  249.......................  297.
                                    3 plus GHG range................  249 to 505................  229 to 462................  281 to 560.
                                    3...............................  314.......................  289.......................  352.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                          Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Incremental Equipment      7...............................  34........................  36........................  33.
 Costs.                             3...............................  36........................  38........................  34.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      Net Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total [dagger][dagger]............  7 plus GHG range................  169 to 425................  154 to 386................  192 to 472.
                                    7...............................  234.......................  213.......................  264.
                                    3 plus GHG range................  213 to 469................  192 to 424................  247 to 526.
                                    3...............................  279.......................  251.......................  318.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* This table presents the annualized costs and benefits associated with the considered WICF refrigeration systems shipped in 2020-2049. These results
  include benefits to consumers which accrue after 2049 from the WICF refrigeration systems purchased from 2020-2049. The incremental installed costs
  include incremental equipment cost as well as installation costs. The results account for the incremental variable and fixed costs incurred by
  manufacturers due to the adopted standards, some of which may be incurred in preparation for the rule. The GHG reduction benefits are global benefits
  due to actions that occur nationally. The Primary, Low Net Benefits, and High Net Benefits Estimates utilize projections of energy prices and real GDP
  from the AEO2016 No-CPP case, a Low Economic Growth case, and a High Economic Growth case, respectively. In addition, incremental product costs
  reflect constant prices in the Primary Estimate, a low decline rate in 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.G. Note that the Benefits and Costs may not sum to the Net
  Benefits due to rounding. The equipment price projection is described in section IV.G.2 of this document and chapter 8 of the final rule technical
  support document (TSD). In addition, DOE used estimates for equipment efficiency distribution in its analysis based on national data supplied by
  industry. Purchases of higher efficiency equipment are a result of many different factors unique to each consumer including boiler heating loads,
  installation costs, site environmental consideration, and others. For each consumer, all other factors being the same, it would be anticipated that
  higher efficiency purchases in the baseline would correlate positively with higher energy prices. To the extent that this occurs, it would be expected
  to result in some lowering of the consumer operating cost savings from those calculated in this rule.
** The interagency group selected four sets of SC-CO2 SC-CH4, and SC-N2O values for use in regulatory analyses. Three sets of values are based on the
  average social costs from the integrated assessment models, at discount rates of 5 percent, 3 percent, and 2.5 percent. The fourth set, which
  represents the 95th percentile of the social cost distributions calculated using a 3-percent discount rate, is included to represent higher-than-
  expected impacts from climate change further out in the tails of the social cost distributions. The social cost values are emission year specific. See
  section IV.L 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.M.3 for further discussion. For the
  Primary Estimate and Low Net Benefits Estimate, DOE used national benefit-per-ton estimates 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 the High Net Benefits Estimate, the benefit-per-ton
  estimates were based on the Six Cities study (Lepuele et al. 2011); these are nearly two-and-a-half times larger than those from the ACS study.
[dagger][dagger] Total Benefits for both the 3-percent and 7-percent cases are presented using the average social costs with 3-percent discount rate. In
  the rows labeled ``7% plus GHG range'' and ``3% plus GHG range,'' the operating cost and NOX benefits are calculated using the labeled discount rate,
  and those values are added to the full range of social cost values.

D. Conclusion

    Based on the analyses culminating in this 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 (loss of INPV and LCC increases for some users of 
these products). DOE has concluded that the standards in this final 
rule represent the maximum improvement in energy efficiency that is 
technologically feasible and economically justified, and would result 
in significant conservation of energy.

II. Introduction

    The following section briefly discusses the statutory authority 
underlying this final rule, as well as

[[Page 31814]]

some of the relevant historical background related to the establishment 
of standards for WICF refrigeration systems.

A. Authority

    Title III, Part C of EPCA, as amended, includes the refrigeration 
systems used in walk-ins that are the subject of this rulemaking. (42 
U.S.C. 6291-6309) EPCA, as amended, prescribed certain prescriptive 
energy conservation standards for these equipment (42 U.S.C. 6313(f)), 
and directs DOE to conduct future rulemakings to establish performance-
based energy conservation standards and to later determine whether 
those standards should be amended. (42 U.S.C. 6313(f)(4)(A), (5)) Under 
42 U.S.C. 6295(m), which applies to walk-ins through 42 U.S.C. 6316(a), 
the agency must periodically review its already established energy 
conservation standards for a covered product no later than 6 years from 
the issuance of a final rule establishing or amending a standard for a 
covered product.
    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. 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) and 6316(a)) 
Manufacturers of covered equipment must use the prescribed DOE test 
procedure as the basis for certifying to DOE that their equipment 
complies with the applicable energy conservation standards adopted 
under EPCA and when making representations to the public regarding the 
energy use or efficiency of that equipment. (42 U.S.C. 6314(d), 6295(s) 
and 6316(a)) Similarly, DOE must use these test procedures to determine 
whether the equipment complies with standards adopted pursuant to EPCA. 
(42 U.S.C. 6295(s) and 6316(a)) The DOE test procedures for WICF 
refrigeration systems appear at title 10 of the Code of Federal 
Regulations (``CFR'') Sec.  [thinsp]431.304.
    DOE has recently published a final rule (``December 2016 TP final 
rule'') amending the test procedures applicable to the equipment 
classes addressed in this final rule, 81 FR 95758 (December 28, 2016). 
The standards established in this rulemaking were evaluated using those 
concurrently amended test procedures. While DOE typically finalizes its 
test procedures for a given regulated product or equipment prior to 
proposing new or amended energy conservation standards for that product 
or equipment, see 10 CFR part 430, subpart C, Appendix A, sec. 7(c) 
(``Procedures, Interpretations and Policies for Consideration of New or 
Revised Energy Conservation Standards for Consumer Products'' or 
``Process Rule''), DOE did not do so in this instance. As part of the 
negotiated rulemaking that led to the Term Sheet setting out the 
standards that DOE is adopting, Working Group members recommended (with 
ASRAC's approval) that DOE modify its test procedure for walk-in 
refrigeration systems. The test procedure changes at issue clarify the 
scope of equipment classes covered by the regulations, modify the test 
procedure to ensure that it avoids measuring efficiency benefits for 
technology options deemed by the Working Group to be inappropriate for 
consideration under the standards rulemaking, and simplify the 
structure of the current test procedure as presented in the CFR. 
Separate from the changes affecting the test procedure itself, DOE's 
test procedure rule also finalized an approach establishing labeling 
requirements to mitigate the regulatory burden on installers of walk-
ins. Specifically, the test procedure explained that walk-in installers 
are not required to submit certification reports for the complete walk-
in. Additionally, an installer that uses certified components with 
labels that meets DOE's requirements bears no responsibility for the 
testing and certification of those walk-in components. The installer is 
permitted to rely upon the representations of the manufacturer of a 
WICF component to ensure compliance of the component; if those 
representations turn out to be false, the component manufacturer is 
responsible. See Docket No. EERE-2016-BT-TP-0030.
    In DOE's view, all of these amendments to the test procedure rule 
have been consistent with the approach agreed upon by the various 
parties who participated in the negotiated rulemaking. On July 29, 
2016, well before the publication of the energy conservation standard 
NOPR on September 13, 2016 (81 FR 62979), DOE publicly issued a pre-
publication version of the test procedure NOPR, which immediately made 
it available for all members of the public, including participating 
stakeholders, to review. As a result, all members of the Working Group 
and other interested parties had an ample opportunity to review the 
proposed procedure and evaluate the proposed WICF energy conservation 
standards against the backdrop of the proposed test procedures, which 
are consistent with the final test procedures. Thus, DOE concludes that 
publishing a final version of the test procedure rule--which adopts the 
limited changes to method for measuring a refrigeration system's AWEF 
that were proposed in the NOPR--prior to the publication of the 
standards proposal was not necessary. Accordingly, consistent with 
section 14 of the Process Rule, DOE has concluded that its deviation 
from the Process Rule is appropriate here.
    DOE must follow specific statutory criteria for prescribing new or 
amended standards for covered products, including WICF refrigeration 
systems. Any new or amended standard for a covered product must be 
designed to achieve the maximum improvement in energy efficiency that 
the Secretary of Energy determines is technologically feasible and 
economically justified. (42 U.S.C. 6295(o)(2)(A)-(3)(B) and 6316(a)) 
Furthermore, DOE may not adopt any standard that would not result in 
the significant conservation of energy. (42 U.S.C. 6295(o)(3) and 
6316(a)) Moreover, DOE may not prescribe a standard (1) for certain 
equipment, including WICF refrigeration systems, if no test procedure 
has been established for the product, or (2) if DOE determines by rule 
that the standard is not technologically feasible or economically 
justified. (42 U.S.C. 6295(o)(3)(A)-(B) and 6316(a)) In deciding 
whether a standard is economically justified, DOE must determine 
whether the benefits of the standard exceed its burdens. (42 U.S.C. 
6295(o)(2)(B)(i) and 6316(a)) DOE must make this determination after 
proposing the standard and receiving comments on it, and by 
considering, to the greatest extent practicable, the following seven 
statutory factors:
    (1) The economic impact of the standard on manufacturers and 
consumers of the equipment subject to the standard;
    (2) The savings in operating costs throughout the estimated average 
life of the covered equipment in the type (or class) compared to any 
increase in the price, initial charges, or maintenance expenses for the 
covered equipment that are likely to result from the standard;
    (3) The total projected amount of energy (or as applicable, water) 
savings likely to result directly from the standard;
    (4) Any lessening of the utility or the performance of the covered 
equipment likely to result from the standard;
    (5) The impact of any lessening of competition, as determined in 
writing

[[Page 31815]]

by the Attorney General, that is likely to result from the standard;
    (6) The need for national energy and water conservation; and
    (7) Other factors the Secretary of Energy (Secretary) considers 
relevant. (42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII) and 6316(a))
    Further, EPCA, as codified, establishes a rebuttable presumption 
that a standard is economically justified if the Secretary finds that 
the additional cost to the consumer of purchasing equipment complying 
with an energy conservation standard level will be less than three 
times the value of the energy savings during the first year that the 
consumer will receive as a result of the standard, as calculated under 
the applicable test procedure.\14\ (42 U.S.C. 6295(o)(2)(B)(iii) and 
6316(a))
---------------------------------------------------------------------------

    \14\ This is equivalent to stating that the rebuttable 
presumption of a standard is justified if the simple payback to the 
consumer, as calculated under the applicable test procedures, of the 
purchased equipment is equal to, or less than 3 years.
---------------------------------------------------------------------------

    EPCA, as codified, also contains what is known as an ``anti-
backsliding'' provision, which prevents the Secretary from prescribing 
any amended standard that either increases the maximum allowable energy 
use or decreases the minimum required energy efficiency of covered 
equipment. (42 U.S.C. 6295(o)(1) and 6316(a)) Also, the Secretary may 
not prescribe an amended or new standard if interested persons have 
established by a preponderance of the evidence that the standard is 
likely to result in the unavailability in the United States in any 
covered equipment type (or class) of performance characteristics 
(including reliability), features, sizes, capacities, and volumes that 
are substantially the same as those generally available in the United 
States. (42 U.S.C. 6295(o)(4) and 6316(a))
    Additionally, EPCA specifies requirements when promulgating an 
energy conservation standard for covered equipment that has two or more 
subcategories. DOE must specify a different standard level for a type 
or class of equipment that has the same function or intended use if DOE 
determines that products within such group (A) consume a different kind 
of energy from that consumed by other covered equipment within such 
type (or class); or (B) have a capacity or other performance-related 
feature which other equipment within such type (or class) do not have 
and such feature justifies a higher or lower standard. (42 U.S.C. 
6295(q)(1) and 6316(a)) In determining whether a performance-related 
feature justifies a different standard for a group of equipment, DOE 
must consider such factors as the utility to the consumer of 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) 
and 6316(a))
    Federal energy conservation requirements generally supersede State 
laws or regulations concerning energy conservation testing, labeling, 
and standards. (42 U.S.C. 6297(a) through (c) and 6316(a)) DOE may, 
however, grant waivers of Federal preemption for particular State laws 
or regulations, in accordance with the procedures and other provisions 
set forth under 42 U.S.C. 6297(d) and 6316(a).
    Finally, pursuant to the amendments contained in the Energy 
Independence and Security Act of 2007 (``EISA 2007''), Public Law 110-
140, any final rule for new or amended energy conservation standards 
promulgated after July 1, 2010, is required to address standby mode and 
off mode energy use. (42 U.S.C. 6295(gg)(3)) Specifically, when DOE 
adopts a standard for a covered product after that date, it must, if 
justified by the criteria for adoption of standards under EPCA (42 
U.S.C. 6295(o)), incorporate standby mode and off mode energy use into 
a single standard, or, if that is not feasible, adopt a separate 
standard for such energy use for that equipment. (42 U.S.C. 
6295(gg)(3)(A)-(B)) In the case of WICFs, DOE is continuing to apply 
this approach to provide analytical consistency when evaluating energy 
conservation standards for this equipment. See generally, 42 U.S.C. 
6316(a).

B. Background

    A walk-in is an enclosed storage space refrigerated to temperatures 
above, and at or below, respectively, 32 [deg]F that can be walked into 
and has a total chilled storage area of less than 3,000 square feet. 
(42 U.S.C. 6311(20)) By definition, equipment designed and marketed 
exclusively for medical, scientific, or research purposes are excluded. 
See id.
    EPCA also provides prescriptive standards for walk-ins manufactured 
starting on January 1, 2009. First, walk-ins must have automatic door 
closers that firmly close all walk-in doors that have been closed to 
within 1 inch of full closure, for all doors narrower than 3 feet 9 
inches and shorter than 7 feet and must also have strip doors, spring 
hinged doors, or other methods of minimizing infiltration when doors 
are open. Additionally, they must also contain wall, ceiling, and door 
insulation of at least R-25 for coolers and R-32 for freezers, 
excluding glazed portions of doors and structural members, and floor 
insulation of at least R-28 for freezers. Walk-in evaporator fan motors 
of under 1 horsepower (``hp'') and less than 460 volts must be 
electronically commutated motors (brushless direct current motors) or 
three-phase motors, and walk-in condenser fan motors of under 1 
horsepower must use permanent split capacitor motors, electronically 
commutated motors, or three-phase motors. Interior light sources must 
have an efficacy of 40 lumens per watt or more, including any ballast 
losses; less-efficacious lights may only be used in conjunction with a 
timer or device that turns off the lights within 15 minutes of when the 
walk-in is unoccupied. See 42 U.S.C. 6313(f)(1).
    Second, walk-ins have requirements related to electronically 
commutated motors used in them. See 42 U.S.C. 6313(f)(2)). 
Specifically, in those walk-ins that use an evaporator fan motor with a 
rating of under 1 hp and less than 460 volts, that motor must be either 
a three-phase motor or an electronically commutated motor unless DOE 
determined prior to January 1, 2009 that electronically commutated 
motors are available from only one manufacturer. (42 U.S.C. 
6313(f)(2)(A)) Consistent with this requirement, DOE eventually 
determined that more than one manufacturer offered these motors for 
sale, which effectively made electronically commutated motors a 
required design standard for use with evaporative fan motors rated at 
under 1 hp and under 460 volts. DOE documented this determination in 
the rulemaking docket as docket ID EERE-2008-BT-STD-0015-0072. This 
document can be found at www.regulations.gov/#!documentDetail;D=EERE-
2008-BT-STD-0015-0072. Additionally, DOE may permit the use of other 
types of motors as evaporative fan motors--if DOE determines that, on 
average, those other motor types use no more energy in evaporative fan 
applications than electronically commutated motors. (42 U.S.C. 
6313(f)(2)(B)) DOE is unaware of any other motors that would offer 
performance levels comparable to the electronically commutated motors 
required by Congress. Accordingly, all evaporator motors rated at under 
1 hp and under 460 volts must be electronically commutated motors or 
three-phase motors.
    Third, EPCA requires that walk-in freezers with transparent reach-
in doors must have triple-pane glass with either heat-reflective 
treated glass or gas fill for doors and windows. Cooler doors must have 
either double-pane glass with

[[Page 31816]]

treated glass and gas fill or triple-pane glass with treated glass or 
gas fill. (42 U.S.C. 6313(f)(3)(A)-(B)) For walk-ins with transparent 
reach-in doors, EISA 2007 also prescribed specific anti-sweat heater-
related requirements: Walk-ins without anti-sweat heater controls must 
have a heater power draw of no more than 7.1 or 3.0 watts per square 
foot of door opening for freezers and coolers, respectively. Walk-ins 
with anti-sweat heater controls must either have a heater power draw of 
no more than 7.1 or 3.0 watts per square foot of door opening for 
freezers and coolers, respectively, or the anti-sweat heater controls 
must reduce the energy use of the heater in a quantity corresponding to 
the relative humidity of the air outside the door or to the 
condensation on the inner glass pane. See 42 U.S.C. 6313(f)(3)(C)-(D).
    EPCA also directed the Secretary to issue performance-based 
standards for walk-ins that would apply to equipment manufactured three 
(3) years after the final rule is published, or five (5) years if the 
Secretary determines by rule that a 3-year period is inadequate. (42 
U.S.C. 6313(f)(4)) In a final rule published on June 3, 2014 (June 2014 
final rule), DOE prescribed performance-based standards for walk-ins 
manufactured on or after June 5, 2017. 79 FR 32050. These standards 
applied to a walk-in's main components: Refrigeration systems, panels, 
and doors. The standards were expressed in terms of AWEF for the walk-
in refrigeration systems, R-value for walk-in panels, and maximum 
energy consumption for walk-in doors. The standards are shown in Table 
II-1 and Table II-2.

Table II-1--Energy Conservation Standards for Walk-In Cooler and Walk-In Freezer Refrigeration Systems Set Forth
                                                  in 2014 Rule
----------------------------------------------------------------------------------------------------------------
        Class descriptor                          Class                  Standard level  min. AWEF  (Btu/W-h) *
----------------------------------------------------------------------------------------------------------------
Dedicated Condensing, Medium--    DC.M.I, <9,000......................  5.61
 Temperature, Indoor System,
 <9,000 Btu/h Capacity.
Dedicated Condensing, Medium--    DC.M.I, >=9,000.....................  5.61
 Temperature, Indoor System,
 >=9,000 Btu/h Capacity.
Dedicated Condensing, Medium--    DC.M.O, <9,000......................  7.60
 Temperature, Outdoor System,
 <9,000 Btu/h Capacity.
Dedicated Condensing, Medium--    DC.M.O, >=9,000.....................  7.60
 Temperature, Outdoor System,
 >=9,000 Btu/h Capacity.
Dedicated Condensing, Low-        DC.L.I, <9,000......................  5.93 x 10-5 x Q + 2.33
 Temperature, Indoor System,
 <9,000 Btu/h Capacity.
Dedicated Condensing, Low-        DC.L.I, >=9,000.....................  3.10
 Temperature, Indoor System,
 >=9,000 Btu/h Capacity.
Dedicated Condensing, Low-        DC.L.O, <9,000......................  2.30 x 10-4 x Q + 2.73
 Temperature, Outdoor System,
 <9,000 Btu/h Capacity.
Dedicated Condensing, Low-        DC.L.O, >=9,000.....................  4.79
 Temperature, Outdoor System,
 >=9,000 Btu/h Capacity.
Multiplex Condensing, Medium--    MC.M................................  10.89
 Temperature **.
Multiplex Condensing, Low-        MC.L................................  6.57
 Temperature **.
----------------------------------------------------------------------------------------------------------------
* These standards were expressed in terms of Q, which represents the system gross capacity as calculated in AHRI
  1250.
** DOE used this terminology to refer to these equipment classes in the June 2014 final rule. In this rule, DOE
  has changed ``multiplex condensing'' to ``unit cooler'' and the abbreviation ``MC'' to ``UC,'' consistent with
  the separate test procedure rulemaking conducted by DOE.


 Table II-2--Energy Conservation Standards for Walk-In Cooler and Walk-In Freezer Panels and Doors Set Forth in
                                                    2014 Rule
----------------------------------------------------------------------------------------------------------------
            Class descriptor                         Class                           Standard level
----------------------------------------------------------------------------------------------------------------
                                Panels                                                Min. R-value
                                                                        (h-ft2-[deg]F/Btu)
rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
Structural Panel, Medium-Temperature...  SP.M.........................  25
Structural Panel, Low-Temperature......  SP.L.........................  32
Floor Panel, Low-Temperature...........  FP.L.........................  28
----------------------------------------------------------------------------------------------------------------
                           Non-display doors                                     Max. energy consumption
                                                                        (kWh/day) [dagger]
rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
Passage Door, Medium-Temperature.......  PD.M.........................  0.05 x And + 1.7
Passage Door, Low-Temperature..........  PD.L.........................  0.14 x And + 4.8
Freight Door, Medium-Temperature.......  FD.M.........................  0.04 x And + 1.9
Freight Door, Low-Temperature..........  FD.L.........................  0.12 x And + 5.6
----------------------------------------------------------------------------------------------------------------
                             Display doors                                       Max. energy consumption
                                                                        (kWh/day) [dagger][dagger]
rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
Display Door, Medium-Temperature.......  DD.M.........................  0.04 x Add + 0.41
Display Door, Low-Temperature..........  DD.L.........................  0.15 x Add + 0.29
----------------------------------------------------------------------------------------------------------------
[dagger] And represents the surface area of the non-display door.
[dagger][dagger] Add represents the surface area of the display door.


[[Page 31817]]

    After publication of the June 2014 final Rule, the Air-
Conditioning, Heating and Refrigeration Institute (``AHRI'') and Lennox 
International, Inc. (``Lennox'') (a manufacturer of WICF refrigeration 
systems) filed petitions for review of DOE's final rule and DOE's 
subsequent denial of a petition for reconsideration of the rule with 
the United States Court of Appeals for the Fifth Circuit. Lennox Int'l 
v. Dep't of Energy, Case No. 14-60535 (5th Cir.). Other WICF 
refrigeration system manufacturers--Rheem Manufacturing Co., Heat 
Transfer Products Group (a subsidiary of Rheem Manufacturing Co.), and 
Hussmann Corp.--along with the Air Conditioning Contractors of America 
(``ACCA'') (a trade association representing contractors who install 
WICF refrigeration systems) intervened on the petitioners' behalf. The 
Natural Resources Defense Council (``NRDC''), the American Council for 
an Energy-Efficient Economy, and the Texas Ratepayers' Organization to 
Save Energy intervened on behalf of DOE. As a result of this 
litigation, a settlement agreement was reached to address, among other 
things, six of the refrigeration system standards--each of which is 
addressed in this document.\15\
---------------------------------------------------------------------------

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

    A controlling court order from the Fifth Circuit, which was issued 
on August 10, 2015, vacated those six standards. These vacated 
standards related to (1) the two energy conservation standards 
applicable to multiplex condensing refrigeration systems (re-named as 
``unit coolers'' for purposes of this rule) operating at medium and low 
temperatures and (2) the four energy conservation standards applicable 
to dedicated condensing refrigeration systems operating at low 
temperatures. See 79 FR at 32124 (June 3, 2014). The thirteen other 
standards established in the June 2014 final rule and shown in Table 
II-1 and Table II-2 (that is, the four standards applicable to 
dedicated condensing refrigeration systems operating at medium 
temperatures; the three standards applicable to panels; and the six 
standards applicable to doors) were not vacated and remain subject to 
the June 5, 2017 compliance date prescribed by the June 2014 final 
rule.\16\ To help clarify the applicability of these standards, DOE is 
also modifying the organization of its regulations to specify the 
compliance date of these existing standards and the standards finalized 
in this rule. To aid in readability, DOE is replacing the existing 
table at 10 CFR 431.306(e) with a new table that incorporates both the 
refrigeration system standards established in this rule and the 
existing refrigeration system standards and clarifies the compliance 
dates for both sets of standards.
---------------------------------------------------------------------------

    \16\ DOE has issued an enforcement policy with respect to 
dedicated condensing refrigeration systems operating at medium 
temperatures. See www.energy.gov/gc/downloads/walk-coolerwalk-freezer-refrigeration-systems-enforcement-policy.
---------------------------------------------------------------------------

    In addition, DOE notes that the existing standard for all 
capacities of dedicated condensing, medium-temperature, indoor 
refrigeration systems requires that these equipment classes meet a 
minimum AWEF of 5.61 Btu/W-h. Likewise, all capacities of dedicated 
condensing, medium-temperature, outdoor refrigeration systems must meet 
a minimum AWEF of 7.60 Btu/W-h. Rather than listing multiple ranges of 
capacity for both indoor and outdoor classes, DOE has modified the 
organization of these standards by grouping these classes into two line 
items, each showing the standard for the relevant full capacity range.
    After the Fifth Circuit issued its order, DOE established a working 
group to negotiate energy conservation standards to replace the six 
vacated standards. Specifically, on August 5, 2015, DOE published a 
notice of intent to establish a WICF Working Group. 80 FR 46521. The 
Working Group was established under the Appliance Standards and 
Rulemaking Federal Advisory Committee (``ASRAC'') in accordance with 
the Federal Advisory Committee Act (``FACA'') and the Negotiated 
Rulemaking Act (``NRA''). (5 U.S.C. App. 2; 5 U.S.C. 561-570, Pub. L. 
104-320.) The purpose of the Working Group was to discuss and, if 
possible, reach consensus on standard levels for the energy efficiency 
of the affected classes of WICF refrigeration systems. The Working 
Group was to consist of representatives of parties having a defined 
stake in the outcome of the standards, and the group would consult as 
appropriate with a range of experts on technical issues.
    Ultimately, the Working Group consisted of 12 members and one DOE 
representative (see Table II-3). (See Appendix A, List of Members and 
Affiliates, Negotiated Rulemaking Working Group Ground Rules, Docket 
No. EERE-2015-BT-STD-0016, No. 5 at p. 5.) The Working Group met in-
person during 13 days of meetings held August 27, September 11, 
September 30, October 1, October 15, October 16, November 3, November 
4, November 20, December 3, December 4, December 14, and December 15, 
2015.

Table II-3--ASRAC Walk-In Coolers and Freezers Working Group Members and
                              Affiliations
------------------------------------------------------------------------
           Member                  Affiliation          Abbreviation
------------------------------------------------------------------------
Ashley Armstrong............  U.S. Department of    DOE.
                               Energy.
Lane Burt...................  Natural Resources     NRDC.
                               Defense Council.
Mary Dane...................  Traulsen............  Traulsen.
Cyril Fowble................  Lennox                Lennox.
                               International, Inc.
                               (Heatcraft).
Sean Gouw...................  California Investor-  CA IOUs.
                               Owned Utilities.
Andrew Haala................  Hussmann Corp.......  Hussmann.
Armin Hauer.................  ebm-papst, Inc......  ebm-papst.
John Koon...................  Manitowoc Company...  Manitowoc.
Joanna Mauer................  Appliance Standards   ASAP.
                               Awareness Project.
Charlie McCrudden...........  Air Conditioning      ACCA.
                               Contractors of
                               America.
Louis Starr.................  Northwest Energy      NEEA.
                               Efficiency Alliance.
Michael Straub..............  Rheem Manufacturing   Rheem.
                               (Heat Transfer
                               Products Group).
Wayne Warner................  Emerson Climate       Emerson.
                               Technologies.
------------------------------------------------------------------------


[[Page 31818]]

    All of the meetings were open to the public and were also broadcast 
via webinar. Several people who were not members of the Working Group 
attended the meetings and were given the opportunity to comment on the 
proceedings. Non-Working Group meeting attendees are listed in Table 
II-4.

 Table II-4--Other ASRAC Walk-In Coolers and Freezers Meeting Attendees
                            and Affiliations
------------------------------------------------------------------------
          Attendee                 Affiliation          Abbreviation
------------------------------------------------------------------------
Akash Bhatia................  Tecumseh Products     Tecumseh.
                               Company.
Bryan Eisenhower............  VaCom Technologies..  VaCom.
Dean Groff..................  Danfoss.............  Danfoss.
Brian Lamberty..............  Unknown.............  Brian Lamberty.
Michael Layne...............  Turbo Air...........  Turbo Air.
Jon McHugh..................  McHugh Energy.......  McHugh Energy.
Yonghui (Frank) Xu..........  National Coil         National Coil.
                               Company.
Vince Zolli.................  Keeprite              Keeprite.
                               Refrigeration.
------------------------------------------------------------------------

    To facilitate the negotiations, DOE provided analytical support, 
including detailed analyses and presentations. These materials are 
available in the relevant rulemaking docket (www.regulations.gov/#!docketBrowser;rpp=25;po=0;D=EERE-2015-BT-STD-0016). The analyses and 
presentations, developed with direct input from the Working Group 
members, included preliminary versions of many of the analyses 
discussed in this final rule, including a market and technology 
assessment; screening analysis; engineering analysis; energy use 
analysis; markups analysis; life cycle cost and payback period 
analysis; shipments analysis; and national impact analysis.
    On December 15, 2015, the Working Group reached consensus on, among 
other things, a series of energy conservation standards to replace 
those that were vacated as a result of the litigation. The Working 
Group assembled its recommendations into a single term sheet (See 
Docket EERE-2015-BT-STD-0016, No. 52) that was presented to, and 
approved by the ASRAC on December 18, 2015. DOE considered the approved 
term sheet, along with other comments received during the negotiated 
rulemaking process, in developing energy conservation standards in this 
document. DOE published a notice of proposed rulemaking on September 
13, 2016. (September 2016 NOPR) 81 FR 62979. A public meeting to 
discuss DOE's proposal was held on September 29, 2016.

III. General Discussion

    DOE developed this rule after considering oral and written 
comments, data, and information from interested parties that represent 
a variety of interests. DOE received comments from a number of 
different entities. A list of these entities is included in Table III-
1. The following discussion addresses issues raised by these 
commenters.

                         Table III-1--Interested Parties Who Commented on the WICF NOPR
----------------------------------------------------------------------------------------------------------------
                                                                                            Comment No.  (docket
                 Name                            Acronym                    Type                 reference)
----------------------------------------------------------------------------------------------------------------
Air-Conditioning, Heating, and          AHRI....................  Trade Association.......                    90
 Refrigeration Institute.
Appliance Standards Awareness Project.  ASAP....................  Energy Efficiency                         * 79
                                                                   Advocates.
Appliance Standards Awareness Project,  ASAP, NRDC and NEEA       Energy Efficiency                           84
 Natural Resources Defense Council,      (ASAP et al.).            Advocates.
 and Northwest Energy Efficiency
 Alliance.
California Investor Owned Utilities...  CA IOUs.................  Utility Association.....                    80
Cato Institute........................  Cato....................  Think Tank..............                    87
CoilPod LLC...........................  CoilPod.................  Component/Material                          77
                                                                   Supplier.
Eric Andrews..........................  Andrews.................  Individual..............                    76
Hussmann Corporation..................  Hussmann................  Manufacturer............                    83
Environmental Defense Fund, Institute   Joint Advocates.........  Energy Efficiency                           81
 for Policy Integrity at New York                                  Advocates.
 University School of Law, Natural
 Resources Defense Council, and Union
 of Concerned Scientists.
Lennox International Inc. and           Lennox..................  Manufacturer............                    89
 Heatcraft Refrigeration Products, LLC.
Manitowoc Foodservice, Inc............  Manitowoc...............  Manufacturer............                    82
Rheem Manufacturing Company and Heat    Rheem...................  Manufacturer............                    91
 Transfer Products Group, LLC.
U.S. Chamber of Commerce, American      USCC et al..............  Business Federation.....                    86
 Chemistry Council, American Coke and
 Coal Chemicals Institute, American
 Forest & Paper Association, American
 Fuel & Petrochemical Manufacturers,
 American Petroleum Institute, Brick
 Industry Association, Council of
 Industrial Boiler Owners, National
 Association of Manufacturers,
 National Lime Association, National
 Mining Association, National Oilseed
 Processors Association, and the
 Portland Cement Association.
Weiss Instruments, Inc................  Weiss...................  Component/Material                          85
                                                                   Supplier.

[[Page 31819]]

 
Zero Zone.............................  Zero Zone...............  Manufacturer............                    88
----------------------------------------------------------------------------------------------------------------
* Comment number 79 indicates the party commented during the public meeting.

A. Equipment Classes and Scope of Coverage

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

B. Test Procedure

    EPCA sets forth generally applicable criteria and procedures for 
DOE''s adoption and amendment of test procedures. (42 U.S.C. 6293 and 
6314) Manufacturers must use the test procedures prescribed under these 
provisions to certify compliance with the applicable energy 
conservation standards and to quantify the efficiency of their covered 
product or equipment.
    EPCA, as modified by EISA 2007, required DOE to develop a 
performance-based test procedure to measure the energy use of walk-in 
coolers and walk-in freezers. (42 U.S.C. 6213(a)(9)(B)(i)) On April 15, 
2011, DOE published test procedures for the principal components that 
make up a walk-in: The panels, doors, and refrigeration systems. DOE 
took this component-based testing approach based on a significant body 
of feedback from interested parties that requiring a single test 
procedure for an entire walk-in would be impractical because most walk-
ins are assembled on-site with components from different manufacturers. 
76 FR 21580, 21582 (April 15, 2011).
    DOE's current energy conservation standards for WICF refrigeration 
systems are expressed in terms of AWEF (see 10 CFR 431.304(c)(10)). 
AWEF is an annualized refrigeration efficiency metric that expresses 
the ratio of the heat load that a system can reject (in Btus) to the 
energy required to reject that load (in watt-hours). The existing DOE 
test procedure for determining the AWEF of walk-in refrigeration 
systems is located at 10 CFR part 431, subpart R. The current DOE test 
procedure for walk-in refrigeration systems was originally established 
by an April 15, 2011 final rule, which incorporates by reference the 
Air-Conditioning, Heating, and Refrigeration Institute (``AHRI'') 
Standard 1250-2009, 2009 Standard for Performance Rating of Walk-In 
Coolers and Freezers. 76 FR 21580, 21605-21612.
    On May 13, 2014, DOE updated its test procedures for WICFs in a 
final rule published in the Federal Register (May 2014 test procedure 
final rule). 79 FR 27388. That rule allowed WICF refrigeration system 
manufacturers to use an alternative efficiency determination method 
(``AEDM'') to rate and certify their basic models by using the 
projected energy efficiency level derived from these simulation models 
in lieu of testing. It also adopted testing methods to enable an 
original equipment manufacturer (OEM) to readily test and rate its unit 
cooler or condensing unit individually rather than as part of matched 
pairs. Under this approach, a manufacturer who distributes a unit 
cooler as a separate component must rate that unit cooler as though it 
were to be connected to a multiplex system. The unit cooler must comply 
with any applicable unit cooler standard that DOE may establish. 
Similarly, a manufacturer distributing a condensing unit as a separate 
component must use fixed values for the suction (inlet) conditions and 
certain nominal values for unit cooler fan and defrost energy, in lieu 
of actual unit cooler test data, when calculating AWEF. (10 CFR 
431.304(c)(12)(ii))
    DOE notes that, although that final rule established the approach 
for rating individual components of dedicated condensing systems, it 
still allowed for matched-pair ratings of these systems. This approach 
addressed the testing of dedicated condensing systems with multiple 
capacity stages and/or variable-capacity, since the current test 
procedure of AHRI 1250-2009 does not have a provision for testing 
individual condensing units with such features. An OEM would have to 
use matched-pair testing to rate multiple- or variable-capacity 
systems, but can choose matched-pair or individual-component rating for 
single-capacity dedicated condensing systems.
    The May 2014 test procedure final rule also introduced several 
clarifications and additions to the AHRI test procedure for WICF 
refrigeration systems. These changes can be found in 10 CFR 431.304.
    The Working Group, in addition to making recommendations regarding 
standards, also recommended that DOE consider making certain amendments 
to the test procedure to support the recommended replacement 
refrigeration system standards. See Term Sheet at EERE-2015-BT-STD-
0016, No. 56, recommendation #6 and #7. Consistent with these test 
procedure-related recommendations, DOE published a test procedure 
notice of proposed rulemaking on August 17, 2016 (``August 2016 TP 
NOPR''). 81 FR 54926. A public meeting was held on September 12, 2016. 
DOE published a test procedure final rule on December 28, 2016. 81 FR 
95758. All documents and information pertaining to the test procedure 
rulemaking can be found in docket EERE-2016-BT-TP-0030. The standard 
levels discussed in this document were evaluated using that revised 
test procedure.

C. Technological Feasibility

1. General
    In each energy conservation standards rulemaking, DOE conducts a 
screening analysis based on information gathered on all current 
technology options and prototype designs that could improve the 
efficiency of the products or equipment that are the subject of the 
rulemaking. As the first step in such an analysis, DOE develops a list 
of technology options for consideration in consultation with 
manufacturers, design engineers, and other interested parties.

[[Page 31820]]

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.C of this document 
discusses the results of the screening analysis for WICF refrigeration 
systems, particularly the designs DOE considered, those it screened 
out, and those forming the basis of the standards considered in this 
rulemaking. For further details on the screening analysis for this 
rulemaking, see chapter 4 of the final rule technical support document 
(``TSD'').
2. Maximum Technologically Feasible Levels
    When DOE adopts a 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) and 6316(a)) Accordingly, in the 
engineering analysis, DOE determined the maximum technologically 
feasible (``max-tech'') improvements in energy efficiency for WICF 
refrigeration systems using the design parameters for the most 
efficient products available on the market or in working prototypes. 
The max-tech levels that DOE determined for this rulemaking are 
described in section IV.D.10 of this final rule and in chapter 5 of the 
final rule TSD.

D. Energy Savings

1. Determination of Savings
    For each trial standard level (``TSL''), DOE projected energy 
savings from application of the TSL to covered WICF refrigeration 
systems purchased in the 30-year period that begins in the year of 
compliance with the standards (2020-2049).\17\ The savings are measured 
over the entire lifetime of considered WICF refrigeration systems 
purchased in the 30-year analysis period. DOE quantified the energy 
savings attributable to each TSL as the difference in energy 
consumption between each standards case and the no-new-standards case. 
The no-new-standards case represents a projection of energy consumption 
that reflects how the market for the equipment at issue would likely 
evolve in the absence of energy conservation standards.
---------------------------------------------------------------------------

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

    DOE used its national impact analysis (``NIA'') spreadsheet models 
to estimate national energy savings (``NES'') from potential standards 
for considered WICF refrigeration systems at issue. The NIA spreadsheet 
model (described in section IV.H of this document) calculates energy 
savings in terms of site energy, which is the energy directly consumed 
by equipment at the locations where they are used. For electricity, DOE 
reports national energy savings in terms of primary energy savings, 
which is the savings in the energy that is used to generate and 
transmit the site electricity. For natural gas, the primary energy 
savings are considered to be equal to the site energy savings. DOE also 
calculates NES in terms of full-fuel-cycle (``FFC'') energy savings. 
The FFC metric includes the energy consumed in extracting, processing, 
and transporting primary fuels (i.e., coal, natural gas, petroleum 
fuels), and thus presents a more complete picture of the impacts of 
energy conservation standards.\18\ DOE's approach is based on the 
calculation of an FFC multiplier for each of the energy types used by 
covered products or equipment. For more information on FFC energy 
savings, see section IV.I.2 of this document.
---------------------------------------------------------------------------

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

2. Significance of Savings
    To adopt any new or amended standards for a covered equipment, DOE 
must determine that such action would result in significant energy 
savings. (42 U.S.C. 6295(o)(3)(B) and 6316(a)) Although the term 
``significant'' is not defined in the Act, the U.S. Court of Appeals 
for the District of Columbia Circuit in Natural Resources Defense 
Council v. Herrington, 768 F.2d 1355, 1373 (D.C. Cir. 1985), indicated 
that Congress intended ``significant'' energy savings in the context of 
EPCA to be savings that are 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 (i.e., 42 
U.S.C. 6295).

E. Economic Justification

1. Specific Criteria
    As noted above, EPCA provides seven factors to be evaluated in 
determining whether a potential energy conservation standard is 
economically justified. (42 U.S.C. 6295(o)(2)(B)(i)(I)(VII) and 
6316(a)) 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 amended standards on 
manufacturers, DOE conducts a manufacturer impact analysis (``MIA''), 
as discussed in section IV.J. DOE first uses an annual cash-flow 
approach to determine the quantitative impacts. This step includes both 
a short-term assessment--based on the cost and capital requirements 
during the period between when a regulation is issued and when entities 
must comply with the regulation--and a long-term assessment over a 30-
year period. The industry-wide impacts analyzed include (1) industry 
net present value (``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 the PBP associated with new or amended standards. 
These measures are discussed further in the following section. For 
consumers in the aggregate, DOE also calculates the national net 
present value of the economic impacts applicable to a particular 
rulemaking. DOE also evaluates the LCC impacts of potential standards 
on identifiable subgroups of consumers that may be

[[Page 31821]]

affected disproportionately by a national standard.
b. Savings in Operating Costs Compared to Increase in Price (LCC and 
PBP)
    EPCA requires DOE to consider the savings in operating costs 
throughout the estimated average life of the covered product in the 
type (or class) compared to any increase in the price of, or in the 
initial charges for, or maintenance expenses of, the covered product 
that are likely to result from a standard. (42 U.S.C. 
6295(o)(2)(B)(i)(II) and 6316(a)) 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 
or amended standards. The LCC savings for the considered efficiency 
levels are calculated relative to the case that reflects projected 
market trends in the absence of new or amended standards. DOE's LCC and 
PBP analysis is discussed in further detail in section IV.F.
c. Energy Savings
    Although significant conservation of energy is a separate statutory 
requirement for adopting an energy conservation standard, EPCA requires 
DOE, in determining the economic justification of a standard, to 
consider the total projected energy savings that are expected to result 
directly from the standard. (42 U.S.C. 6295(o)(2)(B)(i)(III) and 
6316(a)) As discussed in section IV.H, DOE uses the NIA spreadsheet 
models to project national energy savings.
d. Lessening of Utility or Performance of Products
    In establishing equipment classes, and in evaluating design options 
and the impact of potential standard levels, DOE evaluates potential 
standards that would not lessen the utility or performance of the 
considered equipment. (42 U.S.C. 6295(o)(2)(B)(i)(IV) and 6316(a)) 
Based on data available to DOE, the standards adopted in this document 
would not reduce the utility or performance of the equipment under 
consideration in this rulemaking.
e. Impact of Any Lessening of Competition
    EPCA directs DOE to consider the impact of any lessening of 
competition, as determined in writing by the Attorney General, that is 
likely to result from a standard. (42 U.S.C. 6295(o)(2)(B)(i)(V) and 
6316(a)) It also directs the Attorney General to determine the impact, 
if any, of any lessening of competition likely to result from a 
standard and to transmit such determination to the Secretary within 60 
days of the publication of a proposed rule, together with an analysis 
of the nature and extent of the impact. (42 U.S.C. 6295(o)(2)(B)(ii) 
and 6316(a)) To assist the Department of Justice (``DOJ'') in making 
such a determination, DOE transmitted copies of its proposed rule and 
the NOPR TSD to the Attorney General for review, with a request that 
the DOJ provide its determination on this issue. In its assessment 
letter responding to DOE, DOJ concluded that the proposed energy 
conservation standards for WICF refrigeration systems are unlikely to 
have a significant adverse impact on competition. DOE is publishing the 
Attorney General's assessment at the end of this final rule.
f. Need for National Energy Conservation
    DOE also considers the need for national energy and water 
conservation (as applicable) in determining whether a new or amended 
standard is economically justified. (42 U.S.C. 6295(o)(2)(B)(i)(VI) and 
6316(a)) The energy savings from the adopted standards are likely to 
provide improvements to the security and reliability of the Nation's 
energy system. Reductions in the demand for electricity also may result 
in reduced costs for maintaining the reliability of the Nation's 
electricity system. DOE conducts a utility impact analysis to estimate 
how standards may affect the Nation's needed power generation capacity, 
as discussed in section IV.M.
    DOE maintains that environmental and public health benefits 
associated with the more efficient use of energy are important to take 
into account when considering the need for national energy 
conservation. The adopted standards are likely to result in 
environmental benefits in the form of reduced emissions of air 
pollutants and GHGs associated with energy production and use. DOE 
conducts an emissions analysis to estimate how potential standards may 
affect these emissions, as discussed in section IV.K; the estimated 
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.
g. Other Factors
    In determining whether an energy conservation standard is 
economically justified, DOE may consider any other factors that the 
Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII) and 
6316(a)) To the extent DOE identifies any relevant information 
regarding economic justification that does not fit into the other 
categories described above, DOE could consider such information under 
``other factors.''
2. Rebuttable Presumption
    As set forth in 42 U.S.C. 6295(o)(2)(B)(iii) ) (and as applied to 
WICFs through 42 U.S.C. 6316(a)), EPCA creates a rebuttable presumption 
that an energy conservation standard is economically justified if the 
additional cost to the consumer of 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 energy conservation standards would have 
on the payback period for consumers. These analyses include, but are 
not limited to, the 3-year payback period contemplated under the 
rebuttable-presumption test. In addition, DOE routinely conducts an 
economic analysis that considers the full range of impacts to 
consumers, manufacturers, the Nation, and the environment, as required 
under 42 U.S.C. 6295(o)(2)(B)(i), which is applied to WICFs through 42 
U.S.C. 6316(a). The results of this analysis serve as the basis for 
DOE's evaluation of the economic justification for a potential standard 
level (thereby supporting or rebutting the results of any preliminary

[[Page 31822]]

determination of economic justification). The rebuttable presumption 
payback calculation is discussed in section IV.F of this final rule.

F. Compliance Date of Standards

    Under EPCA, performance-based standards for WICFs, including the 
initial establishment of those standards, have a statutorily prescribed 
lead time starting on the applicable final rule's publication date and 
ending three (3) years later. Starting on that later date, WICF 
manufacturers must comply with the relevant energy conservation 
standards. See 42 U.S.C. 6313(f)(4)-(5). DOE may extend the lead time 
to as long as five (5) years if the Secretary determines, by rule, that 
the default 3-year period is inadequate. (See id.)
    As discussed in section III.B, DOE developed test procedures for 
the principal components that make up walk-ins: The panels, doors, and 
refrigeration systems. DOE developed test procedures for walk-in 
refrigeration systems that express their efficiency in terms of AWEF. 
76 FR 21580 (April 15, 2011). The June 2014 final rule established 
DOE's energy conservation standards for walk-in refrigeration systems 
based on AWEF--these standards, established for low-temperature and 
medium-temperature dedicated condensing refrigeration systems and for 
low-temperature and medium-temperature unit coolers (then called 
multiplex condensing systems), had a compliance date of June 5, 2017. 
79 FR at 32124 (June 3, 2014). As discussed in section II.B, the 
standards for several of these categories of refrigeration systems were 
vacated. However, the standards for medium-temperature dedicated 
condensing systems remain in place, and their compliance date remains 
as June 5, 2017.
    In the September 2016 NOPR, DOE projected that that this final rule 
would publish in the second half of 2016, and that it would hence 
establish a compliance date in the second half of 2019 for the new 
refrigeration system standards that DOE is adopting--DOE did not 
anticipate extending the standards lead time beyond three years. 81 FR 
at 62992 (Sept. 13, 2016).
    DOE updated its enforcement policy for walk-in refrigeration 
systems on February 1, 2016, indicating that it would not exercise its 
enforcement authority in regard to energy conservation standards 
associated with medium-temperature dedicated condensing refrigeration 
systems for any such equipment manufactured prior to January 1, 
2020.\19\
---------------------------------------------------------------------------

    \19\ http://energy.gov/sites/prod/files/2016/02/f29/Enforcement%20Policy%20Statement%20-%20WICF%2002-01-16.pdf.
---------------------------------------------------------------------------

    Manitowoc, Hussmann, Lennox, Rheem, and AHRI requested that 
manufacturers not be required to submit certification reports for WICF 
equipment covered in this rule and medium-temperature dedicated 
condensing classes until the projected January 2020 enforcement date. 
They argued that requiring manufacturers to certify refrigeration 
systems covered by the June 2014 final Rule on June 5, 2017, despite 
the fact that enforcement would not occur until 2020, would confuse 
customers and place unneeded burden on manufacturers. Zero Zone also 
argued that requiring certification before enforcement begins will 
cause confusion for manufacturers and customers and will not allow the 
Department to verify the certification data. (Manitowoc, No. 82 at p. 
1; Hussmann, No. 83 at p. 1; Lennox, No. 89 at p. 6; Rheem, No. 91 at 
pp. 1-2; AHRI, No. 90 at pp. 1-2; Zero Zone, No. 88 at p. 1)
    As discussed in the test procedure final rule, DOE has not changed 
the date for certifying the compliance of equipment covered by the June 
2014 standards that have not been vacated, i.e., those applicable to 
doors and medium-temperature dedicated condensing refrigeration 
systems. 81 FR at 95759-95760 (December 28, 2016). The compliance date 
for the WICF equipment covered in this rule, i.e., classes of low-
temperature dedicated condensing refrigeration systems and all classes 
of unit coolers, is three years from today's date.
    Weiss asked for clarification regarding how DOE's proposal would 
address the installation of walk-ins by local contractors who buy 
components from wholesalers and assemble the walk-in on-site. (Weiss, 
No. 85 at p. 1).
    Lennox commented there is ambiguity whether refrigeration system 
components assembled into a complete walk-in must be compliant on the 
date of manufacture of the refrigeration component or when the final 
WICF is actually assembled. Lennox noted that component manufacturers 
would need to leave time to sell components in inventory in advance of 
a compliance deadline, but WICF installers would also need to leave 
time both to purchase WICF components and install such components in 
advance of the compliance deadline. Lennox stated that additional 
burden is placed on WICF component manufacturers to compress timelines 
by several months or more if assemblers of complete walk-ins are 
required to use WICF components that are compliant at the time of 
assembly. (Lennox No. 89 at pp. 7-8) AHRI and Rheem also commented that 
additional burden is placed on component manufacturers as a result of a 
shortened compliance period if the requirement remains for installers 
to use components that are compliant at the time of the complete walk-
in assembly. (AHRI No. 90 at p. 3; Rheem No. 91 at p. 3)
    Lennox, AHRI and Rheem requested that DOE allow an unlimited sell 
through period for components manufactured prior to the compliance date 
of the amended standard. AHRI stated that most products subject to 
energy conservation standards have unlimited sell through periods for 
products manufactured before the effective date of an amended standard. 
Id.
    As discussed in the test procedure final rule, a manufacturer of a 
walk-in cooler or walk-in freezer is any person who: (1) Manufactures a 
component of a walk-in cooler or walk-in freezer that affects energy 
consumption, including, but not limited to, refrigeration, doors, 
lights, windows, or walls; or (2) manufactures or assembles the 
complete walk-in cooler or walk-in freezer. 10 CFR 431.302.
    A manufacturer of a walk-in component (i.e., part 1 of the 
definition of a manufacturer of a walk-in cooler or walk-in freezer) is 
the entity that manufactures, produces, assembles or imports a walk-in 
panel, door or refrigeration system. The component manufacturer is 
responsible for ensuring the compliance of the component(s) it 
manufactures. DOE also requires that the component manufacturer certify 
the compliance of the components it manufactures, prior to distribution 
in commerce. 81 FR at 95778 (December 28, 2016). A walk-in component 
manufacturer must comply with the applicable energy conservation 
standards based on the date the component is produced. For example, 
beginning on June 5, 2017 walk-in door manufacturers must produce doors 
that comply with the applicable energy consumption standard. Imported 
components must comply with the applicable energy conservation 
standards based on the date of importation.
    A manufacturer of a complete walk-in (i.e., part 2 of the 
definition of a manufacturer of a walk-in cooler or walk-in freezer) is 
the entity that manufactures, produces, assembles or imports a walk-in 
cooler or freezer (i.e., an enclosed storage space meeting the

[[Page 31823]]

definition of a walk-in cooler or freezer). This includes 
``installers'' of complete walk-ins. DOE explained that while it does 
not require manufacturers of complete walk-ins to submit certification 
reports for the complete walk-in itself, a manufacturer of a complete 
walk-in must ensure that each walk-in it manufactures meets the various 
statutory and regulatory standards. That is, a manufacturer of a 
complete walk-in is required to use components that comply with the 
applicable standards and to ensure the final product fulfills the 
statutory design requirements. See the test procedure final rule for 
additional discussion on how a manufacturer of a complete walk-in 
demonstrates compliance. 81 FR at 95781 (December 28, 2016).
    DOE explained several ways a manufacturer of a complete walk-in 
could assemble a compliant walk-in. The manufacturer of a complete 
walk-in could make one or more of the components (e.g., a walk-in 
door), test it, and certify it as the component manufacturer. In this 
instance the manufacturer of the complete walk-in is also the component 
manufacturer, and the component must meet the relevant energy 
conservation standard based on the date the component is produced.
    Alternatively, the manufacturer of the complete walk-in could use 
an uncertified component and accept responsibility for its compliance. 
In this scenario, the date of installation is the date of manufacture. 
For example, if walk-in is assembled with a door designed for non-walk-
in applications, then the door becomes a walk-in component on the walk-
in assembly date, and must meet the relevant energy conservation 
standard based on the date of assembly.
    Lastly, the manufacturer of the complete walk-in could use a 
certified component with a label that meets DOE's requirements, as it 
is not the manufacturer of the component, and bear no responsibility 
for the testing and certification of the component. In this case, the 
component must meet the relevant energy conservation standard based on 
the date the certified component was manufactured. As long as a 
manufacturer of a complete walk-in (e.g., installers) uses compliant, 
certified components that are labeled in accordance with DOE's 
requirements, then it can assemble a complete walk-in using those 
components after the effective date of new or amended standards. For 
example, an installer may use walk-in doors manufactured prior to June 
5, 2017 to assemble a walk-in after the compliance date as long as the 
door was certified as compliant with the standards in effect on the 
date the door was produced.

IV. Methodology and Discussion of Related Comments

    This section addresses the analyses DOE has performed for this 
rulemaking with regard to the considered WICF refrigeration systems. 
Separate subsections address each component of DOE's analyses.
    DOE used several analytical tools to estimate the impact of the 
standards 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 national impacts analysis uses a 
second spreadsheet set that provides shipments projections 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 website for this rulemaking at 
www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/30. Additionally, DOE used output from the latest version of the 
Annual Energy Outlook 2016 (``AEO2106'') from the Energy Information 
Administration (``EIA'') for the emissions and utility impact analyses.

A. General Rulemaking Issues

    During the September 29, 2016 NOPR public meeting, and in 
subsequent written comments, stakeholders provided input regarding 
general issues pertinent to the rulemaking, including the trial 
standard levels, the rulemaking timeline, and other subjects. These 
issues are discussed in this section.
1. Proposed Standard Levels
    DOE proposed to adopt TSL 3 as the energy conservation standard for 
the equipment under consideration in this rulemaking. DOE's NOPR 
analysis showed that this level is both technologically feasible and 
economically justified. 81 FR at 63021 (September 13, 2016). TSL 3 
represents the maximum technologically feasible level and corresponds 
to the energy conservation standard level that the Working Group 
unanimously recommended that DOE adopt. (Docket No. EERE-2015-BT-STD-
0016, Term Sheet: Recommendation #5 (December 15, 2015), No. 56 at pp. 
2-3).
    The CA IOUs and ASAP et al. supported the proposed standard levels 
DOE presented in the NOPR. (CA IOUs, No. 80, at pp. 1-2; ASAP et al., 
No. 84, at p. 1)
    Lennox supported the provisions laid out in the ASRAC Term Sheet, 
including the recommended standards levels contained therein, which 
were the result of a negotiated rulemaking. It also commented on the 
NOPR's consumer impact results, noting that while most equipment 
classes have positive or minimal negative consumer impacts, for certain 
equipment classes, the consumer impact is negative for a ``large 
percentage of consumers.'' (Lennox, No. 89 at p. 7) For example, Lennox 
noted that 42 percent of consumers had a net cost impact for low 
temperature unit coolers (UC.L) attached to low temperature multiplex 
condensing systems (MC.L). Lennox clarified that it does not generally 
support energy conservation standards that result in such a large 
portion of consumers experiencing a net cost impact. (Lennox, No. 89 at 
pp. 6-7)
    In general, DOE seeks to avoid adopting standards resulting in 
large numbers of consumers experiencing net costs. DOE notes that 
Lennox supports the proposed standard levels, with which WICF Working 
Group negotiators (including Lennox) had agreed, as documented in the 
ASRAC Working Group Term Sheet. For the reasons discussed later in this 
document, DOE is adopting the same standard levels that it proposed as 
the energy conservation standard for the equipment under consideration 
in this final rule. See section VI for further discussion on the TSLs, 
economic justification and energy savings.
    Eric Andrews agreed that the economic analysis supported the 
regulation on the basis of the purchase of new equipment, but expressed 
concern regarding the up-front cost that the consumer would incur to 
update existing equipment to the standard level. He commented that ``a 
credit'' should be made available to defray such costs. He observed 
further that the market for used equipment was not addressed in the 
analysis. (Andrews, No. 76 at p. 1) The comment seems to be made based 
on the assumption that all installed equipment must be upgraded to the 
standard level. In response, DOE notes that the adopted standard levels 
will apply only to new equipment manufactured after the compliance date 
of the standard. See section III.F for additional discussion regarding 
the compliance date.

[[Page 31824]]

2. Test Procedure
a. Process Cooling
Background
    EPCA defines a walk-in as ``an enclosed storage space,'' that can 
be walked into, which has a total area of less than 3,000 square feet, 
but does not include products designed and marketed exclusively for 
medical, scientific, or research purposes. (42 U.S.C. 6311(20)) The use 
of the term ``storage space'' in the definition raises questions about 
which refrigerated spaces would qualify as a ``storage space'' and 
thereby comprise equipment subject to the walk-in standards. DOE has 
discussed the scope of this definition throughout its rulemakings to 
develop test procedures and energy conservation standards for walk-
ins--most recently, the August 2016 TP NOPR addressed whether the scope 
extends to process cooling equipment such as blast chillers and blast 
freezers that can be walked into. 81 FR at 54934-54936 (August 17, 
2016).
    In the August 2016 TP NOPR, DOE described the background leading to 
the proposal of a definition for walk-in process cooling refrigeration 
equipment. 81 FR at 54934 (August 17, 2016). As described in that 
document, interested parties requested that DOE clarify the 
applicability of standards to this equipment as part of the initial 
standards rulemaking that DOE conducted for developing walk-in 
performance-based standards. The discussions in that prior rulemaking 
led DOE to conclude in the June 2014 final rule that equipment used 
solely for process cooling would not be required to meet the walk-in 
standards, but that products used for ``both process and storage'' 
applications could not categorically be excluded from coverage. 79 FR 
at 32068 (June 3, 2014). The August 2016 TP NOPR noted also the October 
2014 meeting to clarify aspects of the test procedure, during which DOE 
again stated that blast chillers and blast freezers did not fall within 
the scope of the energy conservation standards established for walk-ins 
in the June 2014 final rule. However, DOE acknowledged at the time that 
it did not have a definition for ``process cooling'' in the context of 
walk-ins. (Docket No. EERE-2011-BT-TP-0024, Heatcraft and DOE, Public 
Meeting Transcript (October 22, 2014), No. 117 at pp. 23, 61-63) The 
question of process cooling arose again during the Walk-in Working 
Group meetings, during which meeting participants asked DOE to add 
definitions to clarify the meaning of process cooling (See Docket No. 
EERE-2015-BT-STD-0016: Manufacturer-submitted material, No. 6 at p. 2; 
Lennox, Public Meeting Transcript (August 27, 2015), No. 15 at pp. 96-
97; AHRI, Public Meeting Transcript (December 15, 2015), No. 60 at pp. 
141-142; and Term Sheet, No. 56, Recommendation #7)
    The August 2016 TP NOPR explained that DOE considered process 
cooling more carefully in light of the Working Group's request to 
develop clarifying definitions and concluded that its initial 
statements in the June 2014 final rule that blast chillers and blast 
freezers are not walk-ins were in error. DOE observed that, although 
the EPCA definition refers to a walk-in as an ``enclosed storage 
space'', there is no clarity regarding the meaning of ``storage'' or 
the minimum duration for an item to remain in an enclosure to be 
considered in ``storage''. Hence, DOE now believes that these 
categories of equipment, referred to as ``process cooling equipment'' 
do fall under the EPCA definition for walk-ins and are subject to 
standards. 81 FR at 54934 (August 17, 2016).
    The August 2016 TP NOPR went on to discuss DOE's proposal for 
defining a walk-in process cooling refrigeration system. DOE 
specifically developed this proposal, acknowledging the different 
energy use characteristics of process cooling refrigeration systems as 
well as their different equipment attributes (as compared to other 
walk-in refrigeration systems), to exclude such equipment from being 
subject to walk-in refrigeration system performance standards. (Because 
DOE now regards process cooling systems as ``walk-in coolers or 
freezers,'' they will be subject to the statutory design requirements.) 
DOE proposed defining a ``walk-in process cooling refrigeration 
system'' as ``a refrigeration system that is used exclusively for 
cooling food or other substances from one temperature to another.'' 81 
FR at 54936 (August 17, 2016). The proposed definition specified that a 
process cooling refrigeration system must either be (1) distributed in 
commerce with an enclosure consisting of panels and door(s) such that 
the assembled product has a refrigerating capacity of at least 100 Btu/
h per cubic foot of enclosed internal volume or (2) a unit cooler 
having an evaporator coil that is at least four-and-one-half (4.5) feet 
in height and whose height is at least one-and-one-half (1.5) times the 
width. This proposed definition would cover process cooling systems 
that are distributed in commerce as part of a complete assembly, 
process cooling unit coolers that are distributed separately from the 
enclosure, and refrigeration systems that include unit coolers meeting 
the process cooling definition. 81 FR at 54954 (August 17, 2016).
    DOE noted in the August 2016 TP NOPR that it proposed to consider 
process cooling refrigerated insulated enclosures to be walk-ins that 
are subject to the prescriptive statutory requirements for walk-ins. 
DOE also notes that its discussion and proposals focused on process 
cooling refrigeration systems rather than the panels and doors that 
make up the insulated enclosure. Hence, DOE intended the exclusions 
associated with the proposals to apply only to refrigeration systems 
that meet the process cooling definition, and that the exclusions would 
be associated with walk-in refrigeration system performance standards. 
Id. at 54934-54936. DOE also provided a table in the test procedure 
NOPR public meeting presentation to clarify its interpretation of the 
applicability of walk-in standards to different components of process 
cooling equipment. (Docket No. EERE-2016-BT-TP-0030, Public Meeting 
Presentation, No. 3 at p. 30) This table indicated that the proposed 
exclusion for process cooling refrigeration systems would apply to, 
among other things, dedicated condensing units that are exclusively 
distributed in commerce with unit coolers meeting the unit cooler 
portion of the process cooling definition. DOE noted in the test 
procedure final rule that this exclusion was not explicit in the 
proposed definition and was clarifying it to explicitly include such 
dedicated condensing units in the definition. 81 FR at 95768 (December 
28, 2016).
Importance of Coverage for Process Cooling Equipment
    DOE explained in the August 2016 TP NOPR the reasons it believed 
that walk-in process cooling equipment should be considered to be 
covered under the walk-in definition. See 81 FR at 54934-54936 (August 
17, 2016). In the test procedure final rule, DOE ultimately concluded 
that this equipment should be covered as walk-in equipment. 81 FR at 
95771 (December, 28, 2016). In DOE's view, covering this equipment as a 
class of walk-ins is important in furthering DOE's goals for reducing 
and limiting energy use because this equipment represents a growing 
sector of the refrigeration industry. Process cooling equipment emerged 
on the market relatively recently in 1990 to serve a range of food 
sales and service applications. (Master-Bilt Blast Chillers, No. 25 at 
pp. 2, 3, 10) The global blast chiller market is expected to grow by an

[[Page 31825]]

estimated 4.62% per year from 2016-2020 and North America is expected 
to remain a dominant portion of this market.\20\ This growth is the 
expected result of increased demand in the food service industry (e.g., 
restaurants, bakeries, catering) and meat processing industry and 
growth in the frozen food market.\21\ Hence, DOE believes that there 
will be a robust market for process cooling equipment to serve this 
growing market need, and that there is a large potential growth in 
energy use associated with this market.
---------------------------------------------------------------------------

    \20\ Infinity Research Limited (Technavio), Global Commercial 
Blast Chillers Market 2016-2020; Published November 2016; Accessed 
November 2016 at www.technavio.com/report/global-miscellaneous-global-commercial-blast-chillers-market-2016-2020.
    \21\ Hexa Research, Frozen Food Market Analysis By Product 
(Ready Meals, Meat, Seafood, Fruits & Vegetables, Potatoes, Soup) 
And Segment Forecasts To 2020; Published November 2014; Accessed 
November 2016 at www.hexaresearch.com/research-report/frozen-food-industry/.
---------------------------------------------------------------------------

Process Cooling Equipment Status as Walk-In Equipment
    Many commenters argued in response to the August 2016 TP NOPR that 
process cooling equipment does not fall under the walk-in definition. 
Several of these comments argued that food is not ``stored'' in this 
equipment and/or the temperature within it is not ``held'' at a given 
temperature for storage purposes. AHRI, Manitowoc, KeepRite, Rheem, and 
Hussmann stated that process refrigeration systems are not used for 
storage and therefore do not satisfy the statutory definition for a 
walk-in as an ``enclosed storage space.'' (Docket No. EERE-2016-BT-TP-
0030; AHRI, No. 11 at p. 5; Manitowoc, No. 10 at p. 3; KeepRite, No. 17 
at p. 2; Rheem, No. 18 at p. 3; Hussmann, No. 20 at p. 4) Similarly, 
Zero Zone argued that the purpose of process refrigeration systems 
conflicts with the dictionary definition of ``storage.'' (Docket No. 
EERE-2016-BT-TP-0030, Zero Zone, No. 15 at p. 1) American Panel also 
explained that product could be dehydrated and damaged if left in the 
process cooling equipment for an extended period of time. In its view, 
this fact should disqualify process cooling equipment from being 
considered as storage space--one of the key elements of the walk-in 
definition. (Docket No. EERE-2016-BT-TP-0030, American Panel, No. 7 at 
p. 1) AHRI added that the Term Sheet included the recommendation that 
DOE define process cooling for the purpose of clarifying that process 
cooling equipment are not included in the scope of WICFs. (Docket No. 
EERE-2016-BT-TP-0030, AHRI, No. 11 at p. 5)
    Commenters reiterated many of these statements in response to the 
September 2016 NOPR. Hussmann, Zero Zone, Manitowoc, Rheem, and AHRI 
argued that process cooling refrigeration systems do not fit the EPCA 
definition of a WICF ``enclosed storage space.'' (42 U.S.C. 6311 (20)). 
Manitowoc, Rheem, and AHRI also stated that the inclusion of these 
equipment was not discussed in the ASRAC negotiations and requested 
that process cooling refrigeration systems be removed from the scope of 
the WICF test procedure and be specifically excluded from the WICF 
energy conservation standard and the EPCA prescriptive requirements. 
(Hussmann, No. 83 at p. 2; Zero Zone, No. 88 at p. 1; Manitowoc, No. 82 
at pp. 1-2; Rheem, No. 91 at p. 2; AHRI, No. 90 at p. 2)
    Conversely, the CA IOUs supported classifying process cooling 
equipment as WICF equipment, which would require the refrigeration 
systems, panels, and doors of process cooling equipment to meet the 
prescriptive standards set by EISA 2007. Further, they supported 
applying the June 2014 final rule WICF standards and the proposed 
standards to process cooling panels, doors, and dedicated condensing 
units not sold as part of a ``matched pair'' with a unit cooler. (CA 
IOUs, No. 80 at p. 2) (The R-value requirements for panels and doors 
are carry-overs from EISA 2007.)
    EPCA defines ``walk-in cooler'' and ``walk-in freezer'' as an 
enclosed storage space refrigerated to temperatures, respectively, 
above, and at or below 32 degrees Fahrenheit that can be walked into, 
and has a total chilled storage area of less than 3,000 square feet. 
(42 U.S.C. 6311(20)(A)) While EPCA does not define the component terms 
``storage'' or ``can be walked into'' used in the walk-in definition, 
it does expressly exclude certain equipment from the definition (i.e. 
equipment designed and marketed exclusively for medical, scientific, or 
research purposes). (42 U.S.C. 6311(20)(B))
    Commenters appear to be arguing that a unit must hold contents for 
some minimum time-period to meet the ``storage'' element of the 
definition but offered no suggested time period for DOE to consider in 
applying this definition. The statutory definition of ``walk-in cooler 
and walk-in freezer'' does not indicate a specific timing requirement 
or provide further information about when the use of a space 
constitutes storage. Further, although dictionary definitions of 
``storage'' indicate that the contents be kept for some period of time, 
no specific period is provided.\22\ As noted in the August 2016 TP 
NOPR, the Working Group recommended that DOE define ``storage space''--
which suggests that the term is ambiguous. 81 FR at 54934 (August 17, 
2016). DOE acknowledges that the role of a process cooler or freezer is 
to chill food rapidly (to approach the temperature of the cooler or 
freezer, respectively), and one could interpret ``storage space'' to 
mean a space the primary purpose of which is storage. However, that 
understanding of ``storage space'' would be incongruous in the context 
of walk-in coolers and freezers. The purpose of such equipment is not 
simply storage per se, like a warehouse; it is storage at cold 
temperatures. Storage at cold temperatures necessarily encompasses 
chilling the items to be stored until they reach the temperature of the 
storage space, because items are rarely at exactly the storage 
temperature when they arrive to a walk-in cooler or freezer. A process 
cooler or freezer chills items more quickly than many walk-ins, but DOE 
regards that difference as being a difference in degree, not a 
fundamental difference in kind that makes a process cooler ``chilling'' 
equipment and not ``storage'' equipment.
---------------------------------------------------------------------------

    \22\ ``Storage: 1. The act of storing; state or fact of being 
stored. 2. capacity or space for storing. 3. a place, as a room or 
building, for storing. 4. Computers. memory (def 11). 5. the price 
charged for storing goods.'' en.oxforddictionaries.com/definition/storage. ``Storage: 1a: Space or a place for storing b: An amount 
stored c: Memory; 2a: The act of storing: The state of being stored; 
especially: The safekeeping of goods in a depository (as a 
warehouse) b: The price charged for keeping goods in a storehouse.'' 
www.merriam-webster.com/dictionary/storage.
---------------------------------------------------------------------------

    DOE notes that Recommendation #7 from WICF Term Sheet (which 
contains the only mention of process cooling in the Term Sheet) 
recommended that DOE add ``WICF specific definitions for process 
cooling, preparation room refrigeration, and storage space.'' (Term 
Sheet, No. 56 at p. 3) This recommendation does not state that these 
categories of equipment are excluded from the scope of WICFs. In fact, 
a comment received in response to the initial 2013 notice of proposed 
rulemaking for energy conservation standards stated that process 
cooling equipment would appear to fall within the walk-in definition. 
(Docket No. EERE-2008-BT-STD-0015, Hussmann, No. 93 at pp. 2, 8-9) In 
re-examining that comment, along with other information and materials 
since the publication of the June 2014 final rule, DOE has reconsidered 
its prior views on process cooling equipment.
    As noted in the August 2016 TP NOPR, contents are placed in process

[[Page 31826]]

cooling equipment for at least a brief period of time to reduce their 
temperature. 81 FR at 54934 (August 17, 2016). When asked during the 
public meeting how long the products remain in a process cooling system 
when they are being cooled, American Panel noted that, although the 
Food and Drug Administration and NSF International have recommended 
maximum processing times, there is no industry-specified minimum or 
maximum processing duration for blast chillers or blast freezers. 
(Docket No. EERE-2016-BT-TP-0030, American Panel, Public Meeting 
Transcript, No. 23 at p. 48) DOE notes that the 2013 FDA Food Code 
requires that food starting at 135 [deg]F be cooled to 70 [deg]F within 
2 hours and to 41 [deg]F within 6 hours (FDA 2013 Food Code, Chapter 3, 
Section 501.14(A)), while NSF requires that rapid pulldown 
refrigerators and freezers be able to reduce food temperature from 135 
[deg]F to 40 [deg]F in 4-hours. (NSF/ANSI 7-2009, section 10.5.1) These 
time periods differ significantly and are substantially longer than the 
90-minute pulldown times discussed in the June 2014 final rule. (79 FR 
at 32068 (June 3, 2014)). This observation underscores American Panel's 
statement that there is no standard maximum processing time. Also, 
while DOE recognizes that product may remain in process cooling 
equipment for a short period of time, this fact alone does not 
necessarily clarify that the equipment cannot be considered to have a 
storage function. The period of time a product can be held in a cooler 
or freezer without sustaining some damage can be expected to vary 
product by product, depending on a variety of factors including, 
whether the product is chilled or frozen, its packaging when inserted 
into the equipment (e.g., what type and size container it is in, 
whether or not it is covered, etc.), moisture content, size of the 
individual food pieces, and other factors. Commenters did not provide 
any indication of how long food products can remain in process cooling 
equipment after completion of cooldown before they must be removed to 
avoid damage--hence, making it difficult to draw clear distinctions 
between residence time in this equipment and lengths of time that would 
be associated with ``storage.''
    Absent a definitive time-period to delineate the use of space as 
storage space, DOE considered the design and operation of process 
cooling equipment with other equipment falling within the WICF 
definition. DOE considers that design and operation are reflective of 
the function of equipment (i.e., whether it constitutes storage space) 
because these two elements are necessary components in determining the 
function or purpose of a given type of equipment.
    Manitowoc and AHRI argued in response to the August 2016 TP NOPR 
that the panels and doors used by process cooling systems are not the 
same as those used in other WICF systems and therefore the WICF 
prescriptive requirements should not apply. (Docket No. EERE-2016-BT-
TP-0030, Manitowoc, No. 10 at p. 3; AHRI, No. 11 at p. 5) Manitowoc and 
AHRI did not clarify how the panels and doors are different, and 
provided no indication that process coolers needed specific utility 
features that would justify the use of different efficiency levels or 
be the basis for relief from the performance requirements that are 
already in place. DOE notes that this discussion of panels and doors 
did not provide any clarity as to whether process cooling equipment 
provides any storage function.
    In the context of blast chillers, American Panel noted that while 
the panels and doors for this equipment were similar to those used in 
other walk-ins, the refrigeration systems used in blast chillers are 
designed and used very differently from walk-ins--a fact that, in its 
view, necessitated that these (and similar process cooling equipment) 
be treated separately from walk-ins. (Docket No. EERE-2016-BT-TP-0030, 
American Panel, No. 7 at p. 1) American Panel did not clarify how the 
refrigeration systems are designed differently, in spite of DOE's 
request for data or information on the qualities, characteristics, or 
features specific to the refrigeration system that would cause a 
process refrigeration system to be unable to meet a walk-in 
refrigeration system standard. See 81 FR at 54950 (August 17, 2016).
    American Panel, however, asserted that blast chillers and shock 
freezers differ from walk-ins in that they have an on/off switch, they 
do not reach a stable condition until the pulldown cycle ends, either 
automatically or manually, and they rely on the user to stop and 
restart the cycle. (Docket No. EERE-2016-BT-TP-0030, American Panel, 
No. 7 at p. 1) In its view, all of these features differed from the 
operation of walk-ins, which typically operate continuously and 
independent of user action, being connected to power at all times. DOE 
notes that this description of refrigeration equipment operation also 
applies to other walk-in systems. The walk-in refrigeration system is 
sized so that its capacity is greater than the walk-in box load. 
Equation 1, for example, in AHRI 1250-2009, indicates that the box load 
for a walk-in is 70 percent of the net refrigeration system capacity at 
the design temperature for conditions outside the box. Hence, a walk-in 
refrigeration system does not achieve steady state operation--it relies 
on a thermostat to shut the system off at the desired internal 
temperature (e.g., 35 [deg]F for a walk-in cooler) as the refrigeration 
system is pulling down temperature to what would be a lower steady-
state temperature. As American Panel indicated, a process cooling 
system does not reach stable operation until the pulldown cycle has 
ended and an automatic control may end the cycle to transition the 
system from the pulldown cycle into stable operation. This ending of 
the pulldown with an automatic control is the same as a walk-in 
system's pulldown cycle ending by a thermostat. Hence, in DOE's view, 
American Panel's observations do not provide a clear distinction 
between process cooling and other walk-in equipment since the 
fundamental operational characteristics remain the same.
    American Panel also contended that, because a blast chiller's 
operation changes continuously and the equipment exhibits no stable 
operating condition, it cannot be tested to a rated AWEF and a test 
procedure cannot be applied. (Docket No. EERE-2016-BT-TP-0030, American 
Panel, Public Meeting Transcript, No. 23 at pp. 46-47, 56, 78) American 
Panel added that, if the test procedure were to be updated to include 
blast chiller performance testing, the food industry would support 
using NSF's testing methods for rapid pulldown refrigeration as a 
starting point. (Docket No. EERE-2016-BT-TP-0030, American Panel, No. 
07 at p. 2) DOE notes first that a performance-based test procedure 
requiring steady state operation is not necessary for process cooling 
refrigeration systems, because equipment meeting the definition is 
excluded from the walk-in refrigeration system performance 
standards,\23\ and, hence, a method for measuring AWEF for such 
equipment is not needed. However, DOE notes also that a blast chiller 
refrigeration system appears to have no steady operating condition 
because its capacity is so much larger per insulated box internal 
volume than for other walk-ins. Once the products have been pulled down 
to the specified temperature, the walls of the box do not transmit 
sufficient load to prevent the internal box temperature from dropping 
further--i.e. the box does

[[Page 31827]]

not absorb enough heat to prevent its interior from becoming colder. If 
the same refrigeration system were serving a much larger box, the 
internal temperature may very well stabilize to a steady-state 
operating temperature. Conducting a test to determine the system's AWEF 
would require testing the equipment with a test chamber whose indoor-
room conditioning system has enough heating capacity to balance the 
refrigeration system's cooling capacity. Hence, the difference between 
a process cooling refrigeration system and other walk-in refrigeration 
systems is a function of the magnitude of capacity, rather than any 
fundamental difference in the operation of the equipment. While the 
magnitude of capacity is relevant to how quickly a unit lowers the 
temperature of its contents, and may be instructive as to the duration 
of storage, it does not inform the fundamental consideration of whether 
a unit provides any storage.
---------------------------------------------------------------------------

    \23\ DOE notes that this exclusion does not apply to condensing 
units distributed in commerce individually, because, as discussed 
elsewhere in this section, they are indistinguishable from other 
walk-in refrigeration systems.
---------------------------------------------------------------------------

    Process cooling equipment such as blast chillers and blast 
freezers, despite any asserted differences, have several 
characteristics in common with more conventional walk-ins that make 
them capable of serving the function of refrigerated product storage. 
These characteristics include having an insulated enclosure made of 
insulated panels and a door (or doors) sufficiently large that the 
enclosure can be walked into, and being cooled with a refrigeration 
system consisting of a dedicated condensing unit and a refrigerant 
evaporator that operates using forced convection heat transfer (i.e., 
enhanced by air movement created by a fan). The panels and doors are 
fabricated with a sheet metal exterior shell around insulation that 
serves as a thermal barrier. The panels and/or door may also have a 
multi-pane window to allow viewing of the interior of the enclosure 
from the outside. The doors have hinges or another mechanism to allow 
opening for access to the enclosure interior, with a latching mechanism 
to ensure positive closure when shut. The refrigeration system can 
operate to cool the enclosure to refrigerated temperatures. Product can 
be placed in the refrigerated enclosure. If the product is not already 
at the temperature of the internal refrigerated space, the product's 
temperature will drop, approaching the temperature of the interior, due 
to transfer of heat to the air within the enclosure; otherwise the 
product temperature remains at the average internal temperature until 
removed from the enclosure. As discussed above, while some of the 
details of the design of such systems differ from other walk-ins, these 
equipment generally resemble all walk-ins and are capable of serving 
the function of refrigerated product storage.
    AHRI, Manitowoc, and Rheem also asserted that process cooling 
equipment is inconsistent with the term ``walk-in'' because a person 
cannot walk into a process cooling enclosure during operation. (Docket 
No. EERE-2016-BT-TP-0030, AHRI, No. 11 at p. 5; Manitowoc, No. 10 at p. 
3; Rheem, No. 18 at p. 3) However, DOE notes that the walk-in 
definition does not specify when the equipment can be walked into--it 
simply states that the equipment must be one ``that can be walked 
into.'' (42 U.S.C. 6311(20)(A))
    In interpreting the ``walk-in cooler and freezer'' definition, DOE 
also considered the terms in the context of EPCA's WICF provisions as a 
whole. EPCA establishes a number of prescriptive requirements for 
WICFs. (42 U.S.C. 6313(f)(1)) While not dispositive, none of the 
prescriptive requirements conflicts with including process cooling 
equipment as a class of walk-in. Additionally, Congress has already 
spoken to the groups of equipment that are excluded from the walk-in 
definition by listing specific equipment (i.e., ones designed and 
marketed exclusively for medical, scientific, or research purposes) 
that would be walk-ins. (42 U.S.C. 6311(20)(B)) Process cooling 
equipment is not part of this listing, which suggests that Congress did 
not contemplate that this equipment would be excluded from being 
treated as a class of walk-in equipment.
    In consideration of these factors, DOE has determined that process 
cooling equipment falls within the EPCA definition of ``walk-in 
cooler'' and ``walk-in freezer.'' While products may not be able to be 
stored in process cooling equipment on a long-term basis, products are 
still stored in process cooling equipment at least for the duration 
they are cooled. If Congress had intended to limit the application of 
the walk-in definition to include only long-term storage, it could have 
done so when crafting the final language of the statute. Congress, in 
fact, did not limit what comprises storage space. Moreover, when 
comparing the design and function of process cooling equipment with 
other WICFs, DOE was unable to determine a distinction with regard to 
storage.
    AHRI, Manitowoc, KeepRite, Rheem, and Hussmann argued that 
including process cooling equipment in the definitions of walk-in 
cooler and walk-in freezer would be inconsistent with DOE's proposed 
definition for refrigerated storage space, ``as space held at 
refrigerated temperatures'' since process cooling equipment does not 
hold a specific temperature but changes the temperature of the 
contents. (Docket No. EERE-2016-BT-TP-0030, AHRI, No. 11 at p. 5; 
Manitowoc, No. 10 at p. 3; KeepRite, No. 17 at p. 2; Rheem, No. 18 at 
p. 3; Hussmann, No. 20 at p. 4) DOE notes that comments submitted by 
Bally describe process cooling equipment as operating at ``cold 
temperatures (min. of 5 [deg]F)'' and having ``doors [that] must stay 
condensate free while the air temperature is at 5 [deg]F.'' (Docket No. 
EERE-2016-BT-TP-0030, Bally, No. 22 at p. 1) These descriptions suggest 
control of temperature within the blast chiller is held at the minimum 
5 [deg]F--in other words, the interior is held at a temperature near 5 
[deg]F. This fact suggests that process cooling equipment can (and do) 
hold temperatures, contrary to the comments. Nevertheless, DOE notes 
that the proposed definition for refrigerated storage space as ``space 
held at refrigerated temperatures'' does not require that the 
temperature be held at a discrete constant value--instead, it only 
requires that the space is held at a temperature consistent with 
``refrigerated,'' i.e., ``held at a temperature at or below 55 
[deg]F''. The spaces within blast chillers and freezers are held below 
55 [deg]F and, thus are consistent with the definition of 
``refrigerated storage space.''
    NAFEM also weighed in on this issue generally, arguing that blast 
chillers should not be considered within the scope of the walk-in 
definition because there is no appropriate test procedure for blast 
chillers. (Docket No. EERE-2016-BT-TP-0030, NAFEM, No. 14 at p. 1) 
However, EPCA's walk-in definition does not stipulate that its scope 
extends only to equipment for which there is a test procedure. In fact, 
EPCA mandated prescriptive standards for walk-ins that took effect (on 
January 1, 2009, see 42 U.S.C. 6313(f)(1)) before DOE finalized a test 
procedure on April 15, 2011 for measuring a given unit's energy 
efficiency. 76 FR 21580. Similarly, in response to American Panel's 
comment that a process cooling refrigeration system is not a walk-in 
because it cannot be rated with an AWEF, satisfaction of the separate 
statutory prescriptive requirements specified in the statute (e.g. use 
of certain componentry, satisfaction of certain thermal insulation 
thresholds for doors and panels, and installation of devices to 
minimize infiltration) have no direct bearing on the AWEF value of a 
given refrigeration system. Hence, the question of whether a given 
walk-in

[[Page 31828]]

refrigeration system can be rated with this metric has no bearing on 
whether the equipment is a walk-in.
    Manitowoc, Rheem, and AHRI also noted that an ASHRAE Special 
Project Committee (``SPC'') has been formed to draft a relevant testing 
standard titled, ``Method of Testing for (Rating) Small Commercial 
Blast Chillers, Chiller/Freezers, and Freezers.'' They argued that in 
light of this work, it is premature to define process cooling systems 
while this new industry standard is still under development. (Docket 
No. EERE-2016-BT-TP-0030, Manitowoc, No. 10 at p. 3; Rheem, No. 18 at 
p. 3; AHRI, No. 11 at p. 5) DOE notes that the WICF Working Group, 
which included Manitowoc and Rheem, requested that DOE develop a 
definition for process cooling. Before the finalization of the WICF 
Term Sheet on December 15, 2015, DOE was not aware of any announcement 
from ASHRAE SPC regarding the start of its work. Nevertheless, the SPC 
has not finished its work, and the commenters did not provide any 
indication of what equipment definitions the SPC is considering. 
Accordingly, DOE has finalized its definition in the manner proposed, 
based on the industry input provided. DOE may consider revising its 
``process cooling'' definition if necessary once the ASHRAE rating 
method for blast chillers, chiller/freezers, and freezers is complete.
    Finally, DOE notes that the CA IOUs supported treating process 
cooling as a subset category of WICF equipment. Further, they supported 
requiring process cooling panels, doors, and dedicated condensing units 
not sold as part of a ``matched-pair with a unit cooler'' to meet the 
June 2014 final rule WICF standards and the proposed standards under 
consideration. (Docket No. EERE-2016-BT-TP-0030, CA IOUs, No. 21 at p. 
2)
    As described in the August 2016 TP NOPR, DOE concluded that while 
process cooling enclosures that resemble walk-ins are within the scope 
of walk-ins, it proposed to exclude some of the refrigeration systems 
of these process cooler walk-ins from the performance-based standards 
established and in development for WICF refrigeration systems. 81 FR at 
54934-54937 (August 17, 2016). For the reasons described earlier, DOE 
has not revised its proposed approach after review of the comments, and 
believes that its definition, as adopted in the December 2016 TP final 
rule, satisfies the recommendations of the Working Group Term Sheet.
Distinguishing Characteristics of Process Cooling Refrigeration Systems
    DOE received few comments regarding the distinguishing 
characteristics proposed for process cooling refrigeration systems. In 
fact, only one of the commenters mentioned any characteristic of the 
refrigeration system condensing unit of a process cooling system that 
might distinguish it from the equipment serving other walk-ins--Bally 
commented that the condensing units are not unique to blast chillers, 
except with respect to extra receiver capacity. (Docket No. EERE-2016-
BT-TP-0030, Bally, No. 22 at p. 1) However, DOE would not consider a 
larger receiver to be a sufficient difference to distinguish these 
condensing units since using a larger receiver would not affect steady 
state energy use as measured by the test procedure, since the receiver 
itself does not consume energy and does not contribute significantly to 
the heat transfer function of the condenser. Furthermore, there is a 
range of refrigerant receiver capacities used in walk-in refrigeration 
systems and it is not clear that there is an appropriate receiver 
capacity threshold that would indicate that a condensing unit is used 
for process cooling rather than for other walk-in functions--neither 
Bally nor other commenters suggested such a threshold value. 
Consequently, DOE would not consider a larger receiver to distinguish 
process cooling condensing units. Absent any other clear distinguishing 
feature, DOE must conclude that the condensing units used for process 
cooling are no different than those used for other walk-ins.
    Lennox recommended that the evaporator coil height, width, and 
depth be defined on a diagram accompanying the proposed definition to 
prevent a misinterpretation of the dimensions. (Docket No. EERE-2016-
BT-TP-0030, Lennox, Public Meeting Transcript, No. 23 at p. 40) Lennox 
provided a diagram to illustrate this in its written comments (Docket 
No. EERE-2016-BT-TP-0030, Lennox, No. 13 at p. 8) In reviewing this 
diagram, DOE agreed that the dimensions shown in the provided diagram 
are consistent with the proposed definition's intent and agrees that a 
diagram would be useful to clarify the applicable dimensions. 
Accordingly, the test procedure final rule incorporates a diagram based 
on the one submitted by Lennox to clarify the process cooling 
definition. 81 FR at 95772 (December 28, 2016).
    With respect to blast freezers, Bally noted that some of these 
equipment use horizontally-oriented evaporator units and some non-
process cooling refrigeration systems chill their contents using a 
circular pattern. In its view, because of the absence of any standard 
orientation or chilling pattern for process cooling and non-process 
cooling refrigeration systems, these design characteristics are not 
useful for differentiating process refrigeration systems. (Docket No. 
EERE-2016-BT-TP-0030, Bally, Public Meeting Transcript, No. 23 at pp. 
41-42) DOE notes that a horizontally-oriented evaporator that is not 
part of a unit cooler as defined would not be subject to the unit 
cooler standards, nor would it, as a matched pair with a dedicated 
condensing unit, be subject to the dedicated condensing unit standards. 
In order to clarify the extension of this exclusion to matched pairs 
including such evaporators, DOE has modified the process cooling 
refrigeration system definition to explicitly list dedicated condensing 
units that are distributed in commerce exclusively with evaporators 
that are not unit coolers. 81 FR at 95772 (December 28, 2016).
    Alternatively, Bally suggested that airflow rate may be a good 
characteristic for differentiating process refrigeration systems from 
other walk-in refrigeration systems. (Docket No. EERE-2016-BT-TP-0030, 
Bally, Public Meeting Transcript, No. 23 at p. 44) American Panel 
expressed concern with the use of a cooling capacity per enclosed 
volume rating to differentiate process cooling equipment because the 
equipment may be used to process different quantities or densities of 
product at different times--a condition which may prevent a given blast 
chiller from satisfying a definition based on cooling capacity per 
enclosed volume. (Docket No. EERE-2016-BT-TP-0030, American Panel, 
Public Meeting Transcript, No. 23 at pp. 38-39) DOE had considered 
airflow rate or air velocity to distinguish process cooling 
evaporators, noting that evaporator fan power, velocity, or air flow of 
a unit cooler could be atypically high for a number of reasons, 
including the use of inefficient fans or motors, long air ``throw'' 
distance, and other factors. (See 81 FR at 54936 (August 17, 2016)) For 
example, DOE's investigation of evaporator fan horsepower showed that 
the horsepower for process cooling evaporator fans, although generally 
higher than for other walk-in evaporators, is not always higher than 
all such other walk-in evaporators--a potential overlapping fact that 
lessens the value of using horsepower as a clear distinguishing 
characteristic. Hence, DOE concluded that there would be too much 
overlap with other WICF unit

[[Page 31829]]

coolers on the basis of these parameters. DOE notes that Bally's 
submission did not provide sufficient information or data that would 
support the use of a specific air flow rate on which DOE could rely 
that would serve as the basis for distinguishing process coolers from 
other walk-in refrigeration systems. With respect to American Panel's 
concerns, DOE notes that its comments provided no alternative value of 
cooling load per volume for DOE to consider that would enable one to 
readily distinguish process cooling refrigeration systems from non-
process cooling refrigeration systems. While American Panel seems to 
suggest that the capacity of the refrigeration system would depend on 
the load inserted into a process cooler, DOE disagrees, because the 
capacity cited in the proposed definition is the refrigeration system's 
net capacity when determined in a manner consistent with the prescribed 
walk-in test conditions--this capacity depends on the refrigeration 
system characteristics, not on how much product is being cooled. 
Specifically, when testing a condensing unit alone, the test calls for 
maintaining certain operating conditions (see, e.g., tables 11 through 
14 of AHRI 1250-2009, which specify air and refrigerant entering 
conditions and refrigerant exiting subcooling condition, but nothing 
about the quantity of product being cooled). No commenters provided 
specific suggestions regarding the appropriateness of the proposed 100 
Btu/h per cubic foot, i.e., what lower value would be more appropriate. 
Additionally, commenters provided no other suggestions regarding more 
appropriate distinguishing characteristics to use for process cooling 
refrigeration systems, and none provided specific quantified values for 
recommended parameters to use in the definition. Hence, DOE is largely 
adopting the approach contained in its proposed definition.
    However, to address the comments regarding the inconsistency of the 
``storage'' aspect of walk-ins with the pulldown of product temperature 
in process cooling equipment, DOE will modify the definition to 
identify refrigeration systems that are ``capable of rapidly cooling 
food or other substances'' rather than systems that are ``used 
exclusively'' for this purpose. Also, in order to clarify that the 
enclosure that uses these refrigeration systems is insulated, DOE will 
insert ``insulated'' before the word ``enclosure'' in the definition.
    KPS raised concern regarding the precision of the process cooling 
definition, indicating that ``blast chillers'' and ``blast freezers'' 
are used by customers and manufacturers to describe a range of product 
types. (Docket No. EERE-2016-BT-TP-0030, KPS, No. 8 at p. 1) KPS did 
not, however, elaborate on what other types of equipment should be 
addressed (or excluded) by DOE's proposed definition. DOE is aware, for 
example, of blast chillers and freezers that are smaller than walk-ins 
and that might be considered ``reach-in process cooling equipment,'' 
i.e., process cooling equipment which the user reaches into rather than 
walks into to insert or remove product. This terminology is consistent 
with the term ``reach-in'' used with commercial refrigeration equipment 
(see, e.g., Double Door Refrigerator, No. 93) However, DOE is not 
concerned that such equipment would be confused with walk-in process 
cooling equipment, because such reach-in equipment cannot be walked 
into.
Impact on Refrigeration System Energy Conservation Standards
    As discussed above, process cooling refrigeration systems generally 
are not subject to the energy conservation system standards that are 
the subject of this final rule notice. DOE explicitly established the 
process cooling refrigeration system definition in acknowledgement that 
the energy use of these systems may not be adequately represented by 
the AWEF metric used to represent the efficiency of other walk-in 
refrigeration systems. Consequently, this equipment has little bearing 
on the analysis conducted for this rulemaking or the efficiency levels 
considered as potential standard levels. Nevertheless, walk-in process 
cooling equipment is subject to other standards, notably the EPCA 
prescriptive design standards and the standards for panels and doors as 
prescribed by the June 2014 final rule.
b. Preparation Room Refrigeration Systems
    Hussmann, Zero Zone, Manitowoc, Rheem, and AHRI argued that 
preparation room refrigeration systems do not fit the EPCA definition 
of a WICF ``enclosed storage space.'' (42 U.S.C. 6311 (20)). Manitowoc, 
Rheem, and AHRI also stated that the inclusion of these equipment was 
not discussed in the ASRAC negotiations and requested that preparation 
room refrigeration systems be removed from the scope of the WICF test 
procedure and be specifically excluded from the WICF energy 
conservation standard and the EPCA prescriptive requirements. 
(Hussmann, No. 83 at p. 2; Zero Zone, No. 88 at p. 1 Manitowoc, No. 82 
at pp. 1-2; Rheem, No. 91 at p. 2; AHRI, No. 90 at p. 2) Stakeholders 
expressed similar comments in response to the August 2016 TP NOPR. DOE 
responded to these comments in the December 2016 TP final rule, 
providing extensive discussion supporting its position, and concluding 
that preparation room refrigeration systems are indistinguishable from 
other walk-in refrigeration systems, and hence are subject to the walk-
in refrigeration system energy conservation standards. 81 FR at 95773-
95774 (December 28, 2016).
c. Single-Package Dedicated System
    The CA IOUs agreed that AHRI 1250-2009 is an appropriate test 
procedure for ``packaged dedicated systems'' and suggested the term 
``packaged dedicated system'' be changed to ``single-package dedicated 
system'' or ``self-contained units,'' in order to improve clarity and 
align regulatory and industry language. (CA IOUs, No. 80 at pp. 2-3)
    Conversely, Manitowoc, Rheem, and AHRI argued that packaged 
dedicated units be excluded from the scope of the WICF test procedure 
and specifically excluded from EPCA's prescriptive design requirements 
and energy conservation standards because their proposed inclusion was 
neither discussed in the ASRAC negotiations nor a part of the Term 
Sheet approved by the Working Group. (Manitowoc, No. 82 at pp. 1-2; 
Rheem, No. 91 at p. 2; AHRI, No. 90 at p. 2)
    DOE notes that section 2.1 of AHRI 1250-2009 states that the scope 
of this testing standard ``applies to mechanical refrigeration 
equipment consisting of an integrated single package refrigeration unit 
[emphasis added], or separate unit cooler and condensing unit sections, 
where the condensing section can be located either outdoor or indoor.'' 
AHRI 1250-2009, section 2.1.
    DOE agreed that the suggested use of the term ``single-package 
dedicated refrigeration system'' would provide further clarity, 
indicating much more precisely what this equipment is, and is 
consistent with the approach used for air-conditioning units. DOE 
adopted the suggested term from the CA-IOUs in its December 2016 TP 
final rule. 81 FR at 95764 (December 28, 2016).
    DOE notes that the definition for ``refrigeration system'' was 
established in the context of walk-ins to include ``(1) A packaged 
dedicated system where the unit cooler and condensing unit are 
integrated into a single piece of equipment'' in its April 15, 2011 
final rule establishing test procedures for WICFs. 73 FR at 21605. In 
DOE's view, packaged systems are walk-in refrigeration systems and are 
subject to

[[Page 31830]]

the applicable prescriptive standards established by Congress through 
EISA 2007 along with the performance standards that DOE prescribes for 
these systems.\24\ DOE notes that this view is not restricted to DOE, 
as two manufacturers confirmed that a single-package refrigeration 
system is a type of dedicated condensing system on two occasions during 
the Working Group meetings. (Docket No. EERE-2015-BT-STD-0016; Lennox, 
Public Meeting Transcript (October 16, 2015), No. 63 at pp. 249-251; 
Rheem, Public Meeting Transcript (December 3, 2015), No. 57 at p. 157). 
Also, DOE notes that the Term Sheet included no indication that these 
systems are excluded. (Term Sheet, No. 56) Thus, DOE disagrees that 
these systems are not considered to be WICF refrigeration systems 
subject to WICF standards, including the prescriptive standards 
mandated by EPCA.
---------------------------------------------------------------------------

    \24\ With respect to these prescriptive requirements, DOE notes 
that the relevant statutory provision does not indicate that the 
promulgation of performance standards supplants those standards that 
Congress already mandated through its enactment of EISA 2007. 
Accordingly, because there is no explicit authority in this instance 
for DOE to override a statutorily-prescribed standard, the initial 
design requirements established by Congress continue to apply. See 
42 U.S.C. 6313(f)(1)-(5) (detailing prescriptive design requirements 
for certain walk-in components and the process by which DOE must 
prescribe separate walk-in performance-based standards).
---------------------------------------------------------------------------

d. Hot Gas Defrost
    Lennox agreed with the removal of the hot gas defrost credit from 
the test procedure, and recommended that, as a replacement for this 
removal, that DOE adopt an approach where hot gas defrost models would 
be assigned the AWEF value of an equivalent electric defrost model. 
Lennox defined an equivalent electric defrost model as one within +/- 
10% of the net capacity of the rated hot gas model. If an equivalent 
electric defrost model is not available, Lennox recommended that an 
AEDM could be used to determine a hot gas model's AWEF rating. (Lennox, 
No. 89 at pp. 5-6) DOE also received numerous comments regarding the 
treatment of hot gas defrost units in response to the test procedure 
NOPR, several of which recommended similar or identical approaches. DOE 
discussed these comments and responded to them in the test procedure 
final rule, establishing an approach that includes testing such units 
as if they are electric defrost units, using standardized energy and 
defrost thermal load contributions in the AWEF calculations. 81 FR at 
95774-95777 (December 28, 2016).
e. High-Temperature Freezers
    Lennox requested that DOE allow manufacturers to publish 
application ratings of medium temperature condensing units to cover the 
high temperature freezer application range (room temperature of 10 
[deg]F to 32 [deg]F) and allow sale for that use. Due to the 
limitations of low-GWP refrigerants approved by the U.S. Environmental 
Protection Agency's (``EPA's'') Significant New Alternatives Policy 
(``SNAP''), Lennox noted that only medium temperature condensing units 
are able to operate in this range and thus preventing manufacturers 
from selling these units for this application would violate EPCA's 
mandate that a new standard shall not result in the unavailability of 
any product type, features, sizes, capacities and volumes (42 U.S.C. 
6295(o)(4)). Further, it suggested that such a limitation would lessen 
``the utility or performance'' of this equipment (as contemplated under 
42 U.S.C. 6295(o)(2)(B)(i)(IV)) because in today's marketplace, 
manufacturers publish application data for medium temperature 
condensing units covering this application range. Lennox also argued 
that creating a new equipment class or allowing test procedure waivers 
for these cases will add to manufacturer burden (i.e., additional 
testing, certification, and marketing costs) without passing any 
benefit along to customers or improving energy efficiency performance. 
Finally, Lennox provided test data for 12 medium temperature and 11 low 
temperature condensing units showing that the medium temperature units 
actually achieve a higher AWEF value than the low temperature units 
when operating at the 10 [deg]F test condition. In its view, allowing 
manufacturers to market and sell their medium temperature units for 
this application range may actually result in better energy efficiency 
performance. (Lennox, No. 89 at pp. 2-5)
    As explained in the test procedure final rule, DOE requires that 
equipment that is distributed in commerce consistent with the 
definitions for multiple equipment classes must be certified for all 
such classes. 81 FR 95791 (December 28, 2016). Lennox's assertions 
regarding the potential lessening of utility or performance or the 
unavailability of any product type, features, sizes, capacities and 
volumes are undercut by the available data, which show that all of the 
equipment performance projections--including those provided in Lennox's 
comments--exceed the minimum AWEF standard proposed by DOE by a large 
margin (i.e., have a higher energy efficiency performance than the 
proposed standard). (Lennox, No. 89 at p. 4) Hence, the proposed (and 
final) standard's stringency will not make these equipment unavailable 
or reduce their utility.
3. Rulemaking Timeline
    DOE issued the test procedure final rule on December 2, 2016. DOE 
issued the energy conservation standard NOPR on August 30, 2016 and 
published it on September 13, 2016. 81 FR 62980. The comment period for 
the energy conservation standard NOPR closed on November 14, 2016.
    AHRI, Hussmann and Zero Zone commented on DOE's timeline in 
conducting concurrent test procedure and energy conservation standard 
rulemakings. (Docket No. EERE-2015-BT-STD-0016, AHRI, No. 90, at pp. 2-
3; Hussmann, No. 83, at p. 2; Zero Zone, No. 88, at p. 1) Hussmann 
stated that overlapping NOPRs and comment review periods are not 
adequate. Zero Zone suggested that DOE should not finalize energy 
conservation standard levels until the test procedure is finalized. 
AHRI expressed concern that the concurrent rulemakings present a 
challenge to stakeholders commenting on both proposals. AHRI indicated 
its view that DOE's proposal is different from the Working Group Term 
Sheet. Further, AHRI reiterated its requests that DOE's test procedure 
should exclude ``packaged units,'' ``process refrigeration systems'' 
and ``preparation room refrigeration systems'' and amend the proposed 
standards to specifically exclude these equipment from coverage under 
those standards.
    As described in Section II.A, the negotiated rulemaking that led to 
the Term Sheet setting out the standards that DOE is adopting in this 
final rule also produced recommendations (with ASRAC's approval) that 
DOE modify its test procedure for walk-in refrigeration systems. The 
test procedure changes at issue specifically address the Term Sheet 
recommendations, i.e., that DOE amend the test procedure to clarify the 
scope of equipment classes covered by the regulations, (Term Sheet 
Recommendations #1 and #7, No. 56 at pp. 1-3), and remove from the test 
procedure any test methods associated with technology options deemed by 
the Working Group to be inappropriate for consideration under the 
standards rulemaking (Term Sheet Recommendations #2, #3, and #4, No. 56 
at p. 2). DOE issued a pre-publication version of the test procedure 
NOPR on July 29, 2016 and immediately made it available for stakeholder 
review, thus

[[Page 31831]]

giving an extended period for consideration of the test procedure 
clarifications and simplifications. DOE amended the test procedure 
consistent with its understanding of the approach agreed upon by the 
various parties who participated in the negotiated rulemaking.
    DOE notes that the test procedure NOPR proposed no changes to the 
test methods used to determine equipment efficiency levels, other than 
the amendments made, consistent with the Term Sheet, of removing the 
test provisions for hot gas defrost, and requiring the demonstration of 
compliance without the use of adaptive defrost or on-cycle evaporator 
fans. In light of these facts, in DOE's view, stakeholders had 
sufficient notice and information regarding these specific aspects 
related to the test procedure. No additional time was needed to 
consider these aspects of the proposed amendments beyond that which DOE 
already provided during its negotiated rulemaking meetings and the 
proposal itself.
    DOE notes also that comments were received in response to the 
energy conservation standard NOPR, and that some of these addressed 
interaction between the energy conservation standard and the test 
procedure, thus indicating that commenters had time to voice concerns 
regarding such interactions. Further, DOE notes that none of the 
comments recommended that the proposed standard levels should be 
changed if the final test procedure were as proposed in the test 
procedure NOPR. As mentioned above, there were no proposed changes to 
the test methods other than those recommended by the Working Group--
hence, since there is no measurement change, there is no basis for 
consideration of any standards adjustment associated with measurement 
change. Finally the test method of the final rule is identical to that 
of the NOPR, so stakeholder comments made on the basis of the proposed 
test procedure would have been equally relevant on the basis of the 
finalized test procedure.\25\
---------------------------------------------------------------------------

    \25\ The test procedure final rule did modify the approach for 
testing hot gas defrost systems to make the test for such units 
consistent with tests for electric defrost units. However, this 
change is consistent with the Term Sheet removal of hot gas defrost 
as a design option and simply puts hot gas and electric defrost 
units on the same footing. See additional discussion in section 
IV.A.2.d.
---------------------------------------------------------------------------

    Additionally, commenters indicated that it was the inclusion of 
what they claim to be additional equipment categories in the scope of 
the standards that, in their view, goes beyond the agreements reached 
during the ASRAC negotiations and presented a timing challenge with the 
rulemakings because the test procedure proposals affecting scope would 
have a direct bearing on stakeholders' consideration of the standard 
levels (see, e.g., AHRI, No. 90 at pp. 2, 3). Commenters specifically 
mentioned single-package dedicated refrigeration systems, preparation 
room refrigeration systems, and process cooling refrigeration systems 
as categories that were added to the scope of coverage by the test 
procedure rulemaking, thus creating the need for more time for 
consideration of the standard levels. (Id.)
    In response, DOE does not agree that more time was needed for 
consideration of the standard levels because DOE does not believe that 
the test procedure NOPR or final rule extended the regulatory scope of 
the proposed refrigeration system standards to new equipment, as 
suggested by AHRI and other manufacturers. First, there is no record 
indicating that single-package dedicated refrigeration systems were not 
included as part of the Working Group discussions. The inclusion of 
this equipment category was confirmed on two occasions during the 
Working Group meetings by manufacturer representatives (Docket No. 
EERE-2015-BT-STD-0016; Lennox, Public Meeting Transcript (October 16, 
2015), No. 63 at pp. 249-251; Rheem, Public Meeting Transcript 
(December 3, 2015), No. 57 at p. 157) There was no subsequent 
discussion to exclude single-package dedicated systems and the Term 
Sheet does not indicate any such exclusion. DOE clarified at least as 
far back as the June 2014 energy conservation standard final rule that 
these systems are subject to the refrigeration system standards. 79 FR 
at 32068 (June 3, 2014). Hence, stakeholders have had ample time to 
consider the Term Sheet's recommended standard levels with respect to 
all of the equipment classes at issue, including single-package 
dedicated refrigeration systems.
    Second, regarding preparation room refrigeration systems, DOE 
addressed this issue in the December 2016 TP final rule, providing 
extensive discussion supporting its position, and concluding that 
preparation room refrigeration systems are indistinguishable from other 
walk-in refrigeration systems, and hence are subject to the walk-in 
refrigeration system energy conservation standards. 81 FR at 95773-
95774 (December 28, 2016). There has been no evidence brought forth to 
indicate that such systems are anything other than walk-in 
refrigeration systems. DOE's test procedure notice specifically 
requested information that would distinguish these systems from other 
walk-in refrigeration systems. 81 FR at 54937 (August 17, 2016). 
Stakeholder responses provided many comments indicating that 
preparation rooms do not fit the definition of a walk-in (see, e.g., 
Docket No. EERE-2016-BT-TP-0030, AHRI, No. 11 at p. 4), and commented 
that DOE's proposed definition did not adequately provide a basis for 
distinction (see, e.g., Docket No. EERE-2016-BT-TP-0030, Lennox, No. 13 
at pp. 8-9), but provided no information that could be used to 
distinguish these systems. Hence, DOE concludes that these 
refrigeration systems are indeed walk-in refrigeration systems. As 
such, in DOE's view, there should not have been any expectation that 
they would not be subject to the standard levels being discussed by the 
Working Group. DOE notes that there was no discussion at any time 
during the Working Group meetings suggesting that preparation room 
refrigeration systems would be excluded from the walk-in definition, 
and the Term Sheet does not indicate this possibility. DOE notes also 
that the possible exclusion of preparation room refrigeration systems 
from the walk-in refrigeration system standards has been discussed at 
least since the publication of the 2014 energy conservation standard 
final rule (see, e.g., 79 FR at 32068 (June 3, 2014)), but DOE has at 
no time provided indication that they would be excluded. Hence, in 
DOE's view, stakeholders had sufficient notice that these refrigeration 
systems would be considered within the context of the Term Sheet's 
recommended standards well in advance of DOE's issuance of the energy 
conservation standard NOPR on August 30, 2016.
    Third, regarding process cooling refrigeration systems, DOE's test 
procedure rulemaking defined process cooling refrigeration systems for 
the purpose of excluding them from having to satisfy the refrigeration 
system standards established by this final rule. The only exception to 
this exclusion is a dedicated condensing unit that would be used in a 
process cooling application that is not distributed in commerce with a 
process cooling unit cooler or evaporator or a process cooling walk-in 
enclosure. There has been no evidence presented that these condensing 
units are any different from other walk-in refrigeration system 
condensing units with respect to energy use characteristics, so 
distribution in commerce of such a condensing unit individually is not 
clearly for process cooling applications and could be for

[[Page 31832]]

any walk-in application. DOE's test procedure notice specifically 
requested information that would distinguish these condensing units 
from other walk-in condensing units. 81 FR at 54936 (August 17, 2016). 
Stakeholder responses provided many comments indicating that process 
cooling equipment does not fit the definition of a walk-in (see, e.g., 
Docket No. EERE-2016-BT-TP-0030, AHRI, No. 11 at p. 5), but provided no 
information that could be used to distinguish these systems. In fact, 
one comment suggested that process cooling condensing units do not 
differ from other walk-in condensing units except in that they may have 
a larger refrigerant receiver. (Docket No. EERE-2016-BT-TP-0030, Bally, 
No. 22 at p. 1) Such a difference would not affect energy use as 
measured using the dedicated condensing unit test procedure because 
neither the receiver nor the refrigerant in it consume energy. Hence, 
while most process cooling refrigeration system equipment would be 
excluded from the standards, process cooling condensing units that are 
distributed in commerce individually (without a unit cooler or process 
cooling enclosure) would have no more challenge meeting the recommended 
Working Group standard levels than any other walk-in condensing unit. 
Hence, in DOE's view, further consideration regarding the proposed 
standard levels for such equipment, particularly when they are 
generally being excluded from the walk-in standards, is unnecessary.
    As indicated, DOE concludes that commenters had adequate 
information at an early stage in the process regarding both the test 
method changes adopted in the test procedure rulemaking and the 
intended scope of coverage, and thus had sufficient time to consider 
the energy conservation standard proposals. Hence, DOE has not extended 
the time period for comments, nor delayed finalization of the 
rulemaking.
4. ASRAC Working Group Representation
    Eric Andrews, an owner of an ice cream franchise, commented that 
this rulemaking has little input from the consumers, observing that the 
ASRAC Working Group members and attendees primarily represent 
organizations involved in repair and manufacturing. (Andrews, No. 76 at 
p. 1)
    Prior to the Working Group meetings, on August 5, 2015, DOE 
published a notice of intent to establish a Working Group for Certain 
Equipment Classes of Refrigeration Systems of Walk-in Coolers and 
Freezers to Negotiate a Notice of Proposed Rulemaking for Energy 
Conservation Standards. 80 FR 46521. DOE notes that the agenda for the 
WICF Working Group meetings included as key issues (a) proposed energy 
conservation standards for six classes of refrigeration systems and (b) 
potential impacts on installers. See id. at 46523. These issues focused 
on refrigeration systems and installers. The Working Group consisted of 
12 representatives of parties having a defined stake in the outcome of 
the proposed standards and one DOE representative, including six 
representatives of WICF refrigeration system manufacturers (Traulsen, 
Lennox, Hussmann, Manitowoc, Rheem, and Emerson). In addition, a 
representative of the Air Conditioning Contractors of America 
represented walk-in installers. Other members other than DOE 
represented efficiency advocacy groups and utilities. (Docket EERE-
2015-BT-STD-0016, Term Sheet, No. 56 at p. 4) Hence, DOE believes that 
the representation was appropriate for the scope of the Working Group 
meetings. DOE published a notice of proposed rulemaking on September 
13, 2016 and immediately made it available for public review. 81 FR 
62979. A public meeting to discuss DOE's proposal was held on September 
29, 2016. DOE notes all of the Working Group meetings and the NOPR 
public meeting were open to the public and were also broadcast via 
webinar. DOE believes that stakeholders, including consumers had ample 
opportunities to provide inputs to this rulemaking.

B. Market and Technology Assessment

    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 WICF refrigeration systems 
under consideration. The key findings of DOE's market assessment are 
summarized below. See chapter 3 of the final rule TSD for further 
discussion of the market and technology assessment.
1. Scope of Coverage and Product Classes
    As discussed in section II.B, this final rule covers energy 
conservation standards for covered walk-in refrigeration systems to 
replace the six standards vacated by the Fifth Circuit. These vacated 
standards relate to (1) the two energy conservation standards 
applicable to unit coolers (formerly called multiplex condensing 
systems) operating at medium and low temperatures and (2) the four 
energy conservation standards applicable to dedicated condensing 
refrigeration systems operating at low temperatures. As noted earlier, 
the remaining standards for walk-ins already promulgated by DOE remain 
in place.
    In the June 2014 final rule, DOE divided refrigeration systems into 
classes based on their treatment under the test procedure with respect 
to condensing unit configuration. 79 FR at 32069-32070 (June 3, 2014). 
In the May 2014 test procedure final rule, DOE adopted test methods to 
address walk-in refrigeration system components distributed 
individually--i.e., unit coolers or condensing units sold alone can be 
tested and certified to the applicable standards as individual 
components. DOE also provided manufacturers the option of testing and 
certifying any matched pair that includes a condensing unit and a unit 
cooler. 79 FR at 27391 (May 13, 2013). Dedicated condensing units 
certified alone and as matched pairs are subject to standards as part 
of the dedicated condensing unit equipment class, while unit coolers 
certified alone fall in the unit cooler class (previously identified as 
the ``multiplex condensing'' class).
    As discussed in the September 2016 NOPR, DOE expects that the 
majority of refrigeration equipment certified within the dedicated 
condensing class will consist of condensing units sold alone, while a 
much smaller number of systems certified within this class will be 
tested as matched pairs under DOE's test procedure. 81 FR at 62993 
(September 13, 2016).
    In the December 2016 TP final rule, DOE adopted the term ``unit 
cooler'' to refer to the class of equipment previously identified as 
``multiplex condensing'' refrigeration systems. 81 FR at 95766-95767 
(December 28, 2016). All unit coolers sold alone will be treated for 
certification purposes as belonging to the unit cooler class. For this 
rulemaking, DOE's analysis evaluated the energy use of unit coolers 
installed in both dedicated condensing and multiplex condensing 
applications.

[[Page 31833]]

This analysis is discussed in sections IV.D.1 and IV.F.
    In the June 2014 final rule, DOE established an AWEF standard for 
low-temperature multiplex condensing systems (unit coolers) that did 
not vary with capacity. This standard was subsequently vacated through 
the controlling court order from the Fifth Circuit. Based on further 
comment and analysis conducted during the negotiated rulemaking to 
examine potential energy conservation standards for this class of 
equipment, DOE proposed different standard levels for different 
capacities of low-temperature unit coolers in the September 2016 NOPR. 
The proposal brought the total number of standards up to seven which 
would replace the six standards that were vacated. DOE received 
comments in support of the proposed standard levels for low-temperature 
unit coolers. (CA IOUs, No. 80, at p. 1-2). Hence, in light of the 
analysis conducted and the supporting comments received, this final 
rule separates low-temperature unit coolers into two classes based on 
capacity range.
    The December 2016 TP final rule addressed the coverage of process 
cooling walk-ins and their components under DOE's regulations and 
established a definition for process cooling to distinguish this 
equipment from other walk-ins. 81 FR at 95767-95773 (December 28, 
2016). As discussed in the test procedure final rule, process cooling 
walk-ins are within the scope of the definition of walk-ins, making 
them subject to the prescriptive statutory requirements already 
established by Congress. See 42 U.S.C. 6313(f). In addition, their 
panels and doors are subject to the component-based performance 
standards established by the June 2014 final rule. See 42 U.S.C. 
6313(f) and 10 CFR 431.306. However, a process cooling refrigeration 
system may or may not be subject to the refrigeration system 
standards--including those established today--depending on the 
circumstances.
    DOE has defined a process cooling refrigeration system as a 
refrigeration system that either (1) is distributed in commerce with an 
enclosure such that the ratio of refrigeration system capacity per 
internal enclosure volume is at least 100 Btu/h per cubic foot, 
indicating that the refrigeration system has ample capacity to reduce 
the temperature of products inserted into the enclosure in addition to 
keeping the temperature of the enclosure at refrigerated temperature, 
i.e., below 55 [deg]F, or (2) is a unit cooler with certain dimensional 
characteristics observed only for process cooling unit coolers. 81 FR 
at 95801 (December 28, 2016). In this final rule, DOE is also 
clarifying at 10 CFR 431.306(e) that the refrigeration system standards 
do not apply to equipment that meets the process cooling definition. 
This exclusion applies to both the refrigeration system standards 
adopted in this rule and the refrigeration system standards adopted in 
the June 2014 final rule that were not subsequently vacated. Because of 
the specific aspects of the process cooling definition and the 
exclusion that DOE is providing for refrigeration systems used in 
process cooling applications, the refrigeration system standards do not 
apply to (a) refrigeration systems sold as part of a complete package, 
including the insulated enclosure, and refrigeration systems for which 
the capacity per volume meets the process cooling definition, (b) 
dedicated condensing systems sold as a matched-pair in which the unit 
cooler meets the requirements of the process cooling definition, and 
(c) unit coolers that meet the requirements of the process cooling 
definition. As discussed in the test procedure notice, condensing units 
distributed in commerce without unit coolers or insulated enclosures 
are subject to the standards, even if sold for process cooling 
applications.
2. Technology Options
    In the technology assessment for the June 2014 final rule, DOE 
identified 15 technology options to improve the efficiency of WICF 
refrigeration systems, as measured by the DOE test procedure (see 
Docket EERE-2008-BT-STD-0015, Final Rule Technical Support Document, 
No. 0131, Section 3.3 pp. 3-24 to 3-33):

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

    Weiss indicated that energy saving cycles/set points offset and 
anti-sweat heater controls technologies are not included in this 
analysis. (Weiss, No. 85, at p. 2) DOE notes the test procedure to 
determine AWEF involves measurement of performance (capacity and power 
input) when operating with walk-in box temperature at 35 [deg]F for 
coolers and -10 [deg]F for freezers. Hence the savings of set point 
offsets would not be measured by the test procedure and cannot be 
considered in the analysis. Anti-sweat heater control also is not 
accounted for in the test procedure and hence cannot be considered in 
the analysis.
    DOE continued to consider these 15 options in formulating the WICF 
refrigeration system standards detailed in this final rule. DOE did not 
receive any comments regarding the selected technologies listed in this 
section. See chapter 3 of the TSD for further details on the 
technologies DOE considered.

C. Screening Analysis

    DOE uses the following four screening criteria to determine which 
technology options are suitable for further consideration in an energy 
conservation standards rulemaking:
    (1) Technological feasibility. Technologies that are not 
incorporated in commercial products or in working prototypes will not 
be considered further.
    (2) Practicability to manufacture, install, and service. If it is 
determined that mass production and reliable installation and servicing 
of a technology in commercial products could not be achieved on the 
scale necessary to serve the relevant market at the time of the 
projected compliance date of the standard, then that technology will 
not be considered further.
    (3) Impacts on product utility or product availability. If it is 
determined that a technology would have significant adverse impact on 
the utility of the product to significant subgroups of consumers or 
would result in the unavailability of any covered product type with 
performance characteristics (including reliability), features, sizes, 
capacities, and volumes that are substantially the same as products 
generally available in the United States at the time, it will not be 
considered further.
    (4) Adverse impacts on health or safety. If it is determined that a 
technology would have significant adverse impacts on health or safety, 
it will not be considered further. 10 CFR part 430, subpart C, appendix 
A, 4(a)(4) and 5(b)
    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

[[Page 31834]]

for eliminating any technology are discussed below.
1. Technologies Having No Effect on Rated Energy Consumption
    In the June 2014 final rule, DOE determined that the following 
technologies do not affect measured energy efficiency (see Docket EERE-
2008-BT-STD-0015, Final Rule Technical Support Document, No. 0131, 
Section 4.2 pp. 4-3 to 4-4):

 Liquid suction heat exchanger
 Refrigeration system override
 Economizer cooling
 Automatic evaporator fan shut-off

    Weiss commented on these technologies. Its comments about the use 
of a liquid suction heat exchanger (``not a lot of applications'') and 
automatic evaporator fan shut-off (``not much savings'') appear to be 
in line with DOE's decision exclude them from the analysis. Weiss noted 
that refrigeration system override should be considered if shifting set 
points is included as part of this technology. Weiss also suggested 
that economizer cooling can save energy but requires use of humidity 
measurement. (Weiss, No. 85 at p. 2). In response, DOE clarifies that 
these technologies were screened out because they do not affect the 
rated efficiency as measured by the test procedure. DOE has not 
received any further evidence that these technologies should be 
considered and has not included them in the analysis.
    As discussed in section III.B, DOE modified the method for testing 
systems with hot gas defrost in a separate rulemaking that eliminated 
the credit assigned to hot gas defrost systems when calculating a 
unit's energy efficiency under the prior test procedure. In the final 
version of the test procedure that DOE recently adopted, the AWEF of a 
refrigeration system with hot gas defrost is determined as if it were 
equipped with electric defrost. 81 FR at 95774-95777 (December 28, 
2016). Thus, DOE has dropped hot gas defrost from further consideration 
in its analysis.
2. Adaptive Defrost and On-Cycle Variable-Speed Evaporator Fans
    Consistent with the recommendations made during the Working Group 
negotiations, DOE established a regulatory approach in the December 
2016 TP final rule to address adaptive defrost and on-cycle variable-
speed fans in which these features would not be active during testing 
to demonstrate compliance with the applicable standards, but that the 
features could be active during testing to support representations of 
their benefit, such as when advertising equipment performance in 
product literature. (See Term Sheet at EERE-2015-BT-STD-0016, No. 56, 
recommendation #4 and 81 FR at 95777 (December 28, 2016)). Weiss 
commented that many field tests show an energy savings of 15 to 20 
percent with adaptive defrost controls but that evaporator fan controls 
do not yield much savings. (Weiss, No. 85, at p. 2) DOE agrees that 
there may be the potential for savings with adaptive defrost control 
but reiterates that a test procedure to properly account for its 
savings and a suitable regulatory definition for the technology has not 
been developed and could not be agreed upon by the WICF Working Group. 
Hence, DOE continues to decline to consider these technology options in 
its standards analysis for this rule.
3. Screened-Out Technologies
    In the June 2014 final rule, DOE screened out the following 
technologies from consideration (see Docket EERE-2008-BT-STD-0015, 
Final Rule Technical Support Document, No. 0131, Section 4.3, pp 4-4 to 
4-6):

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

    Weiss indicated that energy storage systems are an old technology, 
which DOE interprets as support for its decision to screen out this 
technology. (Weiss, No. 85, at p. 2) DOE has not received any new 
evidence that would weigh in favor of including these screened-out 
technologies. Consequently, these technologies have not been considered 
in the analysis supporting this final rule. Chapter 4 of the final rule 
TSD contains further discussion of the screening of these technologies.
    The implications of screening out these technologies on the 
analysis and the selected standard levels depend on each particular 
technology. The test procedure does not take into consideration the 
benefits of energy storage systems, so screening this technology did 
not affect the analysis. A manufacturer could adopt the technology, 
which potentially could save energy in field use, but equipment using 
it would not have an improved AWEF. Evaporator fans using higher-
efficiency motors than the electronically commutated motors required by 
the prescriptive standards could possibly be sourced by manufacturers 
in the future, but DOE was not able to identify any such motor 
technology--if such technology were readily available and considered in 
the analysis, the final unit cooler efficiency levels set by this rule 
may have been incrementally higher, assuming designs using such motors 
would have been cost-effective. If utility concerns regarding improved 
or larger evaporator coils were not addressed by screening out this 
technology, the final unit cooler efficiency levels set by this rule 
may have been incrementally higher, assuming designs using such 
evaporators would have been cost-effective. A manufacturer could 
potentially sell unit coolers with such improved evaporators and 
achieve higher AWEF levels, but at the risk of the utility concerns 
discussed in the TSD, e.g. reduced humidity control and/or potential 
defrost issues.
4. Remaining Technologies
    Through a review of each technology, DOE concludes that all of the 
remaining technologies listed in section IV.B.2 satisfy all four 
screening criteria and that their benefits can be measured using the 
DOE test procedure. In summary, DOE chose the following technology 
options to be examined further as design options in DOE's analysis:

 Higher efficiency compressors
 Improved condenser coil
 Higher efficiency condenser fan motors
 Improved condenser and evaporator fan blades
 Ambient sub-cooling
 Off-cycle evaporator fan control
 Variable speed condenser fan control
 Floating head pressure

    Weiss submitted a list of notes regarding each of the remaining 
technologies. (Weiss, No. 85, at p. 2) Specifically, Weiss requested 
that DOE provide details on the analyses of higher efficiency 
compressors and improved condenser coil technologies. DOE notes that 
the detailed description and analysis details of these two technologies 
can be found in section 3.3.5, 3.3.10, 5.5.8.1 and 5.5.8.2 of the final 
rule TSD. Weiss also suggested that using higher efficiency condenser 
fan motors would result in improvement with an electronically 
commutated (``EC'') motor. DOE noted that use of an EC motor was 
considered as a potential design option in its supporting analysis--see 
TSD at section 5.5.8.3. Weiss also commented regarding the benefits and 
costs of improved condenser and evaporator fan blades, variable speed 
condenser fan control

[[Page 31835]]

and floating head pressure. DOE notes that the cost and efficiency 
relationship is reflected in DOE's engineering analysis and the results 
are provided in Appendix 5A of the TSD. Weiss also indicated that 
ambient sub-cooling technology is not used in WICF equipment. DOE notes 
such technology is available in the market for various air conditioning 
and refrigeration applications. DOE did not receive any supported 
reasons for screening out such technology during the rulemaking for 
June 2014 final rule or the Working Group meetings. DOE's analysis has 
shown that using ambient sub-cooling technology incrementally improves 
the efficiency of WICF refrigeration systems. Weiss commented that the 
off-cycle evaporator fan control technology does not make sense for EC 
motors and claimed that they have high inrush current, thus suggesting 
that they should be screened out. In response, DOE points to the 
Working Group consensus regarding consideration of this design option 
and the fact that the Working Group members provided no information 
suggesting issues associated with inrush current or related concerns. 
DOE also notes that this technology is currently available on the 
market for walk-in unit coolers which use these motors. (Docket No. 
EERE-2015-BT-STD-0016, Trenton TLP Product Data and Installation, No. 
92 at p. 22) Hence, DOE has not removed any of these technologies from 
consideration in the analysis.
    DOE determined that these technology options are technologically 
feasible because they are being used or have previously been used in 
commercially-available products or working prototypes. DOE also finds 
that all of the remaining technology options meet the other screening 
criteria (i.e., practicable to manufacture, install, and service, and 
they do not result in adverse impacts on consumer utility, product 
availability, health, or safety). For additional details, see chapter 4 
of the final rule TSD.

D. Engineering Analysis

    In the engineering analysis, DOE establishes the relationship 
between the manufacturer production cost (``MPC'') and improved WICF 
refrigeration system efficiency. This relationship serves as the basis 
for cost-benefit calculations for individual consumers, manufacturers, 
and the Nation. DOE typically structures the engineering analysis using 
one of three approaches: (1) Design option, (2) efficiency level, or 
(3) reverse engineering (or cost assessment). The design-option 
approach involves adding the estimated cost and associated efficiency 
of various efficiency-improving design changes to the baseline 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 manufacturing cost 
model based on detailed bills of material (``BOM'') derived from 
reverse engineering representative equipment. The efficiency ranges 
from that of the least-efficient WICF refrigeration system sold today 
(i.e., the baseline) to the maximum technologically feasible efficiency 
level. At each efficiency level examined, DOE determines the MPC; this 
relationship is referred to as a cost-efficiency curve. DOE conducted 
the engineering analysis for the June 2014 final rule using a design-
option approach. 79 FR at 32072 (June 3, 2014). DOE received no 
comments suggesting that it use one of the alternative engineering 
analysis approaches. Consequently, DOE used a design-option approach in 
the analysis supporting the September 2016 NOPR and this final rule.
    However, as discussed in the September 2016 NOPR, DOE made several 
changes to its engineering analysis based on discussions and 
information provided during the Working Group negotiation meetings. 
These changes are described in detail in chapter 5 of the final rule 
TSD and summarized in the following sections. DOE did not receive any 
comments regarding the engineering analysis details as presented in the 
September 2016 NOPR and chapter 5 of the NOPR TSD. Consequently, DOE 
did not modify its engineering analysis for this final rule. DOE did, 
however, adjust its condenser capacity calculation for dedicated 
condensing units, as discussed in section IV.D.6.d. Details of the 
engineering analysis are available in chapter 5 of the final rule TSD.
1. Component-Based Analysis
    In the June 2014 final rule, DOE's analysis for dedicated 
condensing systems was based on matched-pair systems, and its analysis 
for unit coolers (the ``multiplex'' class) was based on field 
installation in multiplex applications. See Docket EERE-2008-BT-STD-
0015, Final Rule Technical Support Document, No. 0131, Section 5.5.3, 
pp 5-20 to 5-28; see also October 15, 2015 Public Meeting Presentation, 
slide 8, available in Docket No. EERE-2015-BT-STD-0016, No. 26, at p. 
8. However, as discussed in section IV.B.1, most refrigeration system 
components are sold individually (not as matched pairs) and most unit 
coolers are installed in dedicated condensing applications. Hence, the 
analysis conducted for this final rule, as developed initially during 
the WICF Working Group meetings, was based on individual components 
(dedicated condensing units tested, certified, and sold alone, and unit 
coolers also tested, certified, and sold alone). The analysis also 
considered (within the context of unit coolers) both dedicated 
condensing and multiplex condensing applications.
2. Refrigerants
    The analysis for the June 2014 final rule assumed that the 
refrigerant R-404A would be used in all new refrigeration equipment 
meeting the standard. 79 FR at 32074 (June 3, 2014). On July 20, 2015, 
EPA published a final rule under the SNAP program prohibiting the use 
of R-404A in certain retail food refrigeration applications. See 80 FR 
42870 (``July 2015 EPA SNAP Rule''). Under the rule, R-404A can no 
longer be used in new supermarket refrigeration systems (starting on 
January 1, 2017), new remote condensing units (starting on January 1, 
2018), and certain stand-alone retail refrigeration units (starting on 
either January 1, 2019 or January 1, 2020 depending on the type of 
system). See 40 CFR part 82, Appendix U to Subpart G (listing 
unacceptable refrigerant substitutes). EPA explained that most 
commercial walk-in coolers and freezers would fall within the end-use 
category of either supermarket systems or remote condensing units and 
would be subject to the rule. 80 FR at 42902 (July 20, 2015).
    Given that manufacturers would not be allowed to use R-404A in WICF 
refrigeration systems when the WICF standards would take effect, the 
WICF Working Group recommended that DOE conduct its analysis using R-
407A, an alternative refrigerant that will be acceptable for use in all 
of the considered WICF refrigeration systems under the July 2015 EPA 
SNAP rule. ((Docket No. EERE-2015-BT-STD-0016, various parties, Public 
Meeting Transcript (September 30, 2015), No. 67 at pp. 34-39)) Zero 
Zone supported DOE's proposal of using R-407A in the analysis. Zero 
Zone also expressed concern that R-407A might not be allowed in future 
EPA rulemakings and suggested that DOE develop a plan for revising the 
regulation if R-407A is delisted in the future. (Zero Zone, No. 88, at 
p. 1) In response to the comments suggesting analysis based on R-407A,

[[Page 31836]]

DOE revised its analysis using performance information for R-407A 
compressors, R-407A refrigerant properties, and to account for the 
temperature glide of R-407A,\26\ as discussed in the following 
sections.
---------------------------------------------------------------------------

    \26\ ``Temperature glide'' for a refrigerant refers to the 
increase in temperature at a fixed pressure as liquid refrigerant 
vaporizes during its conversion from saturated liquid to saturated 
vapor.
---------------------------------------------------------------------------

    In response to Zero Zone's concern regarding potential future 
delisting of R-407A, DOE does not believe that there is sufficient 
specific, actionable data presented at this juncture to warrant a 
change in its analysis and assumptions regarding the refrigerants used 
in walk-in cooler and freezer applications. As of now, there is 
inadequate publicly-available data on the design, construction, and 
operation of equipment featuring alternative refrigerants to facilitate 
the level of analysis of equipment performance which would be needed 
for standard setting purposes. DOE is aware that many low-GWP 
refrigerants other than R-407A are being introduced to the market, and 
wishes to ensure that this rule is consistent with the phase-down of 
HFCs proposed by the United States under the Montreal Protocol. DOE 
continues to welcome comments on experience within the industry with 
the use of low-GWP alternative refrigerants. However, there are 
currently no mandatory initiatives such as refrigerant phase-outs 
driving a change beyond R407A.
    Absent such action, DOE will continue to conduct its analysis based 
on R-407A, which the Working Group strongly supported. DOE clarifies 
that it will continue to consider WICF models meeting the definition of 
walk-in coolers and freezers to be part of their applicable covered 
equipment class, regardless of the refrigerant that the equipment uses. 
If a manufacturer believes that its design is subjected to undue 
hardship by regulations, the manufacturer may petition DOE's Office of 
Hearing and Appeals (``OHA'') for exception relief or exemption from 
the standard pursuant to OHA's authority under section 504 of the DOE 
Organization Act (42 U.S.C. 7194), as implemented at subpart B of 10 
CFR part 1003. OHA has the authority to grant such relief on a case-by-
case basis if it determines that a manufacturer has demonstrated that 
meeting the standard would cause hardship, inequity, or unfair 
distribution of burdens.
3. As-Tested Versus Field-Representative Performance Analysis
    DOE conducted an intermediate analysis to bridge the gap between 
the engineering analysis and the downstream analyses to predict aspects 
of field performance that would not be measured by the test procedure. 
DOE refers to this intermediate analysis as the ``field-representative 
analysis'' to distinguish it from the normal ``as-tested'' engineering 
analysis, which represents performance according to the test procedure. 
DOE conducted the field representative analysis for this rulemaking 
using a modified version of the engineering calculations in order to 
facilitate the energy use analysis that is conducted to determine 
annual energy use of the equipment when installed. Specific differences 
between DOE's as-tested and in-field performance modeling used in the 
analysis are discussed in section IV.D.6 and in further detail in 
chapter 5 of the TSD.
    DOE provided outputs from the field-representative analysis for use 
in the energy use analysis for four equipment installation scenarios: 
(1) A new unit cooler and a new condensing unit that are installed 
together in the field; (2) a new unit cooler that is installed with a 
multiplex system; (3) a new unit cooler that is installed with an 
existing condensing unit in the field; and (4) a new condensing unit 
that is installed with an existing unit cooler in the field. Scenarios 
1 through 3 apply to the evaluation of unit coolers, while scenarios 1 
and 4 apply to the evaluation of condensing units. The scenarios 
analyzed in the downstream analysis are described in section IV.F. In 
analyzing medium-temperature unit coolers installed with new medium-
temperature condensing units, DOE modeled the condensing units as 
operating with R-407A and meeting the standard for dedicated 
condensing, medium -temperature systems established in the June 2014 
final rule, which remains in effect.
    CoilPod, a company that manufactures certain HVAC-related cleaning 
tools, commented that energy use in the field can be increased 
significantly if condenser coils are not cleaned on a regular basis, 
and provided data for four coil-cleaning scenarios. The data provided 
are for a double-door merchandiser, a ``larger'' double-door 
refrigerator, a single-door freezer, and a double-glass-door 
refrigerator, and constitute daily energy savings from 46 to 50 percent 
after cleaning. (``COILPOD Energy Savings Data'', No. 77 at p. 1) While 
data contained only limited details, DOE assumes that these examples 
are for self-contained commercial refrigeration equipment (``CRE''), 
because the submitted information addresses equipment such as ``double-
door merchandiser'', ``double door fridge'', and ``single door 
freezer'', common terminology for self-contained CRE, as illustrated in 
self-contained CRE marketing information (see, e.g., ``Double Door 
Merchandiser'', No. 92; ``Double Door Refrigerator'', No. 93; ``Single 
Door Freezer'', No. 94). DOE also notes that none of CoilPod's 
information mentions that any of the identified equipment were walk-
ins. There is no information to indicate whether the condensers for 
these units are mounted on top or beneath the equipment cabinets, nor 
any other information regarding accessibility of the condensers for 
cleaning. DOE does not consider this information to be an adequate 
average representation of the additional energy use that could be 
associated with self-contained commercial refrigeration equipment, 
since it represents only four examples and there is no information to 
indicate that the data is part of a larger survey that properly 
represents average impacts of this issue for all such equipment. 
Further, DOE expects that the impact of neglecting to clean condenser 
coils will affect different types of equipment differently, and the 
attention to coil cleaning may be greater for walk-in systems than for 
self-contained equipment (see e.g., ``Commercial Refrigeration 
Maintenance'', No. 95, which suggests a greater need for maintenance of 
walk-ins than other commercial refrigeration), so that the impact on 
walk-in refrigeration systems may for several reasons be very different 
than for self-contained refrigerators and freezers. (With the lack of 
data on walk-in maintenance practices, however, only speculation is 
possible.) At this point DOE does not have sufficient information 
quantifying the potential field impact of dirty condenser coils for 
walk-in refrigeration systems, nor for any other factors that might 
degrade performance, and has not included any degradation factor in its 
calculations of field energy use.
    DOE did not receive any other comments on the NOPR analysis 
scenarios or other aspects of its field-representative analysis, and 
hence has not changed these aspects of its analysis. Details of these 
four scenarios are also provided in chapter 5 of the TSD.
4. Representative Equipment for Analysis
    In the analysis for the June 2014 final rule, DOE analyzed within 
each

[[Page 31837]]

equipment class a range of representative WICF refrigeration systems 
representing different capacities, compressor types, and evaporator fin 
spacing. Based on WICF Working Group meeting discussions, DOE 
simplified the range of these parameters in its analysis for this 
rulemaking, analyzing fewer compressor options and fewer fin spacing 
options, but modifying the selection of representative capacities. DOE 
presented its list of representative equipment in Table IV-1 of the 
September 2016 NOPR. 81 at 62998. DOE did not receive comments 
regarding the chosen representative equipment and hence used the same 
selections in its final rule analysis. The selections are shown in 
Table IV-1 below, which is identical to the table in the September 2016 
NOPR.

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

5. Manufacturer Production Cost and Manufacturer Sales Price
    DOE developed a manufacturing cost model to estimate the MPCs of 
the considered WICF refrigeration systems at each efficiency level from 
the baseline through max-tech for the representative capacities 
considered for each equipment class. The manufacturing cost model is a 
spreadsheet that estimates the dollar cost of manufacturing the 
considered WICF refrigeration systems based on the price of materials, 
the average labor rates associated with fabrication and assembly, and 
the cost of overhead and depreciation associated with the conversion 
processes used by manufacturers. To estimate these various cost 
components, DOE conducted manufacturer interviews and collected 
information on labor rates, tooling costs, raw material prices, and 
other factors. DOE estimated the costs of raw materials based on the 
most recent 5-year price averages available.
    To support its analyses, which were presented and discussed during 
the WICF Working Group meeting, DOE conducted new physical and virtual 
teardowns \27\ of WICF equipment to ensure that its cost model was 
representative of the current market. These new teardowns were in 
addition those conducted in support of the June 2014 final rule. See 
chapter 5 of the TSD for a more detailed explanation of how DOE 
gathered data for cost modeling.
---------------------------------------------------------------------------

    \27\ A virtual teardown uses the results from a physical 
teardown of a specific model and details obtained from product 
literature for a second model in order to develop manufacturing cost 
estimates for the second model.
---------------------------------------------------------------------------

    In order to calculate manufacturer sales price (``MSP''), DOE used 
the same average manufacturer markup of 35 percent for WICF 
refrigeration systems in its analysis as used in the June 2014 final 
rule, and also the same methodology for calculating shipping costs.
    In the September 2016 NOPR, DOE sought comment regarding the method 
it used for estimating equipment manufacturing costs in its analysis. 
81 FR at 62999 (September 13, 2016). DOE did not receive any comments 
regarding this issue and has used the same cost estimation methodology 
for this final rule. Chapter 5 of the final rule TSD provides details 
and assumptions of the cost model.
6. Component and System Efficiency Model
    For each representative capacity within each equipment class 
covered in this rulemaking (see section IV.D.4), DOE selected a 
particular model of unit cooler or condensing unit, as applicable, to 
represent the class at that capacity. DOE used a spreadsheet-based 
analysis tool to predict the performance of each representative unit 
for the range of efficiency levels considered in the analysis, similar 
to the method used in the June 2014 final rule. However, DOE made many 
revisions to its engineering analysis. For example, as discussed in 
section IV.D.1, the analysis prepared during the WICF Working Group 
meetings and used to support the September 2016 NOPR was based on 
individual components and did not analyze matched-pair dedicated 
condensing units. Also, as discussed in section IV.D.3, DOE developed 
field representative calculations in addition to as-tested calculations 
to evaluate the performance of systems as installed. The following 
sections summarize additional changes to DOE's engineering spreadsheet 
analysis as compared with the June 2014 final rule analysis.
a. Unit Coolers (Formerly Termed the ``Multiplex Condensing'' Class)
    DOE's analysis of unit cooler test performance is based on the 
``parallel rack system'' method of AHRI 1250-2009 (see section 7.9 of 
AHRI 1250-2009) for calculating unit cooler AWEF, which uses a 
prescribed multiplex system Energy Efficiency Ratio (``EER'') to 
calculate compressor energy use

[[Page 31838]]

based on unit cooler gross capacity, and also accounts for the energy 
use of the evaporator fan motor and, for low-temperature units, energy 
use associated with defrost.\28\ These aspects of the analysis have not 
changed since the June 2014 final rule analysis. See Docket EERE-2008-
BT-STD-0015, Final Rule Technical Support Document, No. 0131, Section 
5.5.3, pp 5-20 to 5-27. DOE did, however, make a number of changes in 
response to input received during the WICF Working Group meetings.
---------------------------------------------------------------------------

    \28\ Gross capacity differs from net capacity in that it 
includes the evaporator fan heat.
---------------------------------------------------------------------------

    First, DOE developed an analytical framework to represent field 
performance of unit coolers used in multiplex condensing applications 
using a system EER for R-407A developed during the WICF Working Group 
meeting discussions. (This change was made to account for the 
refrigerant shift brought about by the EPA SNAP rule.) Second, DOE 
adjusted its calculation of unit cooler net capacity using a 
correlation relating net capacity and nominal capacity developed based 
on test data. (This change was made to reflect test data obtained and 
reviewed primarily after publication of the June 2014 final rule.) 
Third, DOE revised the input assumption for refrigerant suction dew 
point. (This change was made to establish consistent input assumptions 
across the analyses conducted for the different classes associated with 
pressure drop in the suction line.) DOE received no comments on these 
aspects of the analysis in response to the September 2016 NOPR and has 
not changed them for this final rule.
b. Condensing Units/Dedicated Condensing Class
    DOE made several changes to its prior analysis of dedicated 
condensing refrigeration systems. As mentioned in section IV.D.1, the 
analysis developed during the WICF Working Group meetings was based on 
condensing units tested and sold individually, i.e., not as part of 
matched pairs including unit coolers. The as-tested analysis uses the 
nominal values for unit cooler fan and defrost energy use as prescribed 
in the DOE test procedure (as finalized in 10 CFR part 431, subpart R, 
appendix C, section 3.4.2.2 in the recent test procedure rulemaking, 81 
FR at 95806 (December 28, 2016)). To analyze equipment using R-407A 
refrigerant, DOE used compressor coefficients for compressors operating 
with this refrigerant, and made changes in the analysis to account for 
the refrigerant's temperature glide. The revised analysis also assumed, 
in calculating refrigeration capacity for a condensing unit, that: (1) 
Pressure drop in the suction line is equivalent to a 2 [deg]F reduction 
in dew point temperature;\29\ (2) unit cooler exit superheat \30\ is 6 
[deg]F for low-temperature unit coolers and 10 [deg]F for medium-
temperature unit coolers; and (3) the refrigerant temperature entering 
the condensing unit is 5 [deg]F for low-temperature unit coolers and 41 
[deg]F for medium-temperature unit coolers. For the as-tested analysis, 
DOE assumed that there is no temperature drop in the liquid line after 
it exits from the condensing unit. The liquid line sub-cooling is 
assumed to be 8 [deg]F in the field-representative analysis.
---------------------------------------------------------------------------

    \29\ Compressor performance is generally provided by compressor 
vendors as a function of pressure levels represented as dew point 
temperatures--dew point is the temperature of saturated vapor 
refrigerant, at which any reduction refrigerant enthalpy would 
result in condensation of refrigerant as dew.
    \30\ Superheat of refrigerant vapor is equal to the actual 
temperature of the refrigerant minus the dew point associated with 
its pressure.
---------------------------------------------------------------------------

    As described in section IV.D.4, for the 25,000 Btu/h representative 
capacity DOE considered both scroll and semi-hermetic compressors. DOE 
aggregated the analyses for the two compressors to create a single 
cost-efficiency curve for this representative capacity. See chapter 5 
of the TSD for a more detailed explanation of how DOE aggregated the 
cost-efficiency curves for the compressor types.
    DOE received no comments on these aspects of the analysis in 
response to the NOPR and has not changed them for this final rule.
c. Field-Representative Paired Dedicated Condensing Systems
    As discussed in section IV.D.1, DOE based its as-tested engineering 
analysis for dedicated condensing systems on an evaluation of 
condensing units tested individually. DOE conducted a separate field-
representative analysis that accounts for system operation when 
installed, which necessarily includes the performance of both the 
condensing unit and the unit cooler with which it is paired. The 
assumptions for this field-representative analysis differ in several 
ways from those of the as-tested analysis, including the refrigerant 
cooling in the liquid line, refrigerant pressure in the unit cooler 
(represented by unit cooler exit dew point), and unit cooler fan and 
defrost power. See chapter 5 of the TSD for more details of how DOE 
adjusted these assumption for field-representative analysis. DOE 
received no comments on these aspects of the analysis in response to 
the NOPR and has not changed them for this final rule.
d. Analysis Adjustment
    As part of its final rule analysis, DOE adjusted its equipment 
performance calculations for condensing units to more fully account for 
the performance of the high-glide refrigerant R-407A. This methodology 
was discussed by the Working Group, but the analysis calculations were 
rerun for the final rule. Specifically, this adjustment affected the 
calculation of refrigerant enthalpy at the condenser exit, and resulted 
in an increase in the calculated refrigeration system net capacity for 
analyses involving dedicated condensing units. The adjustment led to a 
0.1 to 0.11 Btu/W-h increase in the AWEF calculated for analyzed DC.L.O 
and DC.L.I dedicated condensing unit classes and increases in the 
capacity calculated for dedicated condensing systems in the field-
representative analysis. The AWEF values reported in Table IV-2 in 
section IV.D.10 reflect this adjustment. DOE believes this approach is 
in-line with the methodology discussed in the Working Group, which 
recommended that the analysis be based on the use of R-407C 
refrigerant.
7. Baseline Specifications
    Because there have not been any previous performance-based 
standards for the considered WICF refrigeration systems, there is no 
established baseline efficiency level for this equipment. DOE developed 
baseline specifications for the representative units in its analysis, 
described in section IV.D.4, by examining current manufacturer 
literature to determine which characteristics represented baseline 
equipment. DOE assumed that all baseline refrigeration systems comply 
with the current prescriptive standards in EPCA--namely, that each 
system satisfies the requirements that (1) evaporator fan motors of 
under 1 hp and less than 460 volts are electronically commutated motors 
(brushless direct current motors) and (2) walk-in condenser fan motors 
of under 1 hp are permanent split capacitor motors. (See section II.B 
for further details on current WICF standards.) Readers interested in 
more detailed baseline specifications for the analyzed representative 
systems should refer to chapter 5 of the TSD. DOE did not receive any 
comments regarding its baselines in response to the September 2016 
NOPR.
8. Design Options
    Section IV.C.4 lists technologies that passed the screening 
analysis and that DOE examined further as potential

[[Page 31839]]

design options. DOE updated the analysis for several of these design 
options based on information received during the WICF Working Group 
meetings. DOE maintained its efficiency calculation assumptions in the 
June 2014 final rule analysis for improved condenser blades, evaporator 
fan blades and off-cycle evaporator fan control. The following sections 
summarize the revised treatment of specific design options as compared 
with the June 2014 final rule analysis. All design options are 
discussed in more detail in chapter 5 of the TSD. DOE did not receive 
comments about these analysis changes in response to the September 2016 
NOPR and did not make any additional changes for the final rule 
analysis.
a. Higher Efficiency Compressors
    In the June 2014 final rule analysis, DOE considered efficiency 
improvements associated with variable-speed compressors. DOE removed 
this option from consideration in the September 2016 NOPR analysis. 81 
FR at 63003 (September 13, 2016). As discussed in section IV.D.1, DOE's 
analysis for the dedicated condensing unit classes was updated to 
reflect the testing and rating of condensing units alone rather than as 
part of matched pairs. The current test procedure does not include a 
method for assessing variable-capacity systems using the condenser-
alone rating method. Hence, DOE did not consider variable-speed 
compressors as a design option in its analysis. This approach does not 
preclude manufacturers from designing and selling systems with 
multiple-capacity or variable-capacity compressors, but they would have 
to be tested and certified as matched-pair systems. DOE may consider 
this design option in a future rulemaking when the test procedure is 
modified to allow the testing of multiple-capacity or variable-capacity 
condensing units individually rather than as part of matched pairs. 
This test procedure change was part of the set of recommendations made 
by the WICF Working Group. (Docket No. EERE-2015-BT-STD-0016, Term 
Sheet: Recommendation #6 (December 15, 2015), No. 56 at p. 3)
b. Improved Condenser Coil
    In its supporting analysis for the June 2014 final rule, DOE 
considered a design option for an improved condenser coil with more 
face area and heat transfer capacity than a baseline coil. DOE assumed 
that the coil would be sized to lower the condensing temperature by 10 
[deg]F based on DOE testing, input received from manufacturers during 
interviews, and analysis. Consequently, the analysis used a reduced 
power input and an increased cooling capacity for the compressor. See 
the June 2014 final rule TSD, chapter 5, pages 5-44 and 5-45 (Docket 
No. EERE-2008-BT-STD-0015, No. 0131). DOE revised its analysis for this 
design option during the WICF Working Group meetings based on input 
from the negotiating parties. This input included specific condensing 
unit performance and design details for DOE to consider as part of its 
analysis. DOE considered a new design approach that would result in a 
5-degree condensing temperature reduction. Based in part on the data 
submitted by manufacturers on condenser coil sizing, (Docket No. EERE-
2015-BT-STD-0016, Lennox, No. 30), DOE estimated that following this 
approach would require a 33 percent increase in airflow and 50 percent 
increase in total heat transfer area over the baseline. DOE 
incorporated the revised cost and energy characteristics of this option 
into the analysis. The assumptions associated with the improved 
condenser coil for both DC.L.I and DC.L.O analyses are discussed in 
more detail in section 5.5.8.2 of the TSD.
c. Floating Head Pressure
    Floating head pressure is a type of refrigeration system control 
for outdoor condensing units that uses a lower condensing pressure set-
point than conventional head pressure control, thus lowering the 
condensing pressure and improving compressor efficiency at low ambient 
temperatures. In its June 2014 final rule analysis, DOE analyzed two 
modes of operation for this option: floating head pressure with a 
standard thermostatic expansion valve (``TXV''), and floating head 
pressure with an electronic expansion valve (``EEV'')--the latter 
option allows for an even lower condensing pressure set-point compared 
to systems that do not use an EEV and was considered in the June 2014 
final rule's analysis only for scroll compressors. See Docket EERE-
2008-BT-STD-0015, Final Rule Technical Support Document, No. 0131, 
Section 5.5.6.10 pp. 5-52 to 5-53. In revising its current analysis in 
response to input received during the WICF Working Group meetings, DOE 
extended consideration of the second step in condensing pressure 
reduction to semi-hermetic compressors. DOE's modeling also more 
closely optimized the interaction among design options at the highest 
efficiency levels (i.e., increasing the minimum head pressure from 125 
psi to 135 psi at the lowest ambient temperature). The details of 
floating head pressure design option are discussed in more detail in 
section 5.5.8.8 of the final rule TSD.
9. Cost-Efficiency Curves
    After determining the cost and energy savings attributed to each 
design option, DOE evaluates the design options in terms of their 
manufacturing cost-effectiveness: That is, the gain in as-tested AWEF 
that a manufacturer would obtain for implementing the design option on 
their equipment, versus the cost for using that option. For each 
representative unit listed in section IV.D.4, DOE calculates 
performance as measured using the test procedure efficiency metric, 
AWEF, and the manufacturing production cost (i.e., MPC). When using a 
design-option analysis, DOE calculates these values first for the 
baseline efficiency and then for more-efficient designs that add design 
options in the order from the most cost-effective to the least cost-
effective. The outcome of this design option ordering is called a 
``cost-efficiency curve'' consisting of a set of manufacturing costs 
and AWEFs for each consecutive design option added in order of most to 
least cost-effective.
    Table IV-2 and Table IV-3 show the AWEFs calculated in this manner. 
Additional detail is provided in Appendix 5A of the TSD, including 
graphs of the cost-efficiency curves and correlation of the design 
option groups considered with their corresponding AWEF levels.

                                                                                Table IV-2--Engineering Analysis Output: Calculated AWEFs for DC Classes
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
      Representative unit                                                                                                  As-Tested AWEF with each Design Option (DO) added *
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                  Nominal
        Equipment class            Btu/h      Compressor type                       Base-line         DO 1                DO 2                DO 3                DO 4                DO 5                DO 6                DO 7
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
DC.L.I, < 6,500 Btu/h..........      6,000  Scroll............  DO................  .........  EC................  CD2...............  CB2...............  ..................  ..................  ..................  .................
                                                                AWEF..............       1.91  1.97..............  2.3...............  2.31..............  ..................  ..................  ..................  .................

[[Page 31840]]

 
DC.L.I, >= 6,500 Btu/h.........      9,000  Scroll............  DO................  .........  EC................  CD2...............  CB2...............  ..................  ..................  ..................  .................
                                                                AWEF..............       2.09  2.14..............  2.48..............  2.49..............  ..................  ..................  ..................  .................
                                 25,000 **  Scroll, Semi-       DO................  .........  EC................  CD2...............  CB2...............  ..................  ..................  ..................  .................
                                             hermetic.
                                                                AWEF..............       2.02  2.06..............  2.4...............  2.41..............  ..................  ..................  ..................  .................
                                    54,000  Semi-hermetic.....  DO................  .........  EC................  CD2...............  CB2...............  ..................  ..................  ..................  .................
                                                                AWEF..............       2.35  2.42..............  2.68..............  2.69..............  ..................  ..................  ..................  .................
DC.L.O, < 6,500 Btu/h..........      6,000  Scroll............  DO................  .........  FHP...............  EC................  CB2...............  FHPEV.............  VSCF..............  CD2...............  ASC
                                                                AWEF..............       2.22  2.57..............  2.66..............  2.67..............  2.87..............  3.................  3.09..............  3.12
DC.L.O, >= 6,500 Btu/h.........      9,000  Scroll............  DO................  .........  FHP...............  EC................  FHPEV.............  CB2...............  VSCF..............  CD2...............  ASC
                                                                AWEF..............       2.41  2.81..............  2.89..............  3.12..............  3.13..............  3.18..............  3.28..............  3.3
                                 25,000 **  Scroll, Semi-       DO................  .........  FHP...............  EC................  FHPEV.............  VSCF..............  CB2...............  ASC...............  CD2
                                             hermetic.
                                                                AWEF..............       2.31  2.7...............  2.77..............  2.98..............  3.05..............  3.05..............  3.08..............  3.16
                                    54,000  Semi-hermetic.....  DO................  .........  FHP...............  FHPEV.............  EC................  VSCF..............  ASC...............  CB2...............  CD2
                                                                AWEF..............        2.6  2.92..............  3.07..............  3.16..............  3.24..............  3.27..............  3.27..............  3.29
                                    72,000  Semi-hermetic.....  DO................  .........  FHP...............  FHPEV.............  EC................  VSCF..............  ASC...............  CB2...............  CD2
                                                                AWEF..............       2.59  2.9...............  3.08..............  3.16..............  3.25..............  3.28..............  3.28..............  3.29
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* Design option abbreviations are as follows: ASC = Ambient sub-cooling; CB2 = Improved condenser fan blades; CD2 = Improved condenser coil; EC = Electronically commutated condenser fan motors; FHP = Floating head pressure; FHPEV =
  Floating head pressure with electronic expansion valve; VSCF = Variable speed condenser fans.
** As discussed in section IV.D.6.b, DOE aggregated the separate results for scroll and semi-hermetic compressors and created a single aggregated cost-efficiency curve in the engineering analysis for the 25,000 Btu/h nominal
  capacity.


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

10. Engineering Efficiency Levels
    DOE selects efficiency levels for each equipment class. These 
levels form the basis of the potential standard levels that DOE 
considers in its analysis. As discussed above, DOE conducted a design-
option-based engineering analysis for this rulemaking, in which AWEFs 
were calculated for specific designs incorporating groups of design 
options. However, these design-option-based AWEFs vary as a function of 
representative capacity due to multiple factors and are not generally 
suitable as the basis for standard levels. Hence, DOE selected 
engineering efficiency levels (``ELs'') for each class that provide 
suitable candidate levels for consideration. The efficiency levels do 
not exactly match the calculated AWEFs at each representative capacity, 
but the candidate efficiency levels are meant to provide overall 
representation of the range of efficiencies calculated for the 
individual representative capacities.
    The selected efficiency levels for the equipment classes analyzed 
for this document are shown in Table IV-4 below. DOE divided the 
dedicated condensing classes into the same two classes initially 
considered in the June 2014 final Rule, except that the classes 
proposed and presented here are split based on the calculated net 
capacity rather than the 9,000 Btu/h nominal capacity used in the June 
2014 final Rule. For the medium-temperature and low-temperature unit 
cooler classes, where the initial analysis had a single class covering 
the entire capacity range, DOE proposed in the NOPR two classes for 
low-temperature unit coolers and one for medium-temperature (81 FR at 
63006)--this approach has not changed for the final rule.
    The maximum technologically feasible level is represented by EL 3 
for all classes. DOE represented the

[[Page 31841]]

efficiency levels by either a single AWEF or an equation for the AWEF 
as a function of the net capacity. The efficiency levels for each class 
are formulated such that they divide the gap in efficiency between the 
baseline and the maximum technologically feasible efficiency level into 
approximately equal intervals. The baseline level is generally 
represented by the lowest AWEF achieved by any representative system in 
the class, while the maximum technologically feasible level is 
represented by the highest AWEF achieved by any representative system 
in the class, rounded down to the nearest 0.05 Btu per watt-hour 
(``Btu/W-h'') to account for uncertainty in the analysis.

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

    DOE did not receive comments regarding the considered efficiency 
levels in response to the September 2016 NOPR and notes that the 
efficiency levels selected in this final rule remain the same as the 
efficiency levels presented in the NOPR. In the NOPR, DOE discussed two 
cases where the AWEFs for the maximum-technology EL 3 exceeds the 
maximum AWEF values as calculated in the design-option engineering 
analysis. 81 FR at 63006 (September 13, 2016).
    The first of these cases involved lower-capacity, low-temperature 
unit coolers. As discussed in the NOPR (81 FR at 63006-63007), DOE 
believes that the selected EL 3 is technologically feasible given the 
uncertainty in the analysis, and the fact that the industry negotiating 
parties explicitly agreed to a standard at this level during Working 
Group meetings. (See Docket No. EERE-2015-BT-STD-0016, AHRI, Public 
Meeting Transcript (December 15, 2015), No. 60 at pp. 229-230) DOE 
received no comments in response to the September 2016 NOPR objecting 
to this proposed efficiency level.
    The second case involved indoor and outdoor dedicated condensing 
units at representative nominal capacity of 25,000 Btu/h. As discussed 
in the NOPR, the AWEF associated with EL 3 for these classes can be 
achieved for this capacity using semi-hermetic compressors. 81 FR at 
63006-63007 (September 13, 2016). DOE also notes that with its now-
adjusted dedicated condensing unit analysis described in section 
IV.D.6.d, the analysis demonstrates that the EL 3 AWEF is achievable 
with scroll compressors for the 25,000 Btu/h nominal capacity. As noted 
earlier, the AWEFs calculated in the design-option-based analysis vary 
as a function of representative capacity due to multiple factors and 
are not generally suitable as the basis for standard levels, and the 
selected engineering ELs for each class provide suitable candidate 
levels for consideration. The efficiency levels do not exactly match 
the calculated AWEFs at each representative capacity, but are instead 
meant to provide an overall representation of the range of efficiencies 
calculated for the individual representative capacities. While AWEF 
values calculated in the NOPR analysis for the 25,000 Btu/h dedicated 
condensing classes did not attain the TSL 3 AWEF, the values are 
consistent with TSL 3 in the current analysis, which DOE believes to be 
more appropriate for this max-tech TSL. Consequently, in DOE's view, 
the analysis for this second case shows that the adjusted analysis 
results in a more appropriate alignment of the engineering analysis 
with the selected ELs.

E. Markups Analysis

    The markups analysis develops appropriate markups (e.g., retailer 
markups, distributor markups, contractor markups) in the distribution 
chain and sales taxes to convert the MSP estimates derived in the 
engineering analysis to consumer prices, which are then used in the LCC 
and PBP analysis and in the manufacturer impact analysis. At each step 
in the distribution channel, companies mark up the price of equipment 
to cover business costs and profit margin.
    For this final rule, DOE retained the distribution channels that 
were used in the NOPR--(1) direct to customer sales, through national 
accounts or contractors; (2) refrigeration wholesalers to consumers; 
and (3) OEMs to consumers. The OEM channel primarily represents 
manufacturers of WICF refrigeration systems who may also install and 
sell entire WICF refrigeration units.
    For each of the channels, DOE developed separate markups for 
baseline equipment (baseline markups) and the incremental cost of more-
efficient equipment (incremental markups). Incremental markups are 
coefficients that relate the change in the MSP of higher-efficiency 
models to the change in the retailer sales price. DOE relied on data 
from the U.S. Census Bureau, the Heating, Air-conditioning & 
Refrigeration Distributors International (``HARDI'') industry trade 
group, and RSMeans \31\ to estimate average baseline and incremental 
markups
---------------------------------------------------------------------------

    \31\ R.S. Means Company, Inc. RSMeans Mechanical Cost Data. 33rd 
edition. 2015. Kingston, MA.
---------------------------------------------------------------------------

    Chapter 6 of the final rule TSD provides details on DOE's 
development of markups for the considered WICF refrigeration systems.

[[Page 31842]]

F. Energy Use Analysis

    The purpose of the energy use analysis is to determine the annual 
energy consumption of the considered WICF refrigeration systems at 
different efficiencies in representative U.S. installations, and to 
assess the energy savings potential of increased WICF refrigeration 
system efficiency. The energy use analysis estimates the range of 
energy use of the considered WICF refrigeration systems in the field 
(i.e., as they are actually used by consumers). The energy use analysis 
provides the basis for other analyses DOE performed, particularly 
assessments of the energy savings and the savings in consumer operating 
costs that could result from adopting amended or new standards.
    The estimates for the annual energy consumption of each analyzed 
representative refrigeration system (see section IV.D.4) were derived 
assuming that (1) the refrigeration system is sized such that it 
follows a specific daily duty cycle for a given number of hours per day 
at full-rated capacity and (2) the refrigeration system produces no 
additional refrigeration effect for the remaining period of the 24-hour 
cycle. These assumptions are consistent with the present industry 
practice for sizing refrigeration systems. This methodology assumes 
that the refrigeration system is correctly paired with an envelope that 
generates a load profile such that the rated hourly capacity of the 
paired refrigeration system, operated for the given number of run hours 
per day, produces sufficient refrigeration to meet the daily 
refrigeration load of the envelope with a safety margin to meet 
contingency situations. Thus, the annual energy consumption estimates 
for the refrigeration system depend on the methodology adopted for 
sizing, the implied assumptions and the extent of oversizing.
    The WICF equipment run-time hours that DOE used broadly follow the 
load profile assumptions of the industry test procedure for 
refrigeration systems--AHRI 1250-2009. As noted earlier, that protocol 
was incorporated into DOE's test procedure. 76 FR 33631 (June 9, 2011). 
For the NOPR analysis, DOE used a nominal run-time of 16 hours per day 
for coolers and 18 hours per day for freezers over a 24-hour period to 
calculate the capacity of a ``perfectly''-sized refrigeration system at 
specified reference ambient temperatures of 95 [deg]F and 90 [deg]F for 
refrigeration systems with outdoor and indoor condensing units, 
respectively. (Docket No. EERE-2015-BT-STD-0016, various parties, 
Public Meeting Transcript (October 1, 2015), No. 68 at p. 9) Nominal 
run-time hours for coolers and freezers were adjusted to account for 
equipment over-sizing safety margin and capacity mismatch factors. They 
were further adjusted to account for the change in net capacity from 
increased efficiency projected to occur in the standards case. 
Additionally, in the case of outdoor condensing equipment, run-time 
hours were further adjusted based on the typical variations in ambient 
temperatures for each of the 9 Census Divisions, not the single point 
95 [deg]F reference temperature specified in AHRI-1250-2009. For indoor 
condensing equipment, DOE estimated run-time hours in the no-new-
standards, and standards cases based on the steady-state design point 
ambient temperature of 90 [deg]F specified in AHRI-1250-2009. DOE notes 
that indoor condensing equipment may be subject to ambient temperatures 
that are higher, or lower than the design point temperature of 90 
[deg]F. To the extent that this occurs, it would be expected to result 
in some increasing or lowering of consumer opening costs savings in 
relation to changes in indoor ambient temperature from the results 
presented in section V.B.1.a. The WICF equipment run-time hours that 
DOE used broadly follow the load profile assumptions of the industry 
test procedure for refrigeration systems--AHRI 1250-2009--which is 
incorporated into DOE's test procedure. See 10 CFR 431.303 and 431.304. 
As in the NOPR analysis, DOE maintained its use of nominal run-times of 
16 hours per day for coolers and 18 hours per day for freezers over a 
24-hour period to calculate the capacity of a ``perfectly''-sized 
refrigeration system at specified reference ambient temperatures of 95 
[deg]F and 90 [deg]F for refrigeration systems with outdoor and indoor 
condensing units, respectively. See generally, Docket No. EERE-2015-BT-
STD-0016, DOE, Public Meeting Transcript (October 1, 2015), No. 68 at 
pp. 9-13) Nominal run-time hours for coolers and freezers were adjusted 
to account for equipment over-sizing safety margin and capacity 
mismatch factors. They were further adjusted to account for the change 
in net capacity from increased efficiency projected to occur in the 
standards case, and, in the case of outdoor equipment, variations in 
ambient temperature. The energy use calculation is discussed in greater 
detail in chapter 7 of the TSD.
1. Oversize Factors
    During the Working Group negotiations, Rheem indicated that the 
typical and widespread industry practice for sizing the refrigeration 
system is to calculate the daily heat load on the basis of a 24-hour 
cycle and divide by 16 hours of run-time for coolers and 18 hours of 
run-time for freezers. In the field, WICF refrigeration systems are 
sized to account for a ``worst case scenario'' need for refrigeration 
to prevent food spoilage, and as such are oversized by a safety margin. 
(Docket No. EERE-2015-BT-STD-0016, Rheem, Public Meeting Transcript 
(October 1, 2015), No. 68 at pp. 12, 14) Based on discussions with 
purchasers of WICF refrigeration systems, DOE found that it is 
customary in the industry to add a 10 percent safety margin to the 
aggregate 24-hour load, resulting in 10 percent oversizing of the 
refrigeration system. The use of this 10 percent oversizing of the 
refrigeration system was presented to the Working Group and accepted 
without objection and incorporated into the analyses for the NOPR and 
the final rule. (Docket No. EERE-2015-BT-STD-0016, various parties, 
Public Meeting Transcript (October 1, 2015), No. 68 at pp. 8-16)
    Further, DOE recognized that an exact match for the calculated 
refrigeration system capacity may not be available for the 
refrigeration systems available in the market because most 
refrigeration systems are produced in discrete capacities. To account 
for this situation, DOE used the same approach as in the June 2014 
final rule. Namely, DOE applied a capacity mismatch factor of 10 
percent to capture the inability to perfectly match the calculated WICF 
capacity with the capacity available in the market. This approach was 
presented to the Working Group and accepted without objection and 
incorporated into both the NOPR final rule analyses. (Docket No. EERE-
2015-BT-STD-0016, various parties, Public Meeting Transcript (October 
1, 2015), No. 68 at pp. 8, 18)
    The combined safety margin factor and capacity mismatch factor 
result in a total oversizing factor of 1.2. With the oversize factor 
applied, the run-time of the refrigeration system is reduced to 13.3 
hours per day for coolers and 15 hours per day for freezers at full 
design point capacity. These calculations are described in detail in 
chapter 7 of the final rule TSD.
2. Net Capacity Adjustment Factors
    In this final rule, as in the NOPR and June 2014 final rule, DOE 
assumed that the heat loads to which WICF refrigeration systems are 
connected remain constant in the no-new-standards and standards cases. 
To account for changes in the net capacity of more efficient designs in 
the standard cases, DOE adjusted the run-time hours

[[Page 31843]]

as part of its supporting analyses. See 81 FR at 63008; 79 FR at 32083.
3. Temperature Adjustment Factors
    In this final rule, as in the NOPR and June 2014 final rule, DOE 
assumed that indoor WICF refrigeration systems are operated at a 
steady-state with an ambient temperature of 90 [deg]F. See 81 FR at 
63008; 79 FR at 32083. For these equipment classes, the run-time hours 
are only adjusted by the change in steady-state capacity as efficiency 
increases. (Docket No. EERE-2015-BT-STD-0016, various parties, Public 
Meeting Transcript (October 1, 2015), No. 68 at p. 23)
    In this final rule, as in the NOPR, DOE assumed outdoor WICF 
refrigeration system run-times to be a function of external ambient 
temperature. 81 FR at 63008 (September 13, 2016). DOE adjusted the run-
time hours for outdoor WICF refrigeration systems to account for the 
dependence of the steady-state capacity on external ambient 
temperature. External ambient temperatures were determined as regional 
histograms of annual weighted hourly temperatures. For these equipment, 
the run-time hours are adjusted by the fraction of heat load that would 
be removed at each temperature bin of the regional histogram. (Docket 
No. EERE-2015-BT-STD-0016, various parties, Public Meeting Transcript 
(October 1, 2015), No. 68 at pp. 33-35)
    These adjusted run-times were presented to the Working Group in 
detail for indoor and outdoor dedicated condensing equipment classes. 
(Docket No. EERE-2015-BT-STD-0016, various parties, Public Meeting 
Transcript (November 20, 2015), No. 66 at pp. 111-119) After reviewing 
DOE's run-time estimates, the CA IOUs, confirmed the reasonableness of 
DOE's estimates. (Docket No. EERE-2015-BT-STD-0016, CA IOUs, Public 
Meeting Transcript (November 4, 2015), No. 65 at p. 190)
    Chapter 7 of the final rule TSD provides details on DOE's energy 
use analysis for the considered WICF refrigeration systems.

G. Life-Cycle Cost and Payback Period Analysis

    DOE conducted LCC and PBP analyses to evaluate the economic impacts 
on individual consumers of potential energy conservation standards for 
the considered WICF refrigeration systems. The effect of energy 
conservation standards on individual consumers usually involves a 
reduction in operating cost and an increase in purchase cost. DOE used 
the following two metrics to measure consumer impacts:
     The LCC (life-cycle cost) is the total consumer expense of 
an appliance or equipment over the life of that equipment, consisting 
of total installed cost (manufacturer selling price, distribution chain 
markups, sales tax, and installation costs) plus operating costs 
(expenses for energy use, maintenance, and repair). To compute the 
operating costs, DOE discounts future operating costs to the time of 
purchase and sums them over the lifetime of the equipment.
     The payback period is the estimated amount of time (in 
years) it takes consumers to recover the increased purchase cost 
(including installation) of more-efficient equipment through lower 
operating costs. DOE calculates the PBP by dividing the change in 
purchase cost at higher efficiency levels by the change in annual 
operating cost for the year that amended or new standards are assumed 
to take effect.
    For any given efficiency level, DOE measures the change in LCC 
relative to the LCC in the no-new-standards case, which reflects the 
estimated efficiency distribution of the considered equipment in the 
absence of new or amended energy conservation standards. In contrast, 
the PBP for a given efficiency level is measured relative to the 
baseline equipment.
    For each considered efficiency level in each equipment class, DOE 
calculated the LCC and PBP for a nationally representative set of WICF 
refrigeration systems. DOE used shipments data submitted by AHRI to 
develop its sample. (Docket No. EERE-2015-BT-STD-0016, DOE, Public 
Meeting Transcript (November 3, 2015), No. 64 at pp. 150) The sample 
weights how the various WICF refrigeration system types and capacities 
are distributed over different commercial sub-sectors, geographic 
regions, and configurations of how the equipment is sold (either as a 
separate unit cooler, a separate condensing unit, or as a combined unit 
cooler and condensing unit pair matched at the time of installation). 
For each of these WICF refrigeration systems, DOE determined the energy 
consumption and the appropriate electricity price, enabling DOE to 
capture variations in WICF refrigeration system energy consumption and 
energy pricing.
    Inputs to the calculation of total installed cost include the cost 
of the equipment--which includes MSPs, manufacturer markups, retailer 
and distributor markups, and sales taxes--and installation costs. 
Inputs to the calculation of operating expenses include annual energy 
consumption, energy prices and price projections, repair and 
maintenance costs, equipment lifetimes, and discount rates. DOE created 
distributions of values for equipment lifetime, discount rates, and 
sales taxes, with probabilities attached to each value, to account for 
their uncertainty and variability.
    The computer model DOE uses to calculate the LCC and PBP relies on 
a Monte Carlo simulation to incorporate uncertainty and variability 
into the analysis. The Monte Carlo simulations randomly sample input 
values from the probability distributions and WICF consumer sample. The 
model calculated the LCC and PBP for equipment at each efficiency level 
for 5,000 consumers per simulation run.
    DOE calculated the LCC and PBP for all consumers of the considered 
WICF refrigeration systems as if each consumer were to purchase new 
equipment in the expected first full year of required compliance with 
the standards. As discussed in section III.F, DOE currently anticipates 
a compliance date in early 2020 for the WICF refrigeration systems 
under consideration.
    Table IV-5 summarizes the approach and data DOE used to derive 
inputs to the LCC and PBP calculations. The subsections that follow 
provide further discussion. Details of the spreadsheet model, and of 
all the inputs to the LCC and PBP analyses, are contained in chapter 8 
of the final rule TSD and its appendices.

      Table IV-5--Summary of Inputs and Methods for the LCC and PBP
                               Analysis\*\
------------------------------------------------------------------------
                 Inputs                           Source/method
------------------------------------------------------------------------
Equipment Cost.........................  Derived by multiplying MSPs by
                                          retailer markups and sales
                                          tax, as appropriate. Used
                                          historical data to derive a
                                          price scaling index to
                                          forecast equipment costs.
Installation Costs.....................  Baseline installation cost
                                          determined with data from RS
                                          Means. Assumed no change with
                                          efficiency level.

[[Page 31844]]

 
Annual Energy Use......................  The total annual energy use
                                          multiplied by the hours per
                                          year. Average number of hours
                                          based on field data.
                                          Variability: Based on the
                                          stakeholder submitted data.
Energy Prices..........................  Electricity: Average and
                                          marginal prices derived from
                                          EIA and Edison Electric
                                          Institute (``EEI'') data.
Energy Price Trends....................  Based on AEO2016 No-CPP case
                                          price projections.
Repair and Maintenance Costs...........  Assumed no change with
                                          efficiency level.
Product Lifetime.......................  Assumed average lifetime of 12
                                          years.
Discount Rates.........................  Approach involves identifying
                                          all possible debt or asset
                                          classes that might be used to
                                          purchase WICFs. Primary data
                                          source was the Damodaran
                                          Online.
Compliance Date........................  2020.
------------------------------------------------------------------------
* References for the data sources mentioned in this table are provided
  in the sections following the table or in chapter 8 of the final rule
  TSD.

1. System Boundaries
    As discussed in section IV.D.6, participants during the Working 
Group meetings stated that the vast majority of WICF refrigeration 
equipment are sold as stand-alone components and installed either as a 
complete system in the field (field-paired) or as replacement 
components--i.e., to replace either the unit cooler (``UC-only'') or 
condensing unit (``CU-only''). AHRI provided data to the Working Group 
indicating that over 90 percent of these WICF refrigeration equipment 
components are sold as stand-alone equipment with the remaining sold as 
manufacturer matched pairs (Docket No. EERE-2015-BT-STD-0016, AHRI, No. 
29). These data stand in contrast to the June 2014 final rule, where 
DOE assumed in its analysis that all equipment was sold as 
manufacturer-matched pairs. Further, section III.B of this document 
DOE's May 2014 test procedure update that specified that in instances 
where a complete walk-in refrigeration system consists of a unit cooler 
and condensing unit sourced from separate manufacturers, each 
manufacturer is responsible for ensuring the compliance of its 
respective units. See 79 FR at 27391. Based on the current market 
situation, the LCC analysis separately estimates the costs and benefits 
for equipment under the following system configuration scenarios: 
field-paired systems,\32\ condensing unit-only,\33\ and unit cooler 
only.\34\
---------------------------------------------------------------------------

    \32\ Paired dedicated systems are described in section IV.D.6.c.
    \33\ Condensing units are described in section IV.D.6.b.
    \34\ Unit coolers are described in section IV.D.6.a.
---------------------------------------------------------------------------

a. Field-Paired
    Under the field-paired system configuration, DOE assumes that the 
unit cooler and condensing unit are purchased as stand-alone pieces of 
equipment and paired together in the field. Field-paired results were 
estimated for dedicated condensing, low-temperature equipment classes 
only, which include dedicated condensing, low-temperature outdoor 
(DC.L.O) and dedicated condensing, low-temperature indoor (DC.L.I) 
equipment classes. Medium-temperature dedicated condensing equipment 
classes were not analyzed as field-paired equipment because these 
condensing units fall outside the scope of this final rule's analysis. 
(These units are already addressed by the June 2014 final rule.) Also, 
unit coolers used in multiplex condensing applications were not 
analyzed as field-paired equipment because the scope of these equipment 
classes only covers the unit cooler portion of the walk-in system.
b. Condensing Unit-Only
    Under the condensing unit-only system configuration, DOE assumes 
that the condensing unit is purchased as a stand-alone piece of 
equipment and installed with a pre-existing baseline unit cooler. 
Condensing unit-only results were estimated for low-temperature, 
dedicated condensing equipment classes only, which includes DC.L.O and 
DC.L.I equipment classes.
c. Unit Cooler Only
    Under the unit cooler-only system configuration, DOE assumes that 
the unit cooler is purchased as a stand-alone piece of equipment and 
installed with a pre-existing baseline condensing unit. Unit cooler-
only results were estimated for all low-temperature condensing 
equipment classes (DC.L.O, DC.L.I, and UC.L). For the medium-
temperature unit coolers belonging to the UC.M equipment class, DOE 
estimated the impact of unit cooler design options on multiplex 
applications (referred to as UC.M in the tables) and on applications 
where the unit cooler is installed with a pre-existing medium -
temperature dedicated condensing unit. For the medium-temperature 
dedicated applications, DOE assumed that the condensing unit meets the 
standards adopted in the June 2014 final rule. In the tables contained 
in this document, the installations with a pre-existing medium-
temperature dedicated condensing unit are referred to as UC.M-DC.M.I 
application and UC.M-DC.M.O applications.
    As discussed in section III.B, DOE established a rating method for 
individually sold walk-in refrigeration system components. Unit coolers 
sold alone are tested and rated using the AWEF calculation procedure 
for a walk-in unit cooler matched to a parallel rack system (see 
section 7.9 of AHRI 1250-2009). Similarly, condensing units sold alone 
are tested and rated with the dedicated condensing system test. DOE 
reflected this approach by aggregating unit cooler-only results within 
the low- and medium-temperature unit cooler equipment classes. The low-
temperature unit cooler equipment class (UC.L) is an aggregation of 
results of all unit coolers attached to DC.L.O, DC.L.I, and low-
temperature multiplex condensing systems. The medium-temperature unit 
cooler equipment class (UC.M) is an aggregation of results of all unit 
coolers in all application types.
d. System Boundary and Equipment Class Weights
    Within each equipment class, DOE examined several different nominal 
capacities (see section IV.D.4). The life-cycle costs and benefits for 
each of these capacities was weighted in the results for each equipment 
class shown in section V based on the respective market share of each 
equipment class and capacity in the customer sample mentioned above. 
The system boundaries and customer sample

[[Page 31845]]

weights (based on share of total sales of the considered WICF 
refrigeration equipment) are shown in Table IV-6.

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

2. Equipment Cost
    To calculate consumer equipment costs, DOE multiplied the MPCs 
developed in the engineering analysis by the markups described earlier 
(along with sales taxes). DOE used different markups for baseline 
equipment and higher-efficiency equipment because DOE applies an 
incremental markup to the increase in MSP associated with higher-
efficiency equipment.
    To develop an equipment price trend for WICFs, DOE derived an 
inflation-adjusted index of the producer price index (``PPI'') for 
commercial refrigerators and related equipment from 1978 to 2014.\35\ 
These data, which represent the closest approximation to the 
refrigeration equipment at issue in this rule, indicate no clear trend, 
showing increases and decreases over time. Because the observed data do 
not provide a firm basis for projecting future price trends for WICF 
refrigeration equipment, DOE used a constant price assumption as the 
default trend to project future WICF refrigeration system prices. Thus, 
prices projected for the LCC and PBP analysis are equal to the 2015 
values for each efficiency level in each equipment class.
---------------------------------------------------------------------------

    \35\ Bureau of Labor Statistics, Producer Price Index Industry 
Data, Series: PCU3334153334153.
---------------------------------------------------------------------------

3. Installation Cost
    Installation cost includes labor, overhead, and any miscellaneous 
materials and parts needed to install the equipment. DOE used data from 
RS Means Mechanical Cost Data 2015 \36\ to estimate the baseline 
installation cost for WICF refrigeration systems. Installation costs 
associated with hot gas defrost design options for low-temperature 
dedicated condensing and multiplex condensing equipment were discussed 
at length during the Working Group meetings. (Docket No. EERE-2015-BT-
STD-0016, various parties, Public Meeting Transcript (October 1, 2015), 
No. 68 at p. 54; Docket No. EERE-2015-BT-STD-0016, various parties, 
Public Meeting Transcript (October 15, 2015), No. 62 at pp. 36-37, 49-
50, 187)
---------------------------------------------------------------------------

    \36\ Reed Construction Data, RSMeans Mechanical Cost Data 2015 
Book, 2015.
---------------------------------------------------------------------------

    However, the Working Group recommended that DOE remove from the 
test procedure the method for calculating the energy use and thermal 
load associated with hot gas defrost (Docket No. EERE-2015-BT-STD-0016, 
Term Sheet: Recommendation #3 (December 15, 2015), No. 56 at p. 2) This 
method did not require any testing of defrost, using instead a 
calculation that includes standardized values associated with both 
electricity use and thermal load associated with hot gas defrost--the 
method gave a significantly

[[Page 31846]]

better AWEF rating for a refrigeration system with hot gas defrost than 
for systems with electric defrost, in effect representing a ``credit'' 
for this feature. The credit recognized the reduced electrical usage 
but, in the absence of a means to account for the energy consumption 
stemming from the use of the hot gas defrost system itself, industry 
representatives argued that, in their view, the credit did not provide 
a completely accurate picture with respect to energy consumption. 
Consequently, in light of these concerns, in addition to making the 
corresponding changes to the test procedure, DOE also removed hot gas 
defrost as a design option from its standards analysis, as discussed in 
section VI.B.2. For this final rule, as in the NOPR, DOE maintained 
that while installation costs may increase with equipment capacity, 
they are not affected by an increase in efficiency and were therefore 
not considered. See 81 FR at 63009, 63011. Installation costs are 
discussed in detail in chapter 8 of the final rule TSD.
4. Annual Energy Use
    DOE typically considers the impact of a rebound effect in its 
energy use calculation. A rebound effect occurs when users operate 
higher efficiency equipment more frequently and/or for longer 
durations, thus offsetting estimated energy savings. DOE did not 
incorporate a rebound factor for WICF refrigeration equipment because 
it is operated 24 hours a day, and therefore there is limited potential 
for a rebound effect. Additionally, DOE requested comment from the 
Working Group if there was any evidence contradicting DOE's assumption 
to not incorporate a rebound factor, (Docket No. EERE-2015-BT-STD-0016, 
DOE, Public Meeting Transcript (November 20, 2015), No. 66 at pp. 92) 
to which Hussmann responded that DOE's assumption was reasonable. 
(Docket No. EERE-2015-BT-STD-0016, Hussmann, Public Meeting Transcript 
(November 20, 2015), No. 66 at pp. 92) Further, ASAP and Lennox 
responded in agreement with DOE's assumption to not incorporate a 
rebound factor in its NOPR. (Docket No. EERE-2015-BT-STD-0016, ASAP, 
Public Meeting Transcript (September 29, 2016), No. 79 at p. 23; Docket 
No. EERE-2015-BT-STD-0016, Lennox No. 89 at p. 7) In light of these 
comments, DOE maintained the same assumptions on rebound effect in this 
final rule.
    For each sampled WICF refrigeration system, DOE determined the 
energy consumption at different efficiency levels using the approach 
described in section IV.D.10.
5. Energy Pricing and Projections
    DOE derived regional marginal non-residential (i.e., commercial and 
industrial) electricity prices using data from EIA's Form EIA-861 
database (based on the agency's ``Annual Electric Power Industry 
Report''),\37\ EEI Typical Bills and Average Rates Reports,\38\ and 
information from utility tariffs for each of nine (9) geographic U.S. 
Census Divisions.\39\ Electricity tariffs for non-residential consumers 
generally incorporate demand charges. The presence of demand charges 
means that two consumers with the same monthly electricity consumption 
may have very different bills, depending on their peak demand. DOE 
maintained its approach from the NOPR analysis for the final rule, and 
derived marginal electricity prices to estimate the impact of demand 
charges for consumers of WICF refrigeration systems. The methodology 
used to calculate the marginal electricity rates can be found in 
appendix 8A of the final rule TSD.
---------------------------------------------------------------------------

    \37\ Available at: www.eia.doe.gov/cneaf/electricity/page/eia861.html.
    \38\ Edison Electric Institute. Typical Bills and Average Rates 
Report. Winter 2014 published April 2014, Summer 2014 published 
October 2014: Washington, D.C. (Last accessed June 2, 2015.) 
www.eei.org/resourcesandmedia/products/Pages/Products.aspx.
    \39\ U.S. Census Bureau, Census Divisions and Census Regions 
www.census.gov/geo/reference/gtc/gtc_census_divreg.html (Last 
accessed February 2, 2016)
---------------------------------------------------------------------------

    To estimate energy prices in future years, DOE multiplied the 
average and marginal regional electricity prices by the forecast of 
annual change in national-average commercial electricity pricing in the 
Reference case described on p.E-8 in AEO 2016,\40\ which has an end 
year of 2040. To estimate price trends after 2040, DOE used the average 
annual rate of change in prices from 2020 to 2040.
---------------------------------------------------------------------------

    \40\ EIA. Annual Energy Outlook 2016 with Projections to 2040. 
Washington, DC. Available at www.eia.gov/forecasts/aeo/. The 
standards finalized in this rulemaking will take effect a few years 
prior to the 2022 commencement of the Clean Power Plan compliance 
requirements. As DOE has not modeled the effect of CPP during the 30 
year analysis period of this rulemaking, there is some uncertainty 
as to the magnitude and overall effect of the energy efficiency 
standards. These energy efficiency standards are expected to put 
downward pressure on energy prices relative to the projections in 
the AEO 2016 case that incorporates the CPP. Consequently, DOE used 
the electricity price projections found in the AEO 2016 No-CPP case 
as these electricity price projections are expected to be lower, 
yielding more conservative estimates for consumer savings due to the 
energy efficiency standards.
---------------------------------------------------------------------------

6. Maintenance and Repair Costs
    Repair costs are associated with repairing or replacing equipment 
components that have failed in an appliance. Industry participants from 
the Working Group indicated that maintenance and repair costs do not 
change with increased WICF refrigeration system efficiency. (Docket No. 
EERE-2015-BT-STD-0016, various parties, Public Meeting Transcript 
(October 15, 2015), No. 62 at pp. 38, 53) As in the NOPR, DOE did not 
include these costs in the final rule.
7. Equipment Lifetime
    For this analysis, DOE continued to use an estimated average 
lifetime of 10.5 years for the WICF refrigeration systems examined in 
this rulemaking, with a minimum and maximum of 2 and 25 years, 
respectively, used in the June 2014 final rule. 79 FR at 32086 (June 3, 
2014). DOE reflects the uncertainty of equipment lifetimes in the LCC 
analysis for equipment components by using probability distributions. 
DOE presented this assumption at the NOPR public meeting and invited 
comment. DOE received no comments on its estimated WICF refrigeration 
system lifetimes. (Docket No. EERE-2015-BT-STD-0016, DOE, Public 
Meeting Presentation (September 29, 2016), No. 78 at p. 29)
8. Discount Rates
    In calculating the LCC, DOE applies discount rates to estimate the 
present value of future operating costs to the consumers of WICF 
refrigeration systems. DOE derived the discount rates for both the NOPR 
and final rule analyses by estimating the average cost of capital for a 
large number of companies similar to those that would likely to 
purchase WICF refrigeration systems. This approach resulted in a 
distribution of potential consumer discount rates from which DOE 
sampled in the LCC analysis. Most companies use both debt and equity 
capital to fund investments, so their cost of capital is the weighted 
average of the cost to the company of equity and debt financing.
    DOE estimated the cost of equity financing by using the Capital 
Asset Pricing Model (``CAPM'').\41\ The CAPM assumes that the cost of 
equity is proportional to the amount of systematic risk associated with 
a company. Data for deriving the cost of equity and debt financing 
primarily came from Damodaran Online, which is a widely used source of 
information about company debt and equity financing for most types of 
firms.\42\
---------------------------------------------------------------------------

    \41\ Harris, R.S. Applying the Capital Asset Pricing Model. UVA-
F-1456. Available at SSRN: http://ssrn.com/abstract=909893.
    \42\ Damodaran Online, The Data Page: Cost of Capital by 
Industry Sector, (2004-2013) (Available at: http://
pages.stern.nyu.edu/~adamodar/).

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

[[Page 31847]]

    More details regarding DOE's estimates of consumer discount rates 
are provided in chapter 8 of the final rule TSD.
9. Energy Efficiency Distribution in the No-New-Standards Case
    To accurately estimate the share of consumers that would be 
affected by a potential energy conservation standard at a particular 
efficiency level, DOE's LCC analysis considered the projected 
distribution (market shares) of equipment efficiencies under the no-
new-standards case (i.e., the case without amended or new energy 
conservation standards). In the case of WICF refrigeration systems, DOE 
was unable to find usable data on the distribution of efficiencies in 
the market, nor was information offered by participants during the 
Working Group meetings. For this analysis, DOE continued to assume, as 
it did for the NOPR analysis, that 100 percent of WICF refrigeration 
equipment is at the baseline efficiency level in the no-new-standards 
case. (Docket No. EERE-2015-BT-STD-0016, DOE, Public Meeting (October 
1, 2015), No. 068 at pp. 53-54) DOE presented this assumption at the 
NOPR public meeting and invited comment. DOE received no comments on 
its efficiency distribution assumption in the no-new-standards case. 
(Docket No. EERE-2015-BT-STD-0016, DOE, Public Meeting Presentation 
(September 29, 2016), No. 78 at p. 29)
10. Payback Period (PBP) 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 and those 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 because the calculation is based only on 
the first-year annual operating expenditures.
    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) and 6316(a)) 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 projection for the year in which compliance with the standards 
would be required.

H. Shipments Analysis

    DOE uses forecasts of annual equipment shipments to calculate the 
national impacts of the energy conservation standards on energy use, 
NPV, and future manufacturer cash-flows.\43\ The shipments model takes 
an accounting approach, tracking the vintage of units in the stock and 
market shares of each equipment class. The model uses equipment 
shipments as inputs to estimate the age distribution of in-service 
equipment stocks for all years. The age distribution of in-service 
equipment stocks is a key input to calculations of both the NES and 
NPV, because operating costs for any year depend on the age 
distribution of the stock.
---------------------------------------------------------------------------

    \43\ DOE uses data on manufacturer shipments as a proxy for 
national sales, as aggregate data on sales are not readily available 
for DOE to examine. In general, one would expect a close 
correspondence between shipments and sales in light of their direct 
relationship with each other.
---------------------------------------------------------------------------

    In DOE's shipments model, shipments of the considered WICF 
refrigeration systems are driven by new purchases and stock 
replacements due to failures. Equipment failure rates are related to 
equipment lifetimes described in section IV.G.7. New equipment 
purchases are driven by growth in commercial floor space.
    DOE initialized its stock and shipments model based on shipments 
data provided by stakeholders during the Working Group meetings. These 
data showed that for low-temperature, dedicated condensing equipment 
classes, 5 percent of shipments are manufacturer-matched condensing 
units and unit coolers, and the remaining 95 percent is sold as 
individual condensing units or unit coolers that installers then match 
in the field. (Docket No. EERE-2015-BT-STD-0016, various parties, 
Public Meeting Transcript (November 3, 2015), No. 64 at p. 120; Docket 
No. EERE-2015-BT-STD-0016, various parties, Public Meeting Transcript 
(November 20, 2015), No. 66 at pp. 83-84) For medium and low-
temperature unit coolers, 82 percent are paired with dedicated 
condensing systems, and the remaining 18 percent are paired with 
multiplex systems; 70 percent of unit coolers are medium-temperature, 
and 30 percent are low-temperature. (Docket No. EERE-2015-BT-STD-0016, 
various parties, Public Meeting Transcript (November 4, 2015), No. 65 
at p. 117)
    As with the NOPR and the June 2014 final rule, DOE assumed in this 
analysis that shipments of new equipment would increase over time at 
the same rate of growth as commercial floor space projected in AEO 
2016. As presented to the Working Group, DOE took this approach because 
data on historic trends in market shares of WICF equipment classes and 
capacities were lacking. Because of this limitation, DOE assumed that 
the share of shipments for each equipment class and capacity would 
remain constant over time. (Docket No. EERE-2015-BT-STD-0016, Public 
Meeting Presentation (November 20, 2015), No. 42, at p. 24)
    DOE recognizes that an increase in equipment price resulting from 
energy conservation standards may affect end-user decisions regarding 
whether to purchase new WICF equipment. However, DOE has not found any 
information in existing literature, or provided by stakeholders, that 
indicates that there is a price elasticity for WICFs. As in the June 
2014 final rule, NOPR, and as presented at the NOPR public meeting, 
similar to other commercial refrigeration equipment, DOE assumed that 
WICF equipment is a necessity for food safety, storage and business 
operations. Because of this assumption, DOE concluded that the demand 
for WICF equipment is inelastic and assumed an elasticity of zero for 
this analysis.\44\ (79 FR 32050; 81 FR 62979; Docket No. EERE-2015-BT-
STD-0016, Public Meeting Presentation (November 20, 2015), No. 42, at 
pp. 27-38) DOE did not receive any comments suggesting that there 
should be a price elasticity for the considered WICF equipment applied 
to its previous analysis--either in response to the proposal or during 
the Working Group negotiations.
---------------------------------------------------------------------------

    \44\ See: Zero Zone, Inc., et al., v. United States Department 
of Energy, et al., 832 F.3d 654 (7th Cir. 2016).
---------------------------------------------------------------------------

I. National Impact Analysis

    The NIA assesses the national energy savings (``NES'') and the 
national net present value (``NPV'') from a national perspective of 
total consumer costs and savings that would be expected to result from 
new or amended standards at specific efficiency levels.\45\ 
(``Consumer'' in this context refers to consumers of the product being 
regulated.) DOE calculates the NES and

[[Page 31848]]

NPV for the potential standard levels considered based on projections 
of annual product shipments, along with the annual energy consumption 
and total installed cost data from the energy use and LCC analyses.\46\ 
For the present analysis, DOE projected the energy savings, operating 
cost savings, product costs, and NPV of consumer benefits over the 
lifetime of WICF refrigeration systems sold from 2020 through 2049.
---------------------------------------------------------------------------

    \45\ The NIA accounts for impacts in the 50 states and U.S. 
territories.
    \46\ For the NIA, DOE adjusts the installed cost data from the 
LCC analysis to exclude sales tax, which is a transfer.
---------------------------------------------------------------------------

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

    Table IV-7--Summary of Inputs and Methods for the National Impact
                                Analysis
------------------------------------------------------------------------
              Inputs                               Method
------------------------------------------------------------------------
Shipments.........................  Annual shipments from shipments
                                     model.
Compliance Date of Standard.......  2020
Efficiency Trends.................  No-new-standards case: none.
                                     Standards cases: none.
Annual Energy Consumption per Unit  Annual weighted-average values are a
                                     function of energy use at each TSL.
Total Installed Cost per Unit.....  Does not change with efficiency
                                     level. Incorporates projection of
                                     future equipment prices based on
                                     historical data.
Annual Energy Cost per Unit.......  Annual weighted-average values as a
                                     function of the annual energy
                                     consumption per unit and energy
                                     prices.
Repair and Maintenance Cost per     Annual values do not change with
 Unit.                               efficiency level.
Energy Prices.....................  AEO2016 no-CPP case price forecasts
                                     (to 2040) and extrapolation through
                                     2050.
Energy Site-to-Primary and FFC      Site-to-Primary: A time-series
 Conversion.                         conversion factor based on AEO
                                     2016. FFC: Utilizes data and
                                     projections published in AEO 2016.
Discount Rate.....................  Three and seven percent.
Present Year......................  2016.
------------------------------------------------------------------------

1. Equipment Efficiency Trends
    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 (2020). In this scenario, the market 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.
    Because data on trends in efficiency for the considered WICF 
refrigeration systems are lacking, DOE took a conservative approach and 
assumed that no change in efficiency would occur over the shipments 
projection period in the no-new-standards case. (Docket No. EERE-2015-
BT-STD-0016, various parties, Public Meeting Transcript (November 20, 
2015), No. 66 at pp. 83-84)
2. National Energy Savings
    The NES analysis involves a comparison of national energy 
consumption of the considered products between each potential standards 
case (TSL) and 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 conversion factors derived from AEO 2016. 
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 that document, 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 \47\ that EIA uses to prepare its Annual Energy Outlook. The FFC 
factors incorporate losses in production and delivery in the case of 
natural gas (including fugitive emissions) and additional energy used 
to produce and deliver the various fuels used by power plants. The 
approach used for deriving FFC measures of

[[Page 31849]]

energy use and emissions is described in appendix 10A of the final rule 
TSD.
---------------------------------------------------------------------------

    \47\ For more information on NEMS, refer to The National Energy 
Modeling System: An Overview 2009, DOE/EIA-0581(2009), October 2009. 
Available at www.eia.gov/forecasts/aeo/index.cfm.
---------------------------------------------------------------------------

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 (energy costs and repair and maintenance costs), 
and (3) a discount factor to calculate the present value of costs and 
savings. DOE calculates net savings each year as the difference between 
the no-new-standards case and each standards case in terms of total 
savings in operating costs versus total increases in installed costs. 
DOE calculates operating cost savings over the lifetime of each product 
shipped during the projection period.
    As discussed in section IV.F.1 of this final rule, DOE used a 
constant price trend for WICF refrigeration systems. DOE applied the 
same trend to forecast prices for each equipment class at each 
considered efficiency level. DOE's projection of equipment prices is 
discussed in appendix 10B of the final rule TSD.
    To evaluate the effect of uncertainty regarding the price trend 
estimates, DOE investigated the impact of different equipment price 
forecasts on the consumer NPV for the considered TSLs for the 
considered WICF refrigeration systems. In addition to the default price 
trend, DOE considered one equipment price sensitivity case in which 
prices increase and one in which prices decrease. The derivation of 
these price trends and the results of the sensitivity cases are 
described in appendix 10B of the final rule TSD.
    The operating cost savings are energy cost savings, which are 
calculated using the estimated energy savings in each year and the 
projected price of the appropriate form of energy. To estimate energy 
prices in future years, DOE multiplied the average regional energy 
prices by a projection of annual national-average commercial energy 
price changes consistent with the cases described on page E-8 in AEO 
2016,\48\ which has an end year of 2040. To estimate price trends after 
2040, DOE used the average annual rate of change in prices from 2020 
through 2040. As part of the NIA, DOE also analyzed scenarios that used 
inputs from variants of the AEO 2016 case that have lower and higher 
economic growth. Those cases have lower and higher energy price trends 
and the NIA results based on these cases are presented in appendix 10B 
of the final rule TSD.
---------------------------------------------------------------------------

    \48\ U.S. Department of Energy-Energy Information 
Administration. Annual Energy Outlook 2016 with Projections to 2040. 
Washington, DC. Available at www.eia.gov/forecasts/aeo/. The 
standards finalized in this rulemaking will take effect a few years 
prior to the 2022 commencement of the Clean Power Plan compliance 
requirements. As DOE has not modeled the effect of CPP during the 30 
year analysis period of this rulemaking, there is some uncertainty 
as to the magnitude and overall effect of the energy efficiency 
standards. These energy efficiency standards are expected to put 
downward pressure on energy prices relative to the projections in 
the AEO 2016 case that incorporates the CPP. Consequently, DOE used 
the electricity price projections found in the AEO 2016 No-CPP case 
as these electricity price projections are expected to be lower, 
yielding more conservative estimates for consumer savings due to the 
energy efficiency standards projections in the AEO 2016 CPP case.
---------------------------------------------------------------------------

    In calculating the NPV, DOE multiplies the net savings in future 
years by a discount factor to determine their present value. For this 
final rule, DOE estimated the NPV of consumer benefits using both a 3-
percent and a 7-percent real discount rate. DOE uses these discount 
rates in accordance with guidance provided by the Office of Management 
and Budget (``OMB'') to Federal agencies on the development of 
regulatory analysis.\49\ 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.
---------------------------------------------------------------------------

    \49\ United States Office of Management and Budget. Circular A-
4: Regulatory Analysis. September 17, 2003. Section E. Available at 
www.whitehouse.gov/omb/memoranda/m03-21.html.
---------------------------------------------------------------------------

J. Consumer Subgroup Analysis

    In analyzing the potential impact of the new or amended standards 
on commercial consumers, DOE evaluates the impact on identifiable 
groups (i.e., subgroups) of consumers that may be disproportionately 
affected. Small businesses typically face a higher cost of capital, 
which could make it more likely that they would be disadvantaged by a 
requirement to purchase higher efficiency equipment.
    DOE estimated the impacts on the small business customer subgroup 
using the LCC model. To account for a higher cost of capital, the 
discount rate was increased by applying a small firm premium to the 
cost of capital.\50\ In addition, electricity prices associated with 
different types of small businesses were used in the subgroup 
analysis.\51\ Apart from these changes, all other inputs for the 
subgroup analysis are the same as those in the LCC analysis. Details of 
the data used for the subgroup analysis and results are presented in 
chapter 11 of the final rule TSD.
---------------------------------------------------------------------------

    \50\ See chapter 8 of the final TSD for a more detailed 
discussion of discount rates.
    \51\ Small businesses tend to face higher electricity prices 
than the average WICF users.
---------------------------------------------------------------------------

K. Manufacturer Impact Analysis

1. Definition of Manufacturer
    A manufacturer of a walk-in is any person who: (1) Manufactures a 
component of a walk-in cooler or walk-in freezer that affects energy 
consumption, including, but not limited to, refrigeration, doors, 
lights, windows, or walls; or (2) manufactures or assembles the 
complete walk-in cooler or walk-in freezer. 10 CFR 431.302. DOE 
requires a manufacturer of a walk-in component to certify the 
compliance of the components it manufactures. This document establishes 
energy conservation standards for seven classes of refrigeration 
equipment that are components of complete walk-in coolers and walk-in 
freezers. DOE provides a qualitative and quantitative analysis on the 
potential impacts of the adopted rule on the affected WICF 
refrigeration manufacturers. The results are presented in section 
V.B.2. This document does not set new or amended energy conservation 
standards in terms of the performance of the complete walk-in cooler or 
walk-in freezer and does not create new burdens on manufacturers who 
assemble the complete walk-in cooler or freezer. DOE provides a 
qualitative review of the potential impacts on those manufacturers that 
assemble complete walk-ins in section V.B.2.e.
2. Overview
    DOE performed an MIA to estimate the financial impacts of energy 
conservation standards on manufacturers of the seven WICF refrigeration 
system equipment classes being analyzed. The MIA also has qualitative 
aspects and seeks to determine how energy conservation standards might 
affect competition, production capacity, and overall cumulative 
regulatory burden for manufacturers. Finally, the MIA serves to 
identify any disproportionate impacts on manufacturer subgroups, 
including small business manufacturers.
    The quantitative part of the MIA primarily relies on the Government 
Regulatory Impact Model (i.e., GRIM), an industry cash-flow model with 
inputs specific to this rulemaking. The key GRIM inputs include data on 
the industry cost structure, unit production costs, equipment 
shipments, manufacturer markups, and investments

[[Page 31850]]

in R&D and manufacturing capital required to produce compliant 
equipment. The key GRIM outputs are the INPV, which is the sum of 
industry annual cash-flows over the analysis period, discounted using 
the industry-weighted average cost of capital, and the impact to 
domestic manufacturing employment. The model uses standard accounting 
principles to estimate the impacts of more-stringent energy 
conservation standards on a given industry by comparing changes in INPV 
between a no-new-standards case and the various trial standards cases 
(TSLs). To capture the uncertainty relating to manufacturer pricing 
strategy following the adoption of standards, the GRIM estimates a 
range of possible impacts under two markup scenarios. DOE notes that 
the INPV estimated by the GRIM is reflective of industry value derived 
from the seven equipment classes being analyzed. The model does not 
capture the revenue from equipment falling outside the scope of this 
rulemaking.
    The qualitative part of the MIA addresses manufacturer 
characteristics and market trends. Specifically, the MIA considers such 
factors as a potential standard's impact on manufacturing capacity, 
competition within the industry, and the cumulative impact of other 
Federal regulations. The complete MIA is outlined in chapter 12 of the 
final rule TSD.
    DOE conducted the MIA for this rulemaking in three phases. In phase 
1, DOE prepared an industry characterization based on the market and 
technology assessment and publicly available information. In Phase 2 of 
the MIA, DOE prepared an industry cash-flow analysis to quantify the 
impacts of an energy conservation standard on manufacturers of WICF 
refrigeration systems. In general, more-stringent energy conservation 
standards can affect manufacturer cash-flow in three distinct ways: (1) 
By creating a need for increased investment; (2) by raising production 
costs per unit; and (3) by altering revenue due to higher per-unit 
prices and possible changes in sales volumes. In Phase 3 of the MIA, 
DOE used information from the Working Group negotiations to update key 
inputs to GRIM to better reflect the industry. Updates include changes 
to the engineering inputs and shipments model.
    As part of Phase 3, DOE also evaluated subgroups of manufacturers 
that may be disproportionately impacted by the adopted standards or 
that may not be accurately represented by the average cost assumptions 
used to develop the industry cash-flow analysis. Such manufacturer 
subgroups may include small business manufacturers, low-volume 
manufacturers, niche players, and/or manufacturers exhibiting a cost 
structure that largely differs from the industry average. DOE 
identified one manufacturer subgroup for which average cost assumptions 
may not hold: Small businesses.
    To identify small businesses for this analysis, DOE applied the 
size standards published by the Small Business Administration (``SBA'') 
to determine whether a company is considered a small business. (65 FR 
30840, 30848 (May 15, 2000), as amended at 65 FR 53533, 53544 
(September 5, 2000); and codified at 13 CFR part 121.) To be 
categorized as a small business manufacturer of WICF refrigeration 
systems under North American Industry Classification System (``NAICS'') 
code 333415 (``Air-Conditioning and Warm Air Heating Equipment and 
Commercial and Industrial Refrigeration Equipment Manufacturing''), a 
WICF refrigeration systems manufacturer and its affiliates may employ a 
maximum of 1,250 employees. The 1,250-employee threshold includes all 
employees in a business' parent company and any other subsidiaries. 
Using this classification in conjunction with a search of industry 
databases and the SBA member directory, DOE identified three 
manufacturers of WICF refrigeration systems that qualify as small 
businesses.
    The WICF refrigeration systems manufacturer subgroup analysis for 
the seven analyzed equipment classes is discussed in greater detail in 
chapter 12 of the final rule TSD and in section VI.B of this document.
3. Government Regulatory Impact Model and Key Inputs
    DOE uses the GRIM to quantify the changes in cash-flows over time 
due to new or amended energy conservation standards. These changes in 
cash-flows result in either a higher or lower INPV for the standards 
case compared to the no-new standards case. The GRIM analysis uses a 
standard annual cash-flow analysis that incorporates MPCs, manufacturer 
markups, shipments, and industry financial information as inputs. It 
then models changes in MPCs, investments, and manufacturer margins that 
may result from analyzed energy conservation standards. The GRIM uses 
these inputs to calculate a series of annual cash-flows beginning with 
the reference year of the analysis, 2016, and continuing to 2049. 
Annual cash-flows are discounted to the reference year using a discount 
rate of 10.2 percent. DOE then computes INPV by summing the stream of 
discounted annual cash-flows during the analysis period. The GRIM 
analysis focuses on manufacturer impacts with respect to the seven 
covered refrigeration equipment classes. The major GRIM inputs are 
described in detail in the following sections.
a. Manufacturer Production Costs
    Manufacturing higher-efficiency equipment is typically more 
expensive than manufacturing baseline equipment due to the use of more 
complex and expensive components. The increases in the MPCs of the 
analyzed equipment can affect the revenues, gross margins, and cash-
flow of the industry, making these equipment costs key inputs for the 
GRIM and the MIA.
    In the MIA, DOE used the MPCs and shipping costs calculated in the 
engineering analysis, as described in section IV.D and further detailed 
in chapter 5 of this final rule TSD. DOE used information from its 
teardown analysis, described in section IV.D.5 to disaggregate the MPCs 
into material, labor, and overhead costs. To calculate the MPCs for 
equipment above the baseline, DOE added incremental material, labor, 
overhead costs from the engineering cost-efficiency curves to the 
baseline MPCs. These cost breakdowns and equipment markups were 
validated with manufacturers during manufacturer interviews conducted 
for the June 2014 final rule and further revised based on additional 
feedback from the Working Group.
b. Shipment Scenarios
    The GRIM estimates manufacturer revenues based on total unit 
shipment forecasts and the distribution of shipments by equipment 
class. For the no-new standards case analysis, the GRIM uses the NIA 
shipment forecasts from 2016, the base year for the MIA analysis, to 
2049, the final year of the analysis period. For the standards case 
shipment forecast, the GRIM uses the NIA standards case shipment 
forecasts. The NIA assumes zero elasticity in demand. With no 
elasticity, the total number of shipments per year in the standards 
case is equal to the total shipments per year in the no-new standards 
case. DOE assumed that equipment efficiencies in the no-new standards 
case that did not meet the standard under consideration would ``roll 
up'' to meet the new standard in the compliance year. Section IV.G and 
in chapter 9 of the TSD provide further details about the shipment 
scenarios.
c. Capital and Product Conversion Costs
    New energy conservation standards will cause manufacturers to incur 
conversion costs to bring their production facilities and equipment

[[Page 31851]]

designs into compliance. For the MIA, DOE classified these conversion 
costs into two major groups: (1) Product conversion costs and (2) 
capital conversion costs. Product conversion costs are investments in 
research, development, testing, marketing, and other non-capitalized 
costs necessary to make equipment designs comply with a new or amended 
energy conservation standard. Capital conversion costs are investments 
in property, plant, and equipment necessary to adapt or change existing 
production facilities such that new equipment designs can be fabricated 
and assembled.
    To evaluate the level of conversion costs the industry would likely 
incur to comply with energy conservation standards, DOE used the data 
gathered in support of the June 2014 final rule. 79 FR at 32091 (June 
3, 2014). The supporting data relied on manufacturer comments and 
information derived from the equipment teardown analysis and 
engineering model. DOE also incorporated feedback received during the 
ASRAC negotiations, which included updated conversion costs to better 
reflect changes in the test procedure, design options and design option 
ordering, the dollar year, and the competitive landscape for walk-in 
refrigeration systems. Finally, DOE incorporated analysis from the WICF 
test procedure final rule to estimate the costs associated with testing 
and labeling.
    In general, the analysis assumes that all conversion-related 
investments occur between the year of publication of the final rule and 
the year by which manufacturers must comply with a new or amended 
standard. The investment figures used in the GRIM can be found in Table 
IV-8 of this document. For additional information on the estimated 
product conversion and capital conversion costs, see chapter 12 of the 
final rule TSD.

               Table IV-8--Industry Product and Capital Conversion Costs per Trial Standard Level
----------------------------------------------------------------------------------------------------------------
                                                                               Trial standard level
                                                                 -----------------------------------------------
                                                                         1               2               3
----------------------------------------------------------------------------------------------------------------
Product Conversion Costs (2015$ MM).............................             3.0             6.0            14.0
Capital Conversion Costs (2015$ MM).............................             0.3             1.1             4.7
----------------------------------------------------------------------------------------------------------------

    Capital conversion costs are driven by investments related to 
larger condenser coils. DOE estimated that four manufacturers produce 
their own condenser coils, which requires an estimated total investment 
of $1.0 million per manufacturer. The remainder of the capital 
conversion costs is attributed to the ambient sub-cooling design 
option.
    DOE's engineering analysis suggests that many efficiency levels can 
be reached through the incorporation of more efficient components. Many 
of these changes are component swaps that do not require extensive R&D 
or redesign. DOE estimated product conversion costs of $20,000 per 
manufacturer per equipment class for component swaps. For improved 
evaporator fan blades, additional R&D effort may be required to account 
for proper airflow within the cabinet and across the heat exchanger. 
DOE estimates product conversion costs to be $50,000 per manufacturer 
per equipment class. Chapter 12 of the final rule TSD provides further 
details on the methodology that was used to estimate conversion costs.
d. Testing and Labeling Costs
    In the test procedure final rule, DOE added a labeling requirement 
for WICF refrigeration systems. 81 FR at 95803 (December 28, 2016). As 
part of that rule's analysis, DOE accounted for the burdens 
manufacturers would incur to update their marketing materials in the 
product conversion cost estimates. Marketing materials include 
literature, data sheets, selection software, sales training, and 
compliance documentation. In the test procedure final rule, DOE 
estimated that manufacturers would incur product conversion costs of 
$50,000 per manufacturer to update marketing materials for WICF 
refrigeration systems. Based on a total of ten manufacturers, DOE 
included industry labeling costs of $0.5 million in product conversion 
costs for all TSLs.
    DOE also included testing costs that manufacturers would incur as a 
result of the test procedure for WICF refrigeration systems. DOE allows 
manufacturers to use alternative efficiency determination methods 
(``AEDMs'') to determine representative values of efficiency. AEDMs 
must be validated with tested performance of at least two distinct 
basic models for each equipment classes. See 10 CFR 429.70. DOE 
estimates that testing costs are $7,500 per basic model. Using this 
estimate, the cost to validate AEDMs for seven equipment classes totals 
$105,000 per manufacturer.
    In addition, DOE included the costs to run AEDMs. Based on DOE's 
Compliance Certification Management System (``CCMS'') Web site, 
refrigeration manufacturers have up to 100 WICF refrigeration models. 
DOE estimates it takes an estimated 3 hours per model for a mechanical 
engineer to run an AEDM model. Using an average hourly wage for a 
mechanical engineer in 2015 of $42.40,\52\ the costs to run AEDMs are 
$12,720 per manufacturer. In summary, testing costs are estimated to be 
$1.2 million, and labeling costs are $0.5 million for the WICF 
refrigeration industry.
---------------------------------------------------------------------------

    \52\ www.bls.gov/oes/current/oes172141.htm.
---------------------------------------------------------------------------

e. Manufacturer Markup Scenarios
    As discussed above, MSPs include direct manufacturing production 
costs (i.e., labor, material, and overhead estimated in DOE's MPCs) and 
all non-production costs (i.e., SG&A, R&D, and interest), along with 
profit. To calculate the MSPs in the GRIM, DOE applied manufacturer 
markups to the MPCs estimated in the engineering analysis and then 
added the cost of shipping. Modifying these manufacturer markups in the 
standards case yields different sets of impacts on manufacturers. For 
the MIA, DOE modeled two standards-case manufacturer markup scenarios 
to represent the uncertainty regarding the potential impacts on prices 
and profitability for manufacturers following the implementation of new 
or amended energy conservation standards: (1) A preservation of gross 
margin percentage markup scenario and (2) a preservation of operating 
profit markup scenario. These scenarios lead to different manufacturer 
markup values that, when applied to the inputted MPCs, result in 
varying revenue and cash-flow impacts. These manufacturer markup 
scenarios were presented during the NOPR public meeting and DOE 
received no additional comment on them. (Public Meeting Transcript 
(September 29, 2016), No. 79 at pp. 40-41) DOE further notes that these 
markup scenarios are consistent

[[Page 31852]]

with the scenarios modeled in the June 2014 final rule for walk-ins.
    Under the preservation of gross margin percentage scenario, DOE 
applied a single uniform ``gross margin percentage'' markup across all 
efficiency levels. As production costs increase with efficiency, this 
scenario implies that the absolute dollar markup will increase as well. 
Based on publicly-available financial information for walk-in 
manufacturers, submitted comments, and information obtained during 
manufacturer interviews from the June 2014 final rule, DOE assumed the 
non-production cost markup--which includes SG&A expenses, R&D expenses, 
interest, and profit--to be 1.35. The manufacturer markup of 1.35 was 
presented during the NOPR public meeting and DOE received no additional 
comments. Public Meeting Transcript (September 29, 2016), No. 79 at pp. 
40-41) Manufacturers have indicated that it would be optimistic for DOE 
to assume that, as manufacturer production costs increase in response 
to an energy conservation standard, manufacturers would be able to 
maintain the same gross margin percentage markup. Therefore, DOE 
assumes that this scenario represents a high bound to industry 
profitability under an energy conservation standard.
    The preservation of operating profit markup scenario assumes that 
manufacturers are able to maintain only the no-new standards case total 
operating profit in absolute dollars in the standards cases, despite 
higher equipment costs and investment. The no-new standards case total 
operating profit is derived from marking up the cost of goods sold for 
each equipment by the preservation of gross margin markup. In the 
standards cases for the preservation of operating profit markup 
scenario, DOE adjusted the WICF manufacturer markups in the GRIM at 
each TSL to yield approximately the same earnings before interest and 
taxes in the standards cases in the year after the compliance date of 
the adopted WICF refrigeration system standards as in the no-new 
standards case. Under this scenario, while manufacturers are not able 
to yield additional operating profit from higher production costs and 
the investments that are required to comply with the adopted WICF 
refrigeration system energy conservation standards, they are able to 
maintain the same operating profit in the standards case that was 
earned in the no-new standards case.
4. Discussion of Comments
    As part of the court settlement reached in Lennox Int'l v. Dep't of 
Energy, DOE agreed to consider any comments regarding any potential 
impacts of the standards on installers and to consider and 
substantively address any potential impacts of the standards on 
installers in its MIA. See Lennox Int'l v. Dep't of Energy, Case No. 
14-60535, Joint Settlement Motion (filed July 29, 2015) (5th Cir.). 
During the Working Group meetings, walk-in installers were represented 
by ACCA. As part of DOE's attempt to consider and address any potential 
installer impacts, the NOPR specifically sought comment on any 
conversion costs and stranded assets that walk-in installers might 
incur. See 81 FR at 63033 and 63048-63049 (detailing specific issues on 
which DOE sought input regarding potential installer-related impacts to 
the proposed rule).
    Stakeholders raised one issue related to installers and the 
possibility of stranded assets. AHRI and Rheem noted that installers of 
complete walk-ins may have stranded assets if they are required to use 
components that are compliant at the time of the complete walk-in 
assembly. AHRI added that compliant components may not be available to 
installers until the compliance date of the new standards, leading to 
equipment availability constraints. (AHRI No. 90 at p. 3; Rheem No. 91 
at p. 3)
    DOE addresses this comment and clarifies the compliance date for 
manufacturers of complete walk-ins in section III.F.

L. 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 2016, as described in 
section IV.N. Details of the methodology are described in the 
appendices to chapters 13 and 15 of the final rule TSD.
    Combustion emissions of CH4 and N2O are 
estimated using emissions intensity factors published by the EPA--GHG 
Emissions Factors Hub.\53\ The FFC upstream emissions are estimated 
based on the methodology described in chapter 15 of the final rule TSD. 
The upstream emissions include both emissions from fuel combustion 
during extraction, processing, and transportation of fuel, and 
``fugitive'' emissions (direct leakage to the atmosphere) of 
CH4 and CO2.
---------------------------------------------------------------------------

    \53\ Available at: www2.epa.gov/climateleadership/center-corporate-climate-leadership-ghg-emission-factors-hub.
---------------------------------------------------------------------------

    The emissions intensity factors are expressed in terms of physical 
units per MWh or MMBtu of site energy savings. Total emissions 
reductions are estimated using the energy savings calculated in the 
national impact analysis.
    For CH4 and N2O, DOE calculated emissions 
reduction in tons and also in terms of units of CO2-
equivalent (CO2eq). Emissions of CH4 and 
N2O are often 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,\54\ DOE used GWP values of 
28 for CH4 and 265 for N2O.
---------------------------------------------------------------------------

    \54\ 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 2016 generally represents current 
legislation and environmental regulations, including recent government 
actions, for which implementing regulations were available as of 
February 29, 2016. 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

[[Page 31853]]

to EPA by the U.S. Court of Appeals for the District of Columbia 
Circuit, but it remained in effect.\55\ 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,\56\ 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.\57\ On 
October 23, 2014, the D.C. Circuit lifted the stay of CSAPR \58\ 
Pursuant to this action, CSAPR went into effect (and CAIR ceased to be 
in effect) as of January 1, 2015.\59\ AEO 2016 incorporates 
implementation of CSAPR.
---------------------------------------------------------------------------

    \55\ See North Carolina v. EPA, 531 F.3d 896 (D.C. Cir. 2008), 
modified on rehearing, 550 F.3d 1176 (D.C. Cir. 2008).
    \56\ See EME Homer City Generation, L.P. v. EPA, 696 F.3d 7 
(D.C. Cir. 2012).
    \57\ See EPA v. EME Homer City Generation, L.P. 134 S. Ct. 1584 
(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 CSAPRIL.
    \58\ See EME Homer City Generation, L.P. v. EPA, Order (D.C. 
Cir. filed October 23, 2014) (No. 11-1302).
    \59\ On July 28, 2015, the D.C. Circuit issued its opinion 
regarding the remaining issues raised with respect to CSAPR that 
were remanded by the Supreme Court. The D.C. Circuit largely upheld 
CSAPR but remanded to EPA without vacatur certain States' emission 
budgets for reconsideration. EME Homer City Generation, LP v. EPA, 
795 F.3d 118 (D.C. Cir. 2015).
---------------------------------------------------------------------------

    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 years, 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 (February 16, 2012). In the MATS final 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 
2016 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.\60\ Therefore, DOE believes that energy conservation standards 
that decrease electricity generation will generally reduce 
SO2 emissions in 2016 and beyond.
---------------------------------------------------------------------------

    \60\ DOE notes that on June 29, 2015, the U.S. Supreme Court 
ruled that the EPA erred when the agency concluded that cost did not 
need to be considered in the finding that regulation of hazardous 
air pollutants from coal- and oil-fired electric utility steam 
generating units (EGUs) is appropriate and necessary under section 
112 of the Clean Air Act (``CAA''). Michigan v. EPA, 135 S. Ct. 2699 
(2015). The Supreme Court did not vacate the MATS rule, and DOE has 
tentatively determined that the Court's decision on the MATS rule 
does not change the assumptions regarding the impact of energy 
conservation standards on SO2 emissions. Further, the 
Court's decision does not change the impact of the energy 
conservation standards on mercury emissions. The EPA, in response to 
the U.S. Supreme Court's direction, has now considered cost in 
evaluating whether it is appropriate and necessary to regulate coal- 
and oil-fired EGUs under the CAA. EPA concluded in its final 
supplemental finding that a consideration of cost does not alter the 
EPA's previous determination that regulation of hazardous air 
pollutants, including mercury, from coal- and oil-fired EGUs, is 
appropriate and necessary. 79 FR 24420 (April 25, 2016). The MATS 
rule remains in effect, but litigation is pending in the D.C. 
Circuit Court of Appeals over EPA's final supplemental finding MATS 
rule.
---------------------------------------------------------------------------

    CSAPR established a cap on NOX emissions in 28 eastern 
States and the District of Columbia. Energy conservation standards are 
expected to have little effect on NOX emissions in those 
States covered by CSAPR 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 final rule for these States.
    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 2016, which 
incorporates the MATS.
    The AEO2016 Reference case (and some other cases) assumes 
implementation of the Clean Power Plan (CPP), which is the EPA program 
to regulate CO2 emissions at existing fossil-fired electric 
power plants.\61\ DOE used the AEO2016 No-CPP case as a basis for 
developing emissions factors for the electric power sector to be 
consistent with its use of the No-CPP case in the NIA.\62\
---------------------------------------------------------------------------

    \61\ U.S. Environmental Protection Agency, ``Carbon Pollution 
Emission Guidelines for Existing Stationary Sources: Electric 
Utility Generating Units'' (Washington, DC: October 23, 2015). 
https://www.federalregister.gov/articles/2015/10/23/2015-22842/carbon-pollution-emission-guidelines-for-existing-stationary-sources-electric-utility-generating.
    \62\ As DOE has not modeled the effect of CPP during the 30 year 
analysis period of this rulemaking, there is some uncertainty as to 
the magnitude and overall effect of the energy efficiency standards. 
With respect to estimated CO2 and NOX 
emissions reductions and their associated monetized benefits, if 
implemented the CPP would result in an overall decrease in 
CO2 emissions from electric generating units (EGUs), and 
would thus likely reduce some of the estimated CO2 
reductions associated with this rulemaking.
---------------------------------------------------------------------------

M. 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, CH4, N2O 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 projection period 
for each TSL. This section summarizes the basis for the values used for 
monetizing the emissions benefits and presents the values considered in 
this final rule.
1. Social Cost of Carbon
    The SC-CO2 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 SC-CO2 are provided in dollars 
per metric ton of CO2. A domestic SC-CO2 value is 
meant

[[Page 31854]]

to reflect the value of damages in the United States resulting from a 
unit change in CO2 emissions, while a global SC-
CO2 value is meant to reflect the value of damages 
worldwide.
    Under section 1(b)(6) of Executive Order 12866, ``Regulatory 
Planning and Review,'' 58 FR 51735 (October 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 SC-CO2 
estimates presented here is to allow agencies to incorporate the 
monetized social benefits of reducing CO2 emissions into 
cost-benefit analyses of regulatory actions. The estimates are 
presented with an acknowledgement of the many uncertainties involved 
and with a clear understanding that they should be updated over time to 
reflect increasing knowledge of the science and economics of climate 
impacts.
    As part of the interagency process that developed these SC-
CO2 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 SC-CO2 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 SC-CO2 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 \63\ 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.
---------------------------------------------------------------------------

    \63\ National Research Council. Hidden Costs of Energy: Unpriced 
Consequences of Energy Production and Use. 2009. National Academies 
Press: Washington, DC.
---------------------------------------------------------------------------

    Despite the limits of both quantification and monetization, SC-
CO2 estimates can be useful in estimating the social 
benefits of reducing CO2 emissions. Although any numerical 
estimate of the benefits of reducing carbon dioxide emissions is 
subject to some uncertainty, that does not relieve DOE of its 
obligation to attempt to factor those benefits into its cost-benefit 
analysis. Moreover, the interagency working group (IWG) SC-
CO2 estimates are well supported by the existing scientific 
and economic literature. As a result, DOE has relied on the IWG SC-
CO2 estimates in quantifying the social benefits of reducing 
CO2 emissions. DOE estimates the benefits from reduced (or 
costs from increased) emissions in any future year by multiplying the 
change in emissions in that year by the SC-CO2 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 current SC-CO2 
values reflect the IWG's best assessment, based on current data, of the 
societal effect of CO2 emissions. The IWG 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.
    As background on the genesis of the IWG estimates, 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 SC-CO2 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 that represented the first sustained interagency effort 
within the U.S. government to develop an SC-CO2 estimate for 
use in regulatory analysis. The results of this preliminary effort were 
presented in several proposed and final rules issued by DOE and other 
agencies.
b. Current Approach and Key Assumptions
    After the release of the interim values, the IWG reconvened on a 
regular basis to generate improved SC-CO2 estimates. 
Specially, the IWG considered public comments and further explored the 
technical literature in relevant fields. It relied on three integrated 
assessment models commonly used to estimate the SC-CO2: 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 SC-CO2 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 IWG 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 IWG selected four sets of SC-CO2 values for 
use in regulatory analyses. Three sets of values are based on the 
average SC-CO2 from the three integrated assessment models, 
at discount rates of 2.5, 3, and 5 percent. The fourth set, which 
represents the 95th percentile SC-CO2 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 SC-CO2 distribution. The values grow in real 
terms over time. Additionally, the IWG determined that a range of 
values from 7 percent to 23 percent should be used to adjust the global 
SC-CO2 to calculate domestic effects,\64\ although

[[Page 31855]]

preference is given to consideration of the global benefits of reducing 
CO2 emissions. Table IV-9 presents the values in the 2010 
IWG report.\65\
---------------------------------------------------------------------------

    \64\ 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.
    \65\ United States Government-Interagency Working Group on 
Social Cost of Carbon. Social Cost of Carbon for Regulatory Impact 
Analysis Under Executive Order 12866. February 2010. 
www.whitehouse.gov/sites/default/files/omb/inforeg/for-agencies/Social-Cost-of-Carbon-for-RIA.pdf.

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

    In 2013 the IWG released an update (which was revised in July 2015) 
that contained SC-CO2 values that were generated using the 
most recent versions of the three integrated assessment models that 
have been published in the peer-reviewed literature.\66\ DOE used these 
values for this final rule. Table IV-10 shows the four sets of SC-
CO2 estimates from the 2013 interagency update (revised July 
2015) in 5-year increments from 2010 through 2050. The full set of 
annual SC-CO2 estimates from 2010 through 2050 is reported 
in appendix 14A of the final rule TSD. The central value that emerges 
is the average SC-CO2 across models at the 3-percent 
discount rate. However, for purposes of capturing the uncertainties 
involved in regulatory impact analysis, the IWG emphasizes the 
importance of including all four sets of SC-CO2 values.
---------------------------------------------------------------------------

    \66\ 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. 
www.whitehouse.gov/sites/default/files/omb/inforeg/scc-tsd-final-july-2015.pdf.

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

    It is important to recognize that a number of key uncertainties 
remain, and that current SC-CO2 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 SC-
CO2. 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.\67\
---------------------------------------------------------------------------

    \67\ 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. (November 26, 
2013). In July 2015 OMB published a detailed summary and formal 
response to the many comments that were received: This is available 
at 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.
---------------------------------------------------------------------------

    DOE converted the values from the 2013 interagency report (revised 
July 2015) 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

[[Page 31856]]

SC-CO2 cases, the values for emissions in 2020 are $13.5, 
$47.4, $69.9, and $139 per metric ton avoided (values expressed in 
2015$). DOE derived values after 2050 based on the trend in 2010-2050 
in each of the four cases in the interagency update.
    DOE multiplied the CO2 emissions reduction estimated for 
each year by the SC-CO2 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 SC-
CO2 values in each case.
    DOE received several comments on the development of and the use of 
the SC-CO2 values in its analyses. A group of trade 
associations led by the U.S. Chamber of Commerce objected to DOE's 
continued use of the SC-CO2 SCC in the cost-benefit analysis 
and stated that the SC-CO2 SCC calculation should not be 
used in any rulemaking until it undergoes a more rigorous notice, 
review, and comment process. (U.S. Chamber of Commerce, No. 86 at p. 4) 
The Cato Institute stated that the current SC-CO2 SCC 
estimates are discordant with the best scientific literature on the 
equilibrium climate sensitivity and the fertilization effect of carbon 
dioxide, and are based upon the output of integrated assessment models 
that have little utility because of their great uncertainties. The Cato 
Institute stated that until the SC-CO2 SCC values are 
corrected, the SC-CO2 SCC should be barred from use in this 
and all other Federal rulemakings. (Cato Institute, No. 87 at pp. 1-2)
    In contrast, the Joint Advocates stated that only a partial 
accounting of the costs of climate change (those most easily monetized) 
can be provided, which inevitably involves incorporating elements of 
uncertainty. The Joint Advocates commented that accounting for the 
economic harms caused by climate change is a critical component of 
sound benefit-cost analyses of regulations that directly or indirectly 
limit greenhouse gases. The Joint Advocates stated that several 
Executive Orders direct Federal agencies to consider non-economic costs 
and benefits, such as environmental and public health impacts. (Docket 
No. EERE-2015-BT-STD-0016, Joint Advocates, No. 81 at p. 2-3) 
Furthermore, the Joint Advocates argued that without an SC-
CO2 SCC estimate, regulators would by default be using a 
value of zero for the benefits of reducing carbon pollution, thereby 
implying that carbon pollution has no costs. The Joint Advocates stated 
that it would be arbitrary for a Federal agency to weigh the societal 
benefits and costs of a rule with significant carbon pollution effects 
but to assign no value at all to the considerable benefits of reducing 
carbon pollution. (Docket No. EERE-2015-BT-STD-0016, Joint Advocates, 
No. 81 at p. 3)
    The Joint Advocates stated that assessment and use of the IAMs in 
developing the SC-CO2 SCC values has been transparent. The 
Joint Advocates further noted that repeated opportunities for public 
comment demonstrate that the IWG's SC-CO2 SCC estimates were 
developed and are being used transparently. (Docket No. EERE-2015-BT-
STD-0016, Joint Advocates, No. 81 at p. 4) The Joint Advocates stated 
that (1) the IAMs used reflect the best available, peer-reviewed 
science to quantify the benefits of carbon emission reductions; (2) 
uncertainty is not a valid reason for rejecting the SC-CO2 
SCC analysis, and (3) the IWG was rigorous in addressing uncertainty 
inherent in estimating the economic cost of pollution. (Joint 
Advocates, No. 81 at pp. 5, 17-18, 18-19) The Joint Advocates added 
that the increase in the SC-CO2 SCC estimate in the 2013 
update reflects the growing scientific and economic research on the 
risks and costs of climate change, but is still very likely an 
underestimate of the SC-CO2 SCC. (Docket No. EERE-2015-BT-
STD-0016, Joint Advocates, No. 81 at p. 4)
    In response to the comments on the SC-CO2 SCC, in 
conducting the interagency process that developed the SC-CO2 
SCC values, technical experts from numerous agencies met on a regular 
basis to consider public comments, explore the technical literature in 
relevant fields, and discuss key model inputs and assumptions. Key 
uncertainties and model differences transparently and consistently 
inform the range of SC-CO2 SCC estimates. These 
uncertainties and model differences are discussed in the IWG's reports, 
as are the major assumptions. Specifically, uncertainties in the 
assumptions regarding climate sensitivity, as well as other model 
inputs such as economic growth and emissions trajectories, are 
discussed and the reasons for the specific input assumptions chosen are 
explained. However, the three integrated assessment models used to 
estimate the SC-CO2 are frequently cited in the peer-
reviewed literature and were used in the last assessment of the IPCC. 
In addition, new versions of the models that were used in 2013 to 
estimate revised SC-CO2 values were published in the peer-
reviewed literature. The GAO report mentioned by IECA noted that the 
working group's processes and methods used consensus-based decision 
making, relied on existing academic literature and models, and took 
steps to disclose limitations and incorporate new information.\68\ 
Although uncertainties remain, the revised SC-CO2 values are 
based on the best available scientific information on the impacts of 
climate change. The current estimates of the SC-CO2 have 
been developed over many years, using the best science available, and 
with input from the public.\69\ DOE notes that not using SC-
CO2 estimates because of uncertainty would be tantamount to 
assuming that the benefits of reduced carbon emissions are zero, which 
is inappropriate. Furthermore, the commenters have not offered 
alternative estimates of the SC-CO2 that they believe are 
more accurate.
---------------------------------------------------------------------------

    \68\ www.gao.gov/products/GAO-14-663. (Last accessed September 
22, 2016)
    \69\ In November 2013, OMB announced a new opportunity for 
public comment on the interagency technical support document 
underlying the revised SC-CO2 estimates. In July 2015, 
OMB published a detailed summary and formal response to the many 
comments that were received. See www.whitehouse.gov/blog/2015/07/02/estimating-benefits-carbon-dioxide-emissions-reductions. OMB also 
stated its intention to seek independent expert advice on 
opportunities to improve the estimates, including many of the 
approaches suggested by commenters.
---------------------------------------------------------------------------

    The Cato Institute also stated that the SC-CO2 approach 
is at odds with existing OMB guidelines for preparing regulatory 
analyses. (Cato Institute, No. 87 at p. 1)
    OMB Circular A-4 provides two suggested discount rates for use in 
regulatory analysis: 3-percent and 7-percent. Circular A-4 states that 
the 3-percent discount rate is appropriate for ``regulation [that] 
primarily and directly affects private consumption (e.g., through 
higher consumer prices for goods and services).'' The interagency 
working group that developed the SC-CO2 values for use by 
Federal agencies examined the economics literature and concluded that 
the consumption rate of interest is the correct concept to use in 
evaluating the net social costs of a marginal change in CO2 
emissions, as the impacts of climate change are measured in 
consumption-equivalent units in the three models used to estimate the 
SC-CO2. The interagency working group chose to use three 
discount rates to span a plausible range of constant discount rates: 
2.5, 3, and 5 percent per year. The central value, 3 percent, is 
consistent with estimates provided in the economics literature and 
OMB's Circular A-4 guidance for the consumption rate of interest.
    Regarding the use of global SC-CO2 values, DOE's 
analysis estimates both

[[Page 31857]]

global and domestic benefits of CO2 emissions reductions. 
Following the recommendation of the IWG, DOE places more focus on a 
global measure of SC-CO2. The climate change problem is 
highly unusual in at least two respects. First, it involves a global 
externality: Emissions of most greenhouse gases contribute to damages 
around the world even when they are emitted in the United States. 
Consequently, to address the global nature of the problem, the SC-
CO2 must incorporate the full (global) damages caused by 
domestic GHG emissions. Second, climate change presents a problem that 
the United States alone cannot solve. Even if the United States were to 
reduce its greenhouse gas emissions to zero, that step would be far 
from enough to avoid substantial climate change. Other countries would 
also need to take action to reduce emissions if significant changes in 
the global climate are to be avoided. Emphasizing the need for a global 
solution to a global problem, the United States has been actively 
involved in seeking international agreements to reduce emissions and in 
encouraging other nations, including emerging major economies, to take 
significant steps to reduce emissions. When these considerations are 
taken as a whole, the interagency group concluded that a global measure 
of the benefits from reducing U.S. emissions is preferable. DOE's 
approach is supported by the requirement to weigh the need for national 
energy conservation, as one of the main reasons for national energy 
conservation is to contribute to efforts to mitigate the effects of 
global climate change.
2. Social Cost of Methane and Nitrous Oxide
    The Joint Advocates stated that EPA and other agencies have begun 
using a methodology developed to specifically measure the social cost 
of methane in recent proposed rulemakings, and recommended that DOE 
should use the social cost of methane metric to more accurately reflect 
the true benefits of energy conservation standards. They stated that 
the methodology in the study used to develop the social cost of methane 
provides reasonable estimates that reflect updated evidence and provide 
consistency with the Government's accepted methodology for estimating 
the SC-CO2. (Docket No. EERE-2015-BT-STD-0016, Joint 
Advocates, No. 81 at pp. 19-20)
    While carbon dioxide is the most prevalent greenhouse gas emitted 
into the atmosphere, other GHGs are also important contributors. These 
include methane and nitrous oxide. Global warming potential values 
(``GWPs'') are often used to convert emissions of non-CO2 
GHGs to CO2-equivalents to facilitate comparison of policies 
and inventories involving different GHGs. While GWPs allow for some 
useful comparisons across gases on a physical basis, using the social 
cost of carbon to value the damages associated with changes in 
CO2-equivalent emissions is not optimal. This is because 
non-CO2 GHGs differ not just in their potential to absorb 
infrared radiation over a given time frame, but also in the temporal 
pathway of their impact on radiative forcing, which is relevant for 
estimating their social cost but not reflected in the GWP. Physical 
impacts other than temperature change also vary across gases in ways 
that are not captured by GWP.
    In light of these limitations and the paucity of peer-reviewed 
estimates of the social cost of non-CO2 gases in the 
literature, the 2010 SC-CO2 Technical Support Document did 
not include an estimate of the social cost of non-CO2 GHGs 
and did not endorse the use of GWP to approximate the value of non-
CO2 emission changes in regulatory analysis. Instead, the 
IWG noted that more work was needed to link non-CO2 GHG 
emission changes to economic impacts.
    Since that time, new estimates of the social cost of non-
CO2 GHG emissions have been developed in the scientific 
literature, and a recent study by Marten et al. (2015) provided the 
first set of published estimates for the social cost of CH4 
and N2O emissions that are consistent with the methodology 
and modeling assumptions underlying the IWG SC-CO2 
estimates.\70\ Specifically, Marten et al. used the same set of three 
integrated assessment models, five socioeconomic and emissions 
scenarios, equilibrium climate sensitivity distribution, three constant 
discount rates, and the aggregation approach used by the IWG to develop 
the SC-CO2 estimates. An addendum to the IWG's Technical 
Support Document on Social Cost of Carbon for Regulatory Impact 
Analysis under Executive Order 12866 summarizes the Marten et al. 
methodology and presents the SC-CH4 and SC-N2O 
estimates from that study as a way for agencies to incorporate the 
social benefits of reducing CH4 and N2O emissions 
into benefit-cost analyses of regulatory actions that have small, or 
``marginal,'' impacts on cumulative global emissions.\71\
---------------------------------------------------------------------------

    \70\ Marten, A.L., Kopits, E.A., Griffiths, C.W., Newbold, S.C., 
and A. Wolverton. 2015. Incremental CH4 and 
N2O Mitigation Benefits Consistent with the U.S. 
Government's SC-CO2 Estimates. Climate Policy. 15(2): 
272SC-298 (published online, 2014).
    \71\ United States Government--Interagency Working Group on 
Social Cost of Greenhouse Gases. Addendum to Technical Support 
Document on Social Cost of Carbon for Regulatory Impact Analysis 
under Executive Order 12866: Application of the Methodology to 
Estimate the Social Cost of Methane and the Social Cost of Nitrous 
Oxide. August 2016. www.whitehouse.gov/sites/default/files/omb/inforeg/august_2016_sc_ch4_sc_n2o_addendum_final_8_26_16.pdf.
---------------------------------------------------------------------------

    The methodology and estimates described in the addendum have 
undergone multiple stages of peer review and their use in regulatory 
analysis has been subject to public comment. The estimates are 
presented with an acknowledgement of the limitations and uncertainties 
involved and with a clear understanding that they should be updated 
over time to reflect increasing knowledge of the science and economics 
of climate impacts, just as the IWG has committed to do for the SC-
CO2. The OMB has determined that the use of the Marten et 
al. estimates in regulatory analysis is consistent with the 
requirements of OMB's Information Quality Guidelines Bulletin for Peer 
Review and OMB Circular ASC-4.
    The SC-CH4 and SC-N2O estimates are presented 
in Table IV-11. Following the same approach as with the SC-
CO2, values for 2010, 2020, 2030, 2040, and 2050 are 
calculated by combining all outputs from all scenarios and models for a 
given discount rate. Values for the years in between are calculated 
using linear interpolation. The full set of annual SC-CH4 
and SC-N2O estimates between 2010 and 2050 is reported in 
appendix 14SC-A of the final rule TSD. DOE derived values after 2050 
based on the trend in 2010SC-2050 in each of the four cases in the IWG 
addendum.

[[Page 31858]]



                                         Table IV-11--Annual SC-CH4 and SC-N2O Estimates From 2016 IWG Addendum
                                                                 [2007$ per metric ton]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                       SC-CH4                                    SC-N2O
                                                                    ------------------------------------------------------------------------------------
                                                                            Discount rate and statistic                Discount rate and statistic
                                                                    ------------------------------------------------------------------------------------
                                Year                                    5%        3%       2.5%         3%         5%        3%       2.5%        3%
                                                                    ------------------------------------------------------------------------------------
                                                                                                       95th                                      95th
                                                                      Average   Average   Average   percentile   Average   Average   Average  percentile
--------------------------------------------------------------------------------------------------------------------------------------------------------
2010...............................................................       370       870     1,200       2,400      3,400    12,000    18,000      31,000
2015...............................................................       450     1,000     1,400       2,800      4,000    13,000    20,000      35,000
2020...............................................................       540     1,200     1,600       3,200      4,700    15,000    22,000      39,000
2025...............................................................       650     1,400     1,800       3,700      5,500    17,000    24,000      44,000
2030...............................................................       760     1,600     2,000       4,200      6,300    19,000    27,000      49,000
2035...............................................................       900     1,800     2,300       4,900      7,400    21,000    29,000      55,000
2040...............................................................     1,000     2,000     2,600       5,500      8,400    23,000    32,000      60,000
2045...............................................................     1,200     2,300     2,800       6,100      9,500    25,000    34,000      66,000
2050...............................................................     1,300     2,500     3,100       6,700     11,000    27,000    37,000      72,000
--------------------------------------------------------------------------------------------------------------------------------------------------------

    DOE multiplied the CH4 and N2O emissions 
reduction estimated for each year by the SC-CH4 and SC-
N2O estimates 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 SC-CH4 and 
SC-N2O estimates in each case.
3. Social Cost of Other Air Pollutants
    As noted previously, DOE 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 CSAPRIL
    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.\72\ The report includes high and low values for 
NOX (as PM2.5) for 2020, 2025, and 2030 using 
discount rates of 3 percent and 7 percent; these values are presented 
in appendix 14B of the final rule TSD. DOE primarily relied on the low 
estimates to be conservative.\73\ The national average low values for 
2020 (in 2015$) are $3,187/ton at 3-percent discount rate and $2,869/
ton at 7-percent discount rate. DOE developed values specific to the 
sector for WICF refrigeration systems using a method described in 
appendix 14B of the final rule TSD. For this analysis DOE used linear 
interpolation to define values for the years between 2020 and 2025 and 
between 2025 and 2030; for years beyond 2030 the value is held 
constant.
---------------------------------------------------------------------------

    \72\ 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), 136 S.Ct. 999.). 
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.
    \73\ 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 citations for the studies mentioned above.)
---------------------------------------------------------------------------

    DOE estimated the monetized value of NOX emissions 
reductions from gas WICF refrigeration systems using benefit per ton 
estimates from the EPA's ``Technical Support Document Estimating the 
Benefit per Ton of Reducing PM2.5 Precursors from 17 
Sectors.'' \74\ Although none of the sectors refers specifically to 
residential and commercial buildings, DOE believes that the sector 
called ``Area sources'' would be a reasonable proxy for residential and 
commercial buildings. ``Area sources'' represents all emission sources 
for which states do not have exact (point) locations in their emissions 
inventories. Since exact locations would tend to be associated with 
larger sources, ``area sources'' would be fairly representative of 
small dispersed sources like homes and businesses. The EPA Technical 
Support Document provides high and low estimates for 2016, 2020, 2025, 
and 2030 at 3- and 7-percent discount rates. As with the benefit per 
ton estimates for NOX emissions reductions from electricity 
generation, DOE primarily relied on the low estimates to be 
conservative.
---------------------------------------------------------------------------

    \74\ www.epa.gov/sites/production/files/2014-10/documents/sourceapportionmentbpttsd.pdf.
---------------------------------------------------------------------------

    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 reduction in other 
emissions in energy conservation standards rulemakings. DOE has not 
included monetization of those emissions in the current analysis but 
notes that it would not expect the inclusion of such values to change 
its analysis or conclusions with respect to the adopted standards.

N. Utility Impact Analysis

    The utility impact analysis estimates several effects on the 
electric power generation 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 2016. 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. For 
the current analysis, impacts are quantified by comparing the levels of 
electricity sector generation, installed capacity, fuel consumption and 
emissions consistent with the projections described on page E-8 of AEO 
2016 and various side cases. Details of the methodology are provided

[[Page 31859]]

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

O. 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 consumers on energy, (2) 
reduced spending on new energy supply by the utility industry, (3) 
increased consumer spending on the products to which the new standards 
apply and other goods and services, and (4) the effects of those three 
factors throughout the economy.
    One method for assessing the possible effects on the demand for 
labor of such shifts in economic activity is to compare sector 
employment statistics developed by the Labor Department's Bureau of 
Labor Statistics (``BLS''). BLS regularly publishes its estimates of 
the number of jobs per million dollars of economic activity in 
different sectors of the economy, as well as the jobs created elsewhere 
in the economy by this same economic activity. Data from BLS indicate 
that expenditures in the utility sector generally create fewer jobs 
(both directly and indirectly) than expenditures in other sectors of 
the economy.\75\ There are many reasons for these differences, 
including wage differences and the fact that the utility sector is more 
capital-intensive and less labor-intensive than other sectors. Energy 
conservation standards have the effect of reducing consumer utility 
bills. Because reduced consumer expenditures for energy likely lead to 
increased expenditures in other sectors of the economy, the general 
effect of efficiency standards is to shift economic activity from a 
less labor-intensive sector (i.e., the utility sector) to more labor-
intensive sectors (e.g., the retail and service sectors). Thus, the BLS 
data suggest that net national employment may increase due to shifts in 
economic activity resulting from energy conservation standards.
---------------------------------------------------------------------------

    \75\ See U.S. Department of Commerce--Bureau of Economic 
Analysis. Regional Multipliers: A User Handbook for the Regional 
Input-Output Modeling System (RIMS II). 1997. U.S. Government 
Printing Office: Washington, DC. Available at www.bea.gov/scb/pdf/regional/perinc/meth/rims2.pdf.
---------------------------------------------------------------------------

    DOE estimated indirect national employment impacts for the standard 
levels considered in this final rule using an input/output model of the 
U.S. economy called Impact of Sector Energy Technologies version 4 
(``ImSET'').\76\ ImSET is a special-purpose version of the ``U.S. 
Benchmark National Input-Output'' (I-O) model, which was designed to 
estimate the national employment and income effects of energy-saving 
technologies. The ImSET software includes a computer-based I-O model 
having structural coefficients that characterize economic flows among 
187 sectors most relevant to industrial, commercial, and residential 
building energy use.
---------------------------------------------------------------------------

    \76\ Livingston, O.V., S.R. Bender, M.J. Scott, and R.W. 
Schultz. ImSET 4.0: Impact of Sector Energy Technologies Model 
Description and User's Guide. 2015. Pacific Northwest National 
Laboratory: Richland, WA. PNNL-24563.
---------------------------------------------------------------------------

    DOE notes that ImSET is not a general equilibrium forecasting 
model, and understands the uncertainties involved in projecting 
employment impacts, especially changes in the later years of the 
analysis. Because ImSET does not incorporate price changes, the 
employment effects predicted by ImSET may over-estimate actual job 
impacts over the long run for this rule. Therefore, DOE used ImSET only 
to generate results for near-term timeframes (2020), where these 
uncertainties are reduced. For more details on the employment impact 
analysis, see chapter 16 of the final rule TSD.

V. Analytical Results and Conclusions

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

A. Trial Standard Levels

    DOE analyzed the benefits and burdens of three TSLs for the 
considered WICF refrigeration systems. These TSLs were developed by 
combining specific efficiency levels for each of the equipment classes 
analyzed by DOE. (Efficiency levels for each class are described in 
section IV.D.10.) DOE presents the results for the TSLs in this 
document, while the results for all efficiency levels that DOE analyzed 
are in the final rule TSD.
    TSL 3 represents the maximum technologically feasible level. It is 
also the energy conservation standard level that the Working Group 
unanimously recommended that DOE adopt. (Term Sheet at EERE-2015-BT-
STD-0016-0056, recommendation #5). TSLs 1 and 2 are direct 
representations of efficiency levels 1 and 2. These efficiency levels 
for each class were formulated to divide the gap in efficiency between 
the baseline and the maximum technologically feasible efficiency level 
into approximately equal intervals. Table IV-1 shows the mapping of 
minimum AWEF values for each equipment class and nominal capacity to 
each TSL.

                               Table V-1--Mapping of AWEF to Trial Standard Levels
----------------------------------------------------------------------------------------------------------------
                                                      Nominal                  Trial standard level
      Equipment component        Equipment class  capacity  Btu/ -----------------------------------------------
                                                        hr               1               2               3
----------------------------------------------------------------------------------------------------------------
Condensing Unit...............  DC.L.I..........            6000            1.91            1.97            2.30
                                                            9000            2.09            2.14            2.48
                                                           25000            2.06            2.40            2.40

[[Page 31860]]

 
                                                           54000            2.35            2.35            2.42
                                DC.L.O..........            6000            2.57            2.67            3.00
                                                            9000            2.41            2.81            3.13
                                                           25000            2.70            2.77            3.16
                                                           54000            2.60            2.92            3.16
                                                           72000            2.59            2.90            3.16
Unit Cooler...................  UC.M............            4000            7.30            8.15            9.00
                                                            9000            7.30            8.15            9.00
                                                           24000            7.30            8.15            9.00
                                UC.L............            4000            3.61            3.78            3.95
                                                            9000            3.69            3.85            4.01
                                                           18000            3.88            4.02            4.15
                                                           40000            3.88            4.02            4.15
----------------------------------------------------------------------------------------------------------------

B. Economic Justification and Energy Savings

1. Economic Impacts on Individual Consumers
    DOE analyzed the economic impacts on consumers of the considered 
WICF refrigeration systems by looking at what the effects of the 
standards at each TSL would be on the LCC and PBP. DOE also examined 
the impacts of potential standards on consumer subgroups. These 
analyses are discussed below.
a. Life-Cycle Cost and Payback Period
    In general, higher-efficiency equipment affects consumers in two 
ways: (1) Purchase prices for the equipment increase and (2) equipment 
annual operating costs decrease. Inputs used for calculating the LCC 
and PBP include total installed costs (i.e., equipment price plus 
installation costs), and operating costs (i.e., annual energy use, 
energy prices, energy price trends, repair costs, and maintenance 
costs). The LCC calculation also uses product lifetime and a discount 
rate. Chapter 8 of the final rule TSD provides detailed information on 
the LCC and PBP analyses.
    The LCC results are the shipment-weighted average of results for 
each equipment class over system capacity using the weights for each 
shown in Table IV-6. The results for each TSL were approximated by 
analyzing the equipment class and nominal capacity combinations with 
the closest AWEF rating shown in Table V-1 that was analyzed in the 
engineering analysis. See chapter 8 of the TSD for more detailed LCC 
results.
    Table V-2 through Table V-20 show the LCC and PBP results for the 
TSLs considered for each equipment class. In the first of each pair of 
tables, the simple payback is measured relative to baseline equipment. 
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.G.1 of this document). Consumers for whom the LCC 
increases at a given TSL experience a net cost.

                  Table V-2--Average LCC and PBP Results by Trial Standard Level for Indoor Dedicated Condensing Units, Low-Temperature
                                                             [DC.L.I, condensing unit only]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2015$)
                                                         ----------------------------------------------------------------     Simple          Average
                TSL                          EL                            First year's      Lifetime                         payback        lifetime
                                                             Installed       operating       operating          LCC           (years)         (years)
                                                               cost            cost            cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    0...................          $3,727          $2,149         $18,320         $20,900             0.0            10.6
1.................................  1...................           3,729           2,146          18,320          20,873             0.0            10.6
2.................................  2...................           3,788           2,093          18,019          20,513             1.0            10.6
3.................................  3...................           4,006           1,955          16,689          19,628             1.5            10.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use equipment at that efficiency level. The PBP is measured relative to the
  baseline (EL 0) equipment.


Table V-3--Average LCC Savings Relative to the No-New-Standards Case for Indoor Dedicated Condensing Units, Low-
                                                   Temperature
                                         [DC.L.I, condensing unit only]
----------------------------------------------------------------------------------------------------------------
                                                                                   Life-cycle cost savings
                                                                           -------------------------------------
                                                                                                   Percent of
                    TSL                                    EL                  Average LCC      consumers  that
                                                                            savings * (2015$)   experience  net
                                                                                                      cost
----------------------------------------------------------------------------------------------------------------
1..........................................  1............................                $26                  0
2..........................................  2............................                387                  0

[[Page 31861]]

 
3..........................................  3............................              1,272                  0
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.


                 Table V-4--Average LCC and PBP Results by Trial Standard Level for Outdoor Dedicated Condensing Units, Low-Temperature
                                                             [DC.L.O, condensing unit only]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2015$)
                                                         ----------------------------------------------------------------     Simple          Average
                TSL                          EL                            First year's      Lifetime                         payback        lifetime
                                                             Installed       operating       operating          LCC           (years)         (years)
                                                               cost            cost            cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    0...................          $4,508          $2,630         $22,368         $25,587             0.0            10.5
1.................................  1...................           4,533           2,534          21,655          24,834             0.1            10.5
2.................................  2...................           4,585           2,359          20,105          23,490             0.4            10.5
3.................................  3...................           4,914           2,226          19,003          22,748             1.2            10.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use equipment at that efficiency level. The PBP is measured relative to the
  baseline (EL 0) equipment.


Table V-5--Average LCC Savings Relative to the No-New-Standards Case for Outdoor Dedicated Condensing Units, Low-
                                                   Temperature
                                         [DC.L.O, Condensing Unit Only]
----------------------------------------------------------------------------------------------------------------
                                                                                   Life-cycle cost savings
                                                                           -------------------------------------
                                                                                                   Percent of
                    TSL                                    EL                  Average LCC      consumers  that
                                                                            savings * (2015$)   experience  net
                                                                                                      cost
----------------------------------------------------------------------------------------------------------------
1..........................................  1............................               $753                  0
2..........................................  2............................              2,097                  0
3..........................................  3............................              2,839                  0
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.


             Table V-6--Average LCC and PBP Results by Trial Standard Level for Indoor Paired Dedicated Condensing Systems, Low-Temperature
                                                                 [DC.L.I, field-paired]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2015$)
                                                         ----------------------------------------------------------------     Simple          Average
                TSL                          EL                            First year's      Lifetime                         payback        lifetime
                                                             Installed       operating       operating          LCC           (years)         (years)
                                                               cost            cost            cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    0...................          $6,012          $2,147         $15,938         $23,294             0.0            10.6
1.................................  1...................           6,015           2,142          15,929          23,257             0.1            10.6
2.................................  2...................           6,078           2,087          15,665          22,877             1.0            10.6
3.................................  3...................           6,318           1,938          16,316          21,922             1.5            10.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use equipment at that efficiency level. The PBP is measured relative to the
  baseline (EL 0) equipment.


[[Page 31862]]


   Table V-7--Average LCC Savings Relative to the No-New-Standards Case for Indoor Paired Dedicated Condensing
                                        Systems, Indoor Condensing Units
                                             [DC.L.I, field-paired]
----------------------------------------------------------------------------------------------------------------
                                                                                   Life-cycle cost savings
                                                                           -------------------------------------
                                                                                                   Percent of
                    TSL                                    EL                  Average LCC      consumers  that
                                                                             savings* (2015$)   experience  net
                                                                                                      cost
----------------------------------------------------------------------------------------------------------------
1..........................................  1............................                $63                  0
2..........................................  2............................                442                  0
3..........................................  3............................              1,397                  0
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.


             Table V-8--Average LCC and PBP Results by Trial Standard Level for Outdoor Paired Dedicated Condensing Systems, Low-Temperature
                                                                 [DC.L.O, field-paired]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2015$)
                                                         ----------------------------------------------------------------     Simple          Average
                TSL                          EL                            First year's      Lifetime                         payback        lifetime
                                                             Installed       operating       operating          LCC           (years)         (years)
                                                               cost            cost            cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    0...................          $7,304          $2,631         $19,136         $28,435             0.0            10.5
1.................................  1...................           7,331           2,530          18,811          27,652             0.2            10.5
2.................................  2...................           7,412           2,330          15,688          26,128             0.5            10.5
3.................................  3...................           7,830           2,155          22,020          25,140             1.4            10.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use equipment at that efficiency level. The PBP is measured relative to the
  baseline (EL 0) equipment.


  Table V-9--Average LCC Savings Relative to the No-New-Standards Case for Outdoor Paired Dedicated Condensing
                                        Systems, Outdoor Condensing Units
                                             [DC.L.O, field-paired]
----------------------------------------------------------------------------------------------------------------
                                                                                   Life-cycle cost savings
                                                                           -------------------------------------
                                                                                                   Percent of
                    TSL                                    EL                  Average LCC      consumers  that
                                                                             savings* (2015$)   experience  net
                                                                                                      cost
----------------------------------------------------------------------------------------------------------------
1..........................................  1............................               $783                  0
2..........................................  2............................              2,307                  0
3..........................................  3............................              3,294                  0
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.


  Table V-10--Average LCC and PBP Results by Trial Standard Level for Low-Temperature Unit Coolers, Attached to Dedicated Condensing Indoor Condensing
                                                                          Units
                                                               [DC.L.I, unit cooler only]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2015$)
                                                         ----------------------------------------------------------------     Simple          Average
                TSL                          EL                            First year's      Lifetime                         payback        lifetime
                                                             Installed       operating       operating          LCC           (years)         (years)
                                                               cost            cost            cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    0...................          $2,283          $2,147         $18,347         $19,468             0.0            10.5
1.................................  1...................           2,317           2,134          18,269          19,396             1.7            10.5
2.................................  2...................           2,379           2,122          18,162          19,361             3.6            10.5
3.................................  3...................           2,433           2,113          18,062          19,347             4.8            10.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use equipment at that efficiency level. The PBP is measured relative to the
  baseline (EL 0) equipment.


[[Page 31863]]


Table V-11--Average LCC Savings Relative to the No-New-Standards Case for Low-Temperature Unit Coolers, Attached
                                 to Dedicated Condensing Indoor Condensing Units
                                           [DC.L.I, unit cooler only]
----------------------------------------------------------------------------------------------------------------
                                                                                   Life-cycle cost savings
                                                                           -------------------------------------
                                                                                                   Percent of
                    TSL                                    EL                  Average LCC      consumers  that
                                                                            savings * (2015$)   experience  net
                                                                                                      cost
----------------------------------------------------------------------------------------------------------------
1..........................................  1............................                $86                  2
2..........................................  2............................                121                  6
3..........................................  3............................                135                 15
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.


  Table V-12--Average LCC and PBP Results by Trial Standard Level for Low-Temperature Unit Coolers, Attached to Dedicated Condensing Outdoor Condensing
                                                                          Units
                                                               [DC.L.O, unit cooler only]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2015$)
                                                         ----------------------------------------------------------------     Simple          Average
                TSL                          EL                            First year's      Lifetime                         payback        lifetime
                                                             Installed       operating       operating          LCC           (years)         (years)
                                                               cost            cost            cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    0...................          $2,795          $2,630         $22,308         $23,816             0.0            10.4
1.................................  1...................           2,809           2,624          22,268          23,782             0.6            10.4
2.................................  2...................           2,856           2,604          22,151          23,673             2.4            10.4
3.................................  3...................           2,969           2,572          21,876          23,529             4.5            10.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use equipment at that efficiency level. The PBP is measured relative to the
  baseline (EL 0) equipment.


Table V-13--Average LCC Savings Relative to the No-New-Standards Case for Low-Temperature Unit Coolers, Attached
                                to Dedicated Condensing Outdoor Condensing Units
                                           [DC.L.O, unit cooler only]
----------------------------------------------------------------------------------------------------------------
                                                                                   Life-cycle cost savings
                                                                           -------------------------------------
                                                                                                   Percent of
                    TSL                                    EL                  Average LCC      consumers  that
                                                                            savings * (2015$)   experience  net
                                                                                                      cost
----------------------------------------------------------------------------------------------------------------
1..........................................  1............................                $35                  0
2..........................................  2............................                144                  3
3..........................................  3............................                288                 15
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.


 Table V-14--Average LCC and PBP Results by Trial Standard Level for Medium-Temperature Unit Coolers, Attached to Dedicated Condensing Indoor Condensing
                                                                          Units
                                                               [DC.M.I, unit cooler only]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2015$)
                                                         ----------------------------------------------------------------     Simple          Average
                TSL                          EL                            First year's      Lifetime                         payback        lifetime
                                                             Installed       operating       operating          LCC           (years)         (years)
                                                               cost            cost            cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    0...................          $2,187          $1,183         $10,010         $11,583             0.0            10.5
1.................................  1...................           2,187           1,183          10,010          11,583             0.0            10.5
2.................................  2...................           2,218           1,170           9,901          11,511             1.8            10.5
3.................................  3...................           2,227           1,167           9,875          11,497             1.9            10.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use equipment at that efficiency level. The PBP is measured relative to the
  baseline (EL 0) equipment.
Note: DOE is examining the impacts of unit coolers (UC.M and UC.L) combined with medium-temperature dedicated condensing equipment (DC.M.I and DC.M.O),
  but DOE is not considering establishing standards for the latter equipment, as they are covered by the June 2014 final rule standards that were not
  vacated by the Fifth Circuit order.


[[Page 31864]]


   Table V-15--Average LCC Savings Relative to the No-New-Standards Case for Medium-Temperature Unit Coolers,
                            Attached to Dedicated Condensing Indoor Condensing Units
                                           [DC.M.I, unit cooler only]
----------------------------------------------------------------------------------------------------------------
                                                                                   Life-cycle cost savings
                                                                           -------------------------------------
                                                                                                   Percent of
                    TSL                                    EL                  Average LCC      consumers  that
                                                                            savings * (2015$)   experience  net
                                                                                                      cost
----------------------------------------------------------------------------------------------------------------
1..........................................  1............................                 $0                  0
2..........................................  2............................                 72                  1
3..........................................  3............................                 87                  1
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
Note: DOE is examining the impacts of unit coolers (UC.M and UC.L) combined with medium-temperature dedicated
  condensing equipment (DC.M.I and DC.M.O), but DOE is not considering establishing standards for the latter
  equipment, as they are covered by the June 2014 final rule standards that were not vacated by the Fifth
  Circuit order.


Table V-16--Average LCC and PBP Results by Trial Standard Level for Medium-Temperature Unit Coolers, Attached to Dedicated Condensing Outdoor Condensing
                                                                          Units
                                                               [DC.M.O, unit cooler only]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2015$)
                                                         ----------------------------------------------------------------     Simple          Average
                TSL                          EL                            First year's      Lifetime                         payback        lifetime
                                                             Installed       operating       operating          LCC           (years)         (years)
                                                               cost            cost            cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    0...................          $2,294            $956          $8,070          $9,912             0.0            10.6
1.................................  1...................           2,294             956           8,070           9,912             0.0            10.6
2.................................  2...................           2,320             942           7,956           9,833             1.4            10.6
3.................................  3...................           2,329             940           7,937           9,823             1.5            10.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use equipment at that efficiency level. The PBP is measured relative to the
  baseline (EL 0) equipment.
Note: DOE is examining the impacts of unit coolers (UC.M and UC.L) combined with medium-temperature dedicated condensing equipment (DC.M.I and DC.M.O),
  but DOE is not considering establishing standards for the latter equipment, as they are covered by the June 2014 final rule standards that were not
  vacated by the Fifth Circuit order.


   Table V-17--Average LCC Savings Relative to the No-New-Standards Case for Medium-Temperature Unit Coolers,
                            Attached to Dedicated Condensing Outdoor Condensing Units
                                           [DC.M.O, unit cooler only]
----------------------------------------------------------------------------------------------------------------
                                                                                   Life-cycle cost savings
                                                                           -------------------------------------
                                                                                                   Percent of
                    TSL                                    EL                  Average LCC      consumers  that
                                                                            savings * (2015$)   experience  net
                                                                                                      cost
----------------------------------------------------------------------------------------------------------------
1..........................................  1............................                 $0                  0
2..........................................  2............................                 79                  0
3..........................................  3............................                 89                  1
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
Note: DOE is examining the impacts of unit coolers (UC.M and UC.L) combined with medium-temperature dedicated
  condensing equipment (DC.M.I and DC.M.O), but DOE is not considering establishing standards for the latter
  equipment, as they are covered by the June 2014 final rule standards that were not vacated by the Fifth
  Circuit order.


   Table V-18--Average LCC and PBP Results by Trial Standard Level for Unit Coolers, Low-Temperature, Attached to Low-Temperature Multiplex Condensing
                                                                          Units
                                                                [MC.L, unit cooler only]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Average costs 2015$
                                                         ----------------------------------------------------------------     Simple          Average
                TSL                          EL                            First year's      Lifetime                         payback        lifetime
                                                             Installed       operating       operating          LCC           (years)         (years)
                                                               cost            cost            cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    0...................          $2,850          $2,131         $18,831         $20,492             0.0            10.6
1.................................  1...................           2,856           2,130          18,820          20,488             0.6            10.6
2.................................  2...................           2,898           2,113          18,670          20,390             2.8            10.6

[[Page 31865]]

 
3.................................  3...................           3,115           2,090          18,468          20,418             7.6            10.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use equipment at that efficiency level. The PBP is measured relative to the
  baseline (EL 0) equipment.


Table V-19--Average LCC Savings Relative to the No-New-Standards Case for Unit Coolers, Low-Temperature Attached
                                  to Low-Temperature Multiplex Condensing Units
                                            [MC.L, unit cooler only]
----------------------------------------------------------------------------------------------------------------
                                                                                   Life-cycle cost savings
                                                                           -------------------------------------
                                                                                                   Percent of
                    TSL                                    EL                  Average LCC      consumers  that
                                                                            savings * (2015$)   experience  net
                                                                                                      cost
----------------------------------------------------------------------------------------------------------------
1..........................................  1............................                 $4                  2
2..........................................  2............................                101                  9
3..........................................  3............................                 74                 49
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.


     Table V-20--Average LCC and PBP Results by Trial Standard Level for Unit Coolers, Medium-Temperature, Attached to Medium-Temperature Multiplex
                                                                    Condensing Units
                                                                [MC.M, unit cooler only]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2015$)
                                                         ----------------------------------------------------------------     Simple          Average
                TSL                          EL                            First year's      Lifetime                         payback        lifetime
                                                             Installed       operating       operating          LCC           (years)         (years)
                                                               cost            cost            cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    0...................          $2,020            $675          $5,928          $7,592             0.0            10.5
1.................................  1...................           2,026             674           5,918           7,588             0.6            10.5
2.................................  2...................           2,056             662           5,813           7,520             2.4            10.5
3.................................  3...................           2,076             659           5,789           7,517             3.0            10.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use equipment at that efficiency level. The PBP is measured relative to the
  baseline (EL 0) equipment.


   Table V-21--Average LCC Savings Relative to the No-New-Standards Case for Unit Coolers, Medium-Temperature,
                            Attached to Medium-Temperature Multiplex Condensing Units
                                            [MC.M, unit cooler only]
----------------------------------------------------------------------------------------------------------------
                                                                                   Life-cycle cost savings
                                                                           -------------------------------------
                                                                                                   Percent of
                    TSL                                    EL                  Average LCC      consumers  that
                                                                            savings * (2015$)   experience  net
                                                                                                      cost
----------------------------------------------------------------------------------------------------------------
1..........................................  1............................                 $4                  1
2..........................................  2............................                 72                  2
3..........................................  3............................                 75                  8
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.

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

[[Page 31866]]

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

                                      Table V-22--Comparison of LCC Savings
                        and PBP for Small Businesses Consumer Subgroup and All Consumers
----------------------------------------------------------------------------------------------------------------
                                                                               LCC savings  (2015$)
    Equipment class--application          Consumer subgroup      -----------------------------------------------
           (design path)                                               TSL 1           TSL 2           TSL 3
----------------------------------------------------------------------------------------------------------------
DC.L.I--C-Only *...................  National Average...........             $26            $387          $1,272
                                     Small Businesses...........              25             359           1,179
DC.L.O--CU-Only *..................  National Average...........             753           2,097           2,839
                                     Small Businesses...........             698           1,960           2,628
DC.L.I--F-P **.....................  National Average...........              63             442           1,397
                                     Small Businesses...........              58             410           1,293
DC.L.O--F-P **.....................  National Average...........             783           2,307           3,294
                                     Small Businesses...........             733           2,164           3,060
DC.L.I--UC-Only [dagger]...........  National Average...........              86             121             135
                                     Small Businesses...........              78             107             116
DC.L.O--UC-Only [dagger]...........  National Average...........              35             144             288
                                     Small Businesses...........              32             131             259
UC.M--DC.M.I.......................  National Average...........               0              72              87
                                     Small Businesses...........               0              67              81
UC.M--DC.M.O.......................  National Average...........               0              79              89
                                     Small Businesses...........               0              73              82
UC.L--MC.L.........................  National Average...........               4             101              74
                                     Small Businesses...........              NA              NA              NA
UC.M--MC.M.........................  National Average...........               4              72              75
                                     Small Businesses...........              NA              NA              NA
----------------------------------------------------------------------------------------------------------------
                                           Consumer Simple PBP (years)
----------------------------------------------------------------------------------------------------------------
DC.L.I--CS-Only *..................  National Average...........             0.0             1.0             1.5
                                     Small Businesses...........             0.0             1.0             1.4
DC.L.O--CS-Only *..................  National Average...........             0.1             0.4             1.2
                                     Small Businesses...........             0.1             0.4             1.2
DC.L.I--F-P **.....................  National Average...........             0.1             1.0             1.5
                                     Small Businesses...........             0.1             1.0             1.5
DC.L.O--F-P **.....................  National Average...........             0.2             0.5             1.4
                                     Small Businesses...........             0.2             0.5             1.4
DC.L.I--UC-Only [dagger]...........  National Average...........             1.7             3.6             4.8
                                     Small Businesses...........             1.7             3.6             4.8
DC.L.O--UC-Only [dagger]...........  National Average...........             0.6             2.4             4.5
                                     Small Businesses...........             0.6             2.3             4.5
UC.M--DC.M.I.......................  National Average...........             0.0             1.8             1.9
                                     Small Businesses...........             0.0             0.0             1.8
UC.M--DC.M.O.......................  National Average...........             0.0             1.4             1.5
                                     Small Businesses...........             0.0             0.0             1.3
UC.L--MC.L.........................  National Average...........             0.6             2.8             7.6
                                     Small Businesses...........              NA              NA              NA
UC.M--MC.M.........................  National Average...........             0.6             2.4             3.0
                                     Small Businesses...........              NA              NA              NA
----------------------------------------------------------------------------------------------------------------
``NA'' indicates that these equipment classes are not commonly purchased by small businesses.
Note: DOE is examining the impacts of unit coolers (UC.M and UC.L) combined with medium-temperature dedicated
  condensing equipment (DC.M.I and DC.M.O), but DOE is not considering establishing standards for the latter
  equipment, as they are covered by the June 2014 final rule standards that were not vacated by the Fifth
  Circuit order.
* Condensing Unit Only (CU-Only): condensing unit-only. This analysis evaluates standard levels applied to a
  condensing unit for a scenario in which a new condensing unit is installed to replace a failed condensing
  unit, but the existing unit cooler is not replaced. See section IV.G.1.b for more details.
** Field-Paired (FP): field-paired unit cooler and condensing unit. This analysis evaluates a scenario in which
  both a new condensing unit and a new unit cooler are installed. See section IV.G.1.a for more details.
[dagger] Unit Cooler Only (UC-Only): unit cooler only. This analysis evaluates standard levels applied to a unit
  cooler for a scenario in which a new unit cooler is installed to replace a failed unit cooler, but the
  existing condensing unit (or multiplex system) is not replaced. See section IV.G.1.c for more details.

c. Rebuttable Presumption Payback
    As discussed in section III.E.2, EPCA establishes a rebuttable 
presumption that an energy conservation standard is economically 
justified if the increased purchase cost for the equipment at issue 
meets the standard is less than three times the value of the first-year 
energy savings resulting from the standard. In calculating a rebuttable 
presumption payback period for each of the considered TSLs, DOE used 
discrete values, and, as required by EPCA, based the energy use 
calculation on the DOE test procedures for the considered WICF 
refrigeration systems. In contrast, the PBPs presented in section 
V.B.1.a were calculated using distributions that

[[Page 31867]]

reflect the range of energy use in the field that is likely seen by 
consumers of the WICF refrigeration systems.
    Table V-23 presents the rebuttable-presumption payback periods for 
the considered TSLs for WICF refrigeration systems. These results show 
that, in most cases, the projected payback period will be three years 
or less for each of the different equipment classes with respect to 
each TSL examined. While DOE examined the rebuttable-presumption 
criterion, it also considered whether the standard levels considered 
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) and 6316(a), that considers the full range of impacts 
to the consumer, manufacturer, Nation, and environment. The results of 
that analysis serve as the basis for DOE to definitively evaluate the 
economic justification for a potential standard level, thereby 
supporting or rebutting the results of any preliminary determination of 
economic justification.

                  Table V-23--Rebuttable Payback Period (Years) for WICF Refrigeration Systems
----------------------------------------------------------------------------------------------------------------
                                                                               Trial standard level
                  Equipment class (Design Path)                  -----------------------------------------------
                                                                         1               2               3
----------------------------------------------------------------------------------------------------------------
DC.L.I (CU-Only) *..............................................             0.0             1.0             1.5
DC.L.O (CU-Only) *..............................................             0.1             0.4             1.2
DC.L.I (FP) **..................................................             0.1             1.0             1.5
DC.L.O (FP) **..................................................             0.2             0.5             1.4
DC.L.I (UC-Only) [dagger].......................................             1.7             3.6             4.8
DC.L.O (UC-Only) [dagger].......................................             0.6             2.4             4.5
UC.M-DC.M.I.....................................................             0.0             0.0             1.8
UC.M-DC.M.O.....................................................             0.0             0.0             1.4
UC.L-MC.L.......................................................             0.6             2.8             7.6
UC.M-MC.M.......................................................             0.6             2.4             3.0
----------------------------------------------------------------------------------------------------------------
Note: DOE is examining the impacts of unit coolers (UC.M and UC.L) combined with medium-temperature dedicated
  condensing equipment (DC.M.I and DC.M.O), but DOE is not considering establishing standards for the latter
  equipment, as they are covered by the June 2014 final rule standards that were not vacated by the Fifth
  Circuit order.
* CU-Only: Condensing unit-only. This analysis evaluates standard levels applied to a condensing unit
  distributed in commerce without a designated companion unit cooler for a scenario in which a new condensing
  unit is installed to replace a failed condensing unit, but the existing unit cooler is not replaced. See
  section IV.G.1.b for more details.
** FP: Field-paired unit cooler and condensing unit. This analysis evaluates standard levels applied to a
  condensing unit distributed in commerce without a designated companion unit cooler for a scenario in which
  both a new condensing unit and a new unit cooler are installed. See section IV.G.1.a for more details.
[dagger] UC-Only: Unit cooler only. This analysis evaluates standard levels applied to a unit cooler distributed
  in commerce without a designated companion condensing unit, either dedicated or multiplex, for a scenario in
  which a new unit cooler is installed to replace a failed unit cooler, but the existing condensing unit is not
  replaced. See section IV.G.1.c for more details.

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

[[Page 31868]]



  Table V-24--Manufacturer Impact Analysis for WICF Refrigeration Manufacturers Under the Preservation of Gross
                                             Margin Markup Scenario
----------------------------------------------------------------------------------------------------------------
                                                                               Trial standard level
                                       Units          No-new-    -----------------------------------------------
                                                  standards case         1               2               3
----------------------------------------------------------------------------------------------------------------
INPV............................        2015$ MM            97.9            97.1            96.4            91.7
Change in INPV ($)..............        2015$ MM  ..............           (0.7)           (1.5)           (6.1)
Change in INPV (%)..............               %  ..............           (0.8)           (1.5)           (6.3)
Product Conversion Costs........        2015$ MM             1.7             3.0             6.0            14.0
Capital Conversion Costs........        2015$ MM  ..............             0.3             1.1             4.7
Total Investment Required.......        2015$ MM             1.7             3.3             7.1            18.7
----------------------------------------------------------------------------------------------------------------


     Table V-25--Manufacturer Impact Analysis for WICF Refrigeration Manufacturers Under the Preservation of
                                        Operating Profit Markup Scenario
----------------------------------------------------------------------------------------------------------------
                                                                               Trial standard level
                                       Units          No-new-    -----------------------------------------------
                                                  standards case         1               2               3
----------------------------------------------------------------------------------------------------------------
INPV............................        2015$ MM            97.9            96.6            93.4            83.6
Change in INPV ($)..............        2015$ MM  ..............           (1.2)           (4.4)          (14.3)
Change in INPV (%)..............               %  ..............           (1.2)           (4.5)          (14.6)
Product Conversion Costs........        2015$ MM             1.7             3.0             6.0            14.0
Capital Conversion Costs........        2015$ MM  ..............             0.3             1.1             4.7
Total Investment Required.......        2015$ MM             1.7             3.3             7.1            18.7
----------------------------------------------------------------------------------------------------------------

    As explained in section IV.J.3.d, DOE modeled the upfront testing 
and labeling costs in both the no-new-standards case and the standards 
cases. These costs total $1.7 million for the industry.
    At TSL 1, DOE estimates impacts on INPV range from -$1.2 million to 
-$0.7 million, resulting in a change in INPV of -1.2 percent to -0.8 
percent, respectively. At TSL 1, industry free cash-flow is expected to 
decrease by approximately 7.4 percent to $7.0 million, compared to the 
no-new standards case value of $7.5 million in 2019, the year leading 
up to the expected standards compliance date.
    DOE expects WICF refrigeration manufacturers to incur approximately 
$3.0 million in product conversion costs for redesign, testing and 
labeling. DOE estimates that WICF refrigeration manufacturers will 
incur $0.3 million in capital conversion costs associated with TSL 1.
    At TSL 1, the shipment-weighted average MPC increases by 
approximately 0.6 percent across all WICF refrigeration systems 
relative to the no-new standards case MPC in 2020, the expected year of 
compliance. In the preservation of gross margin markup scenario, WICF 
refrigeration manufacturers are able to fully pass on this slight cost 
increase to consumers. The increase in MSP is outweighed by the $3.3 
million in conversion costs that WICF refrigeration manufacturers would 
incur, which causes a slight negative change in INPV at TSL 1 under the 
preservation of gross margin markup scenario.
    Under the preservation of operating profit markup scenario, WICF 
refrigeration manufacturers earn the same operating profit as would be 
earned in the no-new standards case, but manufacturers do not earn 
additional profit from their investments. In this scenario, the 0.6 
percent shipment-weighted average MPC increase results in a reduction 
in manufacturer markup after the compliance year. This reduction in 
manufacturer markup and the $3.3 million in conversion costs incurred 
by WICF refrigeration manufacturers cause a negative change in INPV at 
TSL 1 under the preservation of operating profit markup scenario.
    At TSL 2, DOE estimates impacts on INPV range from -$4.4 million to 
-$1.5 million, resulting in a change in INPV of -4.5 percent to -1.5 
percent. At TSL 2, industry free cash-flow is expected to decrease by 
approximately 24.7 percent to $5.7 million, compared to the no-new 
standards case value of $7.5 million in 2019, the year leading up to 
the expected standards compliance date.
    DOE expects WICF refrigeration systems to incur approximately $6.0 
million in product conversion costs for redesign, testing and labeling. 
DOE estimates WICF refrigeration manufacturers will incur $1.1 million 
in capital conversion costs associated with TSL 2 to invest in tooling 
necessary to update condensing system production equipment for models 
that do not meet the required efficiency levels.
    At TSL 2, the shipment-weighted average MPC increases by 
approximately 3.5 percent for all WICF refrigeration systems relative 
to the no-new standards case MPC in 2020, the expected year of 
compliance. In the preservation of gross margin markup scenario, 
manufacturers are able to fully pass on this cost increase to 
consumers. The increase in MSP is outweighed by $7.1 million in 
conversion costs that WICF refrigeration manufacturers would incur, 
which causes a 1.5 percent drop in INPV at TSL 2.
    Under the preservation of operating profit markup scenario, WICF 
refrigeration manufacturers earn the same per-unit operating profit as 
would be earned in the no-new standards case. This scenario results in 
a reduction in manufacturer markup after the compliance year. This 
reduction in manufacturer markup and the $7.1 million in conversion 
costs incurred by WICF refrigeration manufacturers cause a negative 
change in INPV at TSL 2 under the preservation of operating profit 
markup scenario.
    At the max-tech level (TSL 3), DOE estimates impacts on INPV range 
from -$14.3 million to -$6.1 million, or a change in INPV of -14.6 
percent to -6.3 percent. At TSL 3, industry free cash-flow is expected 
to decrease by approximately 79.5 percent to $1.5 million, compared to 
the no-new standards case value of $7.5 million in 2019, the year 
immediately prior to the

[[Page 31869]]

year of compliance for the new standards.
    DOE expects manufacturers of WICF refrigeration systems to incur 
approximately $14.0 million in product conversion costs for redesign, 
testing and labeling. DOE estimates manufacturers will incur $4.7 
million in capital conversion costs associated with TSL 3 to invest in 
tooling and machinery necessary to update condensing system production 
equipment for models that do not meet the required efficiency levels.
    At TSL 3, the shipment-weighted average MPC increases by 
approximately 9.8 percent for all WICF refrigeration systems relative 
to the no-new standards case MPC in 2020, the expected year of 
compliance. In the preservation of gross margin markup scenario, 
manufacturers are able to fully pass on this cost increase to 
consumers. The increase in MSP is outweighed by $18.7 million in 
conversion costs that WICF refrigeration manufacturers would incur, 
which causes a negative change in INPV at TSL 3 under the preservation 
of gross margin markup scenario.
    Under the preservation of operating profit markup scenario, WICF 
refrigeration manufacturers earn the same operating profit as would be 
earned in the no-new standards case, but they do not earn additional 
profit from their investments. In this scenario, the 9.8 percent 
shipment-weighted average MPC increase results in a reduction in 
manufacturer markup after the compliance year. This reduction in 
manufacturer markup and $18.7 million in conversion costs incurred 
cause a negative change in INPV at TSL 3 under the preservation of 
operating profit markup scenario.
a. Impacts on Direct Employment
    To quantitatively assess the impacts of energy conservation 
standards on WICF refrigeration manufacturer employment, DOE used the 
GRIM to estimate the domestic labor expenditures and number of 
employees in the no-new-standards case and at each TSL. DOE used 
statistical data from the U.S. Census Bureau's 2014 Annual Survey of 
Manufacturers (``ASM'') and the results of the engineering analysis to 
calculate industry-wide labor expenditures and domestic employment 
levels. Labor expenditures related to equipment manufacturing depend on 
the labor intensity of the equipment, the sales volume, and an 
assumption that wages remain fixed in real terms over time. The total 
labor expenditures in each year are calculated by multiplying the MPCs 
by the labor percentage of MPCs.
    The total labor expenditures in the GRIM were then converted to 
domestic production employment levels by dividing production labor 
expenditures by the annual payment per production worker (production 
worker hours multiplied by the labor rate found in the U.S. Census 
Bureau's 2014 ASM). The estimates of production workers in this section 
cover workers, including line supervisors, who are directly involved in 
fabricating and assembling equipment within the OEM facility. Workers 
performing services that are closely associated with production 
operations, such as materials handling tasks using forklifts, are also 
included as production labor. DOE's production worker estimates only 
account for workers who manufacture the seven equipment classes covered 
by this rulemaking. For example, a production line worker producing a 
dedicated condensing medium-temperature WICF refrigeration unit would 
not be included in the estimate of the production workers since 
dedicated condensing medium-temperature units are not covered in this 
rule.
    DOE calculated the direct employment associated with the seven 
analyzed equipment classes by multiplying the number of production 
workers by the ratio of total employment to production workers reported 
in the 2014 ASM.
    Using the GRIM, DOE estimates in the absence of new energy 
conservation standards, there would be 154 employees associated with 
the seven analyzed walk-in refrigeration system equipment classes in 
2020. Of these workers, 112 are production workers and 42 are non-
production workers. The employment impacts shown in Table V-26 
represent the potential direct employment changes that could result 
following the compliance date for the seven WICF refrigeration 
equipment classes addressed in this rule. The upper end of the results 
in the table contains estimates regarding the maximum increase in 
direct employment after the implementation of new energy conservation 
standards. The table's results are based on the assumption that WICF 
refrigeration manufacturers would continue to produce the same scope of 
covered equipment within the United States. The lower end of the range 
represents the maximum decrease in the total number of U.S. production 
workers if production moved to lower labor-cost countries. Additional 
detail on the analysis of direct employment can be found in chapter 12 
of the TSD.

               Table V-26--Direct Employment for the Seven Refrigeration Equipment Classes in 2020
----------------------------------------------------------------------------------------------------------------
                                                                               Trial standard level
                                                   No-standards  -----------------------------------------------
                                                       case              1               2               3
----------------------------------------------------------------------------------------------------------------
Production Workers in 2020 (without changes in               112             113             116             123
 production locations)..........................
Direct Employment in 2020.......................             154             155             159             169
Potential Changes in Direct Employment in 2020..  ..............        (112)--1        (112)--5       (112)--15
----------------------------------------------------------------------------------------------------------------

    The direct employment impacts shown are independent of the 
employment impacts from the broader U.S. economy, which are documented 
in the Employment Impact Analysis found in chapter 13 of the TSD.
b. Impacts on Manufacturing Capacity
    DOE did not identify any significant capacity constraints for the 
design options being evaluated for this rulemaking. For most WICF 
refrigeration manufacturers, the walk-in market makes up a relatively 
small percentage of their overall revenues. Additionally, most of the 
design options being evaluated are available as equipment options 
today. As a result, DOE does not anticipate that the industry will 
likely experience any capacity constraints directly resulting from any 
of the energy conservation standards considered by DOE in this 
rulemaking.
c. Impacts on Subgroups of Manufacturers
    As discussed in section IV.J.2, using average cost assumptions to 
develop an industry cash-flow estimate may not be adequate for 
assessing differential impacts among manufacturer sub-groups. Small 
manufacturers, niche equipment manufacturers, and manufacturers 
exhibiting a cost structure substantially different from the

[[Page 31870]]

industry average could be affected disproportionately. DOE used the 
results of the industry characterization performed in the market and 
technology assessment to group manufacturers exhibiting similar 
characteristics. Consequently, DOE analyzed small manufacturers as a 
sub-group for the final rule's analysis. Further details about the 
industry characterization can be found in section 0 and in chapter 3 of 
the final rule TSD.
    DOE evaluated the impact of new energy conservation standards on 
small manufacturers, particularly those defined as ``small businesses'' 
by the SBA. The SBA defines a ``small business'' as having 1,250 
employees or less for NAICS 333415, ``Air-Conditioning and Warm Air 
Heating Equipment and Commercial and Industrial Refrigeration Equipment 
Manufacturing.'' Using this definition, DOE identified three 
refrigeration system manufacturers. DOE describes the differential 
impacts on these small businesses in section VI.B of this document.
d. Cumulative Regulatory Burden
    One aspect of assessing manufacturer burden involves looking at the 
cumulative impact of multiple DOE standards and the regulatory actions 
of other Federal agencies and States that affect the manufacturers of a 
covered product. DOE believes that a standard level is not economically 
justified if it contributes to an unacceptable cumulative regulatory 
burden. While any one regulation may not impose a significant burden on 
manufacturers, the combined effects of several existing or impending 
regulations may have serious consequences for some manufacturers, 
groups of manufacturers, or an entire industry. Multiple regulations 
affecting the same manufacturer can strain profits and lead companies 
to abandon product lines or markets with lower expected future returns 
than competing products. For these reasons, DOE conducts an analysis of 
cumulative regulatory burden as part of its rulemakings pertaining to 
appliance efficiency.
    In addition to these energy conservation standards for WICF 
refrigeration systems, DOE identified other regulations that affect one 
or more WICF refrigeration system manufacturers and will take effect 
three years before or after the estimated 2020 compliance year, which 
is the time frame 2017 to 2023. While all of these regulations may not 
apply to each individual WICF refrigeration system manufacturer, a 
given manufacturer may be subject to one or more of these listed 
regulations depending on its particular product/equipment portfolio. 
DOE summarizes these regulations in Table V-27. Also, included in the 
table are Federal regulations that have compliance dates beyond the 
three years before or after the compliance date. Chapter 12 of the 
final rule TSD includes the full details of the cumulative regulatory 
burden.

         Table V-27--Other DOE Regulations Potentially Affecting WICF Refrigeration System Manufacturers
----------------------------------------------------------------------------------------------------------------
                                                   Number of
                                                 manufacturers                                      Industry
 Federal energy conservation      Number of       affected by     Approx.        Industry      conversion costs/
           standard            manufacturers *     this WICF     standards      conversion      product  revenue
                                                 refrigeration      year     costs millions $       *** (%)
                                                    rule **
----------------------------------------------------------------------------------------------------------------
Commercial Refrigeration                    54               5         2017  $184.0 Million    1.5.
 Equipment 79 FR 17725 (March                                                 (2012$).
 28, 2014).
Non-vacated Walk-in Cooler                  63              10         2017  33.6 Million      2.6.
 and Walk-in Freezer                                                          (2012$).
 Components 79 FR 32050 (June
 3, 2014).
Automatic Commercial                        16               1         2018  $25.1 Million     2.3.
 Icemakers 80 FR 4646                                                         (2013$).
 (January 28, 2015).
Small, Large, and Very Large                12               2         2018  $520.8 Million    4.9.
 Commercial Package Air                                                       (2014$).
 Conditioning and Heating
 Equipment 81 FR 2420
 (January 15, 2016).
Commercial Packaged Boilers                 45               1         2019  $27.5 Million     2.3.
 81 FR 15836 (June 9, 2016).                                                  (2014$).
Commercial Warm Air Furnaces                14               2         2019  $7.5 Million      1.7-5.1.
 81 FR 2420 (January 15,                                                      (2014$) to
 2016).                                                                       $22.2 Million
                                                                              (2014$).
Commercial Water Heaters 81                 25               1         2019  $29.8 Million     3.0.
 FR 34440 (March 31, 2016).                                                   (2014).
Dehumidifiers 81 FR 38338                   25               1         2019  $52.5 Million     4.5.
 (June 13, 2016).                                                             (2014).
Furnace Fans 79 FR 38129                    38               3         2019  $40.6 Million     1.6.
 (July 3, 2014).                                                              (2013$).
Residential Boiler 81 FR 2320               36               1         2021  $2.5 Million      Less than 1.
 (January 15, 2016).                                                          (2014$).
Direct Heating Equipment and                39               1         2015  17.5 (2009$)....  4.9.
 Residential Water Heaters 75
 FR 20112 (April 16, 2010)
 \+\.
Residential Central Air                     45               4         2015  $18.0 (2009$)...  Less than 1.
 Conditioners and Heat Pumps
 76 FR 37408 (June 27, 2011)
 \+\.
External Power Supplies 79 FR              243               1         2016  $43.4 (2012$)...  2.3.
 7846 (February 10, 2014) \+\.
Microwave Ovens 78 FR 36316                 12               1         2016  $43.1 (2011$)...  Less than 1.
 (June 17, 2013) \+\.
Battery Chargers 81 FR 38266                30               1         2018  $19.5 (2013$)...  Less than 1.
 (June 13, 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 WICF refrigeration systems that are also listed as
  manufacturers in the 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. The revenues
  figure includes revenue from just the covered product related to the individual row.
+ Consistent with Chapter 12 of the TSD, DOE has assessed whether this rule will have significant impacts on
  manufacturers that are also subject to significant impacts from other EPCA rules with compliance dates within
  three years of this rule's compliance date. However, DOE recognizes that a manufacturer incurs costs during
  some period before a compliance date as it prepares to comply, such as by revising product designs and
  manufacturing processes, testing products, and preparing certifications. As such, to illustrate a broader set
  of rules that may also create additional burden on manufacturers, DOE has expanded the timeframe of potential
  regulatory overlap to include other EPCA rules with compliance dates that fall within six years of compliance
  date of this rule. Note that this list of rules does not indicate that DOE considers any one particular rule
  to contribute significantly to cumulative impact. DOE has chosen to broaden its list of rules in order to
  provide additional information about its rulemaking activities.

    This final rule establishes energy conservation standards for seven 
WICF refrigeration system equipment classes. The thirteen other 
standards established in the June 2014 final rule (that is, the four 
standards applicable to dedicated condensing refrigeration systems 
operating at medium temperatures; three standards applicable to panels;

[[Page 31871]]

and six standards applicable to doors) were not vacated and remain 
subject to the June 5, 2017 compliance date prescribed by the June 2014 
final rule.\77\
---------------------------------------------------------------------------

    \77\ See www.energy.gov/sites/prod/files/2016/02/f29/Enforcement%20Policy%20Statement%20-%20WICF%2002-01-16.pdf 
(outlining DOE's enforcement discretion policy to not seek civil 
penalties or injunctive relief concerning certain violations of the 
WICF refrigeration systems standards established in the June 2014 
rule that were not vacated).
---------------------------------------------------------------------------

    DOE anticipates that ten manufacturers who would be subject to this 
final rule would also be subject to certain of the non-vacated 
standards, namely the refrigeration system standards applicable to 
dedicated condensing refrigeration systems operating at medium 
temperatures. Three of these manufacturers also produce panels and non-
display doors, and would be subject to those non-vacated standards as 
well.
    DOE discusses these and other requirements and includes the full 
details of the cumulative regulatory burden analysis in chapter 12 of 
the final rule TSD. DOE will continue to 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. DOE plans to seek public comment on the approaches it has 
used here (i.e., both the 3 and 6 year timeframes from the compliance 
date) in order to better understand at what point in the compliance 
cycle manufacturers most experience the effects of cumulative and 
overlapping burden from the regulation of multiple product classes.
e. Impact on Manufacturers of Complete Walk-Ins
    A manufacturer of a complete walk-in is the entity that assembles 
the complete walk-in cooler or walk-in freezer. In some cases, this may 
be an ``installer.'' Walk-in manufacturers have been subject to 
regulation since 2009, when EPCA's statutorily-prescriptive standards 
for walk-in coolers and freezers went into effect. 42 U.S.C. 6313(f)(1) 
EPCA required that all completed walk-ins must: have automatic door 
closers; have strip doors, spring hinged doors, or other method of 
minimizing infiltration when doors are open; and for all interior 
lights, use light sources with an efficacy of 40 lumens per watt or 
more. Furthermore, for walk-ins that use an evaporator fan motor with a 
rating of under 1 hp and less than 460 volts, that fan motor must be 
either a three-phase motor or an electronically commutated motor. Also, 
walk-in freezers with transparent reach-in doors must have triple-pane 
glass with either heat-reflective treated glass or gas fill for doors 
and windows. 42 U.S.C. 6313(f)(1)
    Due to existing regulations, manufacturers of complete walk-ins 
have a responsibility to use components that comply with the applicable 
standards and to ensure the final assembled equipment satisfies the 
already statutorily-prescribed design requirements enacted by Congress. 
To aid manufacturers in meeting these responsibilities, DOE has 
established labeling requirements as part of a separate final rule 
amending the walk-in test procedure. 81 FR at 95782-95789 (December 28, 
2016). As part of that rule, permanent nameplates must include 
information about the manufacturer or brand, and indicate that the 
component is suitable for walk-in use. In DOE's view, such a 
requirement will help reduce the burden on manufacturers of complete 
walk-ins, relative to the existing compliance regime, by allowing them 
to more easily identify and select compliant WICF components for 
assembly.
    DOE notes that this final rule does not establish requirements that 
specify performance requirements for the complete walk-in. 
Manufacturers of complete walk-ins, including installers (i.e., the 
parties that assemble the complete walk-in) have no paperwork or 
certification requirements as a result of this rule when using 
certified walk-in components. DOE was unable to identify installer 
conversion costs that would be likely to occur as a direct result of 
the standard since these costs are borne by component manufacturers. 
Installers will not have stranded assets, as they will be able to 
install certified components purchased before the compliance date. DOE 
finds the burdens on manufacturers of complete walk-ins to be de 
minimis. Manufacturers of complete walk-in have an existing obligation 
to ensure components comply with prescriptive requirements in EPCA. 42 
U.S.C. 6313(f)(1) Based on today's standard, that process would be 
simplified, as installers would be able to identify compliant 
components based on a required label.
    Companies that are both manufacturers of walk-in components and 
manufacturers of complete walk-ins must comply with standards for WICF 
components established in the June 2014 final rule for panels, doors, 
and medium-temperature dedicated condensing refrigeration systems. They 
would also need to comply with the standards for low-temperature 
dedicated condensing refrigeration systems and unit coolers established 
in this rule. Additionally, DOE notes that these entities are already 
responsible for complying with the statutorily-prescribed design 
standards for complete walk-ins.
    As part of the court settlement reached in Lennox Int'l v. Dep't of 
Energy, DOE agreed to consider any comments regarding any potential 
impacts of the standards on installers and to consider and 
substantively address any potential impacts of the standards on 
installers in its MIA. See Lennox Int'l v. Dep't of Energy, Case No. 
14-60535, Joint Settlement Motion (filed July 29, 2015) (5th Cir.). 
During the Working Group meetings, walk-in installers were represented 
by ACCA. As part of DOE's attempt to consider and address any potential 
installer impacts, the NOPR specifically sought comment on any 
conversion costs and stranded assets that walk-in installers might 
incur. See 81 FR at 63033 and 63048-63049 (detailing specific issues on 
which DOE sought input regarding potential installer-related impacts to 
the proposed rule).
    Stakeholders raised one issue related to installers and the 
possibility of stranded assets. AHRI and Rheem noted that installers of 
complete walk-ins may have stranded assets if they are required to use 
components that are compliant at the time of the complete walk-in 
assembly. AHRI added that compliant components may not be available to 
installers until the compliance date of the new standards, leading to 
equipment availability constraints. (AHRI No. 90 at p. 3; Rheem No. 91 
at p. 3)
    DOE addresses this comment and clarifies the compliance date for 
manufacturers of complete walk-ins in section III.F.
3. National Impact Analysis
    This section presents DOE's estimates of the national energy 
savings and the NPV of consumer benefits that would result from each of 
the TSLs considered as potential amended standards.
a. Significance of Energy Savings
    To estimate the energy savings attributable to potential standards 
for the considered WICF refrigeration systems, DOE compared their 
energy consumption under the no-new-standards case to their anticipated 
energy consumption under each TSL. The savings are measured over the 
entire lifetime of equipment purchased in the 30-year period that 
begins in the year of anticipated compliance with the amended standards 
(2020-2049). Table V-28 presents DOE's projections of the national 
energy savings for each TSL considered for the considered WICF

[[Page 31872]]

refrigeration systems. The savings were calculated using the approach 
described in section IV.H of this document.

      Table V-28--Cumulative National Energy Savings for WICF Refrigeration Systems; 30 Years of Shipments
                                                   [2020-2049]
----------------------------------------------------------------------------------------------------------------
                                                                               Trial standard level
                                                                 -----------------------------------------------
                                                                         1               2               3
----------------------------------------------------------------------------------------------------------------
                                                                                       Quads
                                                                 -----------------------------------------------
Primary energy..................................................             0.1             0.5             0.8
FFC energy......................................................             0.1             0.5             0.9
----------------------------------------------------------------------------------------------------------------

    OMB Circular A-4 \78\ requires agencies to present analytical 
results, including separate schedules of the monetized benefits and 
costs that show the type and timing of benefits and costs. Circular A-4 
also directs agencies to consider the variability of key elements 
underlying the estimates of benefits and costs. For this rulemaking, 
DOE undertook a sensitivity analysis using 9 years, rather than 30 
years, of equipment shipments. The choice of a 9-year period is a proxy 
for the timeline in EPCA for the review of certain energy conservation 
standards and potential revision of and compliance with such revised 
standards.\79\ The review timeframe established in EPCA is generally 
not synchronized with the product lifetime, product manufacturing 
cycles, or other factors specific to WICF refrigeration systems. Thus, 
such results are presented for informational purposes only and are not 
indicative of any change in DOE's analytical methodology. The NES 
sensitivity analysis results based on a 9-year analytical period are 
presented in Table V-29. The impacts are counted over the lifetime of 
the considered WICF refrigeration systems purchased in 2020-2028.
---------------------------------------------------------------------------

    \78\ U.S. Office of Management and Budget. Circular A-4: 
Regulatory Analysis. September 17, 2003. www.whitehouse.gov/omb/circulars_a004_a-4/.
    \79\ 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 products, the 
compliance period is 5 years rather than 3 years.

       Table V-29--Cumulative National Energy Savings for WICF Refrigeration Systems; 9 Years of Shipments
                                                   [2020-2028]
----------------------------------------------------------------------------------------------------------------
                                                                               Trial standard level
                                                                 -----------------------------------------------
                                                                         1               2               3
----------------------------------------------------------------------------------------------------------------
                                                                                       Quads
                                                                 -----------------------------------------------
Primary energy..................................................            0.03             0.1             0.2
FFC energy......................................................            0.03             0.1             0.2
----------------------------------------------------------------------------------------------------------------

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 examined for the WICF 
refrigeration systems addressed in this final rule. In accordance with 
OMB's guidelines on regulatory analysis,\80\ DOE calculated NPV using 
both a 7-percent and a 3-percent real discount rate. Table V-30 shows 
the consumer NPV results with impacts counted over the lifetime of 
products purchased in 2020-2049.
---------------------------------------------------------------------------

    \80\ U.S. Office of Management and Budget. Circular A-4: 
Regulatory Analysis. September 17, 2003. www.whitehouse.gov/omb/circulars_a004_a-4/.

  Table V-30--Cumulative Net Present Value of Consumer Benefits for WICF Refrigeration Systems Shipped in 2020-
                                                      2049
----------------------------------------------------------------------------------------------------------------
                                                                               Trial standard level
                          Discount rate                          -----------------------------------------------
                                                                         1               2               3
----------------------------------------------------------------------------------------------------------------
                                                                                   Billion 2015$
                                                                 -----------------------------------------------
3 percent.......................................................             0.5             2.0             3.2
7 percent.......................................................             0.2             0.9             1.4
----------------------------------------------------------------------------------------------------------------

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

[[Page 31873]]

change in DOE's analytical methodology or decision criteria.

   Table V-31 Cumulative Net Present Value of Consumer Benefits for WICF Refrigeration Systems; Nine Years of
                                                    Shipments
                                                   [2020-2028]
----------------------------------------------------------------------------------------------------------------
                                                                               Trial standard level
                          Discount rate                          -----------------------------------------------
                                                                         1               2               3
----------------------------------------------------------------------------------------------------------------
                                                                                   Billion 2015$
                                                                 -----------------------------------------------
3 percent.......................................................             0.2             0.4             1.5
7 percent.......................................................             0.1             0.2             0.9
----------------------------------------------------------------------------------------------------------------

    The above results reflect the use of a constant trend to estimate 
the change in price for the considered WICF refrigeration systems over 
the analysis period (see section IV.H.1). DOE also conducted a 
sensitivity analysis that considered one scenario with an increasing 
price trend and one scenario with a decreasing price trend. The results 
of these alternative cases are presented in appendix 10B of the final 
rule TSD.
c. Indirect Impacts on Employment
    DOE expects that amended energy conservation standards for WICF 
refrigeration systems will reduce energy expenditures 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. As described in 
section IV.N of this document, DOE used an input/output model of the 
U.S. economy to estimate indirect employment impacts of the TSLs that 
DOE considered. DOE understands that there are uncertainties involved 
in projecting employment impacts, especially changes in the later years 
of the analysis. Therefore, DOE generated results for near-term 
timeframes (2020-2025), where these uncertainties are reduced.
    The results suggest that the 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 final rule TSD presents detailed results 
regarding anticipated indirect employment impacts.
4. Impact on Utility or Performance of Products
    DOE tentatively concluded in the NOPR that the standards adopted in 
this final rule will not lessen the utility or performance of the WICF 
refrigeration systems under consideration in this rulemaking, based on 
testing conducted in support of the engineering analysis, and requested 
comment on this issue. 81 FR at 63035. DOE did not receive any comments 
suggesting that the selected standard levels would impact utility or 
performance and DOE notes that manufacturers of these equipment 
categories currently offer equipment that employ the various design 
options that would be needed to meet the adopted standards.
5. Impact of Any Lessening of Competition
    DOE considered any lessening of competition that would be likely to 
result from new or amended standards. As discussed in section 
III.E.1.e, the Attorney General of the United States must assess a 
proposed rule to determine the impact, if any, of any lessening of 
competition likely to result from the proposed standard and to transmit 
such determination in writing to the Secretary within 60 days of the 
publication of a proposed rule, together with an analysis of the nature 
and extent of the impact. To assist the Attorney General in making this 
determination, DOE provided the Department of Justice (``DOJ'') with 
copies of the final rule and the TSD for review. In its assessment 
letter responding to DOE, DOJ concluded that, based on the information 
currently available, it does not believe that the proposed energy 
conservation standards for WICF refrigeration systems are likely to 
have a significant adverse impact on competition. DOE is publishing the 
Attorney General's assessment at the end of this final rule.
6. Need of the Nation To Conserve Energy
    Enhanced energy efficiency, where economically justified, improves 
the Nation's energy security, strengthens the economy, and reduces the 
environmental impacts (costs) of energy production. Reduced electricity 
demand due to energy conservation standards is also likely to reduce 
the cost of maintaining the reliability of the electricity system, 
particularly during peak-load periods. As a measure of this reduced 
demand, chapter 15 in the final rule TSD presents the estimated 
reduction in generating capacity, relative to the no-new-standards 
case, for the TSLs that DOE considered in this rulemaking.
    Energy conservation resulting from potential energy conservation 
standards for the considered WICF refrigeration systems is expected to 
yield environmental benefits in the form of reduced emissions of 
certain air pollutants and greenhouse gases. Table V-32 provides DOE's 
estimate of cumulative emissions reductions expected to result from the 
TSLs considered in this rulemaking. The emissions were calculated using 
the multipliers discussed in section IV.H.2. DOE reports annual 
emissions reductions for each TSL in chapter 13 of the final rule TSD.

[[Page 31874]]



                    Table V-32--Cumulative Emissions Reduction for WICF Refrigeration Systems
                                              Shipped in 2020-2049
----------------------------------------------------------------------------------------------------------------
                                                                               Trial standard level
                                                                 -----------------------------------------------
                                                                         1               2               3
----------------------------------------------------------------------------------------------------------------
                                             Power Sector Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......................................             6.0            25.4            43.5
SO2 (thousand tons).............................................             4.9            21.0            35.9
NOX (thousand tons).............................................             3.2            13.8            23.6
Hg (tons).......................................................             0.0             0.1             0.1
CH4 (thousand tons).............................................             0.6             2.7             4.6
N2O (thousand tons).............................................             0.1             0.4             0.7
----------------------------------------------------------------------------------------------------------------
                                               Upstream Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......................................             0.3             1.4             2.4
SO2 (thousand tons).............................................             0.0             0.2             0.3
NOX (thousand tons).............................................             4.8            20.2            34.7
Hg (tons).......................................................          0.0001          0.0003          0.0006
CH4 (thousand tons).............................................            29.4             125             214
N2O (thousand tons).............................................            0.00            0.01            0.02
----------------------------------------------------------------------------------------------------------------
                                               Total FFC Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......................................             6.3            26.8            45.8
SO2 (thousand tons).............................................             5.0            21.1            36.2
NOX (thousand tons).............................................             8.0            34.0            58.2
Hg (tons).......................................................             0.0             0.1             0.1
CH4 (thousand tons).............................................            30.0             127             218
N2O (thousand tons).............................................             0.1             0.4             0.7
----------------------------------------------------------------------------------------------------------------
Negative values refer to an increase in emissions.

    As part of the analysis for this rule, DOE estimated monetary 
benefits likely to result from the projected reductions of 
CO2 emissions for each of the considered TSLs analyzed in 
this rulemaking. As discussed in section IV.L of this document, DOE 
used the most recent values for the SC-CO2 developed by the 
interagency working group. The four sets of SC-CO2 values 
correspond to the average values from distributions that use a 5-
percent discount rate, a 3-percent discount rate, a 2.5-percent 
discount rate, and the 95th-percentile values from a distribution that 
uses a 3-percent discount rate. The actual SC-CO2 values 
used for emissions in each year are presented in appendix 14A of the 
final rule TSD.
    Table V-33 presents the global value of the CO2 
emissions reduction at each TSL. DOE calculated domestic values as a 
range from 7 percent to 23 percent of the global values; these results 
are presented in chapter 14 of the final rule TSD.

               Table V-33--Present Value of CO2 Emissions Reduction for WICF Refrigeration Systems
                                              Shipped in 2020-2049
----------------------------------------------------------------------------------------------------------------
                                                                            SC-CO2 case
                                                 ---------------------------------------------------------------
                       TSL                                                                          3% discount
                                                    5% discount     3% discount    2.5% discount    rate, 95th
                                                   rate, average   rate, average   rate, average    percentile
----------------------------------------------------------------------------------------------------------------
                                                                           Million 2015$
                                                 ---------------------------------------------------------------
1...............................................            44.7             204             324             623
2...............................................             190             867            1376            2643
3...............................................             325            1484            2355            4525
----------------------------------------------------------------------------------------------------------------

    As discussed in section IV.L.2, DOE estimated monetary benefits 
likely to result from the reduced emissions of methane and 
N2O that DOE estimated for each of the considered TSLs for 
WICF refrigeration systems. DOE used the recent values for the SC-
CH4 and SC-N2O developed by the interagency 
working group. Table V-34 presents the value of the CH4 
emissions reduction at each TSL, and Table V-35 presents the value of 
the N2O emissions reduction at each TSL.

[[Page 31875]]



  Table V-34--Present Value of Methane Emissions Reduction for WICF Refrigeration Systems Shipped in 2020-2049
----------------------------------------------------------------------------------------------------------------
                                                                        SC-CH4 case
                                         -----------------------------------------------------------------------
                   TSL                                                                             3% discount
                                             5% discount       3% discount      2.5% discount      rate, 95th
                                            rate, average     rate, average     rate, average      percentile
----------------------------------------------------------------------------------------------------------------
                                                                       Million 2015$
                                         -----------------------------------------------------------------------
1.......................................               9.5              30.1              42.6              80.2
2.......................................              40.3               128               181               340
3.......................................              69.0               218               309               582
----------------------------------------------------------------------------------------------------------------


          Table V-35--Present Value of Nitrous Oxide Emissions Reduction for WICF Refrigeration Systems
                                              Shipped in 2020-2049
----------------------------------------------------------------------------------------------------------------
                                                                            SC-N2O case
                                                 ---------------------------------------------------------------
                       TSL                                                                          3% discount
                                                    5% discount     3% discount    2.5% discount    rate, 95th
                                                   rate, average   rate, average   rate, average    percentile
----------------------------------------------------------------------------------------------------------------
                                                                           Million 2015$
                                                 ---------------------------------------------------------------
1...............................................             0.2             1.0             1.6             2.8
2...............................................             1.0             4.4             6.9            11.7
3...............................................             1.8             7.5            11.9            20.0
----------------------------------------------------------------------------------------------------------------

    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 GHG emissions in this rulemaking is subject to change. DOE, 
together with other Federal agencies, will continue to review various 
methodologies for estimating the monetary value of reductions in 
CO2 and other GHG emissions. This ongoing review will 
consider the comments on this subject that are part of the public 
record for this and other rulemakings, as well as other methodological 
assumptions and issues. 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 resulting 
from the interagency review process. DOE notes, however, that the 
adopted standards would be economically justified even without 
inclusion of the monetized benefits accruing from reduced GHG 
emissions.
    DOE also estimated the monetary value of the economic benefits 
associated with NOX emissions reductions anticipated to 
result from the considered TSLs for WICF refrigeration systems. The 
dollar-per-ton values that DOE used are discussed in section IV.L of 
this document.
    Table V-36 presents the present value for NOX emissions 
reduction for each TSL calculated using 7-percent and 3-percent 
discount rates. This table presents results that use the low benefit-
per-ton values, which reflect DOE's primary estimate. Results that 
reflect the range of NOX benefit-per-ton values are 
presented in Table V-36.

      Table V-36--Present Value of NOX Emissions Reduction for WICF
                          Refrigeration Systems
                        Shipped in 2020-2049 \*\
------------------------------------------------------------------------
                                            3% discount     7% discount
                   TSL                         rate            rate
------------------------------------------------------------------------
                                                   Million 2015$
------------------------------------------------------------------------
1.......................................            14.3             5.8
2.......................................            60.4            24.8
3.......................................             103            42.4
------------------------------------------------------------------------
* Results are based on the low benefit-per-ton values.

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) and 
6316(a)) No other factors were considered in this analysis.

C. Summary of National Economic Impacts

    Table V-37 presents the NPV values that result from adding the 
estimates of the potential economic benefits resulting from reduced GHG 
and NOX emissions to the NPV of consumer savings calculated 
for each TSL considered in this rulemaking.

[[Page 31876]]



                               Table V-37--Consumer NPV Combined With Present Value of Benefits From Emissions Reductions
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Consumer NPV and low NOX values at 3% discount rate added with:
                                                     ---------------------------------------------------------------------------------------------------
                         TSL                           GHG 5%  discount rate,   GHG 3%  discount rate,     GHG 2.5%  discount     GHG 3%  Discount Rate,
                                                            average case             average case         rate,  average case      95th percentile case
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                 Billion 2015$
                                                     ---------------------------------------------------------------------------------------------------
1...................................................                      0.6                      0.7                      0.9                      1.2
2...................................................                      2.3                      3.1                      3.6                      5.1
3...................................................                      3.7                      5.0                      6.0                      8.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Consumer NPV and Low NOX Values at 7% Discount Rate Added with:
                                                     ---------------------------------------------------------------------------------------------------
TSL                                                     GHG 5% discount rate,    GHG 3% discount rate,    GHG 3% discount rate,    GHG 3% discount rate,
                                                                 average case             average case             average case     95th percentile case
                                                     ---------------------------------------------------------------------------------------------------
                                                                                                 Billion 2015$
                                                     ---------------------------------------------------------------------------------------------------
1...................................................                      0.3                      0.5                      0.6                      0.9
2...................................................                      1.1                      1.9                      2.5                      3.9
3...................................................                      1.8                      3.1                      4.1                      6.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The GHG benefits include the estimated benefits for reductions in CO2, CH4, and N2O emissions using the four sets of SC-CO2, SC-CH4, and SC-N2O
  values developed by the interagency working group.

    The national operating cost savings are domestic U.S. monetary 
savings that occur as a result of purchasing the considered WICF 
refrigeration equipment, and are measured for the lifetime of products 
shipped in 2020-2049. The benefits associated with reduced GHG 
emissions achieved as a result of the adopted standards are also 
calculated based on the lifetime of WICF refrigeration systems shipped 
in 2020-2049. However, the GHG reduction is a benefit that accrues 
globally. Because CO2 emissions have a very long residence 
time in the atmosphere, the SC-CO2 values for future 
emissions reflect climate-related impacts that continue through 2300.

D. Conclusion

    When considering new or amended energy conservation standards, the 
standards that DOE adopts for walk-ins 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) and 6316(a)) In determining whether a standard is 
economically justified, the Secretary must determine whether the 
benefits of the standard exceed its burdens by, to the greatest extent 
practicable, considering the seven statutory factors discussed 
previously. (42 U.S.C. 6295(o)(2)(B)(i) and 6316(a)) The new or amended 
standard must also result in significant conservation of energy. (42 
U.S.C. 6295(o)(3)(B) and 6316(a)).
    For this final rule, DOE considered the impacts of standards for 
the considered WICF refrigeration systems at each TSL, beginning with 
the maximum technologically feasible level, to determine whether that 
level was economically justified. Where the max-tech level was not 
justified, DOE then considered the next most efficient level and 
undertook the same evaluation until it reached the highest efficiency 
level that is both technologically feasible and economically justified 
and saves a significant amount of energy.
    To aid the reader as DOE discusses the benefits and/or burdens of 
each TSL, tables in this section present a summary of the results of 
DOE's quantitative analysis for each TSL. In addition to the 
quantitative results presented in the tables, DOE also considers other 
burdens and benefits that affect economic justification. These include 
the impacts on identifiable subgroups of consumers who may be 
disproportionately affected by a national standard and impacts on 
employment.
1. Benefits and Burdens of TSLs Considered for WICF Refrigeration 
System Standards
    Table V-38 and Table V-39 summarize the quantitative impacts 
estimated for each TSL for the considered WICF refrigeration systems. 
The national impacts are measured over the lifetime of WICF 
refrigeration systems purchased in the 30-year period that begins in 
the anticipated year of compliance with amended standards (2020-2049). 
The energy savings, emissions reductions, and value of emissions 
reductions refer to full-fuel-cycle results. The efficiency levels 
contained in each TSL are described in section V.A of this document.

         Table V-38--Summary of Analytical Results for WICF Refrigeration Systems TSLs: National Impacts
----------------------------------------------------------------------------------------------------------------
          Category                       TSL 1                       TSL 2                       TSL 3
----------------------------------------------------------------------------------------------------------------
                                 Cumulative FFC National Energy Savings (quads)
----------------------------------------------------------------------------------------------------------------
Quads.......................  0.1.......................  0.5.......................  0.9
----------------------------------------------------------------------------------------------------------------
                               NPV of Consumer Costs and Benefits (billion 2015$)
----------------------------------------------------------------------------------------------------------------
3% discount rate............  0.5.......................  2.0.......................  3.2
7% discount rate............  0.2.......................  0.9.......................  1.4
----------------------------------------------------------------------------------------------------------------

[[Page 31877]]

 
                                       Cumulative FFC Emissions Reduction
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)...  6.3.......................  26.8......................  45.8
SO2 (thousand tons).........  5.0.......................  21.1......................  36.2
NOX (thousand tons).........  8.0.......................  34.0......................  58.2
Hg (tons)...................  0.02......................  0.07......................  0.12
CH4 (thousand tons).........  30.0......................  127.......................  218
N2O (thousand tons).........  0.1.......................  0.4.......................  0.7
----------------------------------------------------------------------------------------------------------------
                                          Value of Emissions Reduction
----------------------------------------------------------------------------------------------------------------
CO2 (Billion 2015$) *.......  0.0 to 0.6................  0.2 to 2.6................  0.3 to 4.5
CH4 (billion 2015$).........  0.0 to 0.1................  0.0 to 0.3................  0.1 to 0.6
N2O (million 2015$).........  0.000 to 0.003............  0.001 to 0.012............  0.002 to 0.020
NOX--3% discount rate         14........................  60........................  103
 (million 2015$).
NOX--7% discount rate         6.........................  25........................  42
 (million 2015$).
----------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values.
* Range of the economic value of CO2 reductions is based on estimates of the global benefit of reduced CO2
  emissions.


                Table V-39--Summary of Analytical Results for WICF Refrigeration Equipment TSLs:
                                   Manufacturer and Consumer Impacts [Dagger]
----------------------------------------------------------------------------------------------------------------
                        Category                              TSL 1 *            TSL 2 *            TSL 3 *
----------------------------------------------------------------------------------------------------------------
                                              Manufacturer Impacts
----------------------------------------------------------------------------------------------------------------
Industry NPV (2015$ million) (No-new-standards case              96.6-97.1          93.4-96.4          83.6-91.7
 INPV = 97.9)..........................................
Industry NPV (% change)................................        (1.2)-(0.8)        (4.5)-(1.5)       (14.6)-(6.3)
----------------------------------------------------------------------------------------------------------------
                                      Consumer Average LCC Savings (2015$)
----------------------------------------------------------------------------------------------------------------
DC.L.I (CU-Only) *.....................................                 26                387              1,272
DC.L.O (CU-Only).......................................                753              2,097              2,839
DC.L.I (Field-Paired) **...............................                 63                442              1,397
DC.L.O (Field-Paired)..................................                783              2,307              3,294
DC.L.I (UC-Only) [dagger]..............................                 86                121                135
DC.L.O (UC-Only).......................................                 35                144                288
UC.M--DC.M.I...........................................                  0                 72                 87
UC.M--DC.M.O...........................................                  0                 79                 89
UC.L--MC.L (UC-Only)...................................                  4                101                 74
UC.M--MC.M (UC-Only)...................................                  4                 72                 75
Shipment-Weighted Average..............................                107                393                615
----------------------------------------------------------------------------------------------------------------
                                           Consumer Simple PBP (years)
----------------------------------------------------------------------------------------------------------------
DC.L.I (CU-Only) *.....................................                0.0                1.0                1.5
DC.L.O (CU-Only) *.....................................                0.1                0.4                1.2
DC.L.I (Field -Paired) **..............................                0.1                1.0                1.5
DC.L.O (FP) **.........................................                0.2                0.5                1.4
DC.L.I (UC-Only) [dagger]..............................                1.7                3.6                4.8
DC.L.O (UC-Only) [dagger]..............................                0.6                2.4                4.5
UC.M--DC.M.I...........................................                0.0                0.0                1.8
UC.M--DC.M.O...........................................                0.0                1.4                1.5
UC.L--MC.L (UC-Only)...................................                0.6                2.8                7.6
UC.M--MC.M (UC-Only)...................................                0.6                2.4                3.0
Shipment-Weighted Average..............................                0.2                1.2                2.2
----------------------------------------------------------------------------------------------------------------
                                     % of Consumers that Experience Net Cost
----------------------------------------------------------------------------------------------------------------
DC.L.I (CU-Only) *.....................................                  0                  0                  0
DC.L.O (CU-Only) *.....................................                  0                  0                  0
DC.L.I (FP) **.........................................                  0                  0                  0
DC.L.O (FP) **.........................................                  0                  0                  0
DC.L.I (UC-Only) [dagger]..............................                  2                  6                 15
DC.L.O (UC-Only) [dagger]..............................                  0                  3                 15
UC.M--DC.M.I...........................................                  0                  1                  1
UC.M--DC.M.O...........................................                  0                  0                  1
UC.L--MC.L (UC-Only)...................................                  2                  9                 49
UC.M--MC.M (UC-Only)...................................                  1                  2                  8

[[Page 31878]]

 
Shipment-Weighted Average..............................                  0                  1                  5
----------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values. Weighted results are by shares of each product class in total
  projected shipments in 2020.
* CU-Only: Condensing unit-only. This analysis evaluates standard levels applied to a condensing unit
  distributed in commerce without a designated companion unit cooler for a scenario in which a new condensing
  unit is installed to replace a failed condensing unit, but the existing unit cooler is not replaced. See
  section IV.G.1.b for more details.
** FP: Field-paired unit cooler and condensing unit. This analysis evaluates standard levels applied to a
  condensing unit distributed in commerce without a designated companion unit cooler for a scenario in which
  both a new condensing unit and a new unit cooler are installed. See section IV.G.1.a for more details.
[dagger] UC-Only: Unit cooler only. This analysis evaluates standard levels applied to a unit cooler distributed
  in commerce without a designated companion condensing unit, either dedicated or multiplex, for a scenario in
  which a new unit cooler is installed to replace a failed unit cooler, but the existing condensing unit is not
  replaced. See section IV.G.1.c for more details.
[Dagger] For this NOPR, DOE is examining the impacts of unit coolers (UC.M and UC.L) combined with medium--
  temperature dedicated condensing equipment (DC.M.I and DC.M.O), but DOE is not considering establishing
  standards for the latter equipment, as they are covered by the June 2014 final rule standards that were not
  vacated by the Fifth Circuit order.

    DOE first considered TSL 3, which represents the max-tech 
efficiency levels. TSL 3 would save an estimated 0.85 quads of energy, 
an amount DOE considers significant. Under TSL 3, the NPV of consumer 
benefit would be $1.4 billion using a discount rate of 7 percent, and 
$3.2 billion using a discount rate of 3 percent.
    The cumulative emissions reductions at TSL 3 are 48.5 Mt of 
CO2, 36.2 thousand tons of SO2, 58.2 thousand 
tons of NOX, 0.12 ton of Hg, 218 thousand tons of 
CH4, and 0.7 thousand tons of N2O. The estimated 
monetary value of the GHG emissions reduction at TSL 3 ranges from $325 
million to $4,525 million for CO2, from $69 million to $582 
million for CH4, and from $1.8 million to $20 million for 
N2O. The estimated monetary value of the NOX 
emissions reduction at TSL 3 is $42 million using a 7-percent discount 
rate and $103 million using a 3-percent discount rate.
    At TSL 3, the average LCC impact for low-temperature dedicated 
condensing units is a savings of $1,272 for DC.L.I, $2,839 for DC.L.O 
for the condensing unit-only; $1,397 for DC.L.I , $3,294 for DC.L.O for 
field-paired equipment. The average LCC impact for low-temperature unit 
coolers (UC.L) is a savings of $135 and $288 when connected to indoor 
and outdoor low-temperature dedicated condensing units, respectively, 
and $74 when connected to low-temperature multiplex condensing 
equipment. The average LCC impact for medium-temperature unit coolers 
(UC.M) is a savings of $87 and $89 when connected to indoor and outdoor 
medium-temperature dedicated condensing units, respectively, and $75 
when connected to medium-temperature multiplex condensing equipment. 
The simple payback period impact for low-temperature dedicated 
condensing units is 1.5 years for DC.L.I and, 1.2 years for DC.L.O for 
the condensing unit-only; 1.5 years for DC.L.I and, 1.4 years for 
DC.L.O for field-paired equipment. The simple payback period for low-
temperature unit coolers (UC.L) is 4.8 years and 4.5 years when 
connected to indoor and outdoor low-temperature dedicated condensing 
units, respectively, and 7.6 years when connected to low-temperature 
multiplex condensing equipment. The simple payback period for medium-
temperature unit coolers (UC.M) is 1.9 years and 1.5 years when 
connected to indoor and outdoor medium-temperature dedicated condensing 
units, respectively, and 3.0 years when connected to medium-temperature 
multiplex condensing equipment. The fraction of consumers experiencing 
a net LCC cost is zero percent for DC.L.I and DC.L.O for condensing 
unit-only; and zero percent for DC.L.I, and DC.L.O for field-paired 
equipment. The fraction of consumers experiencing a net LCC cost for 
low-temperature unit coolers (UC.L) is 15 percent when connected to 
indoor and outdoor low-temperature dedicated condensing units, 
respectively, and 49 percent when connected to low-temperature 
multiplex condensing equipment. The fraction of consumers experiencing 
a net LCC cost for medium-temperature unit coolers (UC.M) is 1 percent 
when connected to indoor and outdoor medium-temperature dedicated 
condensing units, and 8 percent when connected to medium-temperature 
multiplex condensing equipment. At TSL 3, the projected change in INPV 
ranges from a decrease of $14.3 million to a decrease of $6.1 million, 
which corresponds to decreases of 14.6 percent and 6.3 percent, 
respectively.
    In addition, the adopted TSL 3 standards are consistent with the 
unanimous recommendations submitted by the Working Group and approved 
by the ASRAC. (See: Term Sheet at EERE-2015-BT-STD-0016-0056, 
recommendation #5) DOE has encouraged the negotiation of standard 
levels, in accordance with the FACA and the NRA, as a means for 
interested parties, representing diverse points of view, to analyze and 
recommend energy conservation standards to DOE. Such negotiations may 
often expedite the rulemaking process. In addition, standard levels 
recommended through a negotiation may increase the likelihood for 
regulatory compliance, while decreasing the risk of litigation.
    After considering the analysis and weighing the benefits and 
burdens, the Secretary has concluded that at TSL 3 for the considered 
WICF refrigeration systems, the benefits of energy savings, positive 
NPV of consumer benefits, emission reductions, the estimated monetary 
value of the emissions reductions, and positive average LCC savings 
would collectively outweigh the negative impacts on some consumers and 
on manufacturers. As noted earlier, DOE's analysis of this level is 
independent of any benefits that may accrue from the reduction 
of GHG and NOX projected to occur with this 
level. Accordingly, the Secretary has concluded that TSL 3 would offer 
the maximum improvement in efficiency that is both technologically 
feasible and economically justified. The Secretary has also concluded 
that TSL3 would result in the significant conservation of energy.
    Therefore, based on the above considerations, DOE is adopting the 
energy conservation standards for WICF refrigeration systems at TSL 3. 
These adopted energy conservation standards for the considered WICF 
refrigeration systems, which are expressed as AWEF, are shown in Table 
V-40.

[[Page 31879]]



                Table V-40--Adopted Energy Conservation Standards for WICF Refrigeration Systems
----------------------------------------------------------------------------------------------------------------
                                      Capacity  (Cnet*)  (Btu/
           Equipment class                       h)                         Minimum AWEF  (Btu/W-h)
----------------------------------------------------------------------------------------------------------------
Unit Coolers--Low-Temperature.......  <15,500................  1.575 * 10-\5\ * qnet + 3.91
                                      >=15,500...............  4.15
Unit Coolers--Medium-Temperature....  All....................  9.00
Dedicated Condensing System--Low-     <6,500.................  6.522 * 10-\5\ * qnet + 2.73
 Temperature, Outdoor.                >=6,500................  3.15
Dedicated Condensing System--Low-     <6,500.................  9.091 * 10-\5\ * qnet + 1.81
 Temperature, Indoor.                 >=6,500................  2.40
----------------------------------------------------------------------------------------------------------------
* Where qnet is net capacity as determined and certified pursuant 10 CFR 431.304.

2. 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 
(1) the annualized national economic value (expressed in 2015$) of the 
benefits from operating walk-in refrigeration systems that meet the 
adopted standards (consisting primarily of operating cost savings from 
using less energy), minus increases in equipment purchase costs, and 
(2) the annualized monetary value of the benefits of GHG and 
NOX emission reductions.
    Table V-41 shows the annualized values for the considered WICF 
refrigeration systems under TSL 3, expressed in 2015$. The results 
under the primary estimate are as follows.
    Using a 7-percent discount rate for benefits and costs other than 
GHG reductions (for which DOE used average social costs with a 3-
percent discount rate),\81\ the estimated cost of the adopted standards 
for the considered WICF refrigeration systems is $34 million per year 
in increased equipment costs, while the estimated annual benefits are 
$169 million in reduced equipment operating costs, $95 million in GHG 
reductions, and $4.2 million in reduced NOX emissions. In 
this case, the net benefit amounts to $234 million per year.
---------------------------------------------------------------------------

    \81\ DOE used average social costs with a 3-percent discount 
rate these values are considered as the ``central'' estimates by the 
interagency group.
---------------------------------------------------------------------------

    Using a 3-percent discount rate for all benefits and costs, the 
estimated cost of the adopted standards for the considered WICF 
refrigeration systems is $36 million per year in increased equipment 
costs, while the estimated annual benefits are $213 million in reduced 
operating costs, $95 million in CO2 GHG reductions, and $5.8 
million in reduced NOX emissions. In this case, the net 
benefit amounts to $279 million per year.

              Table V-41--Selected Categories of Annualized Benefits and Costs of Adopted Standards (TSL 3) for WICF Refrigeration Systems
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                      Low-net-  benefits          High-net-  benefits
                                        Discount rate  (percent)           Primary estimate                estimate                    estimate
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                      Million 2015$/year
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings...  7...............................  169.3.....................  158.4.....................  183.0.
                                    3...............................  213.4.....................  196.9.....................  233.9.
GHG Reduction (using avg. social    5...............................  29.8......................  27.2......................  32.4.
 costs at 5% discount rate) **.
GHG Reduction (using avg. social    3...............................  95.3......................  86.7......................  104.0.
 costs at 3% discount rate) **.
GHG Reduction (using avg. social    2.5.............................  137.7.....................  125.1.....................  150.4.
 costs at 2.5% discount rate) **.
GHG Reduction (using 95th           3...............................  285.8.....................  259.8.....................  311.9.
 percentile social costs at 3%
 discount rate) **.
NOX Reduction [dagger]............  7...............................  4.2.......................  3.9.......................  10.1.
                                    3...............................  5.8.......................  5.3.......................  14.3.
Total Benefits [dagger][dagger]...  7 plus GHG range................  203 to 459................  190 to 422................  225 to 505.
                                    7...............................  269.......................  249.......................  297.
                                    3 plus GHG range................  249 to 505................  229 to 462................  281 to 560.
                                    3...............................  314.......................  289.......................  352.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                          Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Incremental Equipment      7...............................  34........................  36........................  33.
 Costs.                             3...............................  36........................  38........................  34.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      Net Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total [dagger][dagger]............  7 plus GHG range................  169 to 425................  154 to 386................  192 to 472.
                                    7...............................  234.......................  213.......................  264.

[[Page 31880]]

 
                                    3 plus GHG range................  213 to 469................  192 to 424................  247 to 526.
                                    3...............................  279.......................  251.......................  318.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* This table presents the annualized costs and benefits associated with the considered WICF refrigeration systems shipped in 2020-2049. These results
  include benefits to consumers which accrue after 2049 from the WICF refrigeration systems purchased from 2020-2049. The incremental installed costs
  include incremental equipment cost as well as installation costs. The results account for the incremental variable and fixed costs incurred by
  manufacturers due to the adopted standards, some of which may be incurred in preparation for the rule. The GHG reduction benefits are global benefits
  due to actions that occur nationally. The Primary, Low Net Benefits, and High Net Benefits Estimates utilize projections of energy prices and real GDP
  from the AEO2016 No-CPP case, a Low Economic Growth case, and a High Economic Growth case, respectively. In addition, incremental product costs
  reflect constant prices in the Primary Estimate, a low decline rate in 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.G. Note that the Benefits and Costs may not sum to the Net
  Benefits due to rounding. The equipment price projection is described in section IV.G.2 of this document and chapter 8 of the final rule technical
  support document (TSD). In addition, DOE used estimates for equipment efficiency distribution in its analysis based on national data supplied by
  industry. Purchases of higher efficiency equipment are a result of many different factors unique to each consumer including boiler heating loads,
  installation costs, site environmental consideration, and others. For each consumer, all other factors being the same, it would be anticipated that
  higher efficiency purchases in the baseline would correlate positively with higher energy prices. To the extent that this occurs, it would be expected
  to result in some lowering of the consumer operating cost savings from those calculated in this rule.
** The interagency group selected four sets of SC-CO2 SC-CH4, and SC-N2O values for use in regulatory analyses. Three sets of values are based on the
  average social costs from the integrated assessment models, at discount rates of 5 percent, 3 percent, and 2.5 percent. The fourth set, which
  represents the 95th percentile of the social cost distributions calculated using a 3-percent discount rate, is included to represent higher-than-
  expected impacts from climate change further out in the tails of the social cost distributions. The social cost values are emission year specific. See
  section IV.L 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.M.3 for further discussion. For the
  Primary Estimate and Low Net Benefits Estimate, DOE used national benefit-per-ton estimates 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 the High Net Benefits Estimate, the benefit-per-ton
  estimates were based on the Six Cities study (Lepuele et al. 2011); these are nearly two-and-a-half times larger than those from the ACS study.
[dagger][dagger] Total Benefits for both the 3-percent and 7-percent cases are presented using the average social costs with 3-percent discount rate. In
  the rows labeled ``7% plus GHG range'' and ``3% plus GHG range,'' the operating cost and NOX benefits are calculated using the labeled discount rate,
  and those values are added to the full range of social cost values.

VI. Procedural Issues and Regulatory Review

A. Review Under Executive Orders 12866 and 13563

    Section 1(b)(1) of Executive Order 12866, ``Regulatory Planning and 
Review,'' 58 FR 51735 (October 4, 1993), requires each agency to 
identify the problem that it intends to address, including, where 
applicable, the failures of private markets or public institutions that 
warrant new agency action, as well as to assess the significance of 
that problem. The problems that the adopted standards for WICF 
refrigeration systems are intended to address are as follows:
    (1) Insufficient information and the high costs of gathering and 
analyzing relevant information leads some consumers to miss 
opportunities to make cost-effective investments in energy efficiency.
    (2) In some cases the benefits of more efficient equipment are not 
realized due to misaligned incentives between purchasers and users. An 
example of such a case is when the equipment purchase decision is made 
by a building contractor or building owner who does not pay the energy 
costs.
    (3) There are external benefits resulting from improved energy 
efficiency of products or equipment that are not captured by the users 
of such equipment. These benefits include externalities related to 
public health, environmental protection and national energy security 
that are not reflected in energy prices, such as reduced emissions of 
air pollutants and greenhouse gases that impact human health and global 
warming. DOE 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 regulatory action 
in this document 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 
regulatory action is an ``economically'' significant regulatory action 
under section (3)(f)(1) of Executive Order 12866. Accordingly, pursuant 
to section 6(a)(3)(C) of the Order, DOE has provided to OIRA an 
assessment, including the underlying analysis, of benefits and costs 
anticipated from the regulatory action, together with, to the extent 
feasible, a quantification of those costs; and an assessment, including 
the underlying analysis, of costs and benefits of potentially effective 
and reasonably feasible alternatives to the planned regulation, and an 
explanation why the planned regulatory action is preferable to the 
identified potential alternatives. These assessments can be found in 
the technical support document for this rulemaking.
    DOE has also reviewed this regulation pursuant to Executive Order 
13563, issued on January 18, 2011. 76 FR 3281, January 21, 2011. E.O. 
13563 is

[[Page 31881]]

supplemental to and explicitly reaffirms the principles, structures, 
and definitions governing regulatory review established in Executive 
Order 12866. To the extent permitted by law, agencies are required by 
Executive Order 13563 to (1) propose or adopt a regulation only upon a 
reasoned determination that its benefits justify its costs (recognizing 
that some benefits and costs are difficult to quantify); (2) tailor 
regulations to impose the least burden on society, consistent with 
obtaining regulatory objectives, taking into account, among other 
things, and to the extent practicable, the costs of cumulative 
regulations; (3) select, in choosing among alternative regulatory 
approaches, those approaches that maximize net benefits (including 
potential economic, environmental, public health and safety, and other 
advantages; distributive impacts; and equity); (4) to the extent 
feasible, specify performance objectives, rather than specifying the 
behavior or manner of compliance that regulated entities must adopt; 
and (5) identify and assess available alternatives to direct 
regulation, including providing economic incentives to encourage the 
desired behavior, such as user fees or marketable permits, or providing 
information upon which choices can be made by the public.
    DOE emphasizes as well that Executive Order 13563 requires agencies 
to use the best available techniques to quantify anticipated present 
and future benefits and costs as accurately as possible. In its 
guidance, OIRA has emphasized that such techniques may include 
identifying changing future compliance costs that might result from 
technological innovation or anticipated behavioral changes. For the 
reasons stated in the preamble, DOE believes that this final rule is 
consistent with these principles, including the requirement that, to 
the extent permitted by law, benefits justify costs.

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'') 
and a final regulatory flexibility analysis (``FRFA'') for any rule 
that by law must be proposed for public comment, unless the agency 
certifies that the rule, if promulgated, will not have a significant 
economic impact on a substantial number of small entities. As required 
by Executive Order 13272, ``Proper Consideration of Small Entities in 
Agency Rulemaking,'' 67 FR 53461 (August 16, 2002), DOE published 
procedures and policies on February 19, 2003, to ensure that the 
potential impacts of its rules on small entities are properly 
considered during the rulemaking process. 68 FR 7990. DOE has made its 
procedures and policies available on the Office of the General 
Counsel's Web site (http://energy.gov/gc/office-general-counsel). DOE 
has prepared the following FRFA for the products that are the subject 
of this rulemaking.
    A manufacturer of a walk-in cooler or walk-in freezer is any person 
who: (1) Manufactures a component of a walk-in cooler or walk-in 
freezer (collectively, ``walk-ins'' or ``WICFs'') that affects energy 
consumption, including, but not limited to, refrigeration, doors, 
lights, windows, or walls; or (2) manufactures or assembles the 
complete walk-in cooler or walk-in freezer. 10 CFR 431.302. DOE 
considers manufacturers of refrigeration components (WICF refrigeration 
manufacturers) and assemblers of the complete walk-in (installers) 
separately for this Regulatory Flexibility Review.
    This document sets energy conservation standard for seven equipment 
classes of WICF refrigeration systems. Manufacturers of WICF 
refrigeration systems are responsible for ensuring the compliance of 
the components to the new standard. WICF refrigeration manufacturers 
are required to certify to DOE that the components they manufacture or 
import comply with the applicable standards. DOE used the SBA's small 
business size standards to determine whether any small WICF 
refrigeration system manufacturers would be subject to the requirements 
of the rule. See 13 CFR part 121. WICF refrigeration manufacturing is 
classified under NAICS 333415, ``Air-Conditioning and Warm Air Heating 
Equipment and Commercial and Industrial Refrigeration Equipment 
Manufacturing.'' The SBA sets a threshold of 1,250 employees or less 
for an entity to be considered as a small business for this category.
    This document does not include new or amended energy conservation 
standards that are measured in terms of the performance of the complete 
walk-in cooler or freezer. Manufacturers (which may be on-site 
installers) assemble certified components that have been previously 
tested and rated, such as panels, doors, and refrigeration systems, to 
complete the walk-in on-site. However, they are not required to certify 
compliance of their installations to DOE for energy conservation 
standards. Installers of complete walk-ins are categorized under NAICS 
238220, which covers ``refrigeration contractors.'' SBA has set a 
revenue threshold of $15 million or less for an entity to be considered 
small for this category. However, given the lack of publicly available 
revenue information for walk-in assemblers and installers, DOE chose to 
use a threshold of 1,250 employees or less to be small in order to be 
consistent with the threshold for WICF component manufacturers. Based 
on these thresholds, DOE presents the following FRFA analysis:
1. Need for, and Objectives of, the Rule
    Title III, Part C of the Energy Policy and Conservation Act of 
1975, as amended (``EPCA'') (codified at 42 U.S.C. 6291-6309) 
established the Energy Conservation Program for Certain Industrial 
Equipment, which covers certain industrial equipment, including the 
walk-in refrigeration systems addressed in this rulemaking--low-
temperature dedicated condensing systems and low- and medium-
temperature unit coolers. (42 U.S.C. 6311(1)(G)) EPCA established 
prescriptive standards for these equipment, see 42 U.S.C. 6313(f), and 
required DOE to establish performance-based standards for walk-ins that 
achieve the maximum improvement in energy that the Secretary determines 
is technologically feasible and economically justified. See 42 U.S.C. 
6313(f)(4)
    As noted elsewhere in this document, DOE published and codified a 
final rule that requires walk-in manufacturers to meet certain 
performance-based energy conservation standards starting on June 5, 
2017. See 10 CFR 431.306(e). Those standards applied to the main 
components of a walk-in: Refrigeration systems, panels, and doors.\82\ 
Also as discussed earlier in this document, a legal challenge was filed 
in this matter, which resulted in a settlement agreement and court 
order in which the United States Court of Appeals for the Fifth Circuit 
vacated six refrigeration system standards--(1) the two energy 
conservation standards applicable to multiplex condensing refrigeration 
systems (re-named unit coolers for purposes of this rule) operating at 
medium and low temperatures and (2) the four energy conservation 
standards applicable to dedicated condensing refrigeration systems 
operating at low temperatures. This final rule, which was the result of 
a months-long negotiated

[[Page 31882]]

rulemaking arising from the settlement agreement, is consistent with 
the Term Sheet developed as part of that negotiated rulemaking and 
adopts the agreed-upon standards contained in that Term Sheet for the 
seven classes of refrigeration systems. This rule also examines any 
potential impacts on walk-in installers.
---------------------------------------------------------------------------

    \82\ Although DOE had considered alternative performance-based 
standards for panels in a NOPR published September 11, 2013 (78 FR 
55782, 55784), the June 2014 final rule did not deviate from the 
panel standards prescribed by EPCA. (see 42 U.S.C. 6313(f) and 79 FR 
at 32051 (June 3, 2016)) Hence, the compliance date for the panel 
standards was January 1, 2009.
---------------------------------------------------------------------------

2. Significant Issues Raised in Response to the IRFA
    DOE did not receive written comments that specifically addressed 
impacts on small businesses or were provided in response to the IRFA.
3. Description on Estimated Number of Small Entities Regulated
    During its market survey, DOE used available public information to 
identify small WICF refrigeration manufacturers. DOE's research 
involved industry trade association membership directories (including 
those maintained by AHRI 1A\83\ and NAFEM 1A\84\), public databases 
(e.g. the SBA Database \85\), individual company websites, market 
research tools (e.g., Dun and Bradstreet reports 1A\86\ and Hoovers 
reports 1A\87\) to create a list of companies that manufacture or sell 
equipment covered by this rulemaking. DOE also asked stakeholders and 
industry representatives if they were aware of any other small WICF 
refrigeration manufacturers during manufacturer interviews conducted 
for the June 2014 final rule and at DOE public meetings. DOE reviewed 
publicly-available data and contacted companies on its list, as 
necessary, to determine whether they met the SBA's definition of a 
small business manufacturer of WICF refrigeration systems. DOE screened 
out companies that do not offer equipment covered by this rulemaking, 
do not meet the definition of a ``small business,'' or are foreign-
owned.
---------------------------------------------------------------------------

    \83\ See www.ahridirectory.org/ahriDirectory/pages/home.aspx.
    \84\ See www.nafem.org/find-members/MemberDirectory.aspx.
    \85\ See http://dsbs.sba.gov/dsbs/search/dsp_dsbs.cfm.
    \86\ See www.dnb.com/.
    \87\ See www.hoovers.com/.
---------------------------------------------------------------------------

    DOE identified ten WICF refrigeration manufacturers that produce 
equipment for one or more of the equipment classes analyzed in this 
final rule. All ten are domestic companies. Three of the ten WICF 
refrigeration manufacturers are small businesses based on the 1,250 
person threshold for NAICS 333415.
    DOE was unable to identify any company that operated exclusively as 
a manufacturer of complete walk-ins. All businesses that were 
manufacturers of complete walk-ins offered their services as part of a 
broader range of products and service capabilities. All small business 
manufacturers of complete walk-ins that DOE identified were on-site 
installers that also offered HVAC installation or commercial 
refrigeration equipment installation services. DOE relied on U.S. 
Census data for NAICS code 238300. The NAICS code aggregates 
information for ``plumbing, heating, and air-conditioning 
contractors,'' which includes ``refrigeration contractors''.
    According to the 2012 U.S. Census ``Industry Snapshot'' for NAICS 
238220, there were approximately 87,000 plumbing, heating, and air-
conditioning contractor establishments in the United States.\88\ Based 
on detailed breakdowns provided in the 2007 U.S. Census, DOE was able 
to disaggregate the 87,000 business by contractor type.\89\ In 
examining these businesses, 35% were exclusively plumbing, sprinkler 
installation, or steam and piping fitting contractors and were unlikely 
to provide walk-in installation services. Of the remaining 65% of 
establishments, DOE estimated that 3,400 to 14,100 provide offer walk-
in installation services.
---------------------------------------------------------------------------

    \88\ U.S. Census Bureau. Industry Snapshot 
thedataweb.rm.census.gov/TheDataWeb_HotReport2/econsnapshot/2012/snapshot.hrml?NAICS=238220 (Last accessed July 2016).
    \89\ U.S. Census Bureau. Industry Statistics Portal 
www.census.gov/econ/isp/sampler.php?naicscode=238220&naicslevel=6# 
(Last accessed August 2016).
---------------------------------------------------------------------------

    U.S. Census data from 2012 showed that less than 1% of plumbing, 
heating, and air-conditioning contracting companies have more than 500 
or more employees. While the U.S. Census data show that average revenue 
per establishment is approximately $1.7 million, the data provide no 
indication of what the revenue distribution or the median revenue in 
the industry might be. Assuming that the plumbing, heating, and air-
conditioning employment data are representative of those found with 
walk-in installer employment numbers, the vast majority of installers 
are small businesses based on a 1,250-person threshold.
4. Description and Estimate of Compliance Requirements, Including 
Differences in Cost, if Any, for Different Groups of Small Entities
    DOE identified three small WICF refrigeration businesses that 
manufacture WICF refrigeration equipment addressed by this rule. One 
small business focuses on large warehouse refrigeration systems, which 
are outside the scope of this rulemaking. However, this company offers 
small capacity units that can be sold to the walk-in market as well. 
The second small business specializes in building evaporators and unit 
coolers for a range of refrigeration applications, including the walk-
in market. Further, based on manufacturer interviews conducted for the 
June 2014 final rule, DOE determined that the WICF refrigeration system 
revenue for this company is small compared to its total revenue. The 
third small business offers a wide range of equipment, including 
cooling towers, industrial refrigeration equipment, and water treatment 
systems. This company has a limited portfolio of unit coolers, which is 
a small portion of its offerings.
    Conversion costs are the primary driver of negative impacts on WICF 
refrigeration manufacturers. While there will be record keeping 
expenses associated with certification and compliance requirements, DOE 
expects the cost to be small relative to the investments necessary to 
determine which equipment are compliant, redesign non-compliant 
equipment, purchase and install new manufacturing line equipment, and 
update marketing materials. These conversion costs are described in 
section IV.J.C of this document.
    Since no market share information for small WICF refrigeration 
manufacturers is publicly-available, DOE relied on company revenue data 
for the small and large businesses as proxies for market share. For 
companies that are diversified conglomerates, DOE used revenue figures 
from the corporate business unit that produced walk-in refrigeration 
systems.
    At the adopted standard level, DOE estimates total conversion costs 
for an average small manufacturer to be $0.69 million per year over the 
three-year conversion period. Using revenue figures from Hoovers.com, 
DOE estimates that conversion costs are 1.0 percent of total small 
business revenue over the three-year conversion period.
    DOE estimates that there are approximately 3,400 to 14,100 walk-in 
installers and 99% of them are small businesses. Installers of complete 
walk-ins have been subject to regulation since 2009, when EPCA's 
prescriptive standards for walk-ins went into effect. EPCA required 
that all completed walk-ins must: Have automatic door closers; have 
strip doors, spring hinged doors, or other method of minimizing 
infiltration when doors are open; for all interior lights, use light 
sources with an efficacy of 40 lumens per watt or more; contain wall, 
ceiling, and door insulation of at least R-25 for coolers and R-32 for

[[Page 31883]]

freezers; contain floor insulation of at least R-28 for freezers; and 
use doors that have certain features; and use certain types of motors 
in components of the refrigeration system.
    This rule does not add energy conservation standards that would 
measure the performance of the complete walk-in. Manufacturers who 
strictly assemble or install complete walk-ins do not certify 
compliance to DOE. DOE was unable to identify installer conversion 
costs that would be likely to occur as a direct result of the adopted 
standard since these costs are borne by component manufacturers. DOE 
was unable to identify any potential stranded assets since installers 
will be able to continue installing completed walk-ins using certified 
components meeting prior applicable requirements that are purchased 
before the compliance date of this rule. Installers may continue using 
components that complied with prior applicable requirements after the 
compliance date for this final rule is reached. The burden of this rule 
on installers is de minimis.
5. Significant Alternatives to the Rule
    The discussion in the previous section analyzes impacts on small 
businesses that would result from the adopted standards, represented by 
TSL 3. In reviewing alternatives to the adopted standards, DOE examined 
energy conservation standards set at lower efficiency levels. While TSL 
1 and TSL 2 would reduce the impacts on small business manufacturers, 
it would come at the expense of a reduction in energy savings and NPV 
benefits to the consumer. TSL 1 achieves 89 percent lower energy 
savings and 86 percent lower NPV benefits to the consumer compared to 
the energy savings at TSL 3. TSL 2 achieves 44 percent lower energy 
savings and 36 percent lower NPV benefit to the consumer compared to 
the energy savings at TSL 3.
    DOE believes that establishing standards at TSL 3 balances the 
benefits of the energy savings at TSL 3 with the potential burdens 
placed on WICF refrigeration systems manufacturers, including small 
business manufacturers. Accordingly, DOE is not adopting one of the 
other TSLs considered in the analysis, or the other policy alternatives 
examined as part of the regulatory impact analysis and included in 
chapter 12 of the final rule TSD.
    Additional compliance flexibilities may be available through other 
means. EPCA provides that a manufacturer whose annual gross revenue 
from all of its operations does not exceed $8 million may apply for an 
exemption from all or part of an energy conservation standard for a 
period not longer than 24 months after the effective date of a final 
rule establishing the standard. Additionally, section 504 of the 
Department of Energy Organization Act, 42 U.S.C. 7194, provides 
authority for the Secretary to adjust a rule issued under EPCA in order 
to prevent ``special hardship, inequity, or unfair distribution of 
burdens'' that may be imposed on that manufacturer as a result of such 
rule. Manufacturers should refer to 10 CFR part 430, subpart E, and 
part 1003 for additional details.

C. Review Under the Paperwork Reduction Act

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

D. Review Under the National Environmental Policy Act of 1969

    Pursuant to the National Environmental Policy Act (``NEPA'') of 
1969, DOE has determined that the rule fits within the category of 
actions included in Categorical Exclusion (``CX'') B5.1 and otherwise 
meets the requirements for application of a CX. (See 10 CFR part 1021, 
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 rule. DOE's CX 
determination for this rule is available at http://energy.gov/nepa/categorical-exclusion-cx-determinations-cx.

E. Review Under Executive Order 13132

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

F. Review Under Executive Order 12988

    With respect to the review of existing regulations and the 
promulgation of 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)

[[Page 31884]]

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 final rule meets the 
relevant standards of Executive Order 12988.

G. Review Under the Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (``UMRA'') 
requires each Federal agency to assess the effects of Federal 
regulatory actions on State, local, and Tribal governments and the 
private sector. Pub. L. 104-4, sec. 201 (codified at 2 U.S.C. 1531). 
For a regulatory action likely to result in a rule that may cause the 
expenditure by State, local, and Tribal governments, in the aggregate, 
or by the private sector of $100 million or more in any one year 
(adjusted annually for inflation), section 202 of UMRA requires a 
Federal agency to publish a written statement that estimates the 
resulting costs, benefits, and other effects on the national economy. 
(2 U.S.C. 1532(a), (b)) The UMRA also requires a Federal agency to 
develop an effective process to permit timely input by elected officers 
of State, local, and Tribal governments on a ``significant 
intergovernmental mandate,'' and requires an agency plan for giving 
notice and opportunity for timely input to potentially affected small 
governments before establishing any requirements that might 
significantly or uniquely affect 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 has concluded that this final rule may require expenditures of 
$100 million or more in any one year by the private sector. Such 
expenditures may include (1) investment in research and development and 
in capital expenditures by WICF refrigeration systems manufacturers in 
the years between the final rule and the compliance date for the new 
standards and (2) incremental additional expenditures by consumers to 
purchase higher-efficiency WICF refrigeration systems, starting on the 
compliance date for the applicable standard.
    Section 202 of UMRA authorizes a Federal agency to respond to the 
content requirements of UMRA in any other statement or analysis that 
accompanies the final rule. (2 U.S.C. 1532(c)) The content requirements 
of section 202(b) of UMRA relevant to a private sector mandate 
substantially overlap the economic analysis requirements that apply 
under section 325(o) of EPCA and Executive Order 12866. The 
SUPPLEMENTARY INFORMATION section of this document and the TSD for this 
final rule respond to those requirements.
    Under section 205 of UMRA, the Department is obligated to identify 
and consider a reasonable number of regulatory alternatives before 
promulgating a rule for which a written statement under section 202 is 
required. (2 U.S.C. 1535(a)) DOE is required to select from those 
alternatives the most cost-effective and least burdensome alternative 
that achieves the objectives of the rule unless DOE publishes an 
explanation for doing otherwise, or the selection of such an 
alternative is inconsistent with law. As required by 42 U.S.C. 
6313(f)(4), this final rule establishes energy conservation standards 
for WICF refrigeration systems that are designed to achieve the maximum 
improvement in energy efficiency that DOE has determined to be both 
technologically feasible and economically justified, as required by 
6295(o)(2)(A), 6295(o)(3)(B), and 6316(a). A full discussion of the 
alternatives considered by DOE is presented in chapter 17 of the TSD 
for this final rule.

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

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

I. Review Under Executive Order 12630

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

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

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

K. Review Under Executive Order 13211

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

[[Page 31885]]

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

L. Information Quality

    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 peer reviews of 
the energy conservation standards development process and the analyses 
that are typically used and prepared a report describing that peer 
review.\90\ 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. 
DOE has determined that the peer-reviewed analytical process continues 
to reflect current practice, and the Department followed that process 
for developing energy conservation standards in the case of the present 
rulemaking.
---------------------------------------------------------------------------

    \90\ The 2007 ``Energy Conservation Standards Rulemaking Peer 
Review Report'' is available at the following website: http://energy.gov/eere/buildings/downloads/energy-conservation-standards-rulemaking-peer-review-report-0.
---------------------------------------------------------------------------

M. Congressional Notification

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

VII. Approval of the Office of the Secretary

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

List of Subjects in 10 CFR Part 431

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

    Issued in Washington, DC, on June 27, 2017.
Steven Chalk,
Acting Assistant Secretary, Energy Efficiency and Renewable Energy.

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

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

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

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


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


Sec.  431.306  Energy conservation standards and their effective dates.

* * * * *
    (e) Walk-in cooler refrigeration systems. All walk-in cooler and 
walk-in freezer refrigeration systems manufactured starting on the 
dates listed in the table, except for walk-in process cooling 
refrigeration systems (as defined in Sec.  431.302), must satisfy the 
following standards:

----------------------------------------------------------------------------------------------------------------
                                                                         Compliance date: equipment manufactured
             Equipment class                 Minimum AWEF  (Btu/W-h)*               starting on . . .
----------------------------------------------------------------------------------------------------------------
Dedicated Condensing System--Medium,       5.61........................  June 5, 2017.
 Indoor.
Dedicated Condensing System--Medium,       7.60........................
 Outdoor.
Dedicated Condensing System--Low, Indoor
 with a Net Capacity (qnet) of:
    < 6,500 Btu/h........................  9.091 x 10 -\5\ x qnet +      July 10, 2020.
                                            1.81.
    >= 6,500 Btu/h.......................  2.40........................
Dedicated Condensing System--Low, Outdoor
 with a Net Capacity (qnet) of:
    < 6,500 Btu/h........................  6.522 x 10-\5\ x qnet + 2.73
    >= 6,500 Btu/h.......................  3.15........................
Unit Cooler--Medium......................  9.00........................
Unit Cooler--Low with a Net Capacity
 (qnet) of:
    < 15,500 Btu/h.......................  1.575 x 10 -\5\ x qnet +
                                            3.91.
    >= 15,500 Btu/h......................  4.15........................
----------------------------------------------------------------------------------------------------------------
* Where qnet is net capacity as determined in accordance with Sec.   431.304 and certified in accordance with 10
  CFR part 429.

Appendix

[The following letter from the Department of Justice will not appear 
in the Code of Federal Regulations.]

U.S. Department of Justice
Antitrust Division
Renata B. Hesse
Acting Assistant Attorney General
Main Justice Building
950 Pennsylvania Avenue NW.,
Washington, DC 20530-0001
(202) 514-2401 I (202) 616-2645 (Fax).

November 10, 2016

Daniel Cohen, Esq.
Assistant General Counsel for Legislation
Regulation and Energy Efficiency
U.S. Department of Energy
Washington, DC 20585

Re: Docket No. EERE-2015-BT-STD-0016

Dear Assistant General Counsel Cohen:
    I am responding to your September 14, 2016 letter seeking the 
views of the Attorney General about the potential impact on 
competition of proposed energy conservation standards for walk-in 
coolers and walk-in freezers.
    Your request was submitted under Section 325(o)(2)(B)(i)(V) of 
the Energy Policy and Conservation Act, as amended (EPCA), 42 U.S.C. 
Sec.  6295(o)(2)(B)(i)(V), which requires the Attorney General to 
make a

[[Page 31886]]

determination of the impact of any lessening of competition that is 
likely to result from the imposition of proposed energy conservation 
standards. The Attorney General's responsibility for responding to 
requests from other departments about the effect of a program on 
competition has been delegated to the Assistant Attorney General for 
the Antitrust Division in 28 CFR Sec.  0.40(g).
    In conducting its analysis, the Antitrust Division examines 
whether a proposed standard may lessen competition, for example, by 
substantially limiting consumer choice or increasing industry 
concentration. A lessening of competition could result in higher 
prices to manufacturers and consumers.
    We have reviewed the proposed standards contained in the Notice 
of Proposed Rulemaking (81 Fed. Reg. 62980, Sept. 13, 2016), and the 
related technical support document. We also monitored the public 
meeting held on the proposed standards on September 29, 2016; 
reviewed supplementary information submitted to the Attorney General 
by the Department of Energy and public comments submitted in 
connection with this proceeding; and conducted interviews with 
industry participants.
    Based on the information currently available, we do not believe 
that the proposed energy conservation standards for walk-in coolers 
and walk-in freezers are likely to have a significant adverse effect 
on competition.

Sincerely,
Renata B. Hesse
Acting Assistant Attorney General

[FR Doc. 2017-14079 Filed 7-7-17; 8:45 am]
 BILLING CODE 6450-01-P